Tactics These notes function as reminders about how Cin-Made should follow through on the different categories of strategies when choices must be made. For the mailing tubes, the strategy is simple: hold business. "Do a good job and attend to customers' needs. Maintain. But don't take extraordinary measures."
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Market Strategy: Do Not Enter
"We aren't a metal-stamping company, so our techniques for making the metal ends for tubes aren't as good as those of someone in that industry. Besides, we think the trend is going toward paper and plastic. We still produce metal ends for internal use, and we think there's opportunity to improve costs. But if we can't make any headway, we'll outsource this line next year."
Gaining Share in the Core Business
"This represents the majority of our business. Now that the shakeout in the motor-oil-can business is over, the market size is stable. Today we have only 1% to 2% of the total market, so our goal is to gain share. But we won't be a low-priced supplier. We are going to practice value pricing by finding new niches. My whole management team will fan out and talk with prospects to find new opportunities for us."
Attacking a Growing Market
"I concluded that this market was growing from a number of things: a main competitor that makes this style of paper-bottomed can went through an internal leveraged buyout; the company that makes the machines that make this type of can is selling more and more; paper-bottomed products are being talked about more and more in trade-association meetings. We must keep investing, with justifications, in this capital equipment to bring more applications to the marketplace."
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Competitor B Vulnerability
"Part of executing our strategy is paying close attention to our competitors. Recently I found out that one company was financially strapped, making it difficult for it to compete against us. Its customers are now some of our prime targets."
Knowing When to Compete on Price
"We made a substantial capital investment in this area [high speed tubes] before I worked out my niche strategy, so here -- even though it diverges from the overall plan -- I'm willing to compete on price, but only at very high volumes, so I can recoup the investment. On that basis, this category contributes to the bottom line, so we'll stick with it until our newer product lines are entrenched in the marketplace. Employees are careful about deciding when to cut prices, because we have installed a very powerful profit-sharing program."
Taking Chances on New Products
"For the past few years I have been working on a new papermaking technology that has swallowed up a considerable share of the company's R&D budget. But now it's coming to fruition: a joint venture to build a new million-dollar machine that will produce a price-competitive, environmentally sound packaging product. The market potential is almost infinite." In another joint venture, Frey is importing a European packaging design to the United States. When a customer base is established, he'll make a capital investment into it.
The Longer Term
The bottom third of Frey's strategic summary addresses longer-term goals and tactics. These notes are less product-specific and more geared to overall implementation of the mission statement.
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Executive Cross-Training
"Because our strategy is to be continually identifying new niches, we need to expand our sales presence. Since many of my senior managers have successfully delegated many of their responsibilities, I've asked every manager to hit the road. Even my financial manager has committed half his time this year to selling. If your people are committed to your product and technically understand it, they can sell it. They may not have as smooth a presentation as full-time salespeople, but they have other payoffs. They can spot needs and fix problems customers didn't even know they had: they might see that customers are throwing away two cans out of a hundred and say, 'My God, we can prevent that by designing new lid-placement equipment for them.' You don't get that with a conventional salesperson."
Continual Strategic Improvement
"This summary [of strategic goals] is tied into our mission statement and annual corporate objectives. We found that in reviewing last year's operational plans, there were too many objectives that weren't results-driven. For instance, last year's big push to do quality training lacked focus. We never asked, To accomplish what? You have to be able to measure the goal, determine the time frame, and decide on implementation. Now our goal is to get defects on specific machines down to a certain level at a certain time."
Responding to the Market's Environmental Imperative
"The composite-materials industry -- plastic-or foil-coated paper -- is being threatened because it's difficult to recycle those materials. Half our business uses composites, so it's a very substantial threat. Besides trying to come up with substitutes, our biggest R&D investments have been focused on our new environmentally sound packing material. It depends on technology that's totally different from that of winding paper for a canister, but it fits in with our mission of being a packaging company."
Encouraging Creativity
"[Research and development projects] are all investments. Without all these activities down here, the future of our company would be dismal at best. We'd see a gradual decline in our profits and revenues. Product attrition happens quickly in the marketplace. So we have a beefed-up R&D center. I don't ask people to justify spending on R&D as much as I ask them to justify more costly capital expenditures. That would just kill the sparks of creativity. I don't want to make my employees sell their ideas to me, since I don't have to sell my ideas to them. The secret is to allow a lot of little risk experiments. If employees want to spend $20,000, I'll give them $5,000 and see how far they get. I treat myself the same way."
