Sealed Air to Assess Strategic Outlook in Packaging Materials

Case Type: business competition/competitive response.
Consulting Firm: AlixPartners 1st round job interview.
Industry Coverage: Containers & Packaging; Chemical Industry.

Case Interview Questions #00015: Your client Sealed Air Corporation (NYSE: SEE) is a medium sized company headquartered in Elmwood Park, New Jersey, United States that makes a variety of packaging materials, systems and equipment. Founded in 1960, the company’s popular brands include Bubble Wrap, Cryovac, Instapak, Shanklin, etc.

Sealed Air is the largest North American producer of a certain kind of bubble-pack packaging material. Currently, the company has 80% of the market share. The CEO of Sealed Air has asked your consulting team to assess the strategic outlook for his company. How would you begin to assess the future for this client, and what type of recommendations could you make?

Additional Information: (to be given to you if asked)

1. Costs: Costs for the product are broken down as follows:

• 20% for polyethylene, a plastic chemical.
• 35% conversion costs, including allocated fixed costs, labor and energy costs.
• 10% distribution and storage costs.
• 15% marketing and overhead.
• Profit margins are 20%.

2. Company: The factory is 50 years old, and the technology used is the same as when the factory opened.

3. Competition: The client had 100% of the market until two years ago. Since that time, a local startup company has appeared in the Philadelphia / New Jersey market and has captured nearly all of that market. This factory has purchased advanced technology from a German company. Your client does not have much information about this competitor, but it appears that their factory is extremely efficient. They have also been undercutting your client on price.

Possible Solution:

The competitor has used their new technology to produce a lower price product. As evidenced in the Philadelphia / New Jersey market, nearly all customers prefer this product to your client’s. Therefore, the future is extremely bleak for your client, and they should be advised to respond to the competitive threat, perhaps by updating their own technology.