C. R. Plastics has grown over the years since its founding in 1994. The company is engaged in the production of outdoor furniture made from recycled plastics. Despite its growth, the company faces financial challenges. Its owner and president, Jamie Bailey, is in desperate need of additional financing in 2010. During this time, there are two proposed production alternatives. How much additional financing will Jamie Bailey need under both production alternatives?
David Wood and Mary Heisz
Harvard Business Review (W11581-PDF-ENG)
December 08, 2011
Case questions answered:
- How much additional financing will Jamie Bailey, owner and president of C. R. Plastics, need under both production alternatives?
- If you were Jamie Bailey, how much money would you request from the venture capitalists?
- How much equity would you be willing to give up?
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C. R. Plastics Case Answers
Introduction – C. R. Plastics
C. R. Plastics manufacturers is a company based in Stratford, Canada. Outdoor recycled plastic furniture is the primary emphasis of the business.
Canada used to be a net exporter of furniture. However, the Canadian dollar’s recent gains and the availability of low-cost imports from the U.S. and China have led to a shift to importing plastic furniture.
The manufacturing costs of outdoor items made in nations like China are often inexpensive. They don’t need complex technical designs. As a result, outdoor goods are more affordable for shops, encouraging them to switch from supporting local firms that offer identical items at a higher price to going global.
The majority of merchants favored low-cost items over local products that had a high manufacturing cost and a high price, according to this study.
Almost all of Canada’s merchants had been replaced by low-cost imports, resulting in the country buying more than twice as much as it used to sell.
C. R. Plastics Company, a Canadian company, was one of several Canadian businesses that had difficulty selling their goods in the nation because of the invasion of outdoor items.
Definition of Problems
The owner and president of C. R. Plastics, Jamie Bailey, was struggling to boost sales. However, because of the fragmentation of the industry and the stiff competition, he was having difficulty increasing sales for his firm.
As the firm expanded at an alarming rate, it encountered new financial constraints that made it difficult for it to keep up with the growing demand for its products.
Formulation of Alternative Solution
C. R. Plastics and other Canadian firms face the aforementioned difficulty, yet some succeed in overcoming this challenge.
Some of the strategies they used include responding quickly to customer demands and making high-quality, stylish items that match changing consumer tastes. Enterprises needed to boost outdoor product manufacturing before the following season to overcome the issue.
Also, the company could recycle plastic outdoor items to make high-quality, sophisticated designs better than those elsewhere. Canadian and U.S. enterprises like Native and Leisure Group Limited and Casual Living Products Limited have adopted this strategy in their home nations.
Product advertising may also boost domestic company sales. Domestic enterprises should market their specialized items to local and global merchants. C. R. Plastics should…
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