Tredegar Industries' fragmented value chains and organizational disconnect

Tredegar Industries Analysis: Connecting With the Value Chain

Summary of the Case

Tredegar Industries has emerged as a conglomerate that has the potential to expand globally in the plastics, aluminum and vinyl, and energy segments they compete in today predominantly in the U.S. The case study indicates that they have also had extensive investments throughout technology early-venture funds including their Tredegar Investments. The intent of this fund is to invest in communications, IT and life sciences technologies. Molecumetrics Ltd. Is another acquisition that also adds to the conglomerate-based approach Tredegar is taking to growth. The case study indicates that profitability as measured by Net Income continues to increase, yet there is little progress in the more niche-based markets the company initially invests in yet sees only small to non-significant growth. The reset on strategies is a step in the right direction yet not enough, as the conglomerate still lacks a unified strategy overall.

Statement of the Problem

Tredegar Industries has lost connection with its value chains across the many businesses it is attempting to transform into profitable enterprises. The blistering pace of transactions, acquisitions, mergers, and alliances all cloud the fact that their core business model is in a continual state of flux, unfocused on a core vision and mission. The rapid pace of growth by acquisition and mergers has also left each of the divisions disconnected from each other, often battling politically for shared resources and attention on their strategies. In highly decentralized organizational structures the potential exists for internal conflict and politics, all aimed at gaining an advantage in the availability of resources and talent (Walters, Bhattacharjya, Chapman, 2011). This is exactly what has happened with Tredegar Industries and one of the factors that have led to the lower Net Income and Revenue. The lack of internal coordination is leading to significant reductions in expense management and efficiencies, costing the company significantly as a result. Because of this lack of internal communication, the majority of company divisions fail to integrate into the broader value chains each compete and rely on for growth.

Learning Application

This case study is exceptionally detailed and dense with figures and analysis, yet when one strips away the many strategies, tactics, decisions made, and lays bare the case, it is clear there are value chain disconnects in many areas of the company's business. It has lost its way with value generation in key segments of the aluminum and vinyl, and energy segments, and while there are small wins from time to time and only small growth, the company overall is not attaining the growth it is capable of. It is because the focus across all divisions has become myopic and inward-centered, not on how to integrate into the broader value chain of the industries they compete in. The CEO of Tredegar Industries could do the drastic and trim back all businesses that do not integrate well into the broader industry value chains. This however would diminish the size of the business by a large amount. Instead, the company needs to re-align itself to its value to the overall industry value chains and quite being so myopic about the individual divisions. This inward-centered view is limiting the growth of the business and its profitability.