Tredegar Industries Analysis: Connecting With the Value

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.

Proposed Solution

Of the businesses that Tredegar Industries competes in, Film Products is the most multinational in scope, with the greatest success across geographies. The Film Products Division is also the only segment of Tredegar Industries that has the most advanced value chain as well, which is precisely why it is the only one expanding into new markets. Senior management has taken a Finance-centric view of expansion and considered how to orchestrate new acquisitions and mergers yet has failed to integrate its other divisions into the value chains of their industries. All businesses need to have an integrative approach to value creation to become global in operations and capable of continued growth (Porter, 1986).

Learning Application