This document is an authorized copy for the course MBA 2025 - MBA 2025 - Analysis of Business Problems - MUC

taught by prof. Klueter, Thomas Maximilian at IESE B.S.

ASN-103-E
July 2023

Retail Display Solutions Inc.

Thomas Maximilian Klueter
Edi Soler

In 2022, Retail Display Solutions, Inc. (RDS), a fully integrated point-of-sale (PoS) display
manufacturer that served a broad range of industries, was trying to overcome an operations
bottleneck in its plastics division.
For the past decade, the division had been converting plastic sheeting into display PoS stands
commonly used in retail stores to showcase products and new promotions concerning
beverages, snacks, cosmetics, and small electronics. These units functioned as powerful
advertising and sales vehicles for some of the world’s largest international brands, and they were
typically used in gasoline stations, drugstores, and supermarkets.
The product line consisted of 15 base units, some of which were for indoor and outdoor use,
offering clients various merchandising promotion and size options. Acrylic or polyvinyl chloride
(PVC) plastics were used to construct the PoS stands. To customize the displays for advertising
purposes, clients’ logo artwork and other marketing messages were printed on the plastic sheets
prior to the structural manufacturing. To print the sheets, the plastics division contracted with
RDS’s wholly owned printing division. The plastics division performed its own fabrication in a
modern 1,449 m2 facility located near a residential area.
The printing division operated as a shared services group and provided print services to all three
manufacturing divisions of RDS (plastics, metal, and wood). Intracompany print jobs were priced
on an “at cost” basis plus a nominal administration fee, or at cost plus 5%. To function as a profit
center for the company, the print division also offered its services outside of RDS on a “for profit”
basis. It was located in an industrial park close to a brewery and a chemical plant, where it had
a large 3,716 m2 facility with ample space for the printing machines and all the associated
equipment, including print screens, ink, etc.

This case was prepared by Professors Thomas Maximilian Klueter and Edi Soler. July 2023.
This document is based on “InterMarket Technology, Inc.”, ASN-32-E, by Patrick Boyle and Mike Rosenberg, IESE Business School.
IESE cases are designed to promote class discussion rather than to illustrate effective or ineffective management of a given
situation.

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Last edited: 21/7/23

This document is an authorized copy for the course MBA 2025 - MBA 2025 - Analysis of Business Problems - MUC taught by prof. Klueter, Thomas Maximilian at IESE B.S.

ASN-103-E Retail Display Solutions Inc.

The manager of the plastics division had a long-standing, solid relationship with the manager of
the printing division. She had been told many times that RDS’s competitive advantage stemmed
from the high quality of its graphics, and she was very happy with the printing division. Although
the printing division was always seeking “for profit” jobs, the steady stream of print business from
the plastics division helped absorb the overall fixed costs of the printing operation. As the printing
operation was located within 15 miles (8 km) of the plastics division, the shipping costs between
the two divisions were negligible and the actual shipping was performed using company-owned
trucks.
Despite the strong market acceptance of its products, RDS’s sales team had learned that clients
sought a better method for displaying and promoting their items beyond PoS stands and needed
easier ways to embed pricing information and, more importantly, display (quick-response)
QR codes to convert static display experiences into interactive ones, with the goal being to
deepen engagement with potential clients.
While there had been a flurry of hype regarding the possible use cases of QR codes over a decade
before, clients had only truly embraced scannable codes during the COVID-19 pandemic when
contactless had become the new paradigm. Moreover, there had been technological advances
that allowed smartphone cameras to recognize QR codes without the need to download a
separate app. According to industry reports, in 2021, 83% of surveyed consumers stated that
they had used a QR code for the first time to make a payment in 2020. 1 It was expected that
QR codes would serve as important mobile gateways to branded augmented reality experiences
enabled by 5G on smartphones. 2 However, RDS did not offer any add-on solutions for
embedding QR codes into their variety of display stands.
To better meet clients’ needs, RDS devised a novel “PoS Engager” system, which enabled clients
to easily change the display of prices and add QR codes to existing PoS stands. This add-on
solution allowed companies to position prices and QR codes in a very flexible way at various
spots on each PoS display to help catch customers’ eye. Although the PoS Engager required a
distinctive grade of plastic, the production process fit well with RDS’s current manufacturing
technology. More specifically, the PoS Engager consisted of printed numbers and QR codes on
plastic sheets set within a plastic frame that could be easily integrated into any of the
15 standardized display units. While the same PoS Engager was compatible with all the basic PoS
stands, it was visually appealing and looked like a customized option on the display stands. Pilot
field tests revealed that clients were willing to pay a 10% premium for this added feature.
Unlike the base units, which required four-color print, the PoS Engager needed high-quality black
color printed on white plastic because the two colors had the highest amount of contrast. This
ensured the readability of the QR codes for phone cameras and QR code scanners. The black
print demand, hence, was contingent on the order demand forecast for each type of PoS display
that would have the PoS Engager added to it.
For the print division, the shift from four-color printing to high-quality one-color printing was
time consuming for its complex machines, which decreased the printing efficiencies. In addition,
the print division was not eager to give up “for profit” four-color print production time to
schedule one-color “at cost” jobs. The general manager of the print division suggested that the
plastics division consider sourcing its PoS Engager printing from outside the company or

1 “QRurb Your Enthusiasm 2021: Why the QR Code Remains a Top Security Threat and What You Can Do about It,” Ivanti,

2021, https://www.ivanti.com/resources/v/doc/ivi/2554/e3af63a9e95e.
2 Mike Peralta, “The Rebirth of the QR Code (And Why It’s More Important Than You Think),” Driving Growth, February 10,

2023, https://www.ana.net/miccontent/show/id/ii-2023-02-qr-codes.

2 IESE Business School-University of Navarra

This document is an authorized copy for the course MBA 2025 - MBA 2025 - Analysis of Business Problems - MUC taught by prof. Klueter, Thomas Maximilian at IESE B.S.

Retail Display Solutions Inc. ASN-103-E

acquiring equipment to print its own price changers. Furthermore, the print manager made it
clear that there was no space available in the printing facility for more equipment, meaning that
if the plastics division acquired a printing press, it would have to be installed at its own location.
The manager of the plastics division calculated that she had just enough space to accommodate
a one-color printing press 10ftx14ft (3 m x 4 m), so she did not consider this to be a problem.
Additionally, one-color printing did not seem to require technically skilled labor and would
enable the division to print “on demand,” eliminating the need for inventory. She felt that her
department could probably manage to operate the machine with its existing personnel.
The new printing operation would have to comply with regulations established by the
Environmental Protection Agency (EPA). The EPA required all printing operations to maintain
documentation concerning ink purchase, storage, usage, and disposal. Ink had to be stored under
fireproof containment, while any rags used to clean the printing screens had to be disposed of
(similar to the ink) in compliance with hazardous waste regulations. Approximately 0.5% of the ink
would be left over after printing and, therefore, require disposal. When the plastics manager
contacted a hazardous chemical service company, she was quoted a $250 monthly charge to pick
up the leftover ink and rags and transport them to a certified reclaiming station.
The manager of the plastics division began to analyze the PoS Engager print options. In
contracting for printing with outside vendors, the division would also incur shipping costs to and
from its facilities. Depending on the quantity to be printed, quotations for one-color printing
ranged from $4 per sheet to $7 per sheet (including shipping). A very well-established and highly
reliable local company had quoted the $7 per sheet price, while the lower price was offered by
a smaller, less-established printing company. A new, state-of-the-art, one-color printing press
with an output of two sheets/minute could be purchased for $86,000 or leased for
$2,000/month on a five-year contract with no down payment and a $1 buyout at the end of the
term. Installation of the unit (inclusive of the exhaust vent required to vent the ink fumes) was
estimated to cost $5,000. According to the printing press’s manufacturer, the printing cost per
sheet varied depending on the usage of the machine (see Exhibit 1). 3
These costs did not include any of the considerable plant overhead of the plastics division. The
division annually converted around 400,000 sheets of plastic into PoS display units, with total
sales of $9,000,000. Some 75% of the merchandising units required eight sheets of plastic each.
The remaining 25% required 10 sheets of plastic per unit. Approximately 0.8 PoS Engagers could
be made from one sheet of plastic. The division manager had high expectations of the PoS
Engager and hoped that within two years all PoS units would be sold with the new system.

3Considering maintenance periods and potential breakdowns, the manufacturer estimated that the printing press could
operate under normal conditions for approximately 2,000 hours per year.

IESE Business School-University of Navarra 3

This document is an authorized copy for the course MBA 2025 - MBA 2025 - Analysis of Business Problems - MUC taught by prof. Klueter, Thomas Maximilian at IESE B.S.

ASN-103-E Retail Display Solutions Inc.

Exhibit 1
Estimated printing costs for one sheet based on capacity utilization

25

20
Cost per sheet (US$)

15

10

0
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100

Capacity utilization (%)

Source: Prepared by the authors.

4 IESE Business School-University of Navarra