Moller Industries,

Inc. – Case Analysis

SUBMITTED BY GROUP 10 (B2B – 1)
AMAN JAIN - 024006
PARICHITA RAGHAV - 024033
PULKIT DHANAVA - 024036
RONIT GUHA ROY - 024042
Important Facts
 Moller Industries Packaging Division, is a leading manufacturer of strapping systems (steel &
plastic) and associated tools/ machine equipment

 Packaging Division is main source of revenues - $ 286 million out of $ 658 million total sales of
Moller Industries, which is market leader in steel strapping industry

 Market segmentation is done on 2 factors – Annual dollar volume & shipping quantity

 Major competitors – Alpha Corporation, Sanford, Bentley, American Metal, Jersey steel, Plymouth
Key Issues
 6.8% rise in price of cold rolled steel – the raw material

 Market share reducing from 50% in 2007 to 40% in 2013 – due to entry of new competitors who
offer similar products on discount

 Change in customer’s buying behaviour – customers are becoming price sensitive

 Competitors maintenance of price differential of 5% -10% on Moller’s discounted price

 Further selective discounting by competitors - causing erosion of Moller’s market share

Points of Differences - Moller
 Investment in Research & Development

 Creation of regional steel strapping plants & sales offices – for best technical services to customers

 Availability of specialized sales force - to study an industry’s strapping needs, design products
accordingly and provide high level of after sales services

 Only producer of customized steel strapping or machines

Options for Moller
 In order to maintain profitability, halt market share erosion, maintain healthy cash flow and motivate
sales force, following options are being evaluated-

(i) Increase price of strapping products due to increase in price of raw material – consistent with
corporate policy of passing the cost to customers but resistance is there from sales force as
competitor’s offerings are more price sensitive

(ii) Maintain current book prices – which can satisfy company’s cash flow requirements but resistance
is there from mid and small segments, who are inclined towards low price products

(iii) Price flex offering – relates to selective discounting which is mix of charging premium price and
offering discounts to selective customers
Recommendation
 Moller should go for Price flex offering – where premium can be charged from customers inclined
towards quality service and discounts can be offered to customers who take product as commodity

 With sales force having power to offer discounts up to 7% on strapping consumables – this can give
decision power to sales people in order to translate potential opportunity into final sales, thus can be
a motivating factor for them

 Capacity utilization is around 71% (Exhibit 7) - average production costs tend to fall as output rises –
so higher utilization can reduce unit costs, making a business more competitive
THANK YOU