Wald Press Case Analysis

Yugesh Samant 1 Wald Press

Wa ld Pre ss Case Study Analysis (for referenc e only)

Yugesh N Samant

Yugesh Samant 2 Wald Press

Executive Summary: Wald Press was a large New York printing firm, known for unmatched quality work. Largely dependent on Campbell Brothers, a Manhattan publishing house, for orders, it started catering to other customers when orders from Campbell Brothers declined considerably during the Great Depression. Though barely profitable compared to Campbell Brothers, these customers kept Wald Press operational during hard times. Now with increasing orders from Campbell Brothers, Wald Press is facing capacity constraints. This, along with Campbell Brothers’ pressure to drop other customers, has brought Wald Press in dilemma to choose between moral obligation and profitability.

Yugesh Samant 3 Wald Press

Word Count: 96

Situation Analysis: Wald Press was one of the dominant players in New York’s printing business. Campbell Brothers, a large Manhattan publishing house, provided it with major portion of its work before the Great Depression. During the recession, Campbell Brothers couldn’t provide enough work to Wald Press as its own sales was declining to large extent. Hence Wald Press had to search for outside contracts to maintain the workflow. Though these contracts were not as profitable as that of Campbell Brothers, they provided liquidity to Wald Press in hard times. Also these contracts were easy to service with little technical requirements. Now in 1946, with sales increasing to previous highs, Campbell Brothers required more printing capacity than Wald Press was providing at that time. After searching for alternate press, it couldn’t find anyone to supplement the Wald Press’s capacity. Hence it started pushing Wald Press to drop outside contracts and concentrate only on its orders. To influence Wald Press’s management, it also promised them to provide high orders for next 2-3 years. The manager of Wald Press thought of various options to increase capacity in short run. But options of working overtime or adding second shift in schedule were not viable due to monetary and labour constraints respectively. Also option to purchasing new machinery was not useful as new machine will be operational after 1 or 2 years only. The manager was not in favour of dropping outside contracts as it was against the promise it made to these companies while obtaining contracts. Also it would have created mistrust for Wald Press in market and nobody would have helped Wald Press in future.

Problems:

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The main problem here is how to fulfil Campbell Brothers’ increased order.

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Also whether to drop outside contracts as per Campbell Brothers’ demand and concentrate whole capacity for it.

Decision Criteria: •

Reputation in market for any company is very important. Care should be taken that nothing happens to reputation of Wald Press.

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Campbell Brothers account for major portion of Wald Press’s business volume and profit. Care should be taken that any decision doesn’t hamper Wald Press’s profitability.

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Any decision should be economically viable to implement.

Alternatives & Evaluation: •

Campbell Brothers accounts for more than 80% of Wald Press’s billing and more than 95% of its profit. Loosing Campbell Brothers at the revival of markets after recession will be problematic for Wald Press as it provides bulk and profitable orders. Dropping outside contracts as per its demand will secure these orders. But Wald Press promised these companies that it will take care of their work even when Campbell Brothers increases its order. Now defaulting on these promises will damage its reputation. No other company will provide work to Wald Press if downturn happens in future.

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Keeping outside contracts in force, Wald Press needs to cater to increased orders from Campbell Brothers. As other contracts need lesser technical specifications, lesser production time but more inventory turnaround time, Wald Press can produce these books just before delivery. It will reduce inventory cost and they can focus on Campbell Brothers’ orders. But this won’t reduce much load and can create delivery problems sometimes.

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Wald Press can outsource some or all work with lesser technical requirements of other contracts to other small printing firms in vicinity. This way Wald Press can utilise its expertise in more skilled work and focus on Campbell Brothers’ work. It will also help to reduce overheads considerably and increase efficiency of Wald Press.

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Also, Wald Press should look at this situation as opportunity to grow. It should expand its present capacity in long run by setting up new printing press. It can also form joint venture with Campbell Brothers for capacity expansion. The new press can be dedicated only to Campbell Brothers’ orders. This move will reduce the risk attached with expansion and secure continuous flow of work from Campbell Brothers as it will also have a stake in new press.

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To make other contracts profitable, Wald Press should renegotiate the terms with these companies, especially for inventory turnaround time. This will help to increase profit margin as well create a platform to phase out loss making contracts slowly without hurting reputation. But it will take a lot of time and its success cannot be guaranteed.

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Also keeping in mind that such situation can occur in future, Wald Press should reduce its dependency on Campbell Brothers. It should try to attract other big publishing houses after expanding its capacity.

Solution and implementation: In order to overcome this dilemma, Wald Press should implement a twoway policy –

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short-run and long-run.

Short-run In order to keep both Campbell Brothers and outside contracts, Wald Press should divide the work in two parts; work requiring high skills and work requiring low skills. It should identify few small printing

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firms in its vicinity and outsource work requiring low skills to them. This will relieve some of its capacity. After that it should stop producing books for outside contracts for sometime till its piled up inventory is cleared to considerable extent. This will help to focus completely on Campbell Brothers’ work in short run.

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Long-run In order to avoid such dilemma in future and to reduce its dependency

on

Campbell

Brothers,

Wald

Press

should

start

expanding its capacity, with or without the help of Campbell Brothers. Once new capacity is installed, it should add new customers and renegotiate with existing ones for better terms.

Closing Summary: Wald Press should not drop outside contracts as per Campbell Brothers’ demand, but use outsourcing of other work in short run to concentrate on Campbell Brothers’ work and expand its capacity in long run to meet future demands. This will help to maintain its reputation as well as to achieve profitability and growth in future.

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Total Word Count: 96 + 970 = 1066