Peerless Starch

599 Words Apr 21st, 2011 3 Pages
Peerless strategy

Case Overview

The first plant of the Peerless starch industry was started in Blair during the civil war times. It is one of the highest wages paying plants in the region sporting a five story building supported by two massive towers. The other plants in the region have all shut down and currently Peerless starch is the only active plant in the region and it employs 8000 of the 120000 residents of the Blair. Company has three more plants in Illinois, Oregon and Texas which are not as massive as the one in Blair but they have modern equipment and machinery and running in profit. The three other plants combined employ same number of employees as the Blair plant and now the plant at Blair is running in huge losses and
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Following brainstorming exercise discusses the three options available in detail.

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Recommended Solution

Considering the current condition of the Peerless starch and the competitive market, it will be hard for the company to raise money for the plant at Blair. In light of all the points discussed in the brainstorming session, closing the plant at Blair seems to be the best option available. As already mentioned company can earn back the high severance pay that it has to pay after closing the plant in six months hence the company would be running in profits in a very short time. Considering the social responsibility of the Peerless Starch towards the people at Blairs, following further steps can be taken. 1) Pay handsome severance amount. 2) Take up activities in Blair for upliftment of the people by the means of scholarship etc. 3) Transfer few of the good employees to other plants so that some of the jobs can be saved. 4) Open factory at Blair when company is in stable enough condition to raise the money.

Contingency Plan

The second best plan available is to modernize the plant at Blair by raising $25 Million. This way the company can act as socially responsible company and produce quality products from the Blair plant. To recover the cost incurred, company can explore new markets or start synthetic starch production line at Blair as
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