Sealed Air Company Hbs Case
For the exclusive use of M. HUSSAIN
Harvard Business School 9-582-103
Rev. September 24, 1985
Sealed Air Corporation
The president and chief executive officer of Sealed Air Corporation, T. J. Dermot Dunphy, explained the firm’s 25% average annual growth in net sales and net earnings from 1971 to 1980: The company’s history has been characterized by technical accomplishment and market leadership. During the last 10 years we built on our development of the first closed-cell, lightweight cushioning material, introduced the first foam-in-place packaging system, and engineered the first complete solar heating system for swimming pools. We intend to follow the same management guidelines in the 1980s. We intend to seek market leadership because market leadership optimizes profit, and foster technological leadership because it is the only long-term guarantee of market leadership. In July 1981 Barrett Hauser, product manager of Sealed Air’s Air Cellular Products, was reflecting on Dunphy’s management philosophy as he considered how Sealed Air should respond to some unanticipated competition in the protective packaging market. As product manager, Hauser was responsible for the closed-cell, light-weight cushioning material that Dunphy had mentioned. Sealed Air’s registered trademark name for this product was AirCap.1 AirCap cushioning materials had always faced a variety of competitors in the protective packaging market. More recently, however, several small regional producers had invented around Sealed Air’s manufacturing process patents and begun to market cheap imitations of AirCap in the United States.
AirCap Cushioning and Its Competitors
AirCap cushioning was a clear, laminated plastic sheet containing air bubbles of uniform size (see Exhibit 1). The feature that differentiated AirCap cushioning from all other bubble products was its “barrier-coating”: each AirCap bubble was coated on the inside with saran. This greatly increased air retention, meaning less
Harvard Business School 9-582-103
Rev. September 24, 1985
Sealed Air Corporation
The president and chief executive officer of Sealed Air Corporation, T. J. Dermot Dunphy, explained the firm’s 25% average annual growth in net sales and net earnings from 1971 to 1980: The company’s history has been characterized by technical accomplishment and market leadership. During the last 10 years we built on our development of the first closed-cell, lightweight cushioning material, introduced the first foam-in-place packaging system, and engineered the first complete solar heating system for swimming pools. We intend to follow the same management guidelines in the 1980s. We intend to seek market leadership because market leadership optimizes profit, and foster technological leadership because it is the only long-term guarantee of market leadership. In July 1981 Barrett Hauser, product manager of Sealed Air’s Air Cellular Products, was reflecting on Dunphy’s management philosophy as he considered how Sealed Air should respond to some unanticipated competition in the protective packaging market. As product manager, Hauser was responsible for the closed-cell, light-weight cushioning material that Dunphy had mentioned. Sealed Air’s registered trademark name for this product was AirCap.1 AirCap cushioning materials had always faced a variety of competitors in the protective packaging market. More recently, however, several small regional producers had invented around Sealed Air’s manufacturing process patents and begun to market cheap imitations of AirCap in the United States.
AirCap Cushioning and Its Competitors
AirCap cushioning was a clear, laminated plastic sheet containing air bubbles of uniform size (see Exhibit 1). The feature that differentiated AirCap cushioning from all other bubble products was its “barrier-coating”: each AirCap bubble was coated on the inside with saran. This greatly increased air retention, meaning less