Case Detail

Case Summary

Solo Cup in 2007: Dollars in the Details

Case Number: 5-210-261, Year Published: 2010

HBS Number: KEL505

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Authors: James B. Shein; Rebecca Frazzano; Evan Meagher

Key Concepts

Liquidity Crisis, Turnaround Management, Consulting, Performance Improvement Plan, Restructure, Term Loan, Bank Loan, Senior Subordinated Notes, Senior Secured Credit, Contribution Margin, Raw Materials Prices, Plant Consolidation, Plant Closings, Covenant Breach, Unions, Merger Integration, Strategic Repositioning, Core Competence, Operational Improvements

Abstract

The case discusses the operational, strategic, and financial turnaround at Solo Cup, a manufacturer of disposable dining wares. Solo Cup’s troubles were compounded by the acquisition of a larger rival, Sweetheart Company, which had its own problems and presented issues of merger integration that management could not solve. David Garfield, a managing director at turnaround consulting firm Alix Partners, must first recognize Solo Cup’s core competencies in order to determine the appropriate change in strategic course, strip out the assets that no longer support the operations necessary for that strategy, and monetize them in order to rationalize its balance sheet. This case teaches that a three-pronged approach will invariably produce greater results than any one-dimensional turnaround.

Learning Objectives

Students will learn turnaround techniques necessary to restructure a company operationally, strategically, and financially, and will learn how Alix Partners’ relentless focus on “letting data rule” allowed the firm to revive a faltering company.

Number of Pages: 22

Extended Case Information

Teaching Areas: Accounting, Entrepreneurship, Family Business, Finance, Management, Manufacturing, Strategy

Teaching Note Available: Yes

Geographic: Highland Park, Illinois, United States

Industry: Disposable Foodservice Products

Organization Name: Solo Cup Company

Organization Department: Senior Management

Organization Size: Large

Decision Maker Position: Turnaround Consultant

Decision Maker Gender: Male

Year of Case: 2007