CCL Industries Inc.: Divesting the Custom Division
(4 pages of text)
In 2004 CCL Industries Inc. was a leading producer of value-added outsourcing custom products and packages for numerous large consumer packaged goods companies. CCL's chief executive officer and vice-chair faced an important strategic decision. The CEO was contemplating selling the custom manufacturing division of CCL that was the basis for its founding, and still contributed approximately 34 per cent of overall earnings. Although the firm had acquired and divested many business units throughout its history, this divestment was perhaps the most significant in terms of its historical importance. The divestment of this division represented a major change to the essence and strategy of the firm. CCL was fortunate to have a very active, supportive yet independent board of directors. The CEO had to ensure that if he recommended divesting the custom manufacturing division, he would need to be very well prepared for some intense questioning from the board regarding the soundness of his proposal. The board took their role as stewards of the corporation very seriously.
- To look at a major strategic decision from the perspectives of the most senior management positions in a firm — the CEO and the board.
- To provide students with insight into the actual execution of corporate governance.
Students are presented with a situation that is very open-ended with respect to the outcome. They are also able to take the roles of the CEO and the board, which, although both are “on the same side,” will require different analyses and expectations. Depending upon the decisions the main characters make at several key points, they will be expected to develop very different action plans.
The case is ideal for a course on corporate governance but is also appropriate for a strategic management course, which may include sections on such topics as corporate governance, relations between boards and management, strategic change and corporate divestments. The case is intended for a class of MBA-level students; however, it would be ideal for executive MBA students, as well as for a course or seminar on governance and boards presented to directors and senior managers.
Canada, Large, 2004
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