- Teaching Notes
- Supplementary Resources
The case deals with a dilemma the Italian family firm AFG faced after making a significant investment to grow its business. AFG had been a successful commercial dealer of food packaging plastics, but under increased competition and squeezed margins, it bought an extrusion plant to become a manufacturer of plastic packaging for the food industry. AFG’s owner, Mauro Polano, wanted a stronger market position. The plant was, however, defective, underperforming at two-thirds of the promised capacity and causing financial loss. As CEO, Mauro had to decide whether to (1) invest in a new plant to make up for the under-promised capacity of the current one, (2) stop production for two months, repair the plant, and fix all defects, or (3) sell the flawed plant and ...