Scitex: A Company At A Crossroads

Abstract

Scitex is one of the first Israeli high tech firms that succeeded internationally and it was an Israeli pioneer regarding the floatation of the firm on NASDEQ.  Scitex made an international name for itself in the 1980’s by selling prepress systems to major publishers worldwide.  The prepress system developed by Scitex allowed printers to prepare material for print in a digital way, thereby expanding printing options and allowing accurate printing of color pictures.  While Scitex was very successful during the late 1980’s and the beginning of the 1990’s, its financial ratios had declined during the 1990’s and stockholders had shown their dissatisfaction. 

During the 1990’s, Israel had become a leading force in the high-tech world; the country had become part of the “New Economy” in which “Exposing Value” was the motto.  The Board of Directors demanded that Scitex adapt itself to the rules of the new economy in its plans for the future.  Rimon Ben-Shaul, Chairman of the Board, contemplated his response to the request of the Board, which would soon demand an answer. 

At the end of this case study, the students are required to make recommendations to the Scitex Board of Directors in late 1999 on how to continue “unveiling the company’s value”, in light of the reining “New Economy” business models and expectations.  Several options are raised in the text – (1) issuing stock for each SBU separately; (2) uniting functions and operations where possible between the SBU’s; (3) M&A with another player in the digital printing industry.  The students may choose one of the options, a different option not mentioned in the text, or any combinations of the above-mentioned options.  Without the benefit of hindsight, this dilemma has no right or wrong answers.  The students are asked to justify one or more of these strategic alternatives.  Their justification should be based on solid evidence presented in the case or on additional data collected on the Internet for from others resources.  They should consider the advantages and disadvantages of their alternatives and conceive a plan that will minimize the apparent risks, while taking full advantage of the alternatives’ growth and profit potential, as well as pleasing the company’s stockholders, which were to be a key consideration in deciding upon the company’s future.

 The case study allows for a SBU analysis of the core unit, as well as an analysis of the corporate strategy and portfolio management of the company.  It allows students to discuss the different strategic options open to management and recommend one of them.  The case study is suitable for MBA students who study business strategy, corporate strategy, or international business.  Teaching notes can be requested form the author.