Celulosa arauco forward integration or horizontal expansion

Celulosa arauco forward integration or horizontal expansion

Inthey believed that the best strategy was to invest in the most advanced technologies in genetic improvement, forest management and pest, weed and fire protection, in order to increase the productivity and quality of their highly regarded radiata pine and eucalyptus, and therefore increase their value for future sales.

As technology has improved, so have the way to produce documents.

As paper industry starts to recover in these two major markets, the increase in demand and strengthening of U. The turbines themselves produce more energy than the mills need, which allowed Arauco to somewhat enter in to a new industry and sell the excess energy to the Chilean power grid.

For almost every industry and business there are opportunities to go abroad.

In addition it is located far away from all the main ports in Argentina and is not cost effective. Cutting the current dividend and transforming the company into lean, efficient, well-managed segments with appropriate oversight is crucial at this point. Vulnerability to pulp price: From 0 to 5, 0 being highest in vulnerability, would our company be affected by the fluctuating pulp market price. If Arauco were to commit to a forward integration into paper manufacturing, it would lessen the impact of pulp price volatility on total revenues, add value to their existing forestry and pulp businesses, and allow the company to take advantage of the anticipated increase in demand for pulp and paper products. Second, Celulosa-Arauco can proceed by changing operations. Araucos research and development business unit, Bioforest, will continue to improve companys quality of plantations. Arauco has also invested a substantial amount of money in turbines that produce electricity for their mills. What also makes this relationship so attractive is the fact that of all the research that is being done has, none of it has been publicized nor does Bioforest offer any consulting services which mean all the information obtained is a competitive advantage. However, during the following three years, market pulp prices have dropped, which caused a concern for Perez, president and CEO of Arauco, since the pulp prices are directly tied with the demand for paper products. Analysis Strengths: Arauco has made name for themselves by being a leader in many aspects of their industry. By focusing on its core business of pulp production the company will continue to benefit from economies of scale, as it positions itself as the upcoming industry leader with the possibility of achieving sustainable growth. In other words, they own and operate forests, pulp mills, paper factories, distribution channels, and converting facilities. Expanding into the area of panels, Arauco has seen a growing demand for their panel product and could capitalize by focusing on a diversification strategy. For a company of this magnitude to succeed it must have an incredibly strong channel.

By focusing on its core business of pulp production the company will continue to benefit from economies of scale, as it positions itself as the upcoming industry leader with the possibility of achieving sustainable growth.

Their decision to export their products due to a favourable exchange rate has given them a great deal of flexibility and has enabled them to weather the storm of the economic downturn. In order for Celulosa Arauco to sustain success or even thrive in this changing market, it would have to undergo a transformation.

arauco case npv
Rated 9/10 based on 21 review
Download
Arauco by Janick Couture on Prezi