The two growth options that Arauco face have an added advantage of the market share and the economies of scale. However, considering the. Arauco (A): Forward Integration or Horizontal Expansion?. Then we considered the competitive advantages that Arauco enjoyed due to . Horizontal Expansion and Backward Integration over Forward Integration Exhibit .

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Pricing of Market Pulp Because market pulp was the only globally traded commodity in the paper industry, the price of pulp was a key indicator to the pricing along the rest of the value chain. Flutter also an MSPand ii Betfair vs.

The group of producers was referred to forwsrd Norscan North American and Scandinavian producers and historically, data on forwarv levels and prices had been tracked and measured using those four countries.

The asset beta of pulp production and sales was 0.

Arauco(a): Forward Integration or Horizontal Expansion. Essay Example | Graduateway

The new plant would push its capacity to 3. The company hired independent contractors to perform most of its forest operations planting, maintenance, thinning, pruning, harvesting, transportation, and access road construction. Revenues had increased 7. About the Author Ramon Casadesus-Masanell. Cite View Details Purchase Related. Bleached pulp 1 Mikko Tahvanainen, of the Finnish Forestry Industries Federation, explained the reason for the change: It was planning the spin-off of its paper, pulp, and timber operations to Neenah Paper Inc.

During the Second World War, the company faced a low supply of pulp in the international market and chose to backward-integrate into forests and pulp by purchasing Los Pinares, one of the biggest pine reserves in the region. Law Enforcement Code of Ethics Essay.

Western Europe, Japan, and Intetration consumed approximately kilogram per person per year.

Arauco(a): Forward Integration or Horizontal Expansion. Essay

As well, investments made to improve our assets, our operational strength, and economic conditions—like the favorable exchange rate for export industries—have all helped to reduce operational costs. Forwxrd of market share has impacted negatively on capacity utilization rates and consequently unit costs and loss of volume and constant price pressure have hit the top line.


Click here to sign up. Secondly, there seemed to be a main group and subgroups with no integration.

Each producer specialized in either bleached hardwood kraft pulp, bleached softwood kraft pulp, or other pulp formats. Arauco strove to establish long-term relationships and integfation renewable agreements of up to three years with truck owners and operators. By earlywith the new Valdivia plant operational, the company had propelled itself to the third largest market pulp producer with production capacity of 2.

Arauco by Janick Couture on Prezi

The industry had undergone a number of mergers and acquisitions in the s as pulp and paper manufacturers struggled to enhance efficiencies, increase capacities, and lower inteyration. Some industry observers felt that the increasing use of computers, handheld devices, and mobile phones would act as a horziontal for paper. Radiata integraton in Chile had a high yield per hectare due to the quality of soil, making it possible to plant a larger number of kntegration by hectare.

On January 1,Chile and the U. Thirdly, no team leader was officially appointed or nobody was empowered to define the role structure, the decision-making process and assessing team performance. The slow inventory production and turnover could cause significant problems for Celulosa-Arauco.

Some industry observers felt that the highly fragmented nature of the industry meant that prices were less stable. Ledesma manufactured about 85, tons of paper a year, although most of the raw material it needed to produce pulp came from sugar cane. Its production was abouttons annually. Sawmills—Aserraderos Arauco Founded inthe principal function of this division was to produce and sell saw timber and remanufactured products.


In order to compete effectively on cost, many pulp manufacturers attempted to set up facilities in low-cost areas or areas close to their major customers to minimize transportation costs. Anacleto Angelini, inttegration owner of the Angelini Group, was deemed to be one of the 10 richest men in Latin America by Forbes magazine.

Arauco (A) Hbs Forward Integration Or Horizontal Expansion

The main consumers of paper were from North America, with an average consumption of Wood Products From its plantations, Arauco provided logs to sawmills and pulp mills, and to factories for the manufacture of panels. In order for Celulosa Arauco to sustain success or even thrive in this changing market, it would have to undergo a transformation. The company owned 11 sawmills in Chile and two in Argentina that divided their production between sawn timber green or kiln-dried and remanufactured wood products, with an annual production capacity of 2.

Other firms chose to focus on a particular category. This is evident from the increase in educational spending but lack of functional computer software for students. Arauco supplemented its production of pulp logs with purchases in the Chilean market. Kraft pulp was brown in color, and was thus bleached for most applications.

Most of its sales for paper were generated within Latin America. Pulp and paper prices fluctuated as producers lowered prices in times of soft demand, and moved to increase supply by building more capacity when demand was predicted to increase. This company was founded after the stock market crash in with the intention of guaranteeing fuel supplies in Chile.