The two growth options that Arauco face have an added advantage of the market share and the economies of scale. However, considering the. Should the company go with an horizontal expansion and invest US$1 in pulp production by forward integrating into paper manufacturing?. This is a Spanish version. Celulosa Arauco is a major Chilean producer of market pulp and wood products. Owning over million hectares of forest in Chile.

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In addition to market pulp, the company also operated a real estate division in the U.

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

Choose Type of service Writing Rewriting Editing. As an Arauco executive stated: During several years, the company has been concentrated in the pulp business because we had young forests. Forward Integration or Horizontal Expansion? The proximity of third-party resources was another vital forwadd as transportation costs ate into margins.

The company expanded throughout the s and s, increasing its capacities through horizojtal and sawmills and producing cardboard boxes for the fruit and fish sectors.

Stora Enso was involved in the manufacturing of a wide variety of integratioj such as magazine paper, newsprint, fine papers, packaging, graphic products, office papers, wallpaper base, ro sawn timber. The Case Centre is a not-for-profit company limited by guarantee, registered in England No and entered in the Register of Charities No Panels Arauco produced plywood and fiber panels, which represented Betfair and the U.

We will write a custom essay sample on Arauco a: Adapted from Aracruz, presentation to Merrill Lynch dated March 10,www. The current price recovery appears to be demand driven, expwnsion we believe is more important if a price recovery is to be sustained. Sorry, but copying text is forbidden on this website. To maximise their effectiveness, colour items should be printed in colour. In the production of paper, CMPC was the unquestionable leader in the national market and one of the leaders in South America.


Energy Information Administration website, www. Forward Integration or Horizontal Expansion. The slow inventory production and turnover could cause significant problems for Celulosa-Arauco.

Arauco (A): Forward Integration or Horizontal Expansion?

The price recovery is somewhat muted at present for hardwood grades because of recent significant capacity additions in Latin America. The largest producers were North American pulp mills manufacturing Page count 1 integgration words. In addition, there were loading costs associated expannsion moving raw materials from the forest plantations to the plants.

Arauco strove to establish long-term relationships and made renewable agreements of up to three years with truck owners and operators.

Arauco (A): Forward Integration or Horizontal Expansion? | The Case Centre

After a log was cut, it was automatically grouped and then sent to one of three destinations: Horizonta, also an MSPand ii Betfair vs. Cutting the current dividend and transforming the company into lean, efficient, well-managed segments with appropriate oversight is crucial at this point. The company actively exported around the world, with Asia as its major destination for export sales.

Sawmills—Aserraderos Arauco Founded inthe principal function of this division was to produce and sell saw timber and remanufactured products.

Second, Celulosa-Arauco can proceed by changing operations. Western Europe, Japan, and China consumed approximately kilogram per person per year. Eric from Graduateway Hi there, would you like to get an essay? The combination has resulted in a disproportionate earnings pressure on integrated producers, which most public companies are. Forward Integration or Horizontal Expansion? He imagined that some board members would be concerned about the tremendous resources involved and the possibility of horixontal other large projects in the next decade.

One hundred and forty-two million tons of pulp were produced and used in the production of paper by vertically integrated pulp and paper companies.

Arauco by Janick Couture on Prezi

Cite View Details Educators Related. Help Center Find new research papers in: Prices have been on a downward trajectory since the fourth quarter of but the tide is now turning. This company was founded after the hoizontal market crash in with the intention of guaranteeing fuel supplies in Chile.


It was the leading sawmilling company in the southern hemisphere, with an annual production capacity of 2. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Some industry insiders felt that maintaining a fully integrated structure allowed for greater negotiation leverage with the main suppliers to the industry, such as chemical providers and paper and pulp machinery manufacturers.

Ledesma manufactured about 85, tons of paper a year, although forwxrd of the raw material it needed to produce pulp came from sugar cane. Most of the industry used prices tracked by the Finnish firm, FOEX, which was a private company that provided audited pulp and paper indexes.

Both companies had been created 20 years earlier by the Chilean government to develop forest resources, improve soil quality, and promote employment. Wood Products From its plantations, Arauco provided logs to sawmills and pulp mills, and to factories for the manufacture of panels.

How About Make It Original? The remaining wood was purchased from third-party forest owners.

In contrast, brown paper bags were manufactured from unbleached kraft paper. Sorry, but downloading is forbidden on this website.

Bythe division included 12 sawmills with an aggregate processing capacity of 4. By clicking “SEND”, you agree to our terms of service and privacy policy. Exhibit 11 shows the worldwide consumption of paper. The company planned on spinning off its consumer products division but changed plans due to weak equity markets in Panels—Paneles Arauco was formed in and was devoted to the manufacture of semi-finished wood products such as plywood and other panels used mainly for construction.

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