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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By mixing together different variations of softwood or hardwood pulp, the paper manufacturer could produce a product for a specific intent. The log integation process ensures that we are using the parts of the tree for the right purpose.
The sawn timber was used for packaging, pallets, construction, s decorative products for the furniture and design industries. 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.
Such a migration requires logistical concerns and expenses. The new plant would push its capacity to 3.
Arauco strove to establish long-term relationships and made renewable agreements of up to three years with truck owners and operators. But while they were maturing, we developed other important businesses like woods and imtegration that gave a bit more stability to the results.
This rate was expected to stay constant for the foreseeable future. The asset beta of pulp production and sales was 0.
Arauco (A): Forward Integration or Horizontal Expansion? | The Case Centre
The slow inventory production and turnover could cause significant problems for Celulosa-Arauco. The company sold approximately 2. Go to advanced search. Kimberly-Clark xepansion the industry in personal paper products such as tissue paper, paper towels, and diapers. Arauco also sold logs and a variety of wood pieces on the open market.
Translated from Spanish by casewriter. Stora Enso was involved in the manufacturing of a wide variety of products such as magazine paper, newsprint, fine papers, packaging, graphic products, office papers, wallpaper base, and sawn timber.
Other materials included recycled fiber, chemicals, and minerals. Chemical pulp was further subdivided into two groups: Forwwrd of Market Pulp Pulp mills were highly capital intensive.
During several years, the company has been concentrated in the pulp business because we had young forests. Exhibit 4 provides information about each mill. This company was founded after the stock market crash in with the intention of guaranteeing fuel supplies in Chile.
Nevertheless, like all producers of market pulp, Arauco is not able to escape the impact of pricing swings on its financial performance. Weyerhaeser was the largest market pulp producer, with a capacity of 2.
Prices have been on a downward trajectory since the fourth quarter of but the tide is now turning. Ledesma manufactured about 85, tons of paper a year, although most of the raw material it needed to produce pulp came from sugar cane. The Nueva Aldea project would include a pulp mill, a sawmill, and panel and wood-processing facilities. By using advanced forest techniques, the company hoped that it would improve product quality and increase margins. Environmental Considerations—Recycling and Substitutes to Paper Governments had been increasing regulations for pulp and paper companies to avoid clear- cutting forests, to reduce chemical by-products such as chlorine, limit gas emissions from the operation of factories, and increase recycling.
COPEC was the majority shareholder with Market for Sports Betting. Perez is debating whether the company and its shareholders would be better served by a forward integration into the paper business instead of increasing the company’s capacity in market pulp. Arauco also owned five remanufacturing facilities that produced remanufactured wood products from reprocessed sawn timber.
One important activity performed by independent contractors was the transportation from the forest plantations and between mills and ports. We’ll occasionally send you account related and promo adauco.