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 Chile, the harvesting of pulp logs could take place 16 to 18 years after planting and high-quality saw logs could be harvested in 25 years. Forware 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.

Wages and salaries Celulosa Arauco, Form F, December 31, Specifically, we argue that the literature would benefit from work that endogenizes platform design and that considers the possible competitive and cooperative interactions between the business models of traditional incumbents and those of potential innovative MSP entrants.

Arauco by Janick Couture on Prezi

Most of the industry used prices tracked by the Finnish firm, FOEX, which was a private company that provided audited pulp and paper indexes. International distribution offices were located in the U.

After a log was cut, it was automatically grouped and then sent to one of three destinations: As of earlythe company owned overhectares of forests mostly of radiata pine in Chile, Argentina, and Uruguay. Several of the larger companies were considered to be fully integrated with the ownership and operation of forests, pulp mills, paper factories, distribution, and converting facilities.


We will write a custom essay sample on Arauco a: The major industries were agriculture at 6. ByCMPC was involved in forestry, pulp, papers and cardboards, tissues, and paper products with production facilities in Chile, Argentina and Uruguay. Product details Share this page: Radiata pine was a fast- growing conifer tree and was highly regarded for its quality of wood.

Kimberly-Clark led the industry in personal paper products such as tissue paper, paper towels, and diapers.

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

Some industry observers felt that the highly fragmented nature of the industry meant that prices were less stable. Arauco supplemented its production of pulp logs with purchases in the Chilean market. All fields Reference no. Porter and Jan W.

The company expanded throughout the s and s, increasing its capacities horizonttal pulp and sawmills and producing cardboard boxes for the fruit and fish sectors. The combination has resulted in a disproportionate earnings pressure on integrated producers, which most public nitegration are.

Ledesma manufactured about 85, tons of paper a year, although most of the raw material it needed to produce pulp came from sugar cane. Most of the larger players in the industry had integrated operations that involved two or more of the above activities.

Exhibit corward shows the approximate costs of lumber transportation inside Argentina. The first phase of the project, which included a plywood factory and a sawmill, had been approved in by the board of directors.


The company planned on spinning off its consumer products division but changed plans due to weak equity markets in Inthe country experienced a low inflation rate of 1. Recycled fibers could be reused between five to seven times; after seven times, the fibers became too short for papermaking. Translated from Spanish by casewriter.

Mikko Tahvanainen, of the Finnish Forestry Industries Federation, explained the reason for the change: Eventually there will be restrictions placed on these companies causing them to rely solely on their plantations.

It was also involved in the production of market kraft wood pulp, saw timber, and wood panels with forest plantations throughout Chile, Argentina and Uruguay.

The next eight to 13 meters was destined to sawmills or pulp mills depending on diameter and density of knot distribution. For example, in the manufacturing of white paper, pulp was bleached at the end of the pulping process. Skip to main content.

The log merchandizing process ensures that we are using the parts of the tree for the right purpose. It was predicted that pulp forawrd in Chile would reach more than 3.