Pulp and paper industry analysis - Essay Example

Critical Analysis of the Pulp and Paper Industry Introduction The purpose of this paper is to evaluate the impact of technologicaladvancement of global businesses and system on the pulp and paper industry. According to Competition Council (2006); this is a global industry consisting of companies that convert timber to pulp and paper used in various manufacturing industries. The major players in this industry include paper manufacturing companies present at the various stages of paper and pulp production.

The industry has seen a significant shift in terms of technology in recent years. This can be attributed to the emergence of electronic communication and the internet. This shift has necessitated the restructuring of the same so as to enhance their competitive advantage (Barney, 2012). Companies have adapted to this by adopting technologically advanced machinery. This has further resulted in the phasing out of most human labour previously employed to perform tasks that now can be performed technologically.

Technological advancement has also resulted in significant increase of productivity and profits because of the reduction in production costs associated with energy and chemical use. With technology waste product management has changed. Companies can now effectively recycle paper to produce quality products reducing the detrimental effects associated with uncontrolled lumbering. Despite the emergence and increase in electronic technology, the demand for paper and pulp products has not been significantly changed.

This can be attributed to the increase in demand for these products in the less developed countries, shifting the global market towards the East and Asian countries in particular. Competitors, suppliers, buyers, availability of alternatives or substitutes as well as new entries by companies into the industry are the forces that shape this industry. Performance of the industry is greatly affected and shaped by external factors such as technology, the economy, the environment, political factors.

The factors that determine the degree of demand for paper and pulp products include the technology available for example emergence of electronic systems of communication; consumer preferences; the economic status like household and community income as well as socioeconomic factors like use of books and paper in schools. Pulp is the product of the timber and it is sold to manufacturers to be further processed to paper. Paper is used to make writing paper and printing papers to be used to print newspapers, books, magazines, posters and charts.

Another product of this industry is packaging material. The processes involved in paper manufacture include the acquisition of the raw materials; cutting down trees and converting to lumber then chipped wood which is sold pulp factories and sold to next line Companies where production of paper commences. Production companies convert pulp to paper and bulky paper. The bulky paper is further processed to finished paper and packaging material. This is further transferred to distribution chain as finished paper and paper board papers to whole sale companies.

These companies further sell paper and paper products to companies at the retail level. It is economically viable for companies at different levels to consolidate their activities to achieve greater profitability and gain competitive advantage (Barney, 2012). For example, companies involved in production of paper and papers products can consolidate with one involved in distribution and sale to align business and increase efficiency and thus increase productivity. The trees lumbered offer complementary product to this industry.

Other industries that are interrelated with this industry include newspaper, magazine and book publishing firms. These are the chief consumers of paper and paper products. Manufacturers in the food industry use paper packaging materials. Suppliers of raw materials like timber as well as human capital; labour also affect the profitability and growth of the industry. Technology is a factor that affects productivity of the industry in that advancement in technology has been shown to decrease the demand for paper and paper products especially in the developed world.

The companies that lead in this industry include International paper; a US based company and Domtar; Canada-based. These companies lead in market share in that their products are widely used across the world. Their numbers of sales are higher than the rest of the players in this industry. International Paper prides itself in engaging in environmental protection through efficient use of natural resources-forests-, pollution reduction and prevention as well as continuous improved performance through technology and working conditions.

The company is also a leader in the provision of innovative, high quality products to its consumers worldwide. Domtar Company prides itself in working with environmental protection stakeholders as well as investing in forest management practices while focusing on the long term effects of their actions. In doing so, Domtar helps ensuring environmental conservation. According to Barney, KSFs focus on resources that have the highest leverage on the costs of products. The use of competitive advantage and performance is related with the scores regarding the resources (2012).

Figure1: KSF Matrix for International Paper and Domtar Company Competitiveness Environmental Conservation International Paper Good Good Domtar Poor Good To increase competitive advantage and improve profitability, Domtar needs to venture into the Asian and African market. The demand of paper and paper packaging materials is on the rise here as these countries attempt to increase their standards of living through education in schools which employ the use of text books, exercise books and posters.

The increased demand for alternatives to paper in the West caused by advancement in technology as well as the stringent government regulations in place have decreased the demand for products from this industry. This together with adoption and implementing new technological techniques as well as investing in research and product development would go a long way to enhance the quality of the product as well as develop its brand image, attracting loyal customers and in doing so boosts sales. However, there are risks associated with this strategy.

Technology is constantly changing and sooner rather than later, these less developed countries are bound to catch up with the developed ones in terms of electronic communication and adoption of digitalization in businesses and academic institutions. The government policies as well as the public opinion regarding logging for commercial purposes is likely to change in these less developed countries thus introducing stringent regulations which is likely to limit and decrease demands. The company should re address the competitive capabilities by changing their approach towards acquisition of their major input that is timber.

This they could achieve by investing in land and growing their own trees solely for purposes of harvesting this to be used in paper manufacture. This would ensure that they are not on the wrong side of the law and as such be more advantaged than their competitors in Canada and the rest of the world. This would go a long way in providing a viable resource that is sustainable in the long run. For the company to gain market share, it needs to address aspects that relate to pricing, branding as well as advertising to create a loyal customer base.

With increase in economics of scales, the company will be able to lower its unit price and attract more customers. With innovations and new developments, the company will be able to achieve branding and as thus increase sales. Conclusion The drivers in this industry are predominantly factors that are associated with consumer tastes and demand as well as those that increase a company’s competitive advantage in the market and as a result increase its productivity and growth. Activities The research was read through and every member confirmed that they had understood the context.

It was later subdivided with each member assigned sections to critically analyse and provide feedback on. Teamwork Teamwork here enhanced members’ personal effectiveness. While working in a team each member is motivated to perform task as every individual is assigned a task to complete. Completion of individual tasks means that the overall assignment will be completed and submitted. The objectives of the assignment were discussed clearly ensuring that each member knew their role and they committed themselves to such.

However, given the sharing of tasks, some members became lax. The rest of the team members had to assist in performance of these tasks decreasing personal and team effectiveness. Clearly defined goals at the beginning of the group work ensured that each individual was aware that they were required to pull their weight and this increased personal effectiveness and performance. During this assignment, I learnt that teamwork enhances performance and achievement of the set goals. I learnt empirically that Strength, Weakness, Opportunities and Threats (SWOT) analysis as a business guide works also in a team.

That all these factors are at work in a team and there is need to capitalize on the strengths and opportunities while mitigating the weakness and threats available. The involvement of each member in decision making process ensures that the tasks assigned are completed in a timely manner and the objectives are clearly understood. This increases the level of commitment to the tasks at hand. I learnt that an environment where team members are allowed to voice their opinions and feelings enhances performance of group activities.

Skills like dispute resolution were acquired from these activities in that I learnt that disagreements need to be aired and dealt with upfront rather than letting things brew. In future team work activities, the leadership of teams would not be on permanent basis. Rather there would be rotations to ensure that each member feels that they are playing an important role in the team. The rules and expectations regarding deadlines and the quality of work need to be frequently revisited to ensure that everyone is on the right track.

There should be frequent meetings to check on progress of members so as to ensure that everyone is working towards the common goal. I would increase the number of team members to ensure hastened completion of future assignments. This would also mean better quality of work as with more members there would be wider research and coverage of topics. The feedback from a bigger team would be broader and more suggestions would be brought forward. Team assignments would be assigned according to individual capabilities and talents.

In that, members would be assessed to determine which areas they are best suited to tackle so as to increase their effectiveness as individual and improve group performance. References Barney, J. B. (2002). Gaining and sustaining competitive advantage. Upper Saddle River, NJ: Prentice Hall. B.C. Competition Council., & B.C. Competition Council. (2006). Pulp and Paper Industry Advisory Committee: Final report - January 25, 2006. Victoria: BC Competition Council, Pulp & Paper Industry Advisory Committee.