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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The Case Centre is a not-for-profit company limited by guarantee, registered in England No and entered in the Register of Charities No Arauco II produced only bleached radiata pine pulp, and its annual production capacity was abouttons.

This company was founded after the stock market crash in with the intention of guaranteeing fuel supplies in Chile. 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.

Celulosa Arauco, Nitegration F, December 31, While the plantations spannedhectares, only 86, hectares were planted.

Bioforest Bioforest was the only forestry science and technology research center in Chile. Each producer specialized in either bleached hardwood kraft pulp, bleached softwood kraft pulp, or other pulp formats. Sometimes, price negotiation escalated to local government as the forestry industry was the lifeblood of the Misiones province. Like its forest operations, Arauco employed independent contractors to operate all of the sawmills and remanufacturing facilities.

As such, the financial information present above for the years and has been adjusted to incorporate the historical value of the assets and liabilities acquired. The crisis in Argentina has shook us like it has others, but our focus has allowed us to gain access to other markets and weather the storm.

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

However, Sportradar’s core business was thriving, whereas a recent attempt to branch out into video player tracking systems had proved a costly failure. Kraft pulp was brown in color, and was thus bleached for most applications.

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The team weighed the pros and cons of various media ventures, including online sports betting minigames, a social media site, and streaming of sports content.

This short case looks at the company in late after it has decided to invest in a Brazilian joint venture involving forests, saw mills, and a paper mill.

Conclusion There is an obvious need for transformation in this company to protect its debt holders, shareholders, and employees.

The forests were mostly softwood and because of South American climatic conditions, trees were able to grow faster than the northern hemisphere. By using advanced forest techniques, the company hoped that it would improve product quality and increase margins. Chilean climatic conditions were ideal for the growth of radiata pine, and the country was generally considered to have the richest natural resources of radiata pine in the world.

Energy Information Administration website, www.

From Data to Storytelling. Exhibit 3 Arauco Employees Year ended December 31, Pulp mill employees 1, 1, 1, 1, Other industrial employees 1, 1, 1, 1, Forestry employees Administrative employees Total 3, 3, 3, 3, Source: Its remanufacturing plants produced moldings, edge-glued panels, boards, and laminated products.

In order for Celulosa Arauco to sustain success or even thrive in this changing market, it would foward to undergo a transformation.

Forward Integration or Horizontal Expansion.

Arauco by Janick Couture on Prezi

During several years, the company has been concentrated in the pulp business because we had young forests.

Harvard Business School SupplementJuly The top five producers included: The company sold approximately 2. The Horcones II sawmill in Chile and the Misiones sawmill in Argentina were built in the first quarter of to increase production capacity bycubic meters of sawn timber per intsgration. It had three paper manufacturing facilities which together producedtons of product per year.

Pulp and Paper Industry The global pulp and paper industry consisted of five main activities: Celulosa-Arauco would not be able to sustain success if they continue to just suspend or close saw mills as that results in loss of profits and investment. Inthe country experienced a low inflation rate of 1. Stora Enso was involved in the manufacturing of a wide variety of products such as magazine paper, newsprint, fine papers, horizonal, graphic products, office papers, wallpaper base, and sawn timber.


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 has a leading business position in the volatile market pulp industry due to its low- cost production capabilities.

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

Adapted from Greg Rudder, ed. Page count 1 page words.

Go to advanced search. Cite View Details Purchase. 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. In the production of paper, CMPC was the unquestionable leader in the national market and one of the leaders in South America. Celulosa Arauco is a major Chilean producer of market pulp and wood products. The Paper and Paperboard Industry Over half of the material that went into making paper and paperboard was forware using pulp.

Thus, CEO Carsten Koerl believed the company needed to branch into sports media, not just supplying data to companies, but finding ways to tell stories about that data.

Arauco (A): Forward Integration or Horizontal Expansion?

One alternative to proceed with this transformation would be to migrate out of the political and legal pressures. Some industry observers felt that the highly fragmented nature of the industry meant that prices were less stable.

Arauco exported its goods through three ports: