Australian Paper Manufacturers (A) - Case Solution

This case solution includes an Excel file with calculations.

Q1. What opportunities and risks did Ken McRae face as he contemplated

taking Australian Paper Manufacturers (APM) into the fine papers market? Be specific with respect to technological, operations, and capital investment (as well as other) considerations.

Opportunities for Australian Paper Manufacturers

• People had stopped using check-out bags, preferring plastic – Australian Paper Manufacturers (APM) grabbed this opportunity to enter the fine-paper market.
• Upgraded Maryvales machine 3 for producing uncoated fine paper
• Use of toll-free numbers and computer-based information systems for better information flow (eliminating the middleman) and control of production.
• By experimenting and implementing, they learned new capabilities for making the fine paper better than others and meeting the market demand.
• Clear division of products for meeting demands of different customer segments -CopyRight (White Collars), PrintRight (Blue collars), and DataRight (for technology-oriented consumers)
• Investment in the marketing campaign and providing customer-friendly packages by having advertisements and bearing distribution and packaging cost
• Introduction of environmentally friendly products like ReRight made of 100% recycled paper.

Risks for Australian Paper Manufacturers

• Adverse effects of dioxins include reproductive disorders in animals, suppressing immune systems, and hence affecting humans.
• Environmental safety and regulations are susceptible to adverse outcomes of the competition between Australian Paper Manufacturers and PCA.
• Sustaining the business by replacing the merchants and dealing directly with the customer.
• The deforestation rate in Australia led to greater forest scrutiny, and deforestation was put under the radar.
• Attracting the fine paper distribution merchants which PCA is Distributing.

Q2. How has the environment fared in this battle?

DEFORESTATION

Problem

• 4 tonnes of wood to produce 1 tonne of paper and with 358,000 tonnes of paper requirement in…