Case 6-2 Birtch Paper Company

Case 6-2 Birch Paper Company

Internal Environmental Analysis

Birch Paper Company is a medium sized, partly integrated paper company, producing white and kraft papers and paperboard. The company has four producing divisions and a Timberland division, which supplied the company with a percentage of its pulp requirements. Each division is judged on its profit and return on investment. The key players for Birch are James Brunner, manager of the Thompson Division, & William Kenton, Manager of the Northern Division.

External Environment /Industry Analysis (customer’s and supplier’s bargaining power is not applicable)

1) The intensity of rivalry among existing competitors: There is a high rivalry among competitors. Birch has been trying to gain competitive position by changing their policy to one of decentralization.

2) Threat from substitutes: There is a higher risk of threat from substitutions as their product is not unique at all.

3) Threat of new entry: There is a low risk of new entrants. There is a high capital investment and a very competitive market which would make new entrants hesitant to attempt this industry.

Business Strategy Identification

Corporate Level Strategy

Degree of Relatedness

* Each division had been judged independently on the basis of its profit and return on investment.

* The Timberland division, which supplied part of the company’s pulp requirement.

* Management had been working to implement a policy of decentralizing responsibility and authority for all decisions except those relating to overall company policy.

* The Divisions make special agreements with each other.

* Each division manager was normally free to buy from whatever supplier they wished

* Even on sales within the company, the divisions were expected to meet the going market price if they wanted the business.

* The Thompson division bought most of its materials from other Birch Divisions.

* It was possible for top...