Worldwide Paper Company Case 18

SWOT

The proposed new wood-yard will create new opportunities for the company:

1. It will reduce the company’s operating costs, thus increasing its revenues;

2. It will provide independence from the current supplier. With the new technology, the longwood will be processed directly for use in the production, and the need for buying the shortwood from the outside supplier will be eliminated.

3. It will also provide excess shortwood, which will be sold in the open market and will create additional revenues for the company;

4. It will be an opportunity to enter the open market. New players competing with already established companies on the open market could see this as a treat, but in this case, such an opportunity could be seen as Blue Ridge strength, because Blue Ridge Mill could do better than competitors. Since Blue Ridge was shortwood buyer, it knows exactly where the process of buying could be improved. That’s why sales in the second year are projected to reach $ 10 million. This opportunity is also a biggest strength for the project.

Implementation of the new project will require increased level of inventories and accounts receivables. While this could be seen as a weakness, it is also an opportunity to create new jobs.

The only treat for this project is whether or not the benefits would be big enough to justify the cost of the project. Now, this treat is an opportunity for us – the students, to find out how much we have learned in our Financial Management class. Let’s find out.