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Category: Business and Industry
Date Submitted: 03/18/2013 04:05 PM
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...