Essays on Papyrus Australia Ltd Prospects Assignment

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Papyrus Australia Ltd was founded in 1996, as a research company, with the intent of developing alternative technology for the manufacturing of fiber based products in a sustainable manner. It was listed in the Australian Stock exchange in April, 2005.The company researched various alternative fiber sources, the Banana Plant was chosen as the most viable alternative, specifically the banana tree trunk. It was chosen to its inherent physical characteristics, widespread availability and the fact that it is not utilized for any other products in a commercial level, since it was until now considered a waste product.

After considerable research and testing, this material proved to most technically viable, raw material source, which could be utilized as an alternative quality fiber alternative to wood based products. The banana tree has no current commercial uses, and it’s left to rot at the field as a waste product. In September 2004 the company incorporated in order to facilitate the acquisition of capital from the market in the form of an initial public offering (IPO) (Prospectus, 2005) which allowed them to raise the necessary capital to start the commercial phase of operations.

In November 2006 the company was awarded a patent for their proprietary technology. The company also secured a 1.2 million grant from the Australian government in May, 2006. Papyrus has developed patented proprietary technology to turn what today is currently a waste product, into fiber material suitable for the manufacturing of paper, cardboard, fiberboard panels, therefore substituting in a sustainable, environmentally friendly process wood pulp based products. Traditional paper production uses tremendous amounts of energy, chemicals, and water to turn wood into a pulp suitable for the manufacturing of paper and cardboard.

Traditional paper production also suffers from seasonal availability, long lead time to harvest, and a long term detrimental impact to the environment to the consumption of our limit forests. The patented process created by Papyrus Australia eliminates the need for trees, high resource needs, and eliminated the resource intensive pulping step of the manufacturing process. The technology turns the banana trunks into sheets that are converted by their proprietary processes into paper, cardboard, or a myriad of products. The need for toxic chemicals is eliminated; it utilizes a fraction of the electricity and water of the traditional manufacturing methods. The manufacturing processes and technology developed by Papyrus Australia has allowed them to turn a waste stream into an environmentally sound process to create top quality paper products, eliminating the need to cut down precious natural forested land.

It bypasses the toxic processes, inherent with traditional wood pulp based manufacturing, and provides a product that is superior in quality, mechanical strength, durability, and yet at a fraction of the cost. SWOT Analysis Strengths Papyrus has achieved many milestones in the development of their patented environmentally friendly process of transforming banana tree trunks into quality paper like products.

Typically considered a waste product, the banana trunk becomes the raw material for their proprietary process. The company has utilized their start-up capital in an effective and efficient manner. Their technology has passed successfully passed initial production testing with outstanding results. The company enters their first strategic alliances with Sage Automation, a company specialized in automation systems with over 14 years of experience in the field, they assisted the company with the implementation and automation of their proprietary patented technology and the construction of their first full scale commercial plant. The company has also sign a strategic partnership with DaiEi paper, a global paper distributor, in order to help with the initial commercialization of their innovative banana ply paper products.

The company is into the final phases of their commercialization process, after building their full scale, pilot commercial production plant. One of the key features of their technology is the fact that it allows to decentralize the fiber production process by allowing the banana farmers, to produce paper products on- site, due to the modular nature of their technology.

This breakthrough will provide farmers with an additional stream of revenues from an unutilized resource, the banana trunk. Their banana ply material has a lot of physical characteristics that make it superior to conventional paper products. The banana ply material is water resistant, fire resistant and it’s up to 300% stronger than conventional paper, and yet it costs about half to produce compared with regular paper. The company currently has over 2 million dollars in cash reserves. Weaknesses The company has invested a lot of capital and resources in the development of their technology.

The implementation and business model seems to have the right characteristics for future success, but there is a limitation in the amount of product the company can produce. Although the annual worldwide number of banana plants, is in the billions, the fact that it is so widespread throughout the world, limits the possibility of full resource utilization.

The business does not contemplate the transportation costs associated with bringing the tree trunks on-site from other farms that do not possess the resources to set-up their own operation, especially once their commercial businesses start growing, and their raw material supply from their own farms, get depleted for the season. The company would have to set-up a huge distribution worldwide network of suppliers in order to keep up with demand. Furthermore, the banana ply paper will be competing with multibillion dollar established marketplace and corporations which process and manufacture common paper products.

Although product acceptance and initial; reviews have been exceptional, the banana ply paper long term overall market acceptance is still unknown. Opportunities The market potential for these types of products is huge for such an innovative alternative to the common paper. One of the countries where the company will concentrate its developing efforts initially will be probably Africa. Although it is a developing country with relatively poor infrastructure, it possesses the highest concentration of banana plantations in the world. Around 53% of the world’s banana production comes from Africa.

With the addition of a readily available, inexpensive workforce, the modular nature of the technology and the highest concentration of plantations in the world, it seems like the ideal place to launch the initial product commercialization. By allowing individual farmers to become paper producers and the potential of foreign capital investment, it should spurt and encourage a business growth and development never seen before in the fiber product industry. Another strategic opportunity for the company is in the Caribbean, where the much larger plantain trees are commonly cultivated.

The plantain is a type of banana tree that grows much larger in length and girth than the common banana tree. This in term would allow even higher yields per acre than previously estimated. Also once the final commercial testing, the company should consider franchising the business in order to achieve the highest level of growth and widespread implementation of their revolutionary technology. Threats The company’s main threat lies in the fact that final commercial testing has not been completed, so their production estimates and costs are based on the testing done pf the prototype plant.

Although their estimates so far have been accurate, it does not mean that major hurdles to achieve their intended business growth and performance could arise at any time during their business development cycle. Also intellectual theft, once they enter the marketplace is a distinct possibility, especially from the Chinese. This could jeopardize their chances of success in the long term. References Prospectus (2005). Papyrus Australia Prospectus. Retrieved May 7, 2009 from http: //www. papyrusaustralia. com

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