Business or Battling for Competitive Advantage - Case Study Example

The Gunns and the Australian pulp and paper manufacturing industry xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Name xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Course xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Lecturer xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Date Executive summary The Gunns and the Australian pulp and paper manufacturing industry have been great contributor to the Australian economy. Indeed, the industry has continued being a great backbone to the economy of the country. The industry has greatly through employment, export and management of resources. This paper explores the strategies that the company has set in ensuring it maintains the competitive edge in the market. In addition the paper reviews the challenges facing the company. In addition, the internal and external analysis of the company has been done. These factors are important as they assist a company in laying down effective strategies. Table of Contents Table of Contents 3 1.0 Introduction 4 2.0 Business of the company 5 3.0 Strategies of the company 6 3.1 Industry promotion 7 3.2 Research and development 8 3.3 Technology education and transfer 8 3.4 Standard coordination 9 4.0 Success of the company 10 4.1Investment 10 4.2 Company capability 10 4.3 Competitiveness 11 4.4 Sustainability 11 4.5 Climate change 12 4.6 Community support and trust 12 5.0 Analysis of external environment 13 6.0 Analysis of internal environment 14 6.1 Competitive advantage 14 6.2 Opportunities 14 7.0 Challenges 15 8.0 Conclusion 16 References 17 1.0 Introduction The Australian pulp and paper manufacturing industry has been great contributor to the Australian economy. It provides different products that are essential in the everyday life. These products range from paper and paper products. The papers are used as packages, communication, printing, magazines and newspapers. The industry consists of approximately 500 enterprises that have directly employed nearly 20,000 people. The industry does generate billions for domestic demand and gives total value added of nearly $ 2 billion. The industry earns more than$ 2 billion through export. The Gunns Company has both national and international markets. China and Japan are the major countries that import forest and wood products from the Australian industry. The company has set various strategies that are necessary to ensure a higher competitive role in the industry compares to the rival competitors. The company has various advantages that have allowed it to compete effectively in the global economy. However, various challenges have continued to affect the performance of the company and industry as a whole. Instability of the Australian dollar, competition from other countries, cheap importation and a change to the digital communications are the major challenges to the industry. The economic performance of the company in Australian may be described stable. However, with a low R&D and less investment than usual the performance may decrease. It is obvious that company must undergo critical changes in order to secure a sustainable and long term future. 2.0 Business of the company Gunns limited is Australia’s largest softwood and hardwood forest product. It was established in 1875 and it has been a long standing business. The company has a vision which seeks to ensure that the wood and forest products are the only preferred and sustainable material that will meet the market trend both nationally and internationally. The vision will be achieve through knowledge transfer, community support, generic and education promotion and market acceptance of wood and forest products. Gunns ltd has continued to report an increase in its profit every year. This may be attributes to the fact that the buying of its share in the stock markets has continued to grow. The company has three divisions namely; forest products, plantations and others. Under forest products, the company deals with forest plantations, timber products and wood fiber exports. This is the main division in the company. It focuses on integrated production of softwood and hardwood, operating one veneer mill, eight sawmills, export wood fibre facilities and a veneer panel plant (Holbeche 2010). The plantations division includes managed asset schemes for walnuts lots and wood lots. There are 14 managed investment scheme with over $600 million funds under management. The management of the plantation provides a continuous supply of raw material to the company operations (Mourdoukoutas 2006). The other division comprises of construction of Tasmania, Tamar Ridge winery and network of 10 retail hardware outlets. The company has prided itself in the export of hardwood. Japan has been the main market. Other key markets are in China and Japan. The hardwood pulp exported to these countries is processed into paper and pulp products. There is an increase in the utilization of hardwood in these countries. With this increase in demand, the industry has been subjected to a competitive market. Tasmania forestry encompasses plantation and native forest resources, fuel wood, production of logs, timber and woodchips. In Australia, this is the only state that is a net exporter of various forest products (Carkenord 2008). 3.0 Strategies of the company The company has developed various strategies in order to improve its effectiveness in the industry. In so doing, the company will increase its size of market, create demand for its product, and improve its competitive strengths in the industry. In addition, it will increase its environmental conservation programs. It is important to note that the government is a major contributor in some programs within the company. Some strategies have been aligned with the Australian national and rural research priorities, these include productivity improvement, sustain environmental resource management, climate change, value chain efficient and effectiveness, improving and maintaining international market opportunities, education, workforce, skills and diversity, evaluation and collaboration (Burn 2000). 3.1 Industry promotion The company is working on promoting the usage and benefits of wood and forest products in accordance to the environmental awareness, community attitudes and market trends. Under this, the company seeks to engage the community to understand the attitudes and help the company in policy development and decision making. The company also seeks to engage with the standard bodies, regulators, specifiers and opinion leaders in maximizing wood product utilization and specification. The company will promote the wooed and forest applications or products over other alternatives in order to meet the growing demand and emerging markets (Davis 2008). Finally, under this strategy, the company will promote the benefits of wood and forest products, especially in relation to the environment including recyclability, reusability, carbon storage, low embodied energy and evidence of sustainability. This strategy has three outcomes; it will improve market awareness of the products, lead to increase consumption of wood and forest products. It will also increase the community understanding and participation in the environmental and socio-economic benefits of the company and the industry (Evans & Parker 2007). 3.2 Research and development The company seeks to coordinate and invest in R&D in order to improve the company’s competitiveness, enhance investment, and ensure sustainability of the products and climate change response. To work towards this strategy the company has created seven priority theme that include: evaluation of the trend of the market both nationally and internationally in order to enable the company to develop business and development strategies; expand and maintain markets for forest and wood products and create new products in order to meet the growing demands in the market; develop and increase technology and knowledge to improve the existing utilization and production processes; characterize the variability and properties of forest and wood resources as well as maximizing the value of recovery; increase genetic improvement and management of abiotic ad biotic risks factors; develop technologies and systems in order to improve and maintain the utilization and productivity of water; continue to evaluate strategies for the management of forest under climate change and maximize the advantages of greenhouse forest products (Krien 2012). 3.3 Technology education and transfer Under this, the company seeks to grow thw company’s capacity and ability through effective and efficient focused education and technical transfer activities that support the company and its products. The company has four priorities towards this strategy; maximize technology uptake and knowledge adoption and disseminate the output of R&D; help the company to access technologies and knowledge that has been developed elsewhere; enable the company’s continuous adoption and improvement of best practices; develop educational initiatives selectively in order to lift the interest of the employees and stakeholders, skills, for the company, its research providers and networks. The strategy has several outcomes that include; uptake and development of new and existing company oriented educational resources or programs, increased availability of skilled individual in the company, increase the adoption of R&D related findings and improved awareness and interest of the company as a career choice (Allard 2004). 3.4 Standard coordination The company seeks out to coordinate the company’s management of building codes and consensus based standards in order to improve and maintain market acceptance of the company’s products. The company has established various priorities in maintaining the strategy. Firstly, the company will priorities and analyze codes and standard based on the impact and importance to the company. Secondly, ensure effective and efficient engagement and consultation within the company and industry on code and standards. Thirdly, use efficient and cost effective mechanisms for the maintenance and development of codes and standards. Finally, facilitate the adoption and uptake of codes and standards in a timely manner. The strategy has various outcomes that include; reducing barriers to the utilization of forest and wood products, improve the access of the markets, increase te adoption and understanding of relevant codes and standards within the company and building professionals and reduce the price of delivery of the codes and standards that have been developed (Kane 2010). 4.0 Success of the company 4.1Investment Institutional and private financing models have contributed to the success of the company. Indeed, the financial models have continued to invest in this industry and created new opportunities in the infrastructure and natural resources. As such, it has led to harness and attraction of new resources in the company leading to boosting of the company performance in the industry (Evans 2002). 4.2 Company capability The company has been able to overcome the constraints in the context of competition for quality personnel and increased mobile workforce. This has contributed to the success of the company in the industry. The company has continued to embrace a culture of innovation, technical transfer, continuous development, skill development, knowledge adoption and generation in a continuous, consistent and sustainable manner (Sekhar 2009). Various factors that do determine the preference of a market for the material have contributed to the success of the company. They include both extrinsic; development density and affordability; intrinsic; reliability, recyclability and quality. The company has stayed abreast of these trends creating a consumer demand for the products. The application of timely assessment, dissemination and analysis of the market, engagement with standard bodies, designers, regulators and product innovators have led to the success of the company increasing the company’s gain and nation’s benefit (Moon 2009). 4.3 Competitiveness The industry competitive nature has ensured its success in the industry. Indeed, the industry should compete in the diverse and broad marketplace. Issues such as asset consideration, reduced trade barriers, economies of scale , alternative materials and terms of trade have greatly favored the company. Despite the competition for raw materials and inputs such as land, energy and water, the company has shown a shift to alternative and new measure to compete with the rival companies in the industry. The company has continued to deliver value for the consumers’ money. The creation of unique and new services and products has added its competitiveness in the company. It is obvious that the actions taken by the company has contributed to the success in the competing industry (Hoffma & Woody 2000). 4.4 Sustainability The industry demands that the services and goods provided should demonstrate environmental sustainability. The company has been able to balance its products and inputs supply in order to meet the demand of the market. In addition, it has continued to increase the flow of the forest resources by undertaking actions that have seen the maintenance of the environment. Still, the actions that the company has undertaken to increase sustainability have affected the performance of the company as the customers have continued to appreciate the sustainability programs (Popov & Mander 2010). 4.5 Climate change The change of climate in the country has positively affected the company. The changes have offered the company to grow in the industry. It resonates within the entire chain of the product, that is, from ecology and genetic and the end product of the tree. Every aspect of transport, forestry, marketing, manufacturing and end use of applications has been affected by the changes of the climate in the region. Key issues such as biosecurity, fuel and energy use, sequestration and storage of carbon, water have also been affected by the change in climate. The positive respond by the company to this driver has resulted to the success of its operations. 4.6 Community support and trust Australia demographics is seen to shift from in two directions; establishment of knowledge gap between the industry and section of a community. Population in the cities is rising while the rural communities are shifting in response to economic wings and lifestyle. Commercial forestry has continued to require access to non-forested and forested land in the region for the expansion of the industry. This enables the company to supply the community demand for the tree products. Indeed, community and industry engagement is needed in balancing the community attitude towards forestry and the competing demand. The value chain has extended to the community views on the use of forest services and products. Community support and trust for sustainable forests management has been a key success for the company ((Hubbard & Beamish 2011). The main stakeholders of the company are the shareholders. Indeed, in their decision making the company has decisions that have led to annual increase of the pofits, as such, the management is aimed at ensuring the shareholder are able to enjoy the running of the company. 5.0 Analysis of external environment The external environment on which the company is operating is expressed in these factors; political, economic, social and technology. It is important to note that these factors will have a profound effect on the strategy that the come has set. Under political factors, the government legal and regulations define the rules under which the company will operate. Factors such as tax policy, tariffs and trade regulations affect the financial performance of the company. However, the Australian government has established policies that are friendly to the industry. In addition, political stability in the region has ensured that the company has a good environment to operate its business. The economic factors do affect the purchasing power of the clients and the company’s cost of capital (Hubbard & Beamish 2011). The growth of the country economic has had a positive impact on the company. Indeed, it has facilitated the strategies that the company has set. However, the exchange rate in the Australian dollar to some extent, it has reduced the competitive strength of the company. Under the social factors, the increase in population has resulted to an increase in the demand for the products. This has also been evident in the external market. Technology factors have had a tremendous effect on the level of production. Application of latest technology in the company has paid for well. The company has experienced increased output. In addition, increased technology has lowered the barriers to entry. This means that the company will be able to source for more markets in an effective manner. This will assist the company in maintaining and improve its strategies. 6.0 Analysis of internal environment 6.1 Competitive advantage Indeed, the company boasts of various internationally competitive advantages. These include; highly skilled labor, inexpensive energy and fibre resources, attractive business environment and investment, sustainable ecological outcomes and a regulatory framework that maintains world-class. The operating environment offers a solid base for excellent transformation and establishes a certainty for further development. the main strategy for transforming this industry does recognize on these strengths. The company is well known in implementing and developing innovative solutions that address varios problems and improve its effectiveness. A transformation strategy will indeed, encourage such positive outcomes. The company has gained substantial experience in the creation of renewable resources such as energy, waste management and water. 6.2 Opportunities The company has some opportunities that will take the company forward. Such opportunities include implementation of achievable and realistic strategies that ensure an increase in innovation and investment, increase in the development of renewable energy establishment opportunities, enhancement of the acquired skills, improvements to transport and energy efficiency, securing important fibre resources for future development and mitigation on the major impact on the environment and climate. In order to realize the potential opportunities the company should ensure that there is a continuation of supply of affordable fibber in the domestic market. Still, important policies need to be put in place in order to mitigate the looming shortfall of harvested fibre in the country. Indeed, more investment than before is necessary in the industry to ensure an increase in the production (Hubbard & Beamish 2011). 7.0 Challenges Hubbard & Beamish (2011) asserts that the companies have in the recent times faced challenges in the industry. There has been a weakened demand in the traditional market in Japan. This may be attributed by the shift in the nature of the market has shown a demand for plantation fibre. Other countries have also increased their forest products production. This has greatly affected the already established market. In addition, climate change in the world in recent times has posed a great challenge to the strategies of the company. However, the interventions by relevant bodies will curb this. Other challenges include; global financial crises has led to a decline in the demand of the company’s products, competition from cheaper imports, escalating costs of main industry inputs such electricity has limited the ability of the company to capitalize on the energy generation capability, the low level of R&D in the country has affected the level of innovation and competition , the movement of the Australian dollar has been had to manage to ensure excellent competitiveness is maintained against the import completion and increase in utilization of digital communication. This has resulted to less use of paper-based communication such as newspapers. 8.0 Conclusion The Gunns and the Australian Pulp and Paper Manufacturing Industry have been a major contributor to the economy of Australia. The industry is mainly involved in the manufacturing of forest and wood products. The company mainly deals with forest plantations, timber products and wood fiber exports. Indeed, the company has a vision in order to make sure achieves the set objectives. The company has various strategies in order to ensure that it maintains the competitive advantage n the global market. These include research development, promotion and technology transfer and education. Indeed, the industry has been successful in its operations. This may be attributed to various factors such excellent competitiveness, sustainability, community support and care and innovation. There are various challenges that the company has continued to face. These include the instability of the dollar, cheap import, increased production in other countries, increase global concerns, climate change, less investment in the industry. Therefore, there is a need to create and maintain strategies that will curb these challenges that the company is facing. The Australia government should play its role in ensuring that the industry is able to achieve its goals. This is important as the industry is a major contributor to the country economy in terms of employment and taxes. This may done through reduction of trade barriers and good employment policies and rules. References Allard, K 2004, Business as war: battling for competitive advantage. New York: Wiley & Sons, Inc Annual Report , 2010/2011 forest & wood products Australia: Knowledge for a sustainable Australia Burn, P 2000, Number and functions. Cambridge: Cambridge University Press Carkenord, B 2008, Sevens steps to mastering business analysis. New York: J. Ross Publishing Davis, M 2008. The land plenty: Australia in the 2000s. Sydney: MU Evans, A & Parker, C 2007, Inside lawyer ethics. Cambridge: Cambridge University Press Evans, N 2002, Business agility: Strategies for gaining competitive advantage. London: Prentice Hall Hoffma, A & Woody, J 2000, Climate Change: what’s your business strategy. Harvard: Harvard Publishing Holbeche, L 2010, Aligning human resources and business strategy. 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