Defining the Issues/Problem Statement:
Arauco was formed in 1979 when two construction companies merged together to become one. A year after Arauco had already begun expanding, which included “purchasing land and plantations and the installing new technology.” The early expansion of Arauco paid off because the end result of expansion was tremendous. During the 1990s, Arauco introduced new systems and product lines to support more growth. By the early 2000s, Arauco was one of the world’s “premiere forestry enterprise.” Arauco. This led Alejandro Perez, “president and CEO of Chilean forestry company,” to propose a recommendation to invest in a “new state-of-the-art chemical pulp plant.” There are many factors to consider…show more content… Arauco will face constraints if they expand, but opportunities will also be available to them. A constraint would be the current demand for market pulp. The current demand is not too great. Also, the price for market pulp has been decreasing, so Arauco may not gain expected profit. A big opportunity for Arauco is they will be ahead of Aracruz in the market. Meaning that Arauco will be the leading producer of market pulp and put Aracruz behind them. Arauco is recognizable in the Latin American markets, but once it is ahead of Aracruz, it will become more recognizable and people will prefer purchasing from Arauco instead of Aracruz.
Arauco has many factors to consider when expanding, and one of them is alternatives. When expanding, Arauco should consider alternatives that will be less risky or safer than their original plan. One alternative to consider is to
What appears to be the problem? * Alejandro Pérez, president and CEO of Arauco, wants to construct a pulp mill, but it is unsure it will be a success or failure.
How do I know that this is a problem? * It would be successful since the construction of a new mill would put Arauco ahead of Aracruz and make Arauco the largest market pulp producer in the world, if production levels stay the same for other companies. Also, it can be a failure because prices for pulp and resources are decreasing.
What are the immediate issues that need to be addressed? * The immediate issue