Birch Paper Company

1521 Words Feb 27th, 2013 7 Pages
Birch Paper Company
Internal Environmental Analysis

What they do? – Birth Paper Company is a medium sized, partly integrated paper company, producing white and kraft papers and paperboard. They also convert paperboard into corrugated boxes with printing and colour on the outside surface.

Where they operate? – Birch operates 4 production divisions for paper, paperboard, and corrugated boxes as well as a timberland division to supply part of the company’s pulp requirements.

How well are they doing? – The company’s profit and competitive position has improved in the last few years since decentralization of profit responsibility. Divisions appear to be doing well in their respective markets: • Southern division runs below
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Corporate control is to implement overall company policy that benefits all business units. The vice president is exploring cost structures of the various divisions, remembering that the controller had recognized that costs which were variable for one division could be largely fixed for the company as a whole.

Business Unit Level:

The Northern Division is operating with a mission to Build their market share and the innovation of the new box design. They are attempting to grow internally through research and development with a low cost competitive advantage. They are most likely to accept the lowest bid for the production of their new box design.

The Thompson Division is striving for a Build mission as they bid full-cost quotations (most of their sales are made to outside customers) to improve the quality of their business, despite operating below capacity at times. This suggests that they are striving towards a differentiation strategy to offer a higher quality product at the expense of maximizing production of capacity.

The Southern Division is in a Hold mission as they run below capacity at times and had excess inventory, but market price has not noticeably weakened as a result of oversupply. The fact that one of Birch’s competitors, Eire Papers, Ltd., would purchase the outside liner from Southern for a low bid on the specialty box order instead of manufacturing it themselves, would suggest that Southern operates with a low cost

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