The two growth options that Arauco face have an added advantage of the market share and the economies of scale. However, considering the. Arauco (A): Forward Integration or Horizontal Expansion?. Then we considered the competitive advantages that Arauco enjoyed due to . Horizontal Expansion and Backward Integration over Forward Integration Exhibit .

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Arauco (A) Hbs Forward Integration Or Horizontal Expansion

In addition to thehectares Arauco owned in Chile, it ownedhectares in Expansioon and Uruguay. This would be a multiphase project that would include the built of a pulp mill, a sawmill, and a panel and wood-processing facilities.

The company actively exported around the world, with Asia as its major destination for export sales. Arauco supplemented its production of pulp logs with purchases in the Chilean market. We find that although Betfair was an underfunded second mover in the betting exchange space, it was able to attract punters at a much faster rate than the better-funded first mover, Flutter.

Consequently, as the level of corporate strategy tom tome used integration method which has the most prominent integration was Horizontal.

Horizontal and vertical integration In the horizontal integration, the company product range qrauco from a wide clientele. The purpose of this essay is, firstly, to explain the concept of global expansion. Thus, it atauco neither plausible nor cost effective to transport raw material from other countries. Forward Integration or Horizontal Expansion? Skip to main content. Radiata pine in Chile had a high yield per hectare due to the quality of horizonta, making it possible to plant a larger number of pines by hectare.

Nishida from August to February Other firms chose to focus on a particular category. To order copies or request permission to reproduce materials, callwrite Harvard Business School Publishing, Boston, MAor go to http: The country had a population of For example, in the U.


Some industry observers felt that the highly fragmented nature of the industry meant that prices were less stable. Gorizontal earlywith the new Valdivia plant operational, the company had propelled itself to the third largest market pulp producer with production capacity of 2.

Softwood pulp is strongest thanks to only modest capacity increases. It also made specialty wood products for the flooring and furniture markets. It was also involved in the production of market kraft wood pulp, saw timber, and wood panels with forest plantations throughout Chile, Argentina and Uruguay. Eventually there will be restrictions placed on these companies causing them to rely gorward on their plantations.

By using advanced forest techniques, the company hoped that it ofrward improve product quality and increase margins. Suppliers of pulp and paper controlled inventories tightly, releasing products to the marketplace at targeted times.

The Paper and Paperboard Horizonal Over half of the material that went into making paper and paperboard was made using pulp. Master’s or higher degree.

Arauco by Janick Couture on Prezi

Perez’s concerns about the volatility of market prices for the past three years led the company to diversify into wood products like panels, medium-density fiberboard, and other remanufactured wood products. Two processes existed for producing pulp: The company began its internationalization process by exporting pulp to Japan, Korea, and Europe.

While a weaker U. The plantations owned by Arauco covered approximately two-thirds of the raw material needed for production. The Horcones II sawmill in Chile and the Misiones sawmill in Argentina were built in the first quarter of to increase production capacity bycubic meters of sawn timber per year. A corporate strategy should enable a company, or one or more of its business units, to perform one or more of the value creation functions at a lower cost or in a way that allows for differentiation and a premium price.


It was the leading sawmilling company in the southern hemisphere, with an annual production capacity of 2.

Inthe country experienced a low inflation rate of 1. By mixing together different variations of softwood or hardwood pulp, the paper manufacturer could produce a product for a specific intent.

Inthe company employed over 10, workers through more than subcontracting deals, with many contractors having long-standing relationships with Arauco. Exhibit 10 shows the approximate expabsion of lumber transportation inside Argentina. Cite View Details Purchase. Aracruz owned approximatelyhectares41 of forests in Brazil and operated pulp mills, sawmills, and a port terminal.

Adapted from Aracruz, presentation to Merrill Lynch dated March 10,www. Research and developmentā€”Bioforest Bioforest was formed in as a research and development company with a mission to improve the productive efficiency of forest resources by means of genetic engineering, pest control, and the creation of sophisticated operations research models for the management of forest assets.

Help Center Find new research papers in: The top five producers included: Forward or downstream vertical integration takes place when the organisation engages in an activity related to a succeeding stage its. Chile35 The Republic of Chile spannedsquare kilometers and bordered the South Pacific Ocean to the west, Argentina, and Bolivia to the east, and Peru to the north. An analyst explained the dynamic: The major industries were agriculture at 6. Panels Dxpansion produced plywood and fiber panels, which represented Contrastingly, macro level integration involves organisation-to-organisation collaboration e.

In some situations, Arauco provided capital to truck owners in order to expand and improve services.