international business managemnt
lj777ynwa
celbi_presentation-_merged.pptxSTRATEGIC RECOMMENDATIONS REPORT
CELBI
Shana Dickstein
Alice Hwang
Lakshay Jain
Harish Jeyasri
Kathy Wu
Principles
Innovation
High Quality Product
Environmental Efficiency
Declining growth rate in Europe
Celbi focuses Europe as its natural target.
77% of the pulp Celbi produces goes to Europe.
Ensure a consistent supply of eucalyptus through a JOINT Venture with KAPSTONE in the U.S.
Proposed Solution
AGENDA
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POSITION
RECOMMENDATIONS
CHALLENGES
FINANCIALS
MISSION:
to produce high quality short fiber pulp from hardwood eucalyptus. It is recognized for its high quality output and unparalleled customer service.
CELBI:
An Altri Group Company
STRATEGIC ADVANTAGES
Eucalyptus
Growth & Scalability
Location
Reputation & Management
STRATEGIC ADVANTAGES: EUCALYPTUS
EUCALYPTUS: grows faster than other hardwoods, produces excellent fiber, relatively high wood density
ALTRI/CELBI:
R&D to develop a species with increased productivity rates and decreased consumption per ton of pulp produced
PORTUGAL: climate is conductive to growing eucalyptus
STRATEGIC ADVANTAGES: GROWTH & SCALABILITY
Acquisition of Celbi:
431 M€
Celbi’s expansion project:
365 M€
Acquisition of Celtejo:
40 M€
STRATEGIC ADVANTAGES: GEOGRAPHIC LOCATION
Timely and cost-effective shipping:
1. Proximity to Europe
2. Port city
3. Infrastructure
Portugal Ranked #1 by WBG for Trading Across Borders
Portugal Ranked #1 by WBG for Trading Across Borders
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Where eucalyptus has failed to thrive, Altri has restored the original flora
STRATEGIC ADVANTAGES: RESPONSIBILITY & REPUTATION
All Eucalyptus sourced by Altri is certified to be Sustainably Harvested
FIVE FORCES
STRATEGIC POSITION
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Challenges
Compared to the growth in investment, net sales has been static.
Competitors in Europe
In Europe, Brazilian pulp and paper companies have power over the industry.
47% of pulp produced from Brazil is exported to Europe.
Limited supply of Eucalyptus limits Celbi’s ability to compete with Brazilian companies.
Celbi focuses Europe as its natural target.
77% of the pulp Celbi produces goes to Europe.
According to Bracelpa, Brazil is today the 4th largest woodpulp producer in the world, right after USA, China and Canada, reaching 14.2 million tonnes.
Talk about the favorable conditions in Brazil...and how there aren’t enough forest in Portugal
(Brazil)The breakdown of the overseas market pulp deliveries is: Europe, 47%; North America, 20%; Asia, 32%; South America & Others, 1%
Celbi’s reluctance on introducing new lines of products.
Top leaders of the industry produce both pulp and paper products.
Challenges
With the exception of Kimberly Clark, 9 out of top 10 companies produced both pulp and paper products.
In 2007, Oji Holdings Corporation established a joint venture company, Jiangsu Oji Paper Company in Nantong City, Jaingsu Province, China regarding the Nantong Project in which High-quality paper and kraft pulp production facilities were both going to be built.
Numerous global corporations are acquiring, merging, or doing joint ventures.
The Navigator Company, formerly Portucel, also provides both paper and pulp in their services.
Recommendations
Where is demand the highest?
Steady growth of 2% for demand of tissue since 2000
Projected growth rate is forecasted to be 0.8-1.7% per year
North American demand for tissue has been on a steady growth trajectory of 2%/yr since 2000, though the latest severe recession had an impact and US production growth was just 0.6% in 2009, according to AF&PA. The stable long-term demand growth is forecast to continue and Pöyry expects tissue demand to grow 0.8- 1.7%/yr. over the next five years, depending on the speed of economic recovery
http://www.paperage.com/issues/nov_dec2010/11_2010tissue.pdf
Dominant Market Power
Forestry in United States
U.S. forest product exports have grown 80 percent over the last five years.
Unlike places like Indonesia, despite the growth in export volume, U.S. timber stocks (uncut trees in the forest) have experienced net growth for the last 50 years
new growth is now much higher than the harvest rate.
Joint-Venture with Kapstone Paper and Packaging Corp.
Formed in Delaware as a special purpose acquisition corporation on April 15, 2005
Acquired 5 companies in the past 9 years
Continues to look for potential acquisition opportunities to diversify its business
| Celbi’s Competitive Advantage | Kapstone’s Competitive Advantage |
| Very high operational efficiency in pulp production | Capacity for vertical integration (more product lines) |
| Steady supply of pulp | Capacity for horizontal Integration (expand business to U.S) |
| Less transportation cost of importing/supplying pulp from Brazil or other places in U.S | Large and fast growing paper & packaging company |
http://www.kapstonepaper.com/products-services/corrugated-packaging/
Formed in Delaware as a special purpose acquisition corporation on April 15, 2005 for the purpose of effecting a merger, capital stock exchange, asset acquisition or other similar business combination with an unidentified operating business in the paper, packaging, forest products, and related industries.
Vertical Integration
PAPER & PACKAGING
Produce hard- and soft-wood pulp from wood fibre
PULP PRODUCTION
DISTRIBUTION
Produce containerboard, corrugated products, and specialty paper
Packaging design, creating, storage, delivery, and management
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Horizontal Integration
Kapstone currently exports only 18%
Celbi has no exposure in NA
From Us to China
Strategic Position: US & CHINA
CHINA
Outdated production techniques- lack of high quality paper and paperboard products produced locally
Shortage of pulp - lack of forest area
US
steady growth of exports, relatively fast and inexpensive production
Strategic Position
The pulp and paper industry is one of the very few industries in China that has been experiencing shortages in supply.
The domestic production cannot satisfy the domestic consumption, especially for high quality paper and paperboard products, due to old production technique and lack of high-quality raw materials.2 Therefore, unlike other Chinese products, China has been importing more pulp and paper product than exporting.
it is relatively quick, easy, and inexpensive to export from the United States—with the steady growth in goods exports providing the best evidence that it often makes great business sense to build in the United States and sell worldwide.
The lack of forest resources is the main reason for the shortage of high quality pulp in china
In order to meet the increasing demand and to make up the gap in domestic pulp production, China relies on the international market for pulp supply. China imports from international markets for pulp supply mainly through buying wood chips, wood pulp and recovered paper.
By 2005, China’s consumption of wood pulp was less than 7% of world total, but its imports accounted for about 18% of the world total import.
indicating that the demand increases at the same speed of the economic growth. The relatively high income elasticity and low price elasticity of the demand for imports indicates that China has huge market potential for international producers in this industry.However, with the rapid increase in demand, the lowed tariff due to WTO requirements, decreasing shipping costs and appreciation of Chinese currency, the Chinese markets still have great potential for international producers, especially for high quality products
Another factor that influences the demand in China is tariff. China lowered its tariffs for pulp and paper products to 15-20% in 2001 prior to WTO accession. Based on the WTO requirements, the tariff continued to be lower (Table 9). By 2006, it reached 5- 7.5% for most products, and 2% for some products. Market pulp and waste paper has been no tariff since 1999. In 2006, the tariff rate falls to 5% for newsprint and coated paper. In 2002, China has abolished the sliding scale tariffs on newsprint, replacing it with a flat import duty of 8.5%
DCF Analysis
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