Authors: Bo Rundh
The development of the Swedish pulp and paper industry are based on some basic industrial factors such as the location of the raw material in combination with the quality of the fibre. Another important factor has been the supply of cheap energy a factor that is loosing its importance due to different environmental taxes on energy. However, during the 50’s and the 60’s the domestic fibre lost its competitive advantage in relation to fast growing fibres in other regions. At that time the production factors come into focus and the restructuring of the pulp and paper industry started which also made it necessary to close down some mills due inefficiency in relation to the prevailing competitive situation. Investments were also made in larger mills and machines in order to reach economies of scale. Chemical pulp and integrated paper production were also important factors to reach a competitive edge in relation to other producers and due to export from North America.During the 70’s and 80’s it was also possible to notice a lot of mergers and acquisitions in different local markets in Western Europe. This strategic orientation has therefore been an important issue for the Swedish pulp and paper industry in order to increase market shares. This strategic interest for establishing activities in different local markets is expected to continue, but even if the importance of added value products has increased there is still a high dominance of exporting products with a low added value.The increased investments in production facilities and production technology have also lead to a degree of production orientation within the industry since it has been necessary to reach a high production level even to brake even. An increased competition from other materials such as plastics and new packaging solutions has put greater emphasis on trying to create new products and innovations within the industry.Due to the competitive situation in different market areas the paper industry is under the pressure of a need for improving the profitability by overhauling its purchasing and marketing activities. This is done in order to reduce costs and improve efficiency and supply chain management has become a new paradigm for the industry. Both mills and suppliers have responded to this paradigm by forging integrated and long-term relationships built on communication, commitment and mutual gain.Traditionally paper companies have chosen their suppliers to a great extent on competitive pricing and service. While pricing and service remain important, the relationships between paper companies and suppliers have changed. Similar to the competition in other industries e.g. the situation in the automobile industry during the late 1980s and the early 1990s, today’s business climate in the paper industry brings pressure for improved profitability, cost reductions and efficiency improvements.At the same time paper companies have integrated forward by mergers and acquisitions in order to build up a market position on different markets and product areas in the local market structure. Due to structural changes and concentration within different industry’s the paper companies have also come under the pressure from big buyers, especially from customers selling consumer products e.g. the food industry. The pulp and paper industry has therefore been under the pressure from different market dynamics.Keyword: Competitive Strategy, Supply Chain Management, Technology Development
Journal: ( – )
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Publish Year: 2003
Conference: Lugano, Switzerland (2003)