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Outline:

1. Intro/Business Idea
2. Outline Scenario Building
3. Describe each scenario
a. Present Situation
b. Push Factors/Causes
c. Effect
d. Casualty

4. Assessment against current business idea


5. Strategic Management
6. Recommendations

A1B2: Ole
A1B1: James
B1A2: Nayan
B2A2: Thomas

Purpose & Strategic Options: Rafael


<Insert Catchy Tagline for Scenario>
For your consideration:

The purpose of these report is to evaluate the plausible scenarios showed in the group presentation
against the business idea in more details making recommendations to company management.

Mondi – Uncoated Fine Paper Division (UFP)

Mondi is an integrated packaging and business paper producer, employing 31,000 people across 31
countries worldwide. Our analysis concerns is focused on the "Uncoated Fine Paper” division, which
produces substantially commodity paper such as cut sizeA4 sized paper, for example (e.g. A4
80gsm), as well as graphical paper specifically for graphics. for the printing industry. Production
facilities are mainly situated in low cost countries such aslike Russia and Slovakia, as well as but also
in Austria and Israel. In the first half ofH1 2010, we are the biggest player in the paper market with a
15% of the UFP market share in totaling 9.2 million tonsthe division had a UFP market share of 15%
in Europe (total: 9.2 mt ) and 23% in cut size (total: 4.4 million tons)), being the biggest player in the
market. .

Business Idea

Increase negotiation power with suppliers


Get superior access to raw materials
Invest and grow in
Utilize economies of scale / scope emerging markets

Achieve a global, leading market position Low cost Increase profitability


assets / structure Increase
funding

Establish a performance driven culture Reduce prices


Achieve environmental performance

Attract high potential employees


Increase revenue

Force continuous improvement Quality / Service

Increase customer satisfaction Invest in SCM, CRM


Improve customer relations

TheUFP’s business idea of the UFP division is based on the delivery of high quality products ,
produced on with self-sourced raw materials via aa low-cost asset base structure under
environmental friendly conditions. , Our products are with own raw materials, sold in high growth
regions resulting which underpins our position as a market leader in the paper industry,in a leading
market position.
The low cost asset base is mainly supported by a rigorous approach to asset management and long-
term modernization programmes. The, with the ultimate aim of shiftingis to shift UFP’s production
base further down the cost curve. In addition, such a rigorous cost savings approach is supported by
the well anchored continuous improvement culture. Furthermore, the highly integrated approach,
spanning the entire product life cycle, from the development and management of forests, to the
production and marketing of a variety of sustainable business paper products ensures fulfillment of
the business idea. However, UFP sees alsoviews sustainability as a main driver for its business, by
spending efforts to reduce the environmental impact of its products and delivering long-term value
to all of its stakeholders. Products are inherently sustainable – based on natural fibers,
manufactured using renewable sources and easy to recycle. UFP aims to be the best-performing
business paper producer in the world and, as such, recognizes the need to integrate sound principles
governing environmental and economic activities into its business practices and decision-making.
UFP’s sustainability footprint is extensive by considering the global threats posed by climate change
and thus counteracting these effects by reductions in emissions in energy usage, carbon dioxide
(CO2), effluent load to receiving waters and waste to landfill.

Business as usual

Presently, gGreen policies are regularly discussed at the global level, and yet often there is often no
common consensus can be found. Likewise, there is limited consensus within the framework of the
business-as-usual scenario as well as in this scenario and. therefore, progress cannot be expected
within the next 5 years, especially since the priority of emerging markets is to continue accelerated
growth. As such, , in the next 5 years it is not expected that we see some progress, why especially for
the emerging markets growth continues to be priority number one. these To promote the growth
governments will continue to subsidize investments to the detriment of the environment and
humanity. Due to the economic growth alsoFor example, with the slow shift from agriculture to the
industrialization of services, tTransport volume sees ais expected to increase significant increase and
theas the service sector is gaininggains momentum. Simultaneously, with improved access to
electricity, the internet as a mass medium will become commonplace. This will not happen
overnight, however, because the information technology (IT) development process, as seen in
western countries in recent years, will progress incrementally. Thus, assuming sustained
industrialization progresses, GDP-per-capital would theoretically increase and the purchasing power
will strengthen within 7-12 years. As a result, citizens in non-urban regions will migrate to city
centers, which will increase urbanization. The gradual development of IT – both hardware and
software – will inevitably incrementalMeanwhile, the markets were penetrated with recent IT
hardware in every corner. This rapid growth and high penetration of IT will be borne by the
environment and new pollution records are listed, so the climate is out of balance and the average
temperature rises significantly. This results into natural disasters and extreme weather conditions
thus the climate change is initiated. Consequently, the impact will accelerate the scarcity of raw
materials by 2035. Those paper producers that ensure the integrity through efficient integration
techniques will maximize their usage of their raw material supply.

We expect that if expansion of electricity and IT access continues, and GDP per capital
growth rates increase, citizens will become more individualized. New generations will seek to
detach themselves from their elder counterparts by exploring access to new technologies.
Moreover, with the developmental progress and greater economies of scale achieved, mobile
technologies (e.g. e-readers, tablets) will become more affordable in developing markets by 2035.
We are mindful that the position of the stakeholders might change. As raw materials become even
scarcer, our competition will take actionable steps to ensure a reliable supply. Since sustainable
supply sources will be limited, suppliers will garner greater negotiating power and change the terms
of business contracts, increasing our operating costs. We should also be mindful that our employees
will certainly have better opportunities elsewhere. Our competitors could expand operations and
“chip away” at our market share by successfully accessing markets in which we operate, leading to
our employees accepting opportunities with them. This could lead to an increased war for talent
that would prove costly.

As an effect of it there will be scarcity of raw materials in 2035, why those paper producers benefit
that are able to ensure their supply by integration and efficient use of raw materials this means
usage of 100% of the material. In addition, in 2025 based on the high penetration of IT in today’s
emerging markets and as a result of the GDP per capita growth and improved access to the
Internet and electricity, individualization becomes more and more important. New generations
want to distinguish themselves from the elder generations, and have good access to new
technologies. Thus, we expect that at the end of the reporting period in 2035 that new
technologies will rise in emerging in markets. Furthermore this is supported by the assumption
that due to development progress and economies of scale these kinds of mobile technologies will
be affordable for everyone by this. Over the years, the position of the stakeholders might change,
thus the competition will win power, because strong competition is expected because of the
scarcity of raw materials in order to ensure reliable supply. Furthermore, the bargaining power of
suppliers may change resulting in an increase in power. Last but not least is the increased power
of employees to be expected, as employees have better opportunities to switch jobs due to the
growth and changes in sectors resulting in a war for talent.

A “Mossy” World

The year is 2011, and Government from the G8 countries get together tomeet to sign the most influential
inter-governmental agreement in the history. All members agreed upon the EU regional proposal of a new
climate change policy based on the former European Union Emission Trading Scheme. The scheme considers
the varying tax policies and regulations of countries in order to give industries time to adjust to the new global
accord. To give industries and countries the possibility to adapt to the new taxes and regulations, the scheme
takes the different countries current levels into consideration. To prevent “freeloader”ing countries, the
agreement accord stipulates that imposes taxes on trade for countries that have chosen participating in the
binding agreement.with countries who not signed the trading scheme. Initially, some countries refuses to sign
the contract fearing it would damage their low cost production but realized the impact of non-compliance on
the viability of their businesses..

In the end of this decadeBy 2020, carbon trade is a natural part of business and is working efficiently in the
western world. NonethelessHowever,, since some countries are staying out of therefuse to be bound by the
accord, agreement the world trade declines. As a consequence, many paper companies stops theirhalt their
expansion plans intoto emerging markets and instead focuses focus capital investments within more on their
regional markets instead. Due to the tax imposed on high-high taxes on emission levels, high effective
environmentally-friendly production processes performance becomes increasingly important in thegain
importance production processes. In turn, new product launches such as re-printable paper and recycled
paper are developed across all paper manufacturers globally. The environmental focus within the organisation
contributes to product launches such as re-printable paper and re-cycle paper to the market. However, the low
quality and high price for customers prevents the products from gaining popularityto take off. As such, tThe
increased carbon price coupled with the and a more active role byinvolvment of environmental regulators,
creates a tougher challenging environment for companies that is not able tounable to reduce their carbon
dioxide levels. As a consequence,As a result, we see somewe envision that some minor playerssmaller
competitors will living exit the market.

In the next decadeLikewise, the unfavourable trading condition continues to create a rougher difficult
economical, financial and political climate for emerging economies. This also affects the migration of also
affects the technology transfer between the regionsbetween countries. As a consequenceHence, technology
such as satellite coverage and mobile technology does not expand as much projected. However, new younger
generations in emerging markets drives upincrease demand for traditional IT hardware such as computers,
printers and fax machines. Also, anAn international recycle campaign introduces a second hand market, which
increases the flow of computers into emerging marketseconomies. The wider use of computers will stimulate
demand for Internet accessibility in these markets, which across the world willis another important
driverincrease the demand behind a widespread demand forof paper. across throughout the emerging
markets. In the developed part of the developed economiesworld, as mobile technology becomes ubiquitous,
paper demand begins to decline. such as e-books and I-pads is starting to substitute paper.

As a consequence, the eastern UFP market is yet again highly attractive, while the developed market starts to
go into a decline.

Further in to the next decadeBy 2025, there is an increasing strong demand for environmental friendly
products in the eastern market. The new Hhighly-educated Chinese generation starts to demand more
greengreen products even if they are more expensive than traditional onesdespite the expense. Thus,The
increased paper demand creates a profitable environment for the paper industry. At the same time
governments begin tois pushing green research and development (R&D) forward in order to benefit from the
carbon trade system. TheMarket leaders in the paper industry major players in the industry are also starting
to getbegin to produce a higher volume ofn re-printable and recycledable paper, since the quality has
improved significantly. In the other end of the industry, companies with high carbon levels are facing total
extinction.

Around 2020 – 2025By 2030, the last remaining countries puts pen to paper and signs up for theagree to
participate in the global trading scheme. While trade barriers are down, traditional IT hardware takes off in the
emerging part of the world; witch creates a massive demand after UFP in the emerging markets. On the
contrary, the developed paper market is facing a decline. Mainly because of high quality re-printable paper
technology and widespread usage of mobile technology. However, none of the technologies has managed to
get a foothold in the emerging markets, yet.

The paperless officeIt’s trendy to be “paperless”

One scenario that may affect Mondi in twenty or thirty years time is the global embracement of “The
paperless office”. This was first described in Business Week magazine (June 1975) as “a work
environment in which paper is eliminated or greatly reduced”. There are two routes predominantly
in which this end state may be achieved. One is through the Inter-governmental agreement on
green policy and the other is the increase of satellite internet connectivity driving the rapid growth
of portable technology such as IPads®, eBooks etc. in emerging markets. Currently there is no
globally universal adopted policy by governments and technology advances in emerging markets are
incremental in the wake of the West’s developments and not rapid.

If governments were to agree on a universal green policy then this may lead to a fully functioning
carbon trade market and also an expansion of corporate green policy. The governments in those
countries in which Mondi does business would then move towards being more of a player in terms
of stakeholder positioning. Although there power is not necessarily changing, their interest in the
company would increase as failure to comply with such policies would no doubt bring in extra
revenue in terms of fines and taxes. Mondi’s competitors would also move to a more player
orientated position as failure to adopt green corporate polices would alienate the competition.

Both of these factors would lead to an increase in green technology innovation both in terms of
products and manufacturing processes and may see the advent of green paper alternatives such as
inkless and reusable paper, ultimately reducing demand and usage of ultra fine paper (UFP).

The second route which would lead to a paperless office is extensive satellite internet coverage in
the emerging markets. This in turn would increase usage of portable communication devices. Once
this has occurred we would no doubt see a rise of online transactions and communication as virtual
contracts become more the norm. This once again would be seen as detrimental to Mondi’s UFP
wing as demand reduces. Universities and R&D labs would have their shareholder positioning
moved to players due to a massive power increase as a result of trying to offer UFP alternatives.

A2B1 (Mobile Tech Expansion) Nayan - MISSING

Strategic Options

Product Diversification – Mondi would create joint ventures with customers to create an R&D
division that would work in the developing of new types of paper such as a highly recyclable paper or
reusable paper. Both parties would share the costs of the researches expenses but also would share
of any successful new product. The joint venture is a strategic measure to ensure that Mondi can
stay competitive with the growing demand of green paper and also with companies cultures of using
less paper.

Milk and Phase Exit – As Mondi faces a decline in demand of paper due to a demand of green paper
from the west markets combined with the lack of green regulations on thein emerging markets but
with stable prices and customer loyalty Mondi can generate cash flow by reducing investments and
operating expenses Mondi can “milk” the market because it is a high efficiency company and it still
can generate sales and profit. As soon these factors are not more in place Mondi would exit the
market.
Profitable Survivor – The onset ofwith more severe green regulations and the advancement of
portable technology will causethe paper demand had ato significantly decrease. As a result, where
only few companies would survive. So for Mondi to survive this new environment the company
would have to raise the costs of competition, reduce the competitors exit barriers, purchase
competitors market share in order to be one of the profitable survivors in the market.

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