Case Study [AUSTRALIAN PAPER MANUFACTURERS]

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PROBLEM STATEMENT:
Should APM continue to expand its business amid possible environmental concern and recent disgrace
of PCA, In light of its New Technology, better marketing strategy and austerely upholding environmental
thresholds?
This fact is established that Paper industry in Australia would grow at 6.5% annual growth through
1990s, and by 1995 imports will grow at the expense of domestic supply, creating incentive for player to
improvise and enhance their capacities of producing paper. McRae concluded that in order to cope with
such growth either APM or PCA must ascertain its output at 300,000 to 400,000 tonnes. If either of
them successfully manages its output at this rate by creating a single machine with a capacity of 150,000
tonnes of paper production, that company will have the advantage of kicking the other out of the
business for at least a decade.
DISCUSSION:
With the ever increasing demand of paper pertaining to economic spurt and import hanging in the
balance the two great players in Australian Paper Industry i.e. APM and PCA had to inevitably improvise
to stay in the competition or being knocked out of the game. By virtue of competition its inevitable that
some prices are paid not necessarily the competent, theyre cases where third might pay the ultimately
price. For instance in Paper manufacturing industry of Australia along with APM and PCA, Environment
plays the pivotal role as third party. Environment is most susceptible to adverse outcomes of the
competition between APM and PCA.
Originally PCA a subsidiary of Maitland was veteran at fine paper production, while APM greater
markets interest were packaging. Until in 1984 APM decided to enter the fine paper business. With APM
and PCA in competition, probabilities were paved of greater opportunities. Having, said this, these
opportunities were simultaneously paving ways for greater Environmental concerns.
In Order to understand what hazard did paper industry posed to the fundamentals of environment one
must understand how paper is produced. Paper making process commence from cutting down woods,
as its the primary ingredient, there lays the first hazard: Deforestation in order to suffice increasing
demand of paper, wood had to cut down resulting in deforestation. It takes 4 tonnes of wood to
produce 1 tonne of paper and with 358,000 tonnes of paper requirement in 1987 one can estimate the
deforestation rate in Australia this led to the greater forest scrutiny, and deforestation was put under
the radar. Considering such situation using discarded waste paper was considered to a better option as
it consumed half the energy compared to virgin pulp, lesser air and water pollution and lesser
deforestation. After the pulp was acquired, bleaching was carried out to increase the quality and
brightness of paper on average 50-80 kilograms of bleach was required to treat 1 tonne of pulp. This led
to another environmental concern, bleached pulp produced organo-chlorine namely dioxin, in terms of
quantity typically 5-8 Kgs of organo-chlorines per tonnes of paper was produced. Adverse effects of
dioxins included reproductive disorders in animals, suppressing immune systems and these dioxins had
the ability to travels through food chain aiming to possible transference from marine life to ordinary
Case Study [AUSTRALIAN PAPER MANUFACTURERS]

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human being who would consume them. This concern was addressed using oxygen during the pulping
process, this process yielded 50% reduction in chlorine usage for bleaching purpose. With APM
entering in uncoated fine papers, upgrading one of its machine at Maryville Plant, and better marketing
strategies led to greater need of paper than ever, even though measures from APM were taken to
minimize and keep the dioxin limit under permissible value there was a dire need to look out for
possible alternatives, using oxygen could prove to be the solution sought. There were cases where
people came under the impression that companies were not austerely maintaining the dioxin
thresholds, for instance Greenpeace reports stated that PCA exceeded the limit of releasing dioxins into
seawater with 11.5 tonnes of discharge exceeding 80% from the permissible limit, posing greater threats
to environment and workers themselves. However all these concerns were addressed by PCA,
nonetheless PCA had to face the hint of defacement of its reputation.
APM
Originally APM were veteran in packaging, later they decided on entering producing fine paper because
they believed they had the experience of handling paper, but with some improvisation they could give
some tough time to its competitors. Some improvisation was required because the time APM intended
to enter fine paper business PCA hold three-quarters of fine paper business and 80% share in copier
paper business. APM equaled to challenge, and its marketing director McRae came up with two-stage
improvisation; quality and marketing. APM upgraded one of Machine i.e. Machine 3 at Maryvale, which
produced better pulp as compared to old school PCA methodology of soda ash pulping; Further APM
was equipped with twin -wire machine which produced evenly surface paper on both sides. In terms of
service they equipped themselves with better software acquiring orders from consumer directly,
eliminating the middle man i.e. merchants, also APM reduced its lead time allowing consumers to stock
less. APM also established toll-free number and appreciated greater public interference to elevate the
standard of services. APM also ramped up its output from 40,000 tonnes in 1988 to 70,000 tonnes in
March 1989. Other aspect that APM worked was it diversity APM emphasized on producing different
paper for different audiences, i.e. CopyRight for White Collars, PrintRight for blue collars, and DataRight
was aimed at technology-oriented consumers.
PCA
PCA was undoubtedly frontrunner among fine paper manufacturer in Australia until 1984, when APM
decided to establish its business. In 1986 with 75% of fine paper business, APM proved to be real
competitors, slashing PCA stake to 52% and APM taking control of 37% business within 3 years. PCA
responded to APM competition by intending to establish a kraft pulp mill of 400,000 tonnes capacity in
1987 at BridPort, Tasmania. This could not be the case because this project failed pertaining to political
and public opposition, despite mapping out the A$ 1 Billion project with aide of a Canadian Company.
Further Environmental concerns raised in a report by Greenpeace also added insult to injury and
defacing the company for discharging toxins in excess of thresholds. PCA was still practicing old school
methodology of soda ash pulping and not utilizing recycled paper for paper production in contrast to
APM. In 1989 APM was producing 7 tonnes of recycled paper while PCA hadnt even commenced on this
front.
Case Study [AUSTRALIAN PAPER MANUFACTURERS]

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CONCLUSION:
Based on the analysis this fact can ascertain with much confidence that APM has greater perspective in
paper industry of Australia. New Technology, better Marketing Strategy, Better Customer Relations
Techniques, Innovation, Better Market reputation compared to competitors, and better record of
maintaining environmental thresholds would increase consumers and market confidence of APM. Thus
it is advisable for APM to further increase it business.