If we perform the competitive analysis, then the current competitive environment of the market is highly unfavorable to Atlantic Corporation. The reason for this is that Atlantic Corporation is one of the largest companies in US among the forest products and paper product companies, but the company maintains only 1.8% of the total linerboard market.
The current production output of the company was just 780 tons per day and in order to meet the increasing demand of the customers of the company, the management had to purchase the additional 411 tons of the linerboard per day from the external suppliers in order to meet the production and demand requirements of the company.
If the company had to increase its production base and capacity in the market in order to have a strong control over the market, then the only way possible for the company to achieve this was through the expansion of the production capacity of the company. The production in tons for Atlantic Company and the other major competitors of the company was 14900000 for the whole US market, Atlantic Corporation had 280000, Stone Container had 1147000, and Royal Paper Corporation had 747000; their respective market shares were market share 1.88%, 7.70%, and 5.01%.
In terms of the market position of other competitors of the company, if we compare the stock prices of Atlantic Corporation with those of other competitors in linerboard and box industry, the current share price of $ 32 per share for Atlantic Corporation was the lowest in the market as compared to the other competitors in the market. This could b seen in exhibit 6 of the case. One of the main reasons for this might be the limited capacity of 1.8% of the company of the total national linerboard industry and the other competitors had a large linerboard production capacity as compared to that of Atlantic Corporation.
Next, if we compare the bond rating and the market debt to capitalization ratios of all the competitors of Atlantic and the company itself, then we can see in exhibit 6 that the bond rating for Atlantic Corporation is BBB. Royal Paper also has the same credit rating however; all the other competitors in the market have a high credit rating of either A or AA. On the other hand, this lower credit rating is despite the fact that the market debt to capital ratio for Atlantic Corporation is also low among majority of competitors of the company. This shows that the debt management of Atlantic Corporation is poor (Berk & DeMarzo, 2013).
Next, if we compare the beta equity for Atlantic Corporation and its competitors, then Atlantic Corporation has a beta of 1.35, which is higher than most of the competitors in the industry. This shows that the stock of the company is risky and there are numerous risks inherent in the financial and the business operations of Atlantic Corporation. The earnings per share of all the companies in the industry follow a declining trend; however, the current earnings per share for Atlantic Corporation are also lowest among all the other competitors (Berk & DeMarzo, 2013)………………………
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