The supply and demand are experienced everywhere in the US and Canada and provided its large market share as exhibited by the fact of its ranking amongst the firms regarding size and market share.
It shows bright prospects for the company provided future events remains for the comp
any and no new competitor or technological prowess is muscled by the potential incumbent firm.
It is fully compliant with the environmental and sustainability regulations employed by the government. They manage resources in an efficient manner and due consideration is taken for the stakeholders while their decisions impacts the stakeholder in a positive manner. Minimization of waste and recycling of products had implication on the goodwill that it enjoys and government patronage.
However, as per their 10-K reporting, they confessed that sometimes they failed to maintain regulations and restriction imposed on them by the government, which resulted in penalty and fines, especially those that are cost-intensive for the company and a bit difficult to implement, such as installation of pollution controlling equipments and apparatus or other remedial measures. In a nutshell, it may entail further capex and operational costs that falls on the onus of the company(report, 2014).
Domtar’s Corporation has many direct competitors, which includes Clear water Paper Corporation, NASDAQ-, KapStone Paper and Packaging Corporation, Mercer International Inc., Neenah Paper, Inc., Orchids Paper Products Company, Resolute Forest Products Inc., Mauduit, International, Inc., Veritiv Corporation, Wausau Paper Corp.
Strategic Group Map
LOW ECO-FRIENDLY (QUALITY ) HIGH\
Porter Five Forces Analysis
Bargaining Power of Buyers (HIGH)
Overall, the industry analysis explains that the Uncoated Free sheet. In 2007, shipments were about 11,665 million tons. Its imports (543 million tons) and demand (11,757 million tons)decreased by 5.5% in 2006. The Total Printing and Writing Papers of 2007 shipments 27,379 million tons decreased by 0.8% the imports decreased by3,298 million tons and the demand increased by29,457 million tons and decreased by 3% in 2006, which indicates that the supply is low than the demand so the bargaining power is high and
Since there are many direct competitors with the same business model, however Domtar’s Corporation has its Unique selling point (Average Cost than competitors, and believe on Customer satisfaction).
Therefore, the bargaining power of buyers is high.
Bargaining Power of Suppliers (LOW)
High cost and reliance on necessary inputs provide a challenge to the paper industry, hence providing leverage and bargaining power to suppliers. It also threatens industry’s profitability.The companies must position themselves to negate this force since Domtar’s Corporation is using its personal relations in dealing with the local first tier supplier initially to whom it will give numerous orders.
The power lies with Domtar’s Corporation and not with the supplier. However, paper supply is also not an issue because of the reason that there are Paper dealers from where the procurement department can get the job done.
Threat of New Entrants (LOW)
Economies of scale can describe the threats of new entrants. Moreover, high capital is required to sustain in the market and on top of that following the government regulations are the main concerns. In addition to this,managerial, distribution and marketing need a lot time to get accustomed to the market trends and condition and most importantly, brand identity switching cost is high.
The threat of new entrants is low since there is greater number of ventures like Domtar’s Corporation. However, the unique selling point of Domtar’s corporation is sustainable enough to keep its market growing with the time. …………………………..
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