We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

West Fraser Timber Further Cutting Capacity Essay Sample

  • Pages: 2
  • Word count: 473
  • Rewriting Possibility: 99% (excellent)
  • Category: market

Get Full Essay

Get access to this section to get all help you need with your essay and educational issues.

Get Access

Introduction of TOPIC

Hank Ketcham, CEO of West Fraser Timber Co. Ltd., said that lumber producers will have to further reduce capacity because of low product prices. He said that to determine the right operating strategy, “we’re looking at our operations daily.” West Fraser’s output has already been cut “by 13 percent during the long recession in the forest industry.” Because of the collapse in the housing market, the industry has gone through “extensive suffering”, and has worsened by the credit crisis “which could hurt customers and their ability to by products.” The benchmark price of lumber is now around $190, down more than 25 per cent. West Fraser third-quarter results showed that “sales rose 2.5 per cent to $848-million from $827-million a year earlier” and compared with a $40-million loss a year ago, “operating profit was $8-million.” But RBC Capital Markets Analyst Paul Quinn said that “although West Fraser’s results were good given the weak forestry market, investors should avoid the company’s stock because there is no expectation f

or an immediate improvement.” Mr. Ketcham said “the industry has to reduce the amount of wood it

Sorry, but full essay samples are available only for registered users

Choose a Membership Plan
is producing because this is going to be a long downturn.”

The external threats faced by the forestry industry as a result of the downfall in the housing market and credit crisis also presents internal problems for the company such as decrease in product prices, decrease in sales thereby forcing a cutback in production, and lower stock prices with the advice that investors should avoid the company’s stock as “no immediate improvement is expected”. In this industry downturn, how can West Frazer maintain its competitive advantage? Even though sales rose by 2.5%, the “long downturn” is still expected. The company must recognize and take advantage of distinctive competencies if any, revisit its long-term objectives and come up with strategies to improve on their internal problems and reduce the effects of the economical threats posed to avoid falling into a bad financial position.

West Fraser has been able to recognize the threats that confront it and is trying to determine the right operating strategies as the CEO said. Strategies that can be considered at this time include related or unrelated diversification, and/or joint venture/partnering. By focusing on diversification strategy, the company can spread business risk across different products or industries that can yield high returns greater than what the company might be able to achieve alone, thereby creating synergy. The joint venture strategy can benefit the company partnering with another company to globalize its operations and decrease risks. This will help sustain the company’s competitive advantage when it is not able to do it alone. By globalizing operations, the company might be able to increase market share which will make up for the lost domestic sales.

We can write a custom essay on

West Fraser Timber Further Cutting Capacity Essay ...
According to Your Specific Requirements.

Order an essay

You May Also Find These Documents Helpful

So you want to set up a...

In modern society small grocers are not very common, big shops and brands like Walmart or Tesco are taking over the world. The essay Once Upon a Shop is written by Jeanette Winterson, who is a British writer. The essay was first published the 13. June 2010. The essay is about Jeanette Winterson and her little vegetable shop, which is located in Spitalfields in the east end of London. Jeanette Winterson tells in the essay how she opened a vegetable shop instead of being hired in a cooperative brand. She also tells about her passion for running her own shop, and about the challenges and he possibilities by running her own shop and the fact that we still need to be independent. The author Jeanette Winterson had been offered to sell her building to a big coffee company, but she rejected the offer because of what she felt was wrong...

Red bull market

Red bull entered the US market in 1997 because it was a politically stable developed country. The company used a “cell” approach to divide the key markets into geographic segments rather than attempting a nationwide launch. The company’s first test market was Santa Cruz, a beachside town that was known for its active lifestyle through skateboarding and surfing and the University of California Santa Cruz. The target population in Santa Cruz represented a good audience for the product as they were mostly sport enthusiasts and university students. From Santa Cruz, Red Bull moved into the nearby urban market of San Francisco, and then to Venice Beach, a trendy beachside city near in Los Angeles. brand in Maryland, New Jersey, New York, Pennsylvania, and Virginia. When Red Bull entered a cell, it initially targeted high-end nightclubs, bars, plus exclusive health clubs and gyms in order to reach the trendy and active...

Two types of markets

Prices in today’s market often fluctuate based upon two main reasons that we know of; supply and demand. But have you ever stopped to take a more in depth look into other reasonings behind price increases or decreases of firms. Firms do not just randomly decide to decrease or increase their prices of their products or services regularly. Barriers to entry are a big contributor to the impacts upon market outcomes. Entry of firms into the market is an important part of the economy. New firms enter the market with new products and production processes frequently. How does the economy control the number of firms within specific markets? By having barriers of entry to help deter competitors. A barrier to entry can be described best as an economic factor that causes a roadblock in the market, production process or supply chain that discourages other competitors from entering the same market space...

Popular Essays


Emma Taylor


Hi there!
Would you like to get such a paper?
How about getting a customized one?