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

The whole doc is available only for registered users OPEN DOC
  • Pages:
  • Word count: 462
  • Category: market

Get Full Essay

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

Get Access

West Fraser Timber Further Cutting Capacity Essay Sample

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

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...

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....

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...

PepsiCo market position

PepsiCo is celebrated for the broad chomp and the refreshment age that the association focuses onto. The corporate procedure that the PepsiCo uses had engaged the widening of the things into the chomp and the pop pops business. Additionally, to age of the refreshments, the PepsiCo in like manner makes arranged to drink tea and coffee. PepsiCo had used improvement and merger securing system in...

Extra subsidizing and plans of repurchase

PepsiCo is famous for the expansive bite and the refreshment generation that the organization centers onto. The corporate methodology that the PepsiCo utilizes had empowered the broadening of the items into the bite and the soda pops business. What's more, to generation of the refreshments, the PepsiCo likewise creates prepared to drink tea and espresso. PepsiCo had utilized enhancement and merger securing strategy in the...

Get Access To The Full Essay
Materials Daily
100,000+ Subjects
2000+ Topics
Free Plagiarism
All Materials
are Cataloged Well

Sorry, but copying text is forbidden on this website. If you need this or any other sample, we can send it to you via email.

By clicking "SEND", you agree to our terms of service and privacy policy. We'll occasionally send you account related and promo emails.
Sorry, but only registered users have full access

How about getting this access

Become a member

Your Answer Is Very Helpful For Us
Thank You A Lot!


Emma Taylor


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

Couldn't Find What You Looking For?

Get access to our huge knowledge base which is continuously updated

Next Update Will Be About:
14 : 59 : 59
Become a Member