GUNNS AND THE AUSTRALIAN PULP AND PAPER MANUFACTURING INDUSTRY Research

GUNNS AND THE AUSTRALIAN PULP AND MANUFACTURING INDUSTRY - Research Paper Example This study highlights the strategic problems of the company and suggests measures that can be taken up by the company to ensure its sustainable growth in future. The external environment of the company has been analysed using PESTEL analysis and the various competitive factors affecting the company have been identified utilising the Porter’s five forces model analysis concerning the global paper industry. The strict environmental regulations and the strong supplier power in the paper industry are identified to be having a significant impact on the company. The internal environment of the company has also been analysed utilising SWOT analysis as the strategic tool. The core competencies of the company have been identified to be its diversified products portfolio and it is trying to attain competitive advantage in the market through the strengthening of its core competencies. The financial analysis of the company shows that indebtedness is a major problem of the company and it i s facing difficulty to source its fund for future investments. Based on the in-depth analysis of the company and its environmental conditions the best strategic alternative for the company has been identified to restructure its business model, focusing more on plantation based business and accepting the proposed investment proposal related to Bell Bay pulpwood mill. 2. External Environmental Analysis Gunns Ltd. is engaged in the business activities related to forest management, processing, milling, exportation and merchandising of wood products (Bloomberg, 2012). The company operates its business in the global paper industry and the external environmental analysis of the company has been done in this study utilising various strategic tools like PESTEL analysis and Porter's Five Forces Model. 2.1 PESTEL Analysis PESTLE stands for Political, Economical, Social, Technological, Legal and Environmental factors. It is an external environmental analysis tool which helps the organisations t o determine the external trends (Knowhownonprofit, n.d.). Hence Gunns Ltd. which is an Australian company, the country’s business environment can be better understood through the PESTEL analysis presented below: (Source: Businessmate, n.d.). a. Political: Different types of social welfare policies have been undertaken by the Australian government in the recent years like lending support to the aging people and the introduction of the scheme of paid parental leave. Apart from this the carbon tax was enacted by the Australian government recently but had to face protest from different industrial sectors of the country (BBC News Asia, 2012). b. Economical: There has been a steady growth of the Australian economy in the past 10 years. It is likely that the economy would continue to be strong paving way to further industrial growth and development in the nation. On the other and the indebtedness of Australia has increased which is evident from the rise of external debt as a percent age of GDP. At the end of the year 2011, Australia's debt from foreign countries grew to around 94.58% of GDP (Marketline, 2012). c. Social: In accordance with Central Intelligence (CIA) World Factbook the Gini coefficient of Australia ranges from 0 to 100, i.e. from perfect equality to inequality were 30.5 in 2006. The aging population of the country is also on