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  • North Am

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    Girish Ranganathan
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    Northam produces paperboard that is converted by processors into cartons for two consumer segments. The commodity segment is declining but Northam has a strong market share, while the differentiated segment is growing but Northam has a weak position. Upgrading machinery to produce differentiated paperboard would require large capital expenditures. Plastic is a substitute for paperboard but is not a major threat due to unpredictable supply and environmental concerns. Conventional analysis suggests the commodity segment is a cash cow while the differentiated segment has more growth potential. However, value chain analysis shows Northam's internal processes are less profitable in the differentiated segment, so Northam should focus on the commodity segment rather than invest in differentation.

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    Northam produces paperboard that is converted by processors into cartons for two consumer segments. The commodity segment is declining but Northam has a strong market share, while the differentiated segment is growing but Northam has a weak position. Upgrading machinery to produce differentiated paperboard would require large capital expenditures. Plastic is a substitute for paperboard but is not a major threat due to unpredictable supply and environmental concerns. Conventional analysis suggests the commodity segment is a cash cow while the differentiated segment has more growth potential. However, value chain analysis shows Northam's internal processes are less profitable in the differentiated segment, so Northam should focus on the commodity segment rather than invest in differentation.

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    Attribution Non-Commercial (BY-NC)
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    8 views2 pages

    North Am

    Uploaded by

    Girish Ranganathan
    Northam produces paperboard that is converted by processors into cartons for two consumer segments. The commodity segment is declining but Northam has a strong market share, while the differentiated segment is growing but Northam has a weak position. Upgrading machinery to produce differentiated paperboard would require large capital expenditures. Plastic is a substitute for paperboard but is not a major threat due to unpredictable supply and environmental concerns. Conventional analysis suggests the commodity segment is a cash cow while the differentiated segment has more growth potential. However, value chain analysis shows Northam's internal processes are less profitable in the differentiated segment, so Northam should focus on the commodity segment rather than invest in differentation.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    of 2

    Northam is a producer of paperboard ,paperboard is converted into cartons by processors and there are 2 consumer segments A)Commodity(declining market

    share and northam is a strong player in this segment) In 1989 1,46,000 tons of output sold in this segment Stable 40% market share, Market growth of -3% every year for last 5 years, stable in 1989. More than 300 customers. Price sensitive

    B)DIFFERENTIATED (Growing market share but not northam s strength,northam will have to incur huge capex to ugrade machinery to produce in this segment) y y y y y In 1989 60,000 tons of output sold 15% market share, Declining Market growth of 10% every year, future prospects of high growth. 6 customers. Quality sensitive (The main question of this case is that northam should go for which segment contribue with commodity or make huge changes and go for differentiated segment which currently in the growth stage and has huge potential,we use conventional analysis and value chain analysis to find out which option is better) PLASTIC IS A SUBSTITUTE BUT NOT A THREAT TO WOODEN PAPER BOARD 1)More economical than paperboard but cost of procureingkey raw material ethylene is unpredictable in nature 2)A fire had happened distoying 30% of polyethelene supply 3)Not eco-friendly (Nature ke rakshak) 4)Plastic is a by product of oil companies so supply is unpredictable SO DEMAND FOR WOODEN PAPERBOARDS WONT PHASE OUT DESPITE THREAT FROM PLASTICS Conventional analysis Makes use of BCG AND dcf,BCG states that commodity segment is high market share and low market growth hence a cash cow and should be harvested,while differentiated segment is high market growth and low market share so Northam should go for it)

    Value chain Analysis VCA breaks down into 5 stages mill,extruder,converter,processoe,supermarket assigns cost and revenues to each stages .Only first 3 stages are Northams internal process ie mill extruder and converter and ROA is less in differented segment and more in commodity segment.Even thought the over all profit and ROA is more for Differentiated segment for the internal 3 stages it is less.Hence Northam should go for Commodity segment and not incur huge capex and foray into DIFFERENTIATED SEGMENT AS THE ACTUAL PROFIT IS ONLY IN THE PROCESOR AND SUPERMARKET STAGES SO NO VALUE FOR NORTHAM

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