Should Arauco personal both jungles and pulp production facilities? Does the Enorme Paraná project help you answer this question? According to the information of the watch case, clearly Arauco should purchased it own woodlands and facilities, because the benefits from Vertical The use are greater than that costs. The first case is, even if, the ownership of both kinds of resources can decrease the efficiency with the entire organization, it can generate an increasing inside the location productivity (because you can locate our factory near with the forest and in that circumstance you can reduce transport's cost).
Besides, if you are the owner of the forest, you can control it within a better way, matching the type of the trees and shrubs that are rooted with the kind of productive herb that is located near of these forest as well as the availability to make continuous functioning the factory. (The cost of building of a flower is very high-priced, for example Valdivia's plant price about UNITED STATES DOLLAR 900 thousands plus CHF 300 large numbers in forest).
One more is that in the event Arauco is the owner of the forest, there will be simply no transaction costs from settling prices, availability and quality of the trees, because this items will belong to Arauco. Much more, if the methods to produce in the factory need to be bought, there is also a risk (that can be low or high), that one other company can easily compete with you for the same resource (in this situatio, the trees).
From the Alto Paraná factory case, we can conclude the particular issues actually are happening, as this facility is definitely not creating at this full capacity with this own jungles, otherwise they must buy to local producers almost fifty percent of their current capacity. For instance , the problems that are happening are just like:
1 . They have to negotiate prices, availability and shipping dates; this boost transaction costs and the concern of having the factory working 24/7. 2 . Travel cost boost the total expense of the pulp, for example if we consider that Alto Paraná plant neet to purchase 175, 000...