Australian Paper Manufacturers A Case Solution

1. What opportunities and risks did Ken McRae face as he contemplated taking Australian Paper Manufacturers (APM) into the fine papers market? Be specific concerning technological, operations, and capital investment (as well as other) considerations?

Before 1987, the industry of Australian Paper Industry was segmented into three companies: Australian Newspaper Mills (ANM), Australian Paper Manufacturers (APM), and Paper Company of Australia (PCA). APM industry has been owned by Amcor Limited which was known as the largest forest product and packaging company. The company was able to expand into different countries and was involved in developing consumer packaging products and therefore, decided to enter into the fine paper market. Ken McRae upgraded the available machinery. Among the four machines, APM decided o go for Machine 3. It was used by APM to enter the paper market. The major risk was the competition from PCA. At that time, the company had the largest market share and was producing three-quarters of the fine paper in Australia. 

They were known to be among the largest paper merchants in the market. To capture the market share, McRae took the opportunity of using its effective technology. APM relied on Maryvale which provides stronger pulp while PCA was relying on old soda prices. With that being said, excellent service quality was also given by APM. This helped the company to gain a share of the industry. another risk for McRae was to increase brand loyalty when new products were launched in the market. PrintRight and CopyRight were launched in the market. APM encouraged customers to purchase the product but consumers were still buying the previous brands. this situation was catered to by printing photographs on PrintRight to make it attractive to consumers. The technical benefit was talked about, which attracted consumers. 

In addition to this, $1 million was spent on the advertising of the CopyRight and thus was able to establish itself in the market. the right was also launched by APM in the market which became the first stationary paper in Australia. After the success of APM, a capital investment of A$50 million was made to APM by Amcor Limited. The segment of Copier Paper was likely to generate 10 percent of the annual growth.