Question:
You have to Create one Company and Elaborate the following tasks.:
Introduction to Wood Products
Evaluate and Critique of the domestic Market for a Marketing Plan
Evaluation and Critique of the Global Market for a Marketing Plan
Scientifically wood can be defined as porous and fibrous structural tissues that are found in the stems and roots of trees and in other woody plants. It is an organic substance because it produces carbon when burned. Wood has been used form 1000 years as fuel, for construction purpose, it is also used to make tools, weapons, furniture and paper which is one of the most used products. It is also used as feedstock for the production of purified cellulose and its derivatives like cellophane and cellulose acetate.
Woods grow on trees between the existing wood and the inner bark of new woody layers, which covers the stem, this process, is defined as secondary growth, which happens as a result of cell division.
The manufacturing process of wood has following steps
Head Rig: Trees are ct by primary saw into pieces or boards.
Edging: In the next step the irregular edges of the pieces or the boards are removed.
Trimming: Then with the help of of trimmer, the lumber is squared into uniform pieces.
Rough Lumber Sorting: The pieces are then separated and sorted based on the dimension and the final production of the wood products
Stickering: Then lumber is sent to the klin drying production which is staked with spacers known as stickers, allowing the air to move around the stack, the green products do not go throghj this stage and the next stage as well which is known as Drying.
Drying: Klin drying wood makes the natural evaporation of the Wood’s MC in a controlled situation.
Planing: In this stage the wood surfaces are smoothened in order to make every piece identical and uniform in shape and size
Grading: In this process each of the piece of lumber is giving a grade that determines the quality level which is analyzed on the basis of the variety of features which includes its MC
For maximizing the strength of the wood it is very important enough money is invested in the process of kiln drying in which the excess of moisture is removed from the lumber stack. A wood dried properly has many advantages to offer tom its users, it is better than the green wood. This reduces the waste produced during the manufacturing process and the longevity of the wood product is increased. The process of Kiln drying keeps changing, the process involves following steps
The lumbers produced are stacked with care, these lumbers are known as green wood, with the help of using spacers or stickers so that gaps can be created for air to pass and move about freely.
After the wood has been placed in the Kiln, based on the species of the wood, in this process the kiln is heated at temperature that lies between 110 degrees and 180 degrees, Fahrenheit for conventional kilns temperature, 230 to 280 degree Fahrenheit.
It is very important to have a controlled temperature and humidity for the Kiln and therefore the operators constantly monitor the kiln. The profit of the manufacturing company depends upon their ability to increase the quality of the wood (Sujová, Hlavá?ková & Marcineková, 2015).
As per its physical structure, wood is characterized as, strong and stiff but when it is compared to materials like steel, it is light and flexible. Wood has rings and a grain structure, the rings occur annually, it does not have isotopes like metals, plastics and ceramics. A small part of Dead woods can be easily bend and snapped with bare hands. It can be said that wood falls under the category of anisotropic materials which means that a lump of wood has varied aspects and attributes in different directions.
One of the characteristics of good wood is that it lasts for a long time. Like other products wood also decays and rots.
Wood has many advantages, it is used for as fuel, it is a good heat insulator, which helps in building or construction. The dray wood easily burns and thus produces a large amount of heat. It is environmental friendly. It is one of the most important sources of sustainable energy. Growing wood is very beneficial because it is used for a number of purpose. Woods have the quality that if bugs and bacteria do not attack them, they will last forever.
The total production of wood from log harvest in New Zealand in the year 2015 was 29.33 million cubic meters. The pulp and paper production of the country in the same year was 3.53 million cubic meters (Armstrong et al., 2015).
(Armstrong et al., 2015)
The main suppliers of wood products of New Zealand are NZWOOD, the supply engineered wood products. Another major producers of New Zealand are the WPMA New Zealand wood processors and pine manufacturers. CHH wood products of New Zealand is a business group that manufactures and sells wood based building products which includes, timber, ply and laminated veneer lumber (Sidin, 2017).
Product- The wood product of the company includes, Sawn timber, which is both treated and untreated wood. Round wood, posts and treated poles, Veneers, plywood and laminated veneer lumber. Panels that consists of fiber board, particle board, black boar, MDF and others. Engineered products, laminated beams, glulam, I beams and others.
Price- The price of the wood products are generally based on the cost of the wood products. The three most common pricing method used for determining the prices are, markup pricing, target return pricing. Another method of pricing used is demand based pricing, in this pricing is determined based on what the market is willing to pay.
Place- The distribution of the wood products would be done mostly in New Zealand, the orders could be given at the head office of finger joints situated in New Zealand.
Promotion of the wood products is done in the same way the promotions of industrial products are done. The main emphasis of finger joint company would be on personal selling and direct marketing, which the company would be doing by identifying the customers of the who need timber, ply or engineered products. Mainly in the offices that needs timber and furniture or other furniture manufacturing companies that would be using the wood products. Promotion using the common channels like televisions, radio would simply wastage only advertisements on the newspapers in the classified section will help the company get customers who want to buy timber and ply wood products (Sidin, 2017).
The marketing strategy of the company would be to provide quality of wood products that guarantees longevity to the customers. Word of mouth would be used for promotional strategy and for pricing the company would use both cost based and market based strategies. The focus of the company would be on the industrial customers. Since there is not much product differentiation in this industry the strategy that would be used would mainly focus on cost differentiation, the focus of the company will be on reducing the cost in processing of wood products, so that they benefit even if they use market based pricing strategy.
The domestic market of New Zealand is very profitable because finger joints can estimate a growth rate of 35 percent within three years. Any single company does not rule the existing domestic market of New Zealand, almost all the manufacturers have approximately same amount of market share.
The increased number of industries has been increasing the demand for wood, as they are required in many purposes within an organization. Offices require wood products like ply and timber for many constructions works. Even the household constructions requires wood product. The demand has been estimated to increase in the future. There are not much producers in New Zealand. The price of wood products of finger joints is not much and hence it helps the company to create a competitive advantage in the market (Sidin, 2017).
There is not much product differentiation and the demand does not vary because the demand is industrial demand. Only the household demand vary from customers to customers but the the issue is that house hold demand is not much. The producers want to focus mainly in the industrial customers. Another weakness is that some of the producers have well established their business in the industry. Getting raw materials is not easy and the company at times needs many work forces to complete the works related to processing of wood. Another weakness of the domestic market is that, the processing of wood products are both capital intensive and labor intensive, which requires both capital and human resources. For a new company allocation of both the resources is a major challenge (Sandberg, Haller & Navi, 2013).
Globally the demand for the wood products has been increasing for both industrial and household constructions and furniture making. This has led to increase in the investments in forest management. The trends have changed and people now demand for engineered products more. Ply and timber are the favorites of the customers. Apart from that, Sandwood is also in huge demand. For construction purposes people mostly use plywood, this trend is famous in hose hold constructions mostly (Raty et al., 2015).
Recently the environmental activists have raised issues like deforestation, this called for changes in laws and regulations related to forests and hence the producers of wood products find it really difficult at times to accumulate raw materials and fulfill the demand of their customers. The environmental obligation is a worldwide phenomena (Armstrong et al., 2015).
Canada is a country that is having the maximum number of producers. The largest producer of wood is also from Canada, the name of the company is West Fraser Timber co ltd. The company produces 5293 mmfbm in the year 2014. Other major producers of wood products are Canfor which also belongs to Canada. It can be seen that Canada has the maximum number of producers of wood products the reason is the availability of raw materials. Stora Enso of Finland is also among the largest producers of wood producing approximately 4646000 m3 per year, apart from Canada other global exporters of world are Austria, exporting 7 billion Kgs, Russia, 14 billion kgs, Chile exporting 6 billion kgs, USA exporting around 19.5 billion kgs. (Armstrong et al., 2015).
New Zealand market has great opportunities if the investors focus on forest management. If the producers do not get enough raw materials, it is not possible that they would be able to fulfill the demand. New Zealand can reduce the import of wood products by improving plantation of more wood producing useful tree like ply, timber and Sandwood. Recently the demand for finished wooden furniture have been increasing and the industries are focusing in getting ordering readymade wooden furniture, so providing them engineered goods would be beneficial for Finger woods.
In the recent years, the lumber export industry in New Zealand has not enhanced in volume. Nevertheless, the global market value of lumber export has increased exponentially, from 523 million USD in 2006 to 608 million USD in 2010. On the other hand, in New Zealand the value of lumber exports to the US has fallen during this time, from 173 million USD in 2006 to 109 million USD in 2010. In terms of volume, China has lately become the largest lumber market for New Zealand (3rd in value).
The major threat that Finger joints are facing is related to the decrease in the amount of investment in the forest management segment. Environmental concerns and pressure from pro environmentalists have made it difficult to cut tree to fulfill the demand of wood products (Li, Toppinen & Lantta, 2016).
References
Armstrong, G., Kotler, P., Harker, M., & Brennan, R. (2015). Marketing: an introduction. Pearson Education.
Li, N., Toppinen, A., & Lantta, M. (2016). Managerial perceptions of SMEs in the wood industry supply chain on corporate responsibility and competitive advantage: evidence from China and Finland. Journal of Small Business Management, 54(1), 162-186.
Raty, T., Toppinen, A., Roos, A., Riala, M., & Nyrud, A. Q. (2016). Environmental Policy in the Nordic Wood Product Industry: Insights Into Firms’ Strategies and Communication. BUSINESS STRATEGY AND THE ENVIRONMENT, 25(1), 10-27.
Sandberg, D., Haller, P., & Navi, P. (2013). Thermo-hydro and thermo-hydro-mechanical wood processing: An opportunity for future environmentally friendly wood products. Wood Material Science & Engineering, 8(1), 64-88.
Sidin, S. M. (2017). Impact of environmental factors as moderator on export marketing performance in wooden furniture industry. Jurnal Kemanusiaan, 6(1).
Sujová, A., Hlavá?ková, P., & Marcineková, K. (2015). Evaluating the Competitiveness of Wood Processing Industry. Wood Industry/Drvna Industrija, 66(4).
Wan, M., Lähtinen, K., & Toppinen, A. (2015). Strategic transformation in the value-added wood products companies: Case study evidence from China. International Journal of Emerging Markets, 10(2), 224-242.
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