Trust International Paper Corporation

• Main Author: Agbay, Maria Katherine A.
• Format: text
• Language: English
• Published: Animo Repository 2002
• Subjects: Paper industry > Philippines; Business Administration, Management, and Operations
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/2770
• Institution: De La Salle University

Trust International Paper Corporation is a manufacturing company that produces paper being used as a medium for transmitting information. TIPCO manufactures its product through its strong work ethics, creativity, technology and passion to stay ahead. After the Asian crisis that rocked business environemnt, series of events have made the economy gloomy again before it can fully recover. The September 11, 2001 tragedy in the United States was so significant that it affected the global economy. While the company was on its way to recovry from previous year's setback, prices in the international market dropped on its all time lowin two decades. Local prices were also on the downtrend. To make things worse, consumption also declined pushing the manufacturers against the wall. The only noteworthy change is being welcomed by the business society and not affected by the crisis is the e-commerce and internet. In spite of all the changes, business goes back to the essential, and that is to continue to provide total customer satisfaction. This paper aims to propose a strategic plan for TIPCO. The proposed strategic plan for the Company is derived in a systematic and logical sequence. Proposed strategies are formulated with the analysis of the external and internal environment which is what modules I and II discuss. This paper presents a logical sequence of formulating a strategy. Module II- External Environment, discussed the relevant changes that have taken palce which have material effects on the industry which Trust Internatiuonal Corporation belongs. The analysis of the external environment has shown the following changes in the task environments: slowdown in the Philippine economy as shown by various economic indicators decline in interest rates continuous peso depreciation unsettled peace and other problems due to terrorist groups, balikatan exercises and court processing of Joseph Estrada's cases concerns raised on some provisions of RA9136, electric power industry reform act and its implementing rules and regulations move by PULPAPEL to reduce tariff rate from 3% to zero duty for pulp and wastepaper and dumping of xecess production by foreign paper manufacturers. In the international market, the following are the changes that have effects on the industry: decline in newsprint selling prices and sonsumption and the September 11, 2001 US tragedy caused by terrorist group and the retaliation of rge United States and its allies to Bin Laden's group. Based on the above changes, Porter's model of the five forces driving the industry's competition is used to analyze the industry's structure. This framework has helped to identify opportunities which the Company should exploit and threats which the Company should protest itself from. The opportunities derived are as follows: decline in interest rate, devaluation of peso move to reduce import tariff on wastepaper potential to increase exports and potential to reduce electricity cost with a building of a co-generation plant. The threats which the Company should overcome are as follows: energy and power cost hike dumping of imported paper in the country increasing trend of non-paper use slow economic growth, peace and other problems decline in newsprint prices and consumption and the effect on the global economy of the September 11, 2001 terrorist attack and corresponding retaliation and the negative effects brought by emerging countries to the Philippines and to TIPCO such as lost investment and partnership and low selling price of newsprint. Module II- Inrernal Environment, discusses about the Company. Analysis is made on the financial position of the Company through relevant ratios. Value chain is also used as framework to determine the Company's strengths and weaknesses. Determining the strengths and weaknesses is important becaue strengths will be used to exploit opportunities identified in Module II and weaknesses will be used to protect itself from threats. In summary, Trust International Paper Corporation has not done well in Year 2000 as reflected by the financial ratios summed as a follows: operating and financial performance generally have been worse except for sales its financial condition is generally not improving and its capital structure is not healthy as the Company is highly leveraged due to heavy borrowings. The Company's strengths identified using the value chain are as follows: high quality of paper highlr professional and innovative management supported with skilled, creative, knowledgeable and empowered employees technologically upgraded facilities domestic market dominance strong export business ISO 9002 and 14001 certified strong customer base both in the Philippines and abroad strategic location and diverse selection of raw materials and suppliers. Along with these strengths are the Company's weaknesses which include limited financial resources highly leveraged due to huge borrowings no control in increasing prices of raw materials export selling price is dependent on international market dependence on imported materials and no current capital infusion from owners. Proposed strategies in Module IV- Strategy Formulation are the results of extensive analysis of Modules I and II combined. This is the most important module becaus it includes the action that the Company should take to compete in its industry and to achieve competitive asdvantage. After evaluating the current vision of the Company, this is the proposed vision: To be the leading paper manufacturer in Asia by naking a difference in the lives of people. This encompasses a well-conceived vision which includes core values, big, hairy audacious goal and vivid description. Based on the vision financial and strategic objectives are derived. The following present strategies have been analyzed for enhacement: total customer satisfaction focus on newsprint production long standing customer relationship focus on selected export market/customers gradually upgrade and modernize machinery to increase production improve quality and maintain cost position use of de-inked pulp as raw material for both newsprint and wood free and loan restructuring. Some of the present strategies are enhanced in the propsed strategies. Below are the suggested strategies that TIPCO should make in order to achieve its corporate objectives. The defensive strategies are to push for another loan restructuring reevaluate its costs pursue tie-ups and negotiations with the investor that would finance the co-generation palnt and improve wastepaper recovery and collection. The offensive strategies are to strengthen its domestic newsprint market dominance and leadership by obtaining lost market form strategic alliance or forge a tie-up with foreign mill business and pursue expansion programs investment in technological facilities, research and development and training of personnel and enhance utilization of upgraded facilities and skilled staff to offer new services via the internet. Module V- Strategy Implementation presents the program that the Company should do to implement the strategies thoroughly discussed in Module IV. It uses the 7s as framework. A complete resulting of the Company's performance after doing the earlier modules ios presentedin Module VI- Financial Projection. This module presents the financial projections of the Company after inclyuding all the factors considered and given emphasis in Modules I to V.