Strategic Portfolio Management
for Manufacture of pulp, paper and paperboard (ISIC 1701)
Given the 'liability-locked assets' characteristic of the industry, objective, matrix-based decision-making is necessary to overcome emotional or historical attachment to dying assets.
Strategic Overview
In an industry defined by heavy capital intensity and structural knowledge asymmetry, strategic portfolio management serves as the primary tool to prevent capital misallocation. By evaluating business units through the lens of structural attractiveness (e.g., market growth, barrier to entry) vs. competitiveness (e.g., fiber access, logistical reach), firms can optimize their footprint.
2 strategic insights for this industry
Capital Misallocation Prevention
Using quantitative gating to stop 'zombie' capex in declining segments that offer no long-term margin upside.
Logistical Footprint Optimization
Realignment of mills closer to renewable fiber sources to reduce transport costs and geopolitical supply chain exposure.
Prioritized actions for this industry
Divest low-margin, high-commodity segments
Freed capital can be redirected to higher-margin, specialized fiber segments with less volatility.
Implement a Global Cost-to-Serve model
Better understand the actual profitability of specific product-market combinations given volatile energy and log prices.
From quick wins to long-term transformation
- Benchmark mill-level performance across the global portfolio to identify laggards.
- Divestment of isolated, high-cost mills with no future integration potential.
- Acquisition of high-growth sustainable packaging assets in emerging markets.
- Failing to account for the closure liability costs when evaluating divestment candidates.
Measuring strategic progress
| Metric | Description | Target Benchmark |
|---|---|---|
| ROIC by Segment | Return on Invested Capital broken down by paper type and geography. | WACC + 5% |
Other strategy analyses for Manufacture of pulp, paper and paperboard
Also see: Strategic Portfolio Management Framework