What strategy now for SCA?

Résumé du document

SCA is one of Europe's largest pulp and paper companies. For 20 years, the company has adopted a strategy of acquisitions and disposals which permitted SCA to build a strong position in its area. Its three main product areas are hygiene products, packaging and forest products. 'Pulp and paper' is a mature industry. Consequently, SCA has adapted its strategy to focus on profitable and growing product areas. The problem raised by this case is: Does SCA have the best strategy for international expansion? SCA has a strong position in the area of hygiene products due to it's presence in Europe and United States. Its horizontal acquisition was a good idea because it permitted to reinforce its market power. Nevertheless, we think that the company must not continue its global expansion in a short term. The company must build strong brands. We believe that the company must take a new route to building the brand in this evolving environment. What is required is a more integrated, multi functional approach to brand planning that fuses superior customer insights, future economic potential, and reinforcing organizational capability.

Extraits

[...] A strong branding campaign will also signal that SCA is serious about marketing and that it intends to be around for a while. A brand impresses its firm's identity upon potential customers, not necessarily to capture an immediate sale but rather to build a lasting impression of SCA and its products. Branding builds name recognition for the company or product. A brand will help SCA articulate the company's values and explain why the company is competing in its market. Packaging product This area presents a good potential. The market is growing and SCA have not exploited all the benefits of its offer. [...]

[...] Diversification by the market consists in promoting products on a different market, either by geographical extension or by extension from channels of distribution. This type of strategy gives access to more important markets and permits to avoid economics risks and to get profit from synergy and economy of scale. However, this type of strategy has a disadvantage: its costs are higher. In the case of SCA, we have set up these two types of strategies. It establishes a strategy of diversification by developing three types of products: - Packaging - Forest Products - Hygiene Products. [...]

[...] Are there any lessons that other companies in mature markets can learn from the SCA experience? To answer this question, we decided to list and explain all the forces and weaknesses of the company. These forces are the base of the success on a mature market. Finally, we decided to explain which weaknesses it is better to avoid to reach company's goal. We can notice that to evolve on a mature market it is necessary to set up a particular strategy. [...]

[...] This matrix permits to see the situation of all areas of the company. Hygiene product SCA has a strong position in this area due to this presence in Europe and United States. Its horizontal acquisition was a good idea because it permitted to reinforce its market power. Nevertheless, we think that the company must not continue its global expansion in a short term vision. In a first time, the company must build strong brands. We believe that the company must take a new route to building the brand in this evolving environment. [...]

[...] This strategy enabled it to penetrate unknown markets and to ensure a continuous growth of its volume of sales. When the company arrived in the decline cycle of the market, it carried out an acquisition of a foreign company to start again its activity. One of the other strategies is the fact that SCA installed these production sites close to the places of life of the demand. The company is able to approach these customers to answer more quickly a request increasingly more demanding. [...]