Arauco Case Analysis

Arauco should build the Nueva Aldea project for the following reasons:

Growing markets in developing nations: Export sales represent the majority (around 85%) of Arauco's sales from 2001 to 2003. Adding to that, developing nations in Asia, Eastern Europe, and Latin America were expanding their utilization of paper products. In this manner, fabricating more factories to expand profitability to meet the expanding requests in the developing nations is inevitable.

Influence more economies of scale: By expanding the size of its plants, it will prompt to lower costs and higher effectiveness for Arauco to profit more from the economies of scale.

The organization Arauco ought to manufacture the project Nueva Aldea, for different reasons related to

production, proficiency, access to lower expenses and its development universally. Among the reasons

that bolster the development of the new plant, we consider that Arauco will be situated in a particular

locale (VIII) near the ports of Lirquén, Coronel and San Vicente where we can locate the biggest

profitable plantations and where this strategic position would support the assembly of prepared

materials, key purpose of investigation to advance the extension and interconnection of an organization

of this magnitude. Likewise have a perfect access to the central power grid, which would fundamentally

diminish the cost of power transmission. In addition to the strategic location also exist benefits with

respect to transdisciplinary work between various plants. Benefits that outcome in a predictable process

integration, cross data, encouraging learning, innovative exchange, and diminished administrations, all

components which add to the improvement of production processes and efficiency.

In connection to economies of scope, this new project would accomplish differentiate exercises pulping,

exploiting new innovations in processing focused on growing different enterprises. Lastly, this new

plant, will permit to Arauco, get a horizontal growth that would position him as one of the biggest

makers