Diversification strategies in the global pulp and paper industry - empirical analysis from years 1996 and 2006 Online publication date: Wed, 15-Apr-2015
by Mari Valtonen; Satu Pätäri; Ari Jantunen; Kalevi Kyläheiko; Jaana Sandström
International Journal of Business Innovation and Research (IJBIR), Vol. 9, No. 1, 2015
Abstract: Strategic change through diversification is seen to offer potential sources for competitive advantage. On the other hand, there are also many advantages associated to focusing on core capabilities instead of diversification. This article studies how pulp and paper industry (PPI) companies have managed to adjust their diversification strategies in reaction to the changes that have reshaped their operational environment. We will differentiate between related and unrelated diversification, and analyse, how the potential strategic reorientation has affected the profitability of the companies. The sample includes 108 PPI companies and the years to be studied are 1996 and 2006. The results indicate that the PPI companies really have reduced the degree of unrelated and related diversification. Although the strategic change is clear, the profitability effects of diversification were not so explicit.
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