ICT and e-Business in the Pulp, Paper and Paper ... - empirica

Pulp, paper and paper products
Exhibit 5-8: Impact of ICT and e-business on competition in the P&P industry
Competitive forces
1 Threat of new entrants 1
2 Substitution of products / services
3 Bargaining power of suppliers
4 Bargaining power of customers
5 Rivalry in the market
General importance
in the sector (currently)
low < > high
The scale has a maximum of 3 in either direction – "low" ( ) or "high" ( )
Impact of ICT and
e-business
low < > high
1 "New entrants" in the sense of new companies being founded. New entrants in the sense of companies
from a different geographic area entering the European market is considered under "rivalry in the market"
Source: e-Business W@tch (2006), developed from Michael E. Porter
Threat of new entrants
As the P&P industry is very capital intensive, high initial investments and fixed costs
constitute a critical barrier for market entry. As a result, the configuration of major players
in the industry is quite stable. There are not many newly founded companies around. In
this industry, "new entrants" are mainly companies that expand their market size
geographically.
ICT played a critical role in this context, but only for a short period of time – when the first
e-marketplaces for the paper industry were launched, establishing themselves as new
business intermediaries. Confirming economic theory, players reacted to this threat and
developed a counter-strategy: they realised that the broad agreement on industry
standards to facilitate direct B2B trade between companies could, to a large extent,
eliminate the advantage of marketplaces (see Section 4.2.3 – "Peer-to-peer instead of e-
marketplaces"). Defending the industry against new e-intermediaries was one of the main
objectives that drove the development of papiNet® (see Section 4.1).
Currently, there is no obvious link between ICT and e-business developments and the
risk of new entrants. Neither do ICT facilitate market entry in this industry in a substantial
way, nor do they create a barrier for market entry. A possible exception may be
innovation in production technology and processes in the converting industries; however,
survey results and interviews conducted for this report did not find strong evidence for
substantial effects towards lowering market entry barriers.
Substitution of products and services
Substitution of products is a relevant factor for the P&P industry from two completely
different perspectives:
Use of plastic instead of cardboard for packaging. For paper and cardboard
manufacturers, and to some extent for producers of cardboard based packaging
solutions, substitution of cardboard by plastic is a major threat and has a clear
impact on competition and strategy. A recent dispute on the ecological impact of
manufacturing plastic and paper products between the paper and converting
industries confederations (CEPI, CITPA) on the one hand, and PlasticsEurope on
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