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Essay / Porter's Five Forces Model for the Paper Industry
Dell, Tyson, Samsung, and watermelon farms buy boxes to ship their products to stores and sometimes directly to consumers. Grocery stores and fast food restaurants purchase paper bags to hold customers' goods. McDonalds and Starbucks purchase coffee cups directly from the manufacturer. The cut paper is purchased and distributors, such as Wal-Mart, Staples and Office Max, break up the pallets and sell individual reams and cartons to consumers. The vast majority of paper buyers are large customers, and they often prefer generic products; buyers therefore have enormous negotiating power. Manufacturers attempted to raise prices in the mid-2000s, but faced strong opposition and their efforts failed (“Paper business in maturity,” 2013). Even when manufacturers changed their ways and found methods to produce paper at lower cost by increasing productivity by up to 30%; buyers demanded and received lower prices from