international-paper

Businessmodel of International Paper

Customer Segments

International Paper has a mass market business model, with no significant differentiation between customer groups. The company targets its offerings at anyone who wants paper/packaging products.

Value Proposition

International Paper offers three primary value propositions: accessibility, risk reduction, and brand/status.

The company creates accessibility by providing a wide variety of options.  It offers a broad range of packaging products with different applications; these include world-wide commerce; pulp for diapers, tissue, and other personal hygiene products; papers that drive communication; paper bags that carry groceries; and paper cups and food containers.

The company reduces risk by maintaining high safety standards. Specifically, it does the following:

  • Annual Plans – The company maintains plans for all businesses and facilities to address safety priorities. The plans are based on facility safety audits, behavior-based safety observations, and lessons learned from key indicators, such as near-miss reports and safety incident trend analysis.
  • Corporate Standards – The company maintains a global set of safety regulations that identify standards and processes for identifying and eliminating health and safety hazards.
  • Metrics, Goal-Setting and Accountability – The company establishes annual safety goals for all teams. It reports safety incidents and near-misses quickly and consistently, and shares best practices and lessons learned with all of its global locations.
  • Risk Elimination – The company utilizes safe-behavior audits and hazard risk assessments to identify and get rid of unsafe conditions and behaviors. It creates cross-functional teams to identify unsafe behaviors and conditions that need to be addressed.

  • Training and Awareness – The company carries out regular safety training to give contractors and employees the skills and knowledge needed to ensure they all work safely. It also encourages all contractors and employees to case their work if unsafe behaviors or conditions are observed. The company has established a powerful brand due to its success. It is the largest paper and pulp product provider in the world. It is the largest manufacturer of containerboard in the U.S., with a production capacity of more than 13 million tons annually. It is also one of the largest producers of solid bleached sulfate board in the world, with annual U.S. production capacity of approximately 1.2 million tons. It employs 55,000 individuals in over 24 countries and generated revenues of $22 billion in 2015. Lastly, it has won many honors, including the following:

  • Recognition as one of the World’s Most Admired Companies by Fortune 13 times
  • Recognition as one of the World’s Most Ethical Companies by the Ethisphere Institute 10 years in a row
  • Recognition as one of the 100 Best Corporate Citizens by CR Magazine two years in a row
  • Recognition as the “Most Honored Company of 2015” in the Paper & Packaging Sector by Institutional Investor
  • The Indian Paper Manufacturers Association (IPMA) Environment Award for 2013-2014 ### Channels

International Paper’s main channels are agents, resellers, and paper distributors. The company promotes its offering through its website, social media pages, and participation in conferences.

Customer Relationships

International Paper’s customer relationship is primarily of a self-service nature. Customers utilize its products while having limited interaction with employees.

Key Activities

International Paper’s business model designing, developing, and manufacturing its paper and packaging products for customers.

Key Partners

International Paper’s key partners are the suppliers that provide it with the materials, components, and services it needs to make products and manage its operations, which include the following:

  • Fiber – Wood and recovered fiber such as office papers and old corrugated containers (OCC).
  • Raw Materials – A range of raw materials and chemicals.
  • Capital and Manufacturing Services and MRO – Includes the capital equipment needed to make pulp, paper, and power, and products supporting the daily operations and maintenance of facilities. Specific products include paper machine clothing, power transmission components, lubricants, pumps and control valves. The company also utilizes contractors to install equipment and perform maintenance services and install equipment across facilities.
  • Corporate Services – Services in the areas of Human Resources, Information Technology, Finance, and  Supply Chain Operations, which provide support for enterprise services such as consulting, benefits, and travel management.

  • Transportation – Freight carrier transportation services for inbound and outbound freight shipments. The company also partners with various organizations (academic and environmental associationas, government agencies, etc.) in order to develop innovative, sustainable solutions and promote sustainability in the communities where it operates. These partnerships include the following:

  • Corporate Eco Forum – The company is a part of this invitation-only network of Global 500 executives that promotes innovation and forges “next practice” in corporate sustainability.
  • The Dogwood Alliance – The company works with this non-profit organization, which partners with firms to change the way southern U.S. forests are managed. Specifically, the alliance helps International Paper advance its sustainable sourcing, Forest Stewardship Council certification, and conservation objectives.
  • World Wildlife Fund (WWF) – The company has partnered with WWF through its Global Forest and Trade Network (GTFN), which aims to eliminate illegal logging and drive improvements in environmentally and socially responsible forest management. ### Key Resources

International Paper’s main resources are its physical resources. As of 2015, they included the following:

  • 24 pulp, paper, and packaging mills; 169 converting and packaging plants; 16 recycling plants; and three bag facilities in North America
  • 16 pulp, paper, and packaging mills; 67 converting and packaging plants; and two recycling plants in Europe, Asia, Africa, India, Latin America and South America
  • A printing and packaging products distribution business through 12 branches in Asia
  • 335,000 acres of forestland in Brazil
  • A research and development center in Loveland, Ohio, as well as several product laboratories ### Cost Structure

International Paper has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions. Its biggest cost driver is cost of products sold, a variable expense. Other major drivers are in the areas of sales/marketing and administration, both fixed costs.

Revenue Streams

International Paper has one revenue stream: revenues it generates from sales of its paper and packaging products to its customers.

Written on October 25, 2017