Risks in the Swedish Forest, Paper & Packaging Industry

Sammanfattning: Background: In today’s more challenging business environment companies operating in a global market are faced by uncountable numbers of risks. The foundation of this report is based on the scenario of risks within one of the most important industries for the Swedish economy, namely the Forest, Paper and Packaging (FPP)industry. Sweden is one of the most forested countries in Europe and despite being a small country Sweden alone stands for 7 percent of the world’s total FPP production. However, it has been argued that the FPP industry might be in the midst of change where several articles and reports have commented on the upcoming challenges within the industry. Problem discussion & Purpose: Globalization, shifting economical paradigm, a rising interest for sustainability, increased raw material prices and tougher market conditions have in combination lead to a change in today’s view of how to handle risks. FPP companies have to deal with countless number of issues facing business today and the question of how to manage risks across organizations are becoming increasingly important. The purpose of this thesis is to identify risks faced by the Swedish FPP industry and thereafter assess the most crucial risks impact and likelihood of occurrence and how they are linked to the dilemma of holding forestland or not. Method: This study has its origin in interprevitism along with the ontological assumptions of constuctionism. An abductive research approach has been applied that has features from both deduction and induction. The study has applied the three research strategies; descriptive, explanatory and exploratory study in order to produce a true representation, describe relationships and in the same time seek new insight into the researched phenomena. A qualitative research strategy was applied where several semi-structured interviews were carried out, with respondents selected through a purposive sample of the Swedish FPP industry. Thereafter complementary material was sent out in form of a self-administrative questionnaire regarding the identified risks and their significance. Theoretical framework: Consist of general theories concerning macro environment and risk analysis theories for understanding industries along with previous reports concerning the FPP industry. In order to determent the nature and scale of the risk the Risk radar model will be applied along with an assessment of impact and likelihood of occurrence. Conclusion: The Swedish FPP industry today faces the following risks; Globalization & Shift of Capital to the Emerging Markets, Overcapacity, Foreign Exchange Impact & Currency Risks, Export & Import Taxes, Raw Material, Energy & Transportation Costs, Sustainability & Increased Environmental Awareness and Climate Change & Unforeseen Events. Out of these risks the most crucial where proven to be Raw Material and Energy & Transportation Costs hence there high impact and likelihood of occurrence. Given the pros and cons of holding forestland in relation to the most crucial risks identified the ownership of forestland can be seen as a strategic way of educing the threat from these risks, turning them into opportunities.