Newpage Corporation Case Study Essay

Submitted By Dongchen
Words: 663
Pages: 3

Introduction NewPage Corp is a paper manufacturer based in Minnesota that ran into financial problems because of changing market conditions. The role of management in an enterprise is to anticipate problems and opportunities and take the appropriate steps to make necessary changes in the company business plan (Althouse et al, 2008, pp 206). The company failed to recognize the threat from cheaper paper imports and the effect on a diminishing market for newsprint which resulted in the company facing a restructuring through bankruptcy.
The company had been purchased in 2005 by Carberus for $2.3 billion. However it never lived up to the expectations of the new owners. Plants were closed and attempts were made to sell off assets of the company, especially its hydro electric production to reduce the debt. The market for paper was going through a series of changes that saw an increased cost for raw materials and energy and a market shrinking as the numbers of magazine publishers fell. At the same time over capacity in the paper industry in North America and cheaper imports of paper created a situation in which competition was forcing the price of paper down. A newspaper article in the Wall Street Journal describes the company as trying to find a way to restructure because of a high debt load and the falling market for newsprint (Fitzgerald, 2011). Meanwhile the company, in a press release, announced that it hoped to use the Chapter 11 Bankruptcy Protection to allow it time to restructure and build towards a successful future (NewPage, 2011). The management team of a corporation has to remain aware of what is happening in the market and through a SWOT analysis identify threats and weaknesses that can impact the bottom line of a company. Identifying changing market conditions is an important part of this function. A journal article by Lin, Lee and Gibbs (2008) identifies the need for a company to look at both operational and financial restructuring and to use solid data in their calculations.
The company faces a major problem in restructuring because of changing market conditions. Creating a plan and a goal for a company is something that requires constant revising and changing. Globalization has changed the structure of competition and the increased used of technology can make plans obsolete. Computerized media has become a major part of news distribution. Printed magazines have become smaller in size and fewer in numbers. Being aware of current market conditions is a requirement for all businesses.
Future Research Markets for primary industry products, especially items such as newsprint are going through major changes.