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Hayward Lumber Company

Case
How does the supply chain for FSC certified lumber
differ from the supply chain for non- certified
lumber?
The main difference between a non certified lumber and a certified
lumber are the followings: they have to follow all the rules that are
shown in the exhibit 5, which includes some type of procurement

How should Hayward Lumber Company adapt its


operations and supply chain management practices
to handle FSC?

What are the advantages and disadvantages of


horizontal diversification to expand the portfolio of
green products offered by HLC beyond FSC?
The main advantages of an horizontal diversification are that, you
have more opportunities to growth, because when do you have more
investments you also have a more diversified portfolio and the risk is
less. Also the return is less.
Another advantage is that there are more opportunities to find a star
product, I mean, that when you start to produce new green products,
may be one of these items would be the next star product, so you are
going to earn a lot of money with it.
The main disadvantage of this type of diversification is the loosing of
power in your main field, for example if you are expert in pipes, and
you invest your money on roofs. May be you are going to lose market
share because your direct competitors ay be re invest their profit into
the pipe market.
Also another disadvantage is that the green market is a small market
(exhibit 8) in comparison with the rest of the markets. Is important to
highlight that it is a market with a big potential growth but in that
moment is difficult to invest on it.

What are the options for vertical expansion for HLC?


What subset of these options should HSC pursue
and why?
There are 3 strategies that HLC can follow, the creation of a plant to
create roof trusses and wall panels, a design centre in Santa Barbara

or buying eco timber. Now I am going to explain in detail the three


strategies.
The Plant to create roof trusses and wall panels: this idea is
great and the problem I have found was competition.
Santa Barbara Design centre.
Buying Eco Timber.
To choose one of this options I am going to calculate their financial
ecuations if you see the info that the case gve us, the first option is
the more attractive one, the problem I have fond is that they want to
have a revenue of 12 million annually in a market where the revenue
of last year was 8 millions for its competitors. So I think that the
previsions are really optimistic.
The problem of the second strategy is that Santa Barbara in the last
year does not growth in an incredible way.
And I didnt find any problem to the last strategy, the only thing is
that its return is lower but also riskless