Case Study:Australian Tree Corp.Background: Forestry is an important sector within the Australian economy. The Australian Department of Agriculture estimates the industry generates $23 billion in income and employs over 70,000 individuals. [Source:http://www.agriculture.gov.au/forestry/industries]

Case Study:Australian Tree Corp.

Background:

Forestry is an important sector within the Australian economy. The Australian Department of Agriculture estimates the industry generates $23 billion in income and employs over 70,000 individuals. [Source:http://www.agriculture.gov.au/forestry/industries]

You are a consultant working for a company named Australian Tree Corp. (ATC). This company is a large owner of varied forested estates in Western Australia – they grow and sell trees. Their holdings include some 200,000 ha of land and they harvest the tree crop on a cycle of about 10,000 ha per year (or nearly 5 million trees a year!). They grow Australian Pine. They have traditionally just been a grower of trees (planting, maintaining) and outsourced all other elements of the supply chain including logistics (cutting, transport, processing) and manufacturing of a product. An example of some forestry business components and supply chain elements is listed below:

Source:https://www.responsiblewood.org.au/responsible-wood/chain-of-custody/

Australian Tree Corp. is a three-year-old private company with roots in the American tree farming industry with an interesting past. They used to be a state-owned organization, but the state divested their interest in the sector and now leases the land to ATC. This has brought with it some legacy issues including a contingent of employees who ‘the old-timers’ who are used to antiquated technology, systems and a limited range of operations on the estate. When ATC formed, it was spearheaded by an ambitious CEO named Charlie who saw a lot of potential for the land and a path to modernize the systems to drive growth and revenue, but Charlie was also not that familiar with forestry as a crop and has had a lot of challenges along the way. This has created some discord among employees and a lot of discontent. One of his early initiatives was to strategically stop growing trees on certain land he deemed ‘not productive enough’ leading to some layoffs and other big changes to their supply impacting relationships with downstream consumers and customers. It seems his focus on profit has now created friction internally and with customer relations not to mention political pressures from the state who owns the land and counts on lease revenues to fund public schools.

The company has been profitable since formation and early efforts to adopt better practices have been generally fruitful. This said, given their history, the company has struggled to form its own identity as private company within the region. Their contractors (those that assist with tree operations of planting, cutting and transport) still see them as state-employees and have not taken them as serious employers or reformers to the industry. The supply chain generally sees ATC as being the same wood supply as always within the region making it hard to negotiate new contracts and grow their business in any meaningful way. They would like to initiate a campaign to change their internal and external image. Another issue is product accountability, ATC would also like to have better accountability of how much tree volume is grown vs. how much they are selling (reconcile their estimates vs. actual log volumes) but they currently lack systems and competencies in place. Management thinks having this information could transform their business. They have thought about using drones to monitor growth and harvest operations and want to explore this option in the future.

Charlie really believes the future of this industry has to do with a vertically integrated supply chain where they could control growing the trees on the ground but also the production of structural timber for houses and the production of chipped wood for paper production and fuels for boilers. There have been some struggling forest product companies in the area he thinks may be good candidates for acquisition, but he needs to justify this to the board. Furthermore, ATC has dabbled in the past with owning the equipment to cut down trees and transport them to customers, but they are currently outsourcing that as well. They would like to evaluate these options more thoroughly in the future.

Another group within the company feels strongly that the company should focus on the trees themselves – their genetics and evaluate different species. There has been some emerging conversation that they may be able to increase yields by 20% if develop a breeding program to select only their best trees to plant. There is also another species (Exotic Pine) that looks promising for the region, but they haven’t explored its possibility. The tree managers would like to see these potential projects evaluated for viability.

This year ATC has been struggling to meet company targets after a series of natural disasters hit the region including a drought and associated wildfires, a cyclone and associated wind damage to trees, flooding and associated mortality of young trees and insect attack further killing thousands of trees. This has prompted others on the management team to discuss the need for drastic changes in management strategy and even the development of an R&D team. Ideally, they would like to look into the root causes of these problems (environmental changes) as well as learn more about the tree’s vulnerability to specific natural disasters to better plan and manage the forest.

They are also having to deal with the general public who often doesn’t want a single tree to be cut down especially not near where they live. Some in the group think setting up a stakeholder group may be a good idea to solicit the input from the public. This year looks to be the worst on record for the industry and ATC is now, suddenly, struggling to survive. Realizing the challenges, the company faces Charlie brought on board a new business strategy manager, Stacy, to assist in developing a sustainable business.

Stacy has solicited your team to investigate what potential projects there are and what project might offer the most benefit to Australian Tree Corp. Stacy and Charlie have budgeted $10,000 toward a feasibility study to investigate the projects they have in mind or yet unexplored alternatives.

In your role as a Business Analyst team you have been approached by ATC to complete this work.

You are to work together as a team of three (3) or four (4) to make a group report to do this work on potential projects forAustralian Tree Corp. You willform your team in the first week. Please note your tutor can not help you sort through team problems and issues. As part of your assessment you will have to complete individual peer assessments where you can comment on team members contribution to the task.

Reports are to be of your own design but should include the following elements:

Group Information

Title of your project

Team members and student numbers

Background

Potential projects

Chosen project and Business case

Strategic alignment of this project

Risks, assumptions and constraints