Opening up new strategic options in the pulp and paper industry: Case biorefineries

Due to the global climate change discussion and drastic challenges within the external operational environment, many traditional pulp and paper industry (PPI) companies are forced to search for new value creating business opportunities. This paper discusses this development in the PPI and offers some illustrative examples to demonstrate the vital need for opening up new strategic options. To address these challenges, we launch a dynamic strategic framework for a PPI firm. This dynamic capabilities- and strategic options-based framework comprises of (i) sensing the weak signals of the operational environment, (ii) formulating them as strategic options in order to capture their upside potential, (iii) hedging against the downside risks of the options, (iv) exercising these options in often thin (i.e., imperfect) intangible knowledge assets markets, and (v) reconfiguring the existing knowledge base and capabilities to sustain competitive advantage obtained. The framework will be illustrated with strategic options possible for the PPI the main focus being on the interface between the PPI and energy industry by means of a forest biorefinery case.