Allied Office Products Case Write-Up

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Allied Office Products Case Write-up

Allied office products have two different divisions, each of these were treated as profit centers. One of them is the Form Manufacturing division, which basically involved with producing business forms and specialty paper products. The other one is Total Forms Control activity division, which is a program of business forms inventory management services.

The industry value chain is:
TreesPulpPaperForms manufacturing Forms salesTFC Customer
Purchasing Manager Customer receiving Forms end users

The TCF chain is:
Storage and inventory financing Requisitioning Stock selection and pick-pack Order entry—billing Desk top delivery Freight

In terms of the profitability performance, the Business Forms Division in 1988 earned a 20 percent ROI, but returns have been dropping for several years. In 1992, Allied Office Products has annual sales of $900 million and sales from TFC were only about $60 million. TFC profitability was suffering in October 1992 and it was projected to earn an ROI of only 6 percent for 1992.

Porter’s 5 forces: * Supplies: Forms and other paper products are commodity products and there are a lot of supplies in the market. Low power * Customers: Since form products are commodity products and therefore customers are sensitive to the price change. The switching cost is low and they have many options to choose from, such as Staples and Office Depot. While TCF division just started up, competition in this market is relatively low and therefore there are not many options to choose from. Medium power. * Threat of new entrants: The barrier to enter is relatively low since not much investment is needed, while the competition makes the entering relatively difficult. However, there are certain renowned brands and therefore making new companies difficult in obtaining market shares. Medium power.…...

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