Do SWOT analysis for Keflavik Paper Company

Case Report :Keflavik Paper Company

In recent years, Keflavik Paper Company has been having problems with its project management process. Several commercial projects, for example, have come in late and well over budget, and product performance has been inconsistent. A comprehensive analysis of the process has traced many of the problems back to faulty project selection methods.

Keflavik is a medium-sized corporation that manufactures a variety of paper products, including specialty papers and the coated papers used in the photography and printing industries. Despite cyclical downturns due to general economic conditions, the firm’s annual sales have grown steadily, though slowly. About five years ago, Keflavik embarked on a project-based approach to new product opportunities. The goal was to improve profitability and generate additional sales volume by developing new commercial products quickly, with better targeting to specific customer needs. The results so far have not been encouraging. The company’s project development record is spotty. Some projects have been delivered on time, but others have been late; budgets have been routinely overrun; and product performance has been inconsistent, with some projects yielding good returns and others losing money.

Top management hired a consultant to analyse the firm’s processes and determine the most efficient way to fix its project management procedures. The consultant attributed the main problems not to the project management processes themselves, but to the manner in which projects are added to the company’s portfolio. The primary mechanism for new project selection focused almost exclusively on discounted cash flow models, such as net present value analysis. Essentially, if a project promised profitable revenue streams, it was approved by top management.

One result of this practice was the development of a “family” of projects that were often almost completely unrelated. No one, it seems, ever asked whether projects that were added to the portfolio fit with other ongoing projects. Keflavik attempted to expand into coated papers, photographic products, shipping and packaging materials, and other lines that strayed far from the firm’s original niche. New projects were rarely measured against the firm’s strategic mission, and little effort was made to evaluate them according to its technical resources. Some new projects, for example, failed to fit because they required significant organizational learning and new technical expertise and training (all of which was expensive and time- consuming). The result was a portfolio of diverse, mismatched projects that was difficult to manage.

Further, the diverse nature of the new product line and development processes decreased organizational learning and made it impossible for Keflavik’s project managers to move easily from one assignment to the next. The hodgepodge of projects also made it difficult for managers to apply lessons learned from one project to the next. Because the skills acquired on one project were largely non-transferable, project teams routinely had to relearn processes whenever they moved to a new project.