PORTER' DIAMOND MODEL APPROA I-1: A E lNG THE
OMPETITVENE
OF BRIT! H COLUMBIA' LUMBER
INDU TRY' E PORT TO INDI

by

Ru ell William Robert talker
B

.,

niv r ity fNorthern Briti h

lumbi a, 2003

PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF
THE REQUIREMENTS FOR THE DEGREE OF
MA TER OF BUS IN S ADMIN I TRA TIO

UN IV RSITY

F NORTH RN BRIT! H
pril 2013

© Ru ell

talker, 20 I

OL MBI

AB TRACT

The Briti h

lumbi a oftw d lumb r indu try c ntinu e to pur ue
t r du
th r li an
and ma rket vuln rability of the
nited tate ( ) fo r
p rt . R ecentl y, the indu stry ha b n ucc ful in
p netratin g the hina mark t and i I king t m rg ing m ark et u ch a Indi a for
futih r growth and di er ity, but India remai n an elu ive m arket w hi h p o es
many chall ng . T h purpo of thi tud y is t xamin how to enhance B.
xport to Ind ia and maintain it c mp titi ve adva ntag in thi lucrativ mark t.
hi tud y empl oy tw c mp titi ve ne model , P01i er' ( 1990) di amo nd
model and al o th e gen rali z d d ubl e diamond m del develop ed by Ru gm an et
al. , (1 993) a the analyt ica l fram ew rk fo r analyz ing the comp titive dynami c of
oftw od Lumber indu try' drive for m arket dev lopment out id North Ameri ca and to id enti fy opportunities to achieve thi s.
U ing the four determinants ( 1. factor conditions, 2. dem and conditi ons,
3. related and upporting indu tri es, 4. firm trategy, stru cture and ri va lry) of
Potier ' di amond model the B .C. oftwood lumber indu try' current home
advantage and competitiveness is id entified . T lu·ough th e id entifi cati n of th e
hom e advantages, the generalized doubl e di am ond model intem ati onali z the e
advantage with India and examines the pro pective competitive advantage ,
directions and solutions fo r the indu try in nhan ing the m arket sh are in the
Indian lumber m arket.

TABLE OF CONTENT

TRA T ......................................................................................................................... i
T

L

F

0

TE T .................................................................................................... ii

LI

............................................................................................................. Ill

LI T

..,

............................................................................................................ IV

hapter 1 ............................................................................................................................. 1
INTR D

T IO

............................................................................................................... 1

hapter 2 ............................................................................................................................. 6
REVI W

F LITERAT URE .............................................................................................. 6

2. 1 Determinant of Demand fo r oftwo d Lumber fr m

anada .................................... 6

2.2 U -Canada Lumber Di pute and it Impact on Lumber lndu try in Canada ............. 8
Chapt er 3 ...... ..................................................................................................................... 14
RE EAR H M ETHODOLOGY ...................................................................................... 14
3. 1

ingle-diamond framework ........................................................................................ 15

3.2 Do ubl e Diamond Framework .......................... ..................................................... ...... 20
Chapter 4 ..................................................... ...................................................................... 23
EMPIRICAL ANAL Y IS ............................. ........................... ......................................... 23
Factor Conditions: ........................................... .. ................................................................ 23
Detnand Cond iti ons ........................................................................................................... 27
Related and supp01i ing indus tries ...... ............................................................................... 31
Finn strategy, structure and ri va lry ........................................ ........................................... 33
Chance Events: ................ ........ .. ........................................................................................ 36
The Role of Government: .................................................................................................. 36
Chapter 5 .......................... ................................................................................................. 4 5
CONCL USION ............................................................................................................... 45
5. 1 Limitati ons and F uture Research Directi on ............................................................... 48

BIBLIO RAPI-IY .................................................................................................... ... ...... 49

II

LI TOFTABLE

T ab! 1.

ummary of R ar h n et rminant f
mand D r ftwood
Lumb r fr n1 anada ............................................................................. .

Tabl 2. Hi t ry of

Tab! 3. Factor

ftwo d

umb r

gr ement betw

n

anada and

.. .... 10

ondition of P 11cr' (1990) Diam nd M d 1.. ................. ........ 16

iii

LI T OF FIGURE

Figur 1. P Ii r'

Figur 2.

ingl Diam nd M del ............................................... 15

nerali zed D ubl e

Figure 3. Lumber Price -

1am nd M del. ................... ..... . ........ .... .. 2 1

anadian

Figure 4. Baltic Dr lnde : World wid

ftwo d v . M ya nmar Teak .................. 25

hippin g o t .............................. 26

iv

Chapt r 1

INTRODUCTION

~ r J0

anada ace unt
(Duflour, 2002). It i one

entire G re ted ar a

p r cent of the plan et'

f the leading uppli r of wood and paper products

globally. Th contribution of fore t produ ct exc ed it co ntributi n to GDP and
play an important role in th e d v lopm nt of many regi n and rural area of
anada. Canada ha exce
market i United

upply of lumb r product and it main traditional

tates (U ). The demand for oftwood lumber in U

repre ents

nearl y half of the world' c n umption ( ong et al., 20 1 I).

oftwood i the major

building material in US where housing industry ace unt

for 7 p er cent of it

national income (Song et a!., 2011 ).
oftwood lumber in the U

Canada has been the principal

ource of

market, pro viding more than 90 p r cent of the U

total imports and more than 30 per cent of US co nsumption.

Statistics Canada e timate

that there exi t n arly 1,000

awmill

that

employed more than 80,000 workers in 200 I , the majority of them were in Briti h
lumbia, Qu ebec and

ntario . British

workforce in th e lumber industry in
200 1 nearl y

olumbia had n arly 43 per ent of the

anada (Duflour, 2002) .

anada c port d in

11 billion of lumb r of whi h 53 per c nt

a me from Briti h

lumbia ( ufl ur, 2002).

h lu sh oftwood forests of Briti h

olumbia hav

be n ca ll ed the 'green go ld '. B. . i th mo t di crs provin e both biological!

1

v r
milli n acr )

with 40 dif£1 r nt tr e

ommercially availab le oftw

cov r.

onifer u tre

tar

and ha

ran g

a wid

( 149

( oftw od) f, re t

veg tation

dominate

har e ted in B . . inc lud ; Lodg pole Pine (Pinu

pe 1

ontorta), Pond er

a Pine (Pinu. ponderosa), Whit

ubalpin fir (Abi

Ia iocarpa),

pru ce (Pi ea g lau a)

ugla -fi r (P. M nz ie ·ii) , W

te rn R ed

(Thuja pli ala) and H emlock (Tsuga h I rophy lla) (B

Mini try of For

1991 ). Lodg pol

in British

pine is th e mo t pl entiful tree p ecie

Lodgepole pin , interior

f

d ( II, 201 ).

d and hardw

ergre n c nifer u

v r 60 million h

pru ce, and

edar

t ,

o lumbi a.

ubalpin e fir are mark eted t gether a

ingle pecie group ( pru ce-pine-fir or

PF) .

f B. . '

a

total land base, 94 p er

cent i publically owned. Manag m ent of the fore t re ource li e primarily with
the government which allocates the right to harvest crown land throu gh fore t
tenures with an annual allowable cut (AAC). The province receiv

stumpa ge fees

from harvested timb er which is allocated to, a nd r li ed on by, y tern s uch as
health care, edu cation, and transportation.

Forest resource including harvesting, are goven1ed throu gh the Fore t and
R ange Practice Act (FRPA), the Forest Act and the Foresters Act to en ure ound
forest stewa rdship and that this crown resource i man aged in an
ustainabl manner. Briti h
related to how th

o lumbians and

thical and

anadian are involved in deci ion

fore ts are m a na ged . Govemm nt at all lc els rc pond with

policy dev I pm nt

th at

i

open

and

inv lv m e nt and backed by co mpr h n i

tran parent,

ba

d

on

c mmunity

legi lation (Fll, 20 I ). Pri at fore, t
2

f th

unt Dr5.4%

land a

r gulati n

lD

t, that appl
pri atel

wn d by

(

~ r

h m

) ha hi t r i a II y been

ten IV I in

f

a large market hare, B. .'

~

re t

nit d tat

anada and

c n tru cti n and al

anada' and
ftw

tori 'c upled'
and

rth

m n a a it i

u d in c mmercial

, and indu tri al building .

ftwo d lumber ace unting fl r ver half f

h u ing market. The

ct

r 2 ,0 0 pri ate fl r t wn r ( 11 , 201 ).

building , publi c and recrea ti nal fa iliti
tat

tinking Wat r Pr t ti n

miJJi n h ctare

t th

d lumb r 1 u d
th e pnm ary materi al

t,

ct, Wildlife

luding the Water

ct an

er 0

and 1 r gulat d by

land ba

he

nited

.' larg t e p rt mark et for
d lumber ex p rt . With uch
ith

tmp rt d mand and

anada ha fought many

ftwood lumber

' trade wa r ' for more than two decade ; th e trade di pute tarted in 19 2 wh n th
anadian hare f U

f1wood lumb er c n umpti on increa ed fr m 20 per cent

in the middle of 1970 to 27 per cent in 19 2. The di pute when thr ugh , fo und
round between 1982 and 2001 (Zhang, 200 1, 2006; Baek, 2006, 20 12). The fi fth
r und of di pute tarted around March 200 1 when th e 1996
Lumber

greement expired. The

- anada oftw od

lu mber indu try argue that the

anadian

pr ducer have expanded their mark t hare with ub idi zed, I w tu mpag rate 1
and thu trade restri cti on are th onl y way to maintain a ' leve l pia ing field'. In
recent years the U fin an ial cri si and the co ll ap e of the hou ing market in ~00
m
hi, t ri

co n id erabl y depre

d

anadi an lumber imp rt . H u ing . t( 11. [I II from a

hi gh of v r 1.5 milli n t 0.55 milli on in 2009.

-arl

10.7 million

1

tumpage ra tes refer, t the fees pa1d b fo1est produ t compan1e.., to the prm 1nce.., l'o1 the n ghh
to cut trees on r wn land .

3

\

m rtgage borr w r in
th

chall ng

and it

2

quit ) in 2009 .

re ' und r wate r' (n gati
c n equ ent impact

on

anadian

n

IV

con m y and

empl ym nt itu ati on ef£ rt w re made to ' de-c upl

th lumber indu try fr m

th

hina and lndia.

and di

r ify into fa t r gr w ing market like

i1 uri bing ec n m y, tied w ith p li

c n tra int

lim iting

hin a'

lom e ti c £ re t

pr du ction, ha r ulted in a larg dem and for lumber imp rt over the la t everal
yea r . T day,
.S. in 20 10 (

hina i th large t imp rt r f lumber in th e w rld, urp a ing th e
FI, 20 13).

ignifica nt m arket for B . .

v r th e la t n um b r fyea r

hina h a em erged a a

ftwo d lumber acco unting for cJo e t

1 billi on ibm

(board fee t) of export in 20 11 and 20 12.

India h as played a relatively in ignificant ro le in B . . oftwood lumber
exports o far and represents a ignificant chall enge to its diver ifica ti on efforts
du e to the fo llowing rea ons. Indi a's appeti te for

ftwoo d i le s as traditi ona ll y

they have u ed hardwood fo r co nstru ction

and fUI11itu re manu fac turing.

Secondl y, Can ada does not enj oy th e 'fi rst-mover adva ntage' a co un tri es s uch a
Au strali a, New Zealand, M alaysia etc. are exi tin g pl ayer in the m arket which
has covered supply- dem and gaps in the Indian market. T hirdly, the tran portation
co t of lumber from

anada i

relatively more than o th er countri

in Asia-

Pacific. But the Indi an market pro mises eno rmous po tenti al given the fact that
In d ia's popul ation i

et to eclipse

hina by 2050 w ith an annual growth in the 6-

9% range over the pa t decade (FII , 2012). With thi , a ignifi ant in rea e in
middl e c ia

that w ill exp and fro m 50 m illi on to 583 million p

ngress (20 11) ~ conomic Report of the Pres1dent,

pie by 20_5,

hapter 4, p.l 06.

4

c n umer mark t for

( II, 201 2).

f

ariety

r th
ec tor

a t ar
am

tim ated t

pportuniti s ar em rgm g aero

p n d, bu ine

thr u ghout Ind ia pr

iding

pp rtunity [! r

f th

pre

nt

lumb r ( II, 20 12). T he m ain a 1m

t in the w rid

m e th 5th Jarg

b

ftwo d

tud y i to e amm

a

p

how t

ftwo d e p 11 t India and m ai ntain it c mp titi v ad an tag in thi

enh an

lucrative m arket. Micha l Port r '
fram work to e amine th

d iamo nd model prov ide

det m1in ant

industry in India (P orter, 1990).

f competitiv ne

po iti on o f Lumber

Beg innin g w ith Porter's -G ur determin ant

(factor c ndition , d m and cond iti on , related and
trategy,

th e ana lyti ca l

tru cture and riva lry), the pre

nt

upp rting indu tri es, fin11

tud y examme

th e prospecti ve

competitive advantage , directions and oluti ons fo rth indu stry in enh ancing th e
m arket share in Indian lumber m arket.

This stud y i

organized as fo llows : chapter II rev iew

the ex isting

literature on the subj ect; chapter III di scusses the data base and m ethodo logy.
Chapter IV prese nts th e empiri ca l an a lys is ba ed on Porter's di amond mode l and
Chapter V presents the conclu sions.

5

hapt r 2

REVIEW OF LITERATURE

In thi chapter, we bri efl y r
Lumb r indu try in

iew th e exi ting lit rature on

oftwo d

anada. The xi ting litera ture n the Lumber indu try can b

broadly di vided into three egment (a) D t nninan t of d mand for Lumber and
(b) Effect of
(to non-

- an ada Lumber di put

and (c) i ue of market di ver ification

market ).

2.1 Determinants of Demand for Softwood L umber from Can ada.
Softwood lumber is the major building m aterial in U

where hou sing

indu stry accounts fo r 7 p r cent of country' GDP in 2009 ( ong et a!. 20 1 1). In
US the demand for softwood lumber exceeds its dom esti c supply and the U
demand is approximately around 60 billion board feet in 2000 ( ong et al. , 2011 ).
For decades, Canada has been the dominant exporter of oftwood lumber to U
accounting for 90 per cent ofU

total exports (Yin et al., 2004) . In 2001, Canada

exported softwood lumber and wood products to the United
billion ($6.5

billion) .

Many researchers have examined

detenninant of U demand for softwood lumber from
1979, 1988;

tate worth C 10
the proximat

anada (Buongiorno t al.,

hen et al., 1988 ; Jennin g et al. , 1991 ; Wear and Lee, 199 ; Myneni

6

t a!., 1994· arkar 1996; Zhang 2001 2006; Ba k and Yin, 2006 ; B lk jo and
Buongiorno, 2006 , Ba k, 2007 201 2).

u ng1 rn

t al. (19

1mp rta nt fac t r influ ncm g

pnc

) :D und

f oftw

ana dian lumb r imp rts.

d lumb r i the m

t

arkar ( 1996) al o found

that U Jumb r pri ce t b th m aj or determinant plu addition al vari abl e like
di po abl

incom e and

dem and fo r

h u ing tart

t

be th e m aj or determinant of

anadi an lumb r. Both Buongion1 et al. , ( 19 8) and

fo und that exchan ge rate t have negligibl e impact n
Lumber.

B aek (20 12) found the

implies that an increa e in U
lumber by 0.3 5%.

pri ce

arkar (1 996)

dem and fo r

an adi an

Ia tic ity to be aro und 0.35 which

lumber pri ce by l % increa e

anadi an dem and for

imilarly, Baek (20 12) al o fo und that hou ing starts elasti city

to be around 0.50 which impli e th at a 1% increase in housing starts increa es
demand fo r Can adian lumber by 0.50%. T abl e 1 summarize the major finding of
research on determinants of Demand fo r Canadian oftwood lumber from

7

Table 1.
ummary of Re earch on D eterminant of D emand for
Lumber from Canada.

oftwood

Peri d

Auth r

f tudy
t a!. 1979 19

Bu

1 74- 19 6

chang rat , Price

1965- 19 5

n c,

4. Baek (2012)

1994- 2009

Price f
Hou ing

ftw od lumber,
tart , ""' xchange rate

5.

1990-2006

Price f

oftwood lumber

2
3

Buongi rno t a!., 19
hen ct al., 19

Songetal.,2011

on umpti n

2.2 US-Ca nada Lumber Dispute and its Impact on Lumber Industry in
Canada.
Bilateral trade in softwood lumb er is the subj ct of long standin g dispute
between Canada and US (Reed, 2001; VanKooten , 2002 ; Zhang, 2007 ; Malhotra
and Gulati , 201 0). Since 1982 US has claimed and continue to clai1n that fee
charged for harvesting softwood on publi c land (stumpage pri e ) by

anadian

provincial govermnents are artificially low and this amounts to ubsidizing the
anadian softwood lumber produ cers. The
and govermnent have defend ed th eir

oftwood lumber industry

tumpa ge pri c ing sy tem and log e port

co ntrol claiming that increa ed lumber
comp titive advantage

anadian

port

to the U

are due to th ir

re ulting from production efficiency, U

pr ference and fav urabl e

consum r

hang rate ( hl er, 1991 ; arkar, 1996).
8

argue that trad r
on I wa

to ma intain a ' I

tri ti n

n

anadian lumb r unp rt are thu the

I pia in g field' unJ

anada

han ge it tumpage

price and reiaxe it I g ex port c ntroi (Rago ta and

lark, 2000) . P riodi cally,

e argum nt ha v I d t trad a ti n in th e D rm

f re tri c tion (qu ta ) and

th

le 1e on

only lumb r pr du cer from
U

anada but al

impo ed counterva iling duti

duti e hit

w hi ch had a deva tatin g impact n n t

anadian lumber imp rt to

on rural c mmunitie . In May 2002,

av ragmg 27%

anada hard and e peciall y Briti h

n

anadi an import .

Th

lumbia , which accounts for about

half of the export . Mill w re clo ed, thousand

of worker were lai d off and

profits have crash ed .

Periodi cally, Canada and US entered into oftwood lumber agreem ent to
minimize the impact of trade di spute

on their national eco nomi e . Table 2

summari zes the history of the Softwood Lumber Agreement between Canada and
the US.

9

Table 2. Hi tory of oftwood Lumber

greement between

anada and U

15% Pr

oftwo d Lumber II : 19 6

i ional duty
replaced by 15 % port ta in M U
aft r anada unilaterally te1minates
M

oftw

untervailing ca e filed : Interim
b nding requir m ent.

d Lumb r III : 1991

anada win appeal against
countervailing duty in
STA (1993
and 1994).
nited tates revok duties again t
anadian lumber (Augu t
1994).

Bilateral co n uJtation proce s for
oftwood estab lished .
Threat of a Countervailing Duty
Investigation: 1996

oftwood Lumber Agreement i igned :
The fir t 650 million board feet over
14.7 BBF was subject to a tax of 50
per thou sand board feet , and any further
exports were subject to a tax of 100
per thousand board feet.

Source: Malhotra and Gulati (20 10), p . 278.

The National

sociation of Home Builder in U

(2000 3 ) estimate that

the Softwood Lumber Agreement (SLA) rai e the co t of lumber on an average

3

hi e timate wa. made on April 13, 2000 for a ubmis ion to the Trade Polley taff mm1ttee
of the ffice f United tates Trade Repre entative titl ed "Regarding oft wood Lumber Pra ' lice
1n anad a and oftwood Lumber Trade b tween United States and anada". ee lalhota and
ul ati (20 10) for fu11her discussion .

10

n w h me 111

by

timat

00- 1, 00 . It al

that £1 r

ery

50 incr a e in

the pric of 1 000 board D t of fratning lumb r, 00 000 p tenti al home owner
ar pric d ut f th hou ing m ark t.

In r cent tim
200

, th

ha furth er impa t d ad

1v n thi

from

r ely the d m and :fl r

ce nari o, effo rt w r m ade b

nit d

tate

and di ver ify th ir

grow ing A ian m arket e p ecialJ y
Columbi a'

anadi an

anadi an g

ftw od lumb r.

ernm ent t

" deco upl e"

oftwoo d lumber m ark et toward

fa t

lun a, Jap an and Indi a. In 2 010 , Briti sh

oftw ood lumb r ex p rt to

increa e from 200 3. The
United

h u ing m arket du e t fin ancial cri i in

lum1 in

hina total d

total sale to Ja p an and

687m ( 667m ), a tenfo ld
hin a exceeded those to th e

tate . Wherea five year ago m ore than two- third s of hipment went

aero s the bord er to U S, now barely m ore than one- third g e to th e U . The
indu try forecasts that by 201 3, China w ill be it bi ggest m arket. That i th e payoff for a marketing effort involving th e indu stry and government: Canada has
helped to revise China' building codes, et up coll ege there to train worker m
timber-fram e constru cti on, and forged ties w ith distributors.

A lthou gh, the access to the Chine e m arket h as u cceeded, but penetrating
the Indian market has been a m aj or chall enge du e to the fo ll owing reason :
F ir tl y, the Indian impo11 of timber h a
constructi on

and

furniture) and

do mes ti all y by ill ega l dom

been hard wood (which i

the dem and

ha

used for

traditionally b en

met

ti c logging and imports from Malay ia, N w

11

Zealand and

u tralia .

ondly th

Indian mark t i m r

ther ar fi w big importer of

ftw

indu try organi zation t impr

market a ce

d

ntrali z d and

d lumb r. Th r are om e ffort 1nade by
to India which i di cu

d in the

followin g paragraph .

. . market, th G vernm nt

In additi on to pro iding tabl e ace
of

anada ha acti ely

pand d

th r market opp ri uniti

produ ct through fundin g pro id ed t
well a

fi r

anadi an w od

p en new m arket opportunities in Indi a a

ther o er eas m arket (Foreign

ffair and Intem ati na l trad

an ada,

201 3).

U ntil recently, India did not all ow th e importati on of B . . interi or
lumber into their country w ithout it requirin g fumiga ti on as th ey wer

PF

worri ed

about a p e t call ed the pinewood nem atode. A result of interac tions by Canadi an
industry organizati ons (CFIA, D epartm ent of Intern ational Trade, and Canada
W ood) India am ended their plant health regu lations in 20 11 to all ow

PF lumber

into India providin g it was heat-treated which p asteuri zes the woo d and kill s an y
presence of pests. Since then India oftwood imports have grown m ore than 500%
( OFI, 2011 ).

The Council
representing the B

of Fore t

Indu tr ies ( OFI) and

lnt rior/ lbetia, Ea t rn

lumber; pl ywood/ SB ; and th e B

indu try m mber

anadi an hardwood and B

Coa t

w ho le ale sector trav li ed to New Delhi to

12

participate in a pr gram
how. Thi

p

d

f m r hant and

it and attend the

it

elhiWood

anadian mill ale r p that had previ u ly d n bu in

with India from a di tanc to meet maj or cu t m er face-to -fac forth fir t time.
Thi e ent fi lded enquiri

fr m a w id e an ay of m rchant

D lhiW od h w. Indi an trad r wer rec pti

to

and u

r at th

m mercial relati on hip and

Canada e tabli hed it credential a n w upplier g in g [! rward (

Fl, 20 13).

13

hapt r 3

RESEARCH METHODOLOGY

In thi chapter, w

di cu

anad ian oftwo d lum b r in du

th

analyti al fra mework [! r a
m p titi v ne

mg the

m th e Indi a n market and

way t improve th e m ark t a

it comp etit r .

hi

Po rt r' (1990) di am ond m d 1 and a! o th

g neralized doubl

tud y mpl oy
di am ond m del

developed by Ru gm an et al. , ( 199 ) a th an a lytical framework D r a e ing th e
competiti ve dynami c

f

oft ood L umb r ind u try'

thru t fo r mark et

developm nt outsid e No rth-America.

Michael Porter introduced economic theo ry into th e di sciplin e o f trategic
m anagem ent. Applying th e tru cture-condu ct-p erform ance (SCP) fram ework, h e
built a found ati on fo r research o n co mpetiti ve dynami cs. To Porter, a firm 's
p erformance is a function of the indu stry environment in which it compete . T he
di amond m odel is an economic model developed by Mi chael P orter in his book
"The

ompetitive Adva ntage of Nati ons (C N) w hich ex plain w hy o me nati n

gain competitive advantages in international markets. He argues th at the hape of
the " di amond " depend s on four influence

- 1. fac tor condi tion , 2. demand

conditions, 3. related and suppo11ing indu tri es, and 4 . finn trategy, tructure and
rivalry. Porter also suggest th at there are fo ur stages of competitive deve lopm nt
which charac terize a nati on'

ource of adva ntage in intern ationa l c mpetition : the

14

fa t r dri

n, m

pr

an appr priat r 1 that g

rib

di

in th D 11

u

t111 nt dri

n mn

ing para graph

ati n dri
111ment

n and

alth dri

n. P 11 r

h uld play in a h f th 111 . W

ingl diam nd 111 d I and it

th

n-

d ubi dia111 nd m d I.

3.1

m le-diamond fram ew ork

P rt r ( 1990)

ndu ted a four-

ar tudy f ten imp rtant trading nati n 4 and

ugge ted the "diam nd m del'' . Porter c n ludcd that a nati n uccced in a particular
indu tr

a c mp tJtive ad antage rclati e t

c mp tit r . Porter' diamond m del con i t
2. d mand

--

rhance

~----

, and 4 . firm trategy, tructure

Figure 1).

Figure 1. Porter'
(

b t worldwide

f ~ ur determinant : I . fact r c nditi on ,

ndition , . related and upp rting indu tri

and rivalry (

th

in g le Diamond M od el
F1rm strategy.
structure
and nvalry

--------

Fa ct or
cond 1t1on s

Demand
cond1t1 ons

Relat ed
and supporting
1ndustn es

G~vernm~

---

urc : Potier, 1998, p. l 27.

4

enmark,
m1any, Italy, J pc n, K r a, mga p r , \ eden, wit/crland, th '
nit d Kingd m and the nit d tat
15

Factor ondition
to P rt r ( 1990), fa tor conditi n

r ~ r to th

produ cti n that ar r quired t c mp t in a giv n indu try.
endowment th ory

f int rn ati nal trade, a nati on w i II

abundant fa t r ondition, fo r whi h it i w 11
P01i r gr up d the

c

fa ctor

f

rding to fa ctor

p01i g od th at utili z

ndowed (Ru gm an et al. , 20 12).

fac tor into broad ca t g ri s and the e are u1111nari z d in

T abl e 3:

Table 3. Factor C ondition s of Porter' s (1990 ) Diamond M od el
D e cription

Factor Condition
Human R esource
Physical R e ources

Knowledge R esource
Capital resources

Infrastructure

The abund ance, quality, acce ibihty and co t of
physical re ources (i.e. land , timber, water, mineral
deposits, hydroelectric p ower ource ).
cientifi c, techni cal and market knowledge that
affect the qu antity and qu ality f goods and
erv1 ces.
The am ount, co t and capital re ource th at are
ava ilab le to finance indu try.
The typ e, qu ality and user cost of infrastru cture
(conununication system s, transportation systems,
hea lth care system s and o ther factor that directly
affect the qu ality of life in the country) .

These are further broken dow n into basic factor ver u advanced factor
and gen eralized factors versu

p cialized factors. H e pl ains that basic factor

are pa sively inh rited, such a

climate, unskill d and

wherea adva nced fac t r are co nditio n a co unty creat

cmi - killed labour,

su h as highly educated

16

p r nnel. Furth r ad an d r p
phi ti ated
r ated thr ugh fa t r- r ating m

pp

ializ
mp titi
hani m

ad antag
uch a publi

and th at they can b
r pn at

du ati nal

in tituti n .

mand ·onditions

nati n ga in
tr ng. P rt r ( 1990)

mpetiti e ad antag in indu trie where h me demand i
pl ain that thi g1 e

mpame
competiti e ad antage

to 1nno at

mpam

a i w f emerging bu yer

fa t r and a hi eve m r

than th ir D r 1gn n al a a re ult

phi ti ca ted

f pre ure

from

demanding dome ti c buyer .

Demand condition
market a defin ed by bu ye r

includ e: th e co mpo iti on

f demand in the home

phi tication, exi ting market ni che and incr a ed

level of need in the home market compar d to bu yer in ther mark t . Th

1ze

and grow th rate of the home demand ; and the way in whi ch dome ti c demand i
intern ati onali zed and pull a nati on' pr du ct and ervice abroad (Ru gman et al. ,
1991 , 1993) .

Related and support in , industries

P rter ( 1990) as rted that related and supporting indu. tri
pre ence o f internati nally co mpetiti e
effi cient a

to co t-effecti v

inputs

uppli r
rea t

in -Jud

the

and that throu gh carl

or

ad anta ges in down trcam

17

indu trie . Mor

ignificantly (a P rter, 1990 explain ), home- ba ed r lated and

upporting indu tri
clo

pro id inn vati n and up gradin g - an advantage ba

working r lati n hip . h rt lin

of communica tion, ng ing

d on

change

f

idea and inno ati n, a w 11 a , quick and con tant n w of in[! rmation an b
expl ited by uppli r and

nd u er located in clo e proximity t

(clu ter ). The e fact r can nh an e a fi rm ' co mpetiti ene

each other

(Porter, 1990).

Firm tra tegy, tructure, and riva l1y
Finn strategy, tructure and ri valry i the fin al detem1inant and refer to
the national circum tance and c ntext whi ch mold how companie are created ,
organized and managed, a well as what the nature of dom e tic rivalry will be
(Porter, 1990). Thi s includ es the goal compani e

eek, th e moti vation o f their

employees and m anagers and the per i tence of competiti ve advantage in the
respective indu try (Rugm an et al. , 199 1,1993 ). For exampl e, the goal

or

of individual countri es can differ significantl y based on

th e

characteristics of national capital markets and the compensation practice

of

strategies

managers (Porter, 1990). M anagerial systems, or structure, a] o differ between
nations and are driven by management practices and organizational

tructure

favored in each country . Finally, loca l riva lry i a strong and powerfu l stimulu in
the creation of competitive adva ntage by pu hing comp ani es to be more ffi cient
and innova ti ve in ord er to out-compete their co mpetitor (Porter, 1990).

18

Apart fr m the £ ur d t nninant
variabl

and can hav

play tmp rtant r 1

comp titiv n

of national ad antag , tw

ex ternal

dramatic influenc

of a country, provin e and n indu try. he

on th

determinants are:

Th rol of Gm ern m nt:
overnment can influenc
throu gh

many

action

all ~ ur of the c untry specifi c determinant

uch

a

ub idie ,

edu cation

poli cie ,

regu lation/deregu lation of capital market , e tabli hm nt of local produ ct
tandards and regulations

purchas of goods and service

tax law , antitrust

law .

The role of chan ce:

Chance events can nullify the advantage of ome competitor and bring about
a shift in overall competitive position because of developments uch as:

new inventions ·
politi cal decision by foreign goverrunent ;
wars;
significant shifts in world financial markets ore change rate
di continuitie in input costs such a

il hock ;

surges in world or regional demand ;
major technologica l brea kthrough .

19

P tier' diamond mod el wa cho
th

imp rtant

ariabl

d t rmm111 g a nation '

analytical fram ework. M
ub

t of P rte r

n for thi

t

th r m del

d

c mpetitiv n

ign d :D r thi

into a

ing le

purpose repre

nt

c mpreh n i e m del ex luding imp tiant conditi n th at need

to b c n id ered wh n id ntifyi n g c mpetitivene

H owever, ther
r m ain

tudy a thi mod 1 int grat

are limitati n

regarding the stgn

of relati on hip

thi

(M oon t al. , 1998).

m d I.

ub tanti al ambi guity

and the predi cti ve power of th e

' m od I' ( rant, 199 1). T hi is ma inl y be au e Porter fa il to in co rporate th e effect
of multinati onal acti vities in hi m od I. To solve thi s pro bl em, Dunning (1992),
fo r exampl e, trea t multinational acti itie as a third exogenous variabl e w hich
hould be add ed to Porter's model. In today's g lo ba l bu siness, however,
multinational acti vities represent mu ch m ore th an just an exogenou

variabl e.

Th erefore, Porter's ori g in al di amond mode l has bee n ex tend ed to th e ge nera li zed
doubl e di am ond m odel (M oon et al. , 1998) w hereby m ultinational acti vity i
formally incorp orated into the m odel.

3.2 Double Diamond Framework

A m aj or limitation of the

ing le di am ond m odel i

that it cannot fully

expl ain the intern ational uccess o f multinati onal relativ to indu try ri al . The
doubl diamond m del, devel pcd by A lan Ru gm an et a!. , ( 1993)
ga p. Ru gm an firml y beli v

k to fill thi

th at in ternational trade is dri en by the intrar gional

trade and in ve tme nt of M N ~ ' (trade \l 'ilh in their region) . Rugman ( 199 ) argued
20

that finn within c untri

c uld al

d m ti diam

in lud d in the ingl diam nd model) w r add d t

r gi n p cific ad antag
diam nd · th

ac e

). Th

r gi nal ad anta g . In thi way the

inner diam nd r pr

ut ide n th gl bal di am nd ( igure 2). The

diam nd i relativ ly fi

d

ithin a certain peri d, but the izc

diamond fa c untry r indu try dif[i r fr m th

nt the dome ti c
JZ

[th e global
[ the domesti c

c [ ther c untri e in ize and

ompetiti ene .

Figure 2. Generalized Double Diamond Model

FI RM

TRAT GY,

TRL T RE&
RI VAL RY

/
/

'\.,_______ _ _ _ __.. I ntemati ona l
'\.

/

'\.

/

FACTOR
CON DI TIO S

'\.

/

'\.

/

Domc~tic

Rf'LA I L· D AND
SUPPOR 11 CT
I N D UST RII

'ource: Moon et a!. ( 1998, p. 138). Modified by the author

21

In th

ne t chapt r, w

u

th

abov

m nti n d

doubl di amond fram ework to an alyze the omp titiv ne
indu try in

anada in their thru t fo r global diver ifi ca tion

ingle di am ond and
f

oftwood Lumb r
f m arket and it

p tential to ucceed in Ind ia n market.

22

Chapter 4

SOFTWOOD LUMBER EXPORTS TO INDIA
- EMPIRICAL ANALYSIS

In thi
indu try in

chapter, we

xamme the competitivene

anada in the Indian market. A di

"diamond" model (P rt r, 1990), and '
1991, 1993) t

analyz

f

oftw od Lumber

u sed in . hapter 3, we adopt the

uble diamond" model (Rugman et a l,

the international competitivenes of

anadian softwood

lumb r indu try in developing market

uch as India . The logic of adopting the

double diamond framework is that

anada, with an excess upply of oftwood

lumber, r present a mall economy (in terms of population and inteJnal demand
for lumber) and India repre ents one of the fa te t growing economies of th
world and a potential large trading partner of Canada in the future . Therefore, one
should take into con ideration not only home (Canada) country factor but also
host (India) country factors in the analytical and empirical framework. In the
following paragraph , we are di cussing each building block f

anada and India

in terms of the single diamond (Porter, 1990) and double diamond model
(Rugman et al., 1991 , 1993).

Factor Conditions:

In tcnns of fa tor endowm ents,
timb r !I r the produ tion of

P

anada i endowed with a large , upply of

lumb r and ha,

mparati e ad an ta g" ov r
23

India in producing it. India on th oth r hand ha limited timber uppl y due to
ov r harve ting in th pa t that re ulted in a ban on the harve t oft ak in 1995 by
it ap x court ( A I 20 12) .

t the am tim

th economic ref01m ha accelerated

the pace of development and India ha

bee m e one of the fastest growmg

econom1 e of the world , und r the BRI

umbrella. The accelerated pace of

de elopm nt ha accelerated demand for pulp, pap r and wood produ ct in India.
M any of th quantitative re trictions on impo1i of wood w re removed in April

200 l. The import tariff on wood products is minimal (around 10 percent) (FII,
20 12).

Given the fac tor condi tions such as

anada's excess suppl y itu ation and

Canad a's trade conflicts with the US (with regards to lumber), India repre ent the
national counterpart fo r Canada's exce s suppl y.

The lwnber supply - dem and imbalance in Canada and m India are
refl ected in the lumber prices in both countries (Figure 3).

24

Figure 3. Lumber Price -Canadian

oftwood v . Myanmar Teak

lumber Prices {$US/m 3 )
2100
2000
1900
1800
1700
1600
1500
1400
1300
m 1200
11oo
.......... 1000
'V).
900
800
700
600
500
400
300
200
100

E

0

• • • • • • • • •
2003

2004

2005

2006

Softwood Lumber ($/m3)

ourcc :

2007
-

2008

2009

2010

2011

2012

Teak - Myanmar ($/m3)

HB , 2013 & ITTO, 20 II

The relatively higher price for teak in India, a proxy for oftwood lumber,
indicates a hortage of upply and a high demand in the country, which i in fact
theca e a indicated by a 17 million m3 deficit of wood in 2010 (Fll, 20 12).
The Gravity model of international trade, predict bilateral trade flow
based on the economic izes of (using GDP mea urem nt) and di tance between
two countrie . The

anadian and Indian national income i more or le

(around $1.8 trillion in 2011) but the di tance between

imilar

anada and India i

ubstantial. Thi s i so when compared to the exi ting competitor in th Jndian

25

market like Malay ia,

cw Zealand,

u tralia etc . hi increa cd di tance rc ult

in hi gh r c t of hipping product to India ( i a vi it c mpctitor ).
The d cline Jn
han gc Dry lnd

hipping co t

w rldwidc

(801) . Thi pr vide

renectcd in the Ba ltic

me pp rtunity [! r anadian lumber

pr duccr to minimi ze th tim et market and hipping co t to India (figure 4).

Figure 4. Baltic Dry Ind ex: World wid e hippin g Costs

Ba lt ic Dry Index
lnde"<. 01 0-1 19 5- 1.0 )()
1-l .O

t \au on

I..;

1 Cb

)

1 2t )2

, 1ru 22

12.0

10.0l l
0
6 . .lO

-l . >0

)

0

n
0

2

3 2t -1

2l :-l5

2! o 21 r

21)

2l ·19

2010 2011

2012

2nu

The Balllr Dry lnde1; LS a m.'liltliir shxpplllf lllde1; lb.11 lllf'JSUrt>5 ch.met ra1es fur shxpplilf dn bull cOiliiOOd.lnes soch as

coaL f!Tanl and u on ore

Sou.rcl's Balt•c Excha.nfl' Bloombl'te

Crlobatuanoo , · \IOtll'tan Pouc\ lnshi'OII'
F..&-•••1 <'SI'f'<' B.tnl ol DaU~s

26

Demand Conditions

D emand condition

are th

f home- mark t d 1nand for the

, a de c ribed by Po rter ( 1990). He ac kn owl edge that

indu tr ' product r

nations ga in c mp etitive ad antag
th ir comp a ni e a clearer
dem anding bu yer

nature

in indu tri e wh ere the home d m an I give

r earli er picture o f em rging bu yer n e d , and wh ere

pu h comp am e

phi tica ted competitive ad antag
are the mo t dem and ing and

to innova te faster and

achi eve more

th a n their foreign ri va l . If dom esti c bu y r

ophi ti ca t d buyer , th y can p rovide in ight into

advanced custo mer n eed and pu h comp ani e to innovate, up grad e and improve.

In Briti h Co lumbi a, and

an ad a D r that m atter, h om e d m and for lumber

has put pre ure on m anu fac turing co mp ani es to innova te and achi eve greater
comp etitive advantage . Con umers,

pecificall y builders/carp enters in B .C. and

in C an ada as a whole are very sophisticated w ith lumber and are hi ghl y
dem anding. As a result of building cod es, p articul ar grade of lumber are required
for specifi c building applicati ons. The National Lumber Grades A uthori ty
(NLGA ) is resp o nsibl e for the e tablishment, issu ance, publi ca ti on, am e ndm ent
and interpretatio n of Canadi an lumber grading rul es and stand ard (NLGA, 2013 ).
If a p ecific grade of lumber i purchased by Build r /ca rpenter , and the quality
exp ectation of tha t grade is ub stand a rd , o r a signifi ca nt amoun t i at the at the
low end qu ality of th e grad , builders/carp enter

will express concem or

hift

purcha e to an ther retail r. T hi s ha drive n retail to re to push back on lumb r
m anufacturing co mp a ni es t
c n i tent.

ertain r tail

improv

the qu alit

of th

grad

or length if not

to res d man d mo re as well

om

ha

d manded

27

p

ial cu t m r pe ific r quirem nt

[! r th ir

wn in h u

uch a bar

effi ienc ie 11 rc ing

mpam

din g n a h piece of lumb r
t 1nn

the e fact r. pu h lumb r m anufacturin g c mp ani e t
m dify th e ir pr du ct , bu in
m r

c mpe titi

proce

in th ir h m

11 f

a t and ad apt.

ontinu ally impr vc and

an I effi ci nc ie in e ita bl y m akin g them

ma rket and intern ati n a ll y pr

in g t

be a

co mp e titi e ad antage.

ftwo d lumb r o uld a! o be I

H me dem and 11 r B .
c n um r

a nadi an and

a

" inte rn ati na l iz d" ho me de ma nd .
for

tra tegy purp

e

into a

a ·

o rth

Am e ri ca n"

an ada and th e

h me de m a nd ,

r

a re two co untri e integ rated

ing le m ark t [! nnin g a

di am o nd " (Ru gm an et a!. , 20 12).

ked at a b th

a nadi an -

' do ubl e

nd er thi doubl e di am ond , C anadi an bu in e

are in direc t co mp etiti on w ith firm o peratin g in a di am o nd

'

f th eir ow n in th e

. From the influ ence of thi s combin ed lumber dem and fro m both countri e ,
B . . lumber comp ani e have n eded t

find way t pr du e more lumber w hil e

redu cing co ts to tay co mp etitive.
With an exce

timb er uppl y itu ati on, oppo rtuniti e to increa e do m e tic

dem and w ithin Ca nada ca n be achi eved if wo d-ba ed c n tru ctio n can be
prom o ted in an increasing m ann er. T h propo. ed Wood Inn
in Prince
111

eo rge i th e fir t tcp in prom o ting w

ati o n

entr (WI )

d-ba. ed ·o nstmction indu tr

anada and abroa d .
W ith the

, ace untin g for a larg mark t . hare, the seasonal nature or

hom e building play. an impo11ant ro le in the B . . lum ber market, with lumb 'r
price. ri s ing w ith

hous ing. tart a nd fa ll ing in lm building sea. ons . 8

. ha:

28

been vulnerable to th

h u ing mark t a

en in the r c nt U financial cri i

and the co !lap e f the hou in g mark tin 2008 . Hou ing start D 11 from a hi toric
high of ver 1.5 million t 0.55 milli on in 2009 (

en u Bureau, 201 2). In an

attempt to av id thi ri k, the lumber indu try and B. . g v rnm nt ha ve been
eking ver ea foreign market t di ver ify and redu ce mark t risk.

ln tim

f 1 w lumb r dem and , B. . lumber compame are 111 fi erce

competition to urvive by cutting c

t and becoming a

ffi ci nt as po ibl e. Thi

in turn dri e companie to b com e Jean by eliminating ineffi ciencie , id entify in g
opportunitie , up grading,

im1ovating in new

proce

and

ys tem

and

technology. Through the history of B .C . lumber market hi ghs and low , thi s need
for innovati on ha fu ell ed the need fo r schoo l to conduct re earch and edu cati on
programs to provid e pecialized and ophi sticated know ledge resource to remain
competitive.
Technological innovation in forestry is being spearheaded by researcher
at Briti sh Co lumbi a's Centre's of Exce ll ence, w hi ch bring togeth er e pert from
the public, pri vate and academic sectors to coll aborate on applied research,
development and commercialization of new teclm ologie . Briti h Columbia
enjoys an ex tensive and globally recognized fo rest produ ct research network that
suppmis the indu stry through resea rch and developm ent and innovation (Briti sh
olumbia, 20 12).

T herefor , a new comp titive adva ntag

for the B.C . , oftwood lumber

indu try i it ' p uhli · edu ·ation .\J'slem pro idi ng a mean for inn

ation and

29

pecialized edu ati n pr gram tail r d t fi re try, lumber/pr duct manufacturing
and D re t by-pr du t utili zati n.
P rt r (1 990) al

mpetiti c ad antage

pl ain

that h m -d mand c nditi n

help build

h n a pm1i ul ar indu try cgmc nt i , 111 re vi ibl c in th

d 111 tic market than th fi r ign mark t .
d c n umpti n in Indi a i d minated by hard w od repre nting 70%

W

f the t tal alu e f I g and a\ n w
pr ference

d lik

difference in "ta te'' betwe n
hard w od
pec1e

d imp Ii . Indi an

n um er

how tr ng

teak (Rattan, 1999) reprc nting a

anada and Indi a. Indi a ha traditi onall y preferred

includin g Tea k, Meranti , and Kapur whi ch are th

dominating the market du e to the perception

m

t p pul ar

f du ra bil ity and their

re i tance to ' termite · whi ch are an i ue in many pa rt of th e country. H we er,
due to ri ing teak pn ce

and import restri ction , a market for oth r

p c1e

including softw od i beginning to open up (FII, 20 12) . anadia n p c1e

uch a

Dougla

fir, We tern R d

edar and Hem lock are darker

attribute closer to tea k and oth er In dian hardwood and c uld
market demand a

ubstitut

oftwo d

wi th

ati fy In dia'

beca u e of their vcr atility and wide range of

applica tions including woodwork/joi n ry, interior paneling, n oring and . pecialt
product ( a -Zmudzin ki , 20 12).

30

Related and upporting industries

P rter (1990) a
pr

nc

rt d that r lat d and upp rting indu trie includ

f int rnationally c mp titive

uppli er

and that tlu·ough early or

efficient ace

to co t-ef~ ctiv

indu trie . Mor

ignificantly, h m -ba d r ]at d and

provide ad antage

111

r lati n hip . Porter tat

1nn

input

the

create advantag

m d wn tream

upp rting indu tri

vation and upgrading ba ed on clo e w rking

that upplier and end us r if loca t d n ar each other

can take advantage of hort lines of conununication, quick and con tant flow of
infom1ation, and an ongoing exchange of id ea

and innovation . The nation

companies benefit most when the suppliers are global competit r them elve .

This holds true as a competitive advantage for the B. . oftwood lumber
industry.

In

the

lumber

manufacturing

indu try,

up tream

uppli er

of

manufacturing equipment, which process lo gs into finished lumber, are primarily
located in Canada with offices in B .C. to serve the large market. Th e suppliers
and end users have short lines off communications where supplier provide, and
are necessarily relied on for, supp01i of their mechani cal, ele trical and oftware
products. In almo t all case , suppliers ha ve remote acce

to machine computers

to troubl e hoot is uc or provid e so luti on to any lumber c mpan 's i uc during
pr ducti n t minimize machine downtim

31

To a great r

tent, lumb r compam

oftware or in machine de ign from th
producti ity impro
la r and

the

uppli rs to unprov

either accuracy,

analy i and rep 1iing functi n , imul ati n capabilitie or

cannmg capabiliti

uppli r and w ill 1 t them kn w
do not

fr qu ently requ e t new upgrade to

ompanie

have en nn u

demand

on th ir

ery quickl y if uppli r produ ct are fl aw d or

rv the end u er with what th ey require. All of the e fa ctor ha ve driven
uppli er t

continu all y iru1ovate, up grade and improve their produ ct to

the ir cu tomers' need , in cr a in g produ cti vity, lumber rec ve ry and grad
recovery increasing the competiti ven

of lumber compani e

a

well as th

upplier .

The relation rup are intimate a there is a depend ence on the knowledge
of suppli er and edu ca tion to the end u ser. Supplier in the ho me country regul arl y
vi it the manufacturing fac ilitie in B.C . to inspect, and servi ce their produ cts and
uppo11 the mills through their ervice and training. These supplier are global
competitors serving compani e in their hom e m arket and other foreign m arket .

Technology can then be een a a new competiti ve advantag driven by the
force of supp011ing and related indu stry. Du e to the clo e com1ection and clu ter
in the B. . lumber indu try and the demands fro m lumber pr du cers on uppli er
to continu all y improve and innova te, the B. . and Canadi an lumber industry i
technologica lly adva nced ompared to many co untries including India .

32

Firm trategy, structure and rivalry

Firm trategy

tructur and rivalry i a cru ial determinant and refer to

the national circum tanc

and c nt

t whi h m ld how compani

orgamz d and mana ged, a w 11 a what th nature of d m
(Porter, 1990). Thi includ
employee

and manager

the goa l c mpanie

ar cr ated,

tic rivalry will be

eek , the motivati n of th ir

and th e p er i tence of co mpetitiv

advantage in the

re p cti e indu try (Rugman et a!. , 19 1,1993 ). The ex i tence of in ten e dom e tic
rivalry i

f p cial importance a it enco ura g

finn in the indu try t break th eir

dep endence n hom e factor advantage .

Briti h

o lumbia's fore try compan1e are hi ghl y automated with large

volumes of output of higher value tand s, resulting in lower cost of production
and increa ed co t-co mpetitivene . Briti sh Co lumbia '

fore try and wood

products ector includes large companies and hi ghl y-trained workers with wellresp ected reputations, producing a wide variety of product for stru ctural and
finishing needs (British Columbia, 20 12). Management strategy i

based on

reducing costs and maximizing production throu gh economi es of cal

to be

comp etitive.

Dome tic rivalry is, arguably, the most imp rtant because of it powerful
ffect o n all other determinants (Po1i r, 1990). Lumber manufacturing i
ge graphi ca ll y concentrat d in B. . du to it va t timb r resource.
of time, th r ha

vera p riod

b n con olidation of fin11 in the lumber indu tr

and now
33

there xi t a few highly competitive firn1s (like

anfor We t Fra er Ti1nber etc.)

The oligopoli tic character of th indu try ha promot d inten e competition that
ha

re ult d in a hi ghly effi cient

uppl y chain which can withstand global

competition .

conomte

f

cal

gained ptimarily from th

diamond r sultin g from NAFT

anadian - U

double

ha been a competitive advantage for the lumber

indu try in B .C. The combined hom e dem and and US demand has crea ted
conditions for attaining economies of cale needed to make B .C. companies cost
competitor in lumber manufacturing. Thi ha helped lumber manufacturers to be
competitive in overseas markets as well, notably Japan and more significantly
China, providing needed diversification and reduction of m arket ri k from the US
economy.

Thus, market diversification can be seen as a competitive advantage for the
B.C.'s softwood lumber industry. As see n fro m the US hou in g cri i

m

2008/2009, the US accounted for over 50% of B .C. softwood lumber exports
(BCStats, 20 13). This dependence on the US (for Canadian lumber) demand had
detrimental effects on the industry. The demand for housing in the US plummeted,
driving lumber prices down forcing numerous higher cost mill

to

hut down

whil e others had to reduce hifts to hold back production to meet lower demand .

Although many compani es were looki ng to alternate forei gn market, ompani

34

wh

had

ad antage

In

ucc

Nimbl ene

th e d wntum had a

ompetitive

new m arket , lumber c mpame

ne d to be

r th r .

rei r t

nimbl e- abl e t
There[! r

full y eli er ifi d pn r t

eli er ify int

re p nd rapidly t ch anging n ir nm ent- d m

" n imbl ene " b c m
in th e B

a mean

ti c and abr ad .

f achi eving comp etiti v

lumber indu try m an

that c mp ani e /mill

advantage.
are abl e t

react t cu t m er r quir m ent /requ e t to gain m ark t hare (By ungho, J. et al. ,
2006) . They ha e th e ca pability, or w ill eek to acquire th capability, to pr du ce
what the

u ta m er wa nt

grade or dim en ion

or require . T hi

f lumb r leadin g t

could a l o relate to qu ality or logi ti c

may includ

crea ting new lumber

new packagin g and/or brandin g. T hi
requirem ent

as oppo eel t

produ ct

change . N t all compani e have nimbi ne s and are w illing to accommodate and
m ake ignifi ca nt ch an ge to gain m arket hare, it may not be part of their trategy.
But tho e w ho see th e advantage and are nimble ca n expl it thi advantage to ga in
market hare and econorni e of sca le.

Acco rd ing to P tier ( 1990), the four com r
conditi ons, aggregate dem and , relat d and

of the diamond - factor

upp o11:ing indu tri

and amount of

rivalry - is al o exogenou ly infl uenced by go ernment po licy and the role of
chance. The fo u r con1er

f th e diamo nd 1lu

th

two c og nou, influence.

(g vcrnmcnt and the ro le of chance) reprc cnt an intcracti c s stem that afT cts
firm in th home economy.

35

Chance Events:

The mo t important " chance'' event for th e

anadian lumber indu try

the earthqu ake in Japan in 19 5 and 2011 . In both the e cata tr phic vent , twoby-four con tructi n u ing w od wa abl e to with tand the earthquake better than
other mode of construction. Th superior seis1nic performance of wood creat d
con id erable demand fo r s ftwoo d lumber not onl y in Japan but also A ia
( e pecially

hina).

The Role of Government:

Porter ( 1990), states that government pl ay an impotiant role in haping
the context and instituti onal structure
environment that

urrounding companie

by creating an

timulates cmnpanies to gain competitive advantage. He

explains that goverrunent 1s a catalyst and a challenger, ncouragmg or even
pushing companies to move to higher levels of competitive perfonn ance, but
recognizes that govenunent cannot create competitive industri es, onl y companie
can do that. Govenunent poli cies that succeed are those that create an
environment in which companies can gain competitive advantage rather than
those that involve gov rmnent directl y in the proce , except in nation in th
early development proce

(Pmier, 1990).

36

' atal
g

In the ca

f th lumber indu try, the g

t' r le in

reatin g fr h demand G r lumber produ t . Th r Je played by

rnm nt along with indu try a

e p iall y ll1

hina and

ernment in

anada ha played a

in dev 1 ping building code ,

ciation

etting up c !leg

train w rk r in timber-frame

n tru cti n ha played an imp rtant ro le in furthering the indu try' intere t.

In the Indi an c nt

t, th e g

ernmen t f

anada ha pl ayed an important

r le in reducing tariff and n n-tariff batTier to trade with India . A free trade
agreement wi th Indi a i under negotiation .
concl ud ed new trad agre m nt with

ver th e Ia t 5 year ,

anada ha

c untries and 50 more are und er way.

The "Double Diamond " Model of International Com petiti veness

The single diamond model of Porter ( 1990) ha b en cri ti cized by evera l
cholars (Ru gman et al. , 1993 ). They argue that the double diam nd and/or
multiple linked diamonds may reflect the ource of competitive advantage better
than porter' single diamond framework.
The double diamond model how that two countrie are int grated into a
ingle market for strategy purposes (Rugman et al., 20 12).
1993 explanation, B. . oftw

per Rugman t al.,

d lumber companie are now in dire t competition

with fitm operating 1n a diamond of their own in Indi a. To b succe ful in
competing with In dia'

wood market and their fragmented indtL tr), B. .

bu ine e have to develop compctiti c capabilitic of a higher ord r. W can no
long r rely entirely on our hom diamond and natural rcsour 'CS ha. c. Innovati( n

37

and c t c mp titiv ne

ar ju t a important and reqmre

d 1gn d to acce

India diam nd . Now B.

th

trategie

that are

lumb r manag r

ne d a

"d uble diam nd per pe ti e" [i r trat gi deci ton to pr vid further directi n
and

!uti n

~ r th

indu try with the id ntifi d n w competitive factor from th

ingle diam nd .
ne

f the barrier for B. . oftwood lumb r goin g to India i Indi an

go errunent poli cy that pr teet
w

mall bu ine e and

d manufacturing indu try f awmill throu gh th

upports th

fragmented

tructure of import tariff:

which are conducive to dome tic manufacturing ( /\1 , 2012) . India'
tariff: for awn w

Import

d are currently et at I 4 .7 1% makin g it more difficult t be

competiti e in the Indian wood market and again t New Zealand' radiata pine.
Thu , a new competitive advantage would be the impl ementati n of a
anadian - India free-trade agreement. Thi would open the market for

anada

and the B.C. lumber indu stry by removing tariffs and opening the door to building
econom1e of scale. In addition to the removal of tariff: and the advantage for
Canadian softwood lumber, a free-trad
countri e to produ ce other goods and

agreement will al so encourage both

rvice for which they have a competitiv

advantage and to buy the other good and ser ice from the other. A welL a, the
economie grow, so will the amount of trade as

ach adapt operation, to the

de ire of th e other and tart to tap th eir markets fUJiher.
and the North American
crea te a market for

ree Trade

s seen with Me. ico

greement (Rugman ct a!., . . . 0 12), India ca n

anadi an good in that, a the middl , and upp ' r cia,', c in th,

38

c untry m crea e their pur h a ing p w er, th y can turn m r
purc ha e o f

anadi a n g

fr
g

emm nt

trad
and

and m re to the

d .

agre m nt w uld ne d to be initi ated by th e
Indi an

g

ernm nt

hi ghli ghtin g

th

cru cial

government pl ay, and influ ence they have, in crea tin g competiti v ne
indu tri e at an intem a ti onal ca le.
b th c untrie

bu in e

and cc n m1e

gov rnm nt for th e promo ti n fa

Wi th c n id erati o n to th
tra de b tween

ro l

tha t

fl r hom

how advantage to

hould be c n id r d by b th

anada- Ind ia free trade agreeme nt.

new id enti fied c mp etiti ve ad antage of free

timul ate

through red uced ta ri ff:

competitivene

and

anada and Indi a, th e ro le of the

crea te an environm ent w hi ch
co mpa me

II o f th e above fac tor

an adi a n

anadi an g vemm ent w uld be to

comp etit ive advantage fl r Ca nadi a n

and B. . 's lum ber indu try thro ug h pri ce

and expo ure to economie of scale. Furth er adva ntag

to free

trade w ill prove ben efic ial fl r growth of both cou ntrie . A lthough free trade is not
the" il ver bu ll et" in ga inin g market share in Ind ia, a th ere are ma ny oth er noted
ch all enges, government pl ays a role that ucceed only wh n working in tandem
with favorab le, underlyi ng condition

in the diamond. T herefor , a fr e trad

agreement would be an important tep coupled wi th other diamond ad antage
and co nd iti ons, leading to B. 's succe

in India' \VOod market.

W ith th turmoi l, d ura tion and negati e impact on the lumber indu . trJ in

B. . and in

an~ da, the e pcrienccs from th

di pu te shou ld not be forgotten . If a

anadian -

softwood lumber

anada - India f're' trade agreement is

39

ucc

ful a uitable m ea ur w uld b to app ly th le on learned fr m

and th

and n g tiate and implement a

anada - India

agr em ent. With an agre ment upfr nt, b th co untri e
impact pr v i u ly
fi cu

ffort

peri enced, maintain and

n comp titi vene

anada

ftw od lumber

an av id the negati ve

tr ng then bu in e

r lation and

at an international cale.

Demand condition

In India, con umer are n t very fami li ar wi th

ftwood

PF lumb r and

have an ab ence of pri or experi ence and r feren

Therefi re th y are

unknow ledgeable

trength

application

of th e

advan tage , chara teri ti c ,

for it. The India lumber indu try is not elf-regul ated like it ts 111

No rth America: th ere are no
importer

or po ible

tandardized grading agenc1es. Indi an wo d

rely heavily on th e ex porter to

ugge t wood

pec1e

and type

dep ending on the end use. Therefore, educating Indian impOiier , trader and nd
user of

PF softwood lumber can be a competi tive advantage.

ducation on

grading standards and wood product attributes a well a the benefit and higher
qualitie comp ared to alternat

[i r ign

oftwoods, and

h wing them how and

where it can be used will build accep tance and u e of the product. Thi

i an

impotiant st pin enteri ng the Indian market.

duca ti on and know ledge transfer ca n be achieved b

British

olumbia

oftwood lumber e pc1is ettin g up demon trati on enter. to educate India's
important player

on lumber grade marl ing

and SPI· appli ' at ion . . B. ". '"

40

u tainable for try and certificati n proc

hould be empha iz d. Further,

wood n hou ing demon tration projects wou ld further educate and promote B . .
lumber. Indu try edu cation program

and courses could be set up in India to

tran ferring kn wl dg

ab ut B .

and

perti

PF lumber to di tributer's,

builder and end u er through education program

R elated a nd supportin g indu stri es

P rter ( 1990) as erted that related and upporting indu tries include the
pre enc

of internationally competitive

efficient acces

uppli er

and that throu gh early or

to cost-effective inputs create advantages in downstream

industrie .
Through technology, a new ly identified competitive advantage created by
suppm1ing industries (in the diamond) a new competitive advantage in a
downstrem11

sector is created. The

transportation

sector and

associated

infrastructure in B.C. are well developed for the transp011 of export produ cts via
trucking, rai l and shipping, to th e effic ient roadway , railways and port . B.C.' s
transportation is an impm1ant advantage to the lumber industry by reducmg co t
and ensuring timely and reliable transport of lumber to cu tomer , ensuring a
functional and reliable suppl y chain and upholding an important reputation by
B. . exporter to foreign customers.
All three noted means of tran , port ar r lied on to mov lumber from B. .
mills to reload yards, t port where lumber i

hipped to forei gn markets. The
41

infra tru ture in B . . i far ad v ane d in
infra tru c tur

i identi fi d a

om pan

n to India (Fll , 20 12) who

a barri er by adding co t du e t

111

ffi ci ne t

and

limita ti on f m v m g tmp rted go d by tru ck fr m p 11 .

i en Indi a'

ra pid growth a nd in c rea ed de mand fo r re o urce t

c n um er, m anu fac turing and c n tru cti o n indu trie

fu I th e

have gr wn dram ati call y,

and Indi a i impo1i ing fro m in ternationa l m a rk t t m eet m any of it need . With
thi

in cr a e in impo rt , In d ia'

tran p rtati n infra tru cture ha

b ttl eneck and a barrier. Inl and tran po rtati n of goo d
dominated by tru ck
Inl and

fr m th e p ort

du e to poor rail in fra tru cture and cap acity. A

ontainer D ep t (I D ) o r dry pOli

di tributi on of go d

bee m e a

by truck aero

a re ult,

pl ay a signifi ca nt ro le a hub fo r th e

th e co untry. T he I Ds are often

ev rely

con gested and there can be ignifi ca nt delay and co t a ociated w ith hipping
produ ct inl and (F II, 20 12 ).
With the in creased impo1i dem and fo r large co mm odity item

uc h a

lumber, fue l , machin e ry a nd equip ment and prec1o u m eta l and ge m , In d ia'
tra nspo rtatio n infra tru ctu re ho uld e mu late th at of B. . 's.
from an export per pecti ve, Briti h

o lumbia relie

on

imil ar to Ind ia, but
fficie nt rai l line

and

highways to export imi lar large commodities (lumb r, oi l, coal and container )
from

remo t

efficiencie

locations
co ul d

be

to

sea ide

dupl icated

ports
111

fo r export.

India

to

B. . '

remove

the

transportation
tran. portation

infra tructure barrier thu red ucing cost. . Upgra d ing and e panding rad, port and
highway ca pacity to ha nd le growing imports \ ould

' reate a

' Ompctitivc

42

advantag

for India , a

efficiently r ducing c

it ha with B . . to move go d

fr m port

to inland

t fore porting companie as well a end u ers.

Firm strategy, tru cture and ri valry

International competitivene
strate gy,
"nimblen

tructure and riva lrie

can

nly tmprove when Jeading finn'

are well

uited to " market diver ification and

''. F r example the oftwoo d lumber indu try is primarily c lu tered

in B .C. Thi g ographic concentration cater to nimblene

as firms have close

tie to upplier and educated and spec ialized human resources. These suppliers
and pecial ized re ource can efficiently erv·ice firm ' reque ts for change if they
do not have the ability or experti e to do so in hou e. This enable companie in
this indu try to be competitive throu gh the ability to make substa ntial operational
changes to cater to the diversity and dynamics of international markets 111 an
efficient manner.

India 's demand for so ftwood lumber is currentl y in the remanufa cturing
industry for interior applications, pmiicularly for interior doors, window

and

partition walls and for p acka gin g material u ed to export goods like machinery
and glass ( AI, 20 12) . D em and for SPF is incr a ing in re~ p n
demand for molding, door and window frame
increase co mpetitivene

in Jndi a, B. .

to grov ing

and decorati e application~ . To

oftwood lumber producer

competitive advantage through nimblene s by id ntif ing altern.at

' an gam

or pref ITed

lumber dimcn ion. , pr du ts and app li 'a ti ons in the Indian mark t than making
43

operati nal change efficiently to produce a more de ir d finished product for the
Indian market.

rading

tandard

and dimen ion

in India do not ex ist: the end user

determines pec1e , dimen ion and grad e required and Canadian exporter are
relied on to sugg st the uitabl e produ ct depending on customer needs . This will
po e challenge

to mills that are unabl e to shift production to accommodate

cu t m order , but fo r tho e abl e to adapt, there are signifi cant opportunities in the
Indian market. BC exporter will need to work with importers to understand end
u es and edu cate customer on b e t fit izes and grad es for different applications
(FII, 20 12). Having the agility (nimbl en ess) to make operational change

to

prov ide the market w ill be instrumental to firm's success in lndi a.

44

Chapter 5

CONCLUSIONS
Th

mam objective of thi

tudy wa

to examme the d terminant

international comp titive advantage of oftwo d Lumber indu try in
ecuring greater mark t ac e

of

anada in

in one of th fa te t growin g economy via., India.

U ing Micha el Porter' s diamond

fram work

(factor conditions,

demand

nditions related and supporting industries, finn trat gy, tru cture and rivalry) ,
along with factors such a chance and government toward a better und er tanding
of the ources of competiti ve advantage of the Softwood Lumber indu try in the
Indian market. W e also suppl emented the sin gle diamond framework of Porter
with double diamond framework ofRugman et al. , (1993).

Canada's endowment of timber and excess lumber suppl y represents a
small economy (in terms of international demand) . India on the other hand
represents a potential large trading partner as one of the fastest growing
economies in the world. This supply- demand imbalance in

anada and India ar

reflected in the lumber prices when comparing the two c untrie .

anada' e c

uppl y coupl ed with Indi a's large demand provide

for

opportunit

anadian

lumber exports to Indi a. As

hown tlu·ough the Baltic Dry lnde , although

distance is a disadvantage to

anadian xports compared to oth r int mational

competitors, low shipping cost may make Indi a a iable destination for

anadian

softwood lumber exports
45

A m aj r ch all eng

£1 r

anadi an

oftwood Lumber pr due r in India i

th la k o f kn w ledge about irtu e of oftwo d in con tru c ti n indu try v i -a-vi
traditi nal hard w od lik

timb er w hich i

rec mm end

hould £1 cu

program

that

ab ut

anada
an adi an

w id ely u ed m India. T he

n edu ca ting, and devel ping edu ca ti n

ftwo d in India.

tting up d m o n tration center

w oden h u m g dem n tra ti n proj ct , and edu ca ti o n program
Indian w

d u

r to

tud y

can e po e

f

a nadi a n oftw od produ c t attribute and th e ben efit

highe r qualiti e c mpared t alt m at G r ign oftwoods and ub titut

.

To d crea e co t £1 r B .C . xp011 co mp anie a nd Ind ia' e nd u e r , Indi a '
rail , p01i and h ighwa y infra tru cture need t be upgrad ed to handl e th e ca pac ity of
growin g import . In thi paper w e identi fi ed B.C .'
and effici encies a

a co m petitive advantage.

tra n po rtat io n in fra tru cture

The e can be and sho ul d be

d uplicated in India to remove the tran portatio n infrastru c ture barrier that exi t ,
in turn, creating a competiti v adv anta ge fo r India a it ha with B . .

To increa
sho u ld as e

competiti venes

m Indi a, B .C .

ftwo d lumber p rodu c r

th e ir " nirnbl ene s" and ability to rc po nd and ma ke o pe ratio nal

change effi ciently to pro vid

alternate produc t and pre ferences fo r the India n

mark e t. The ability to do thi w ill pro id e a co mp etiti e ad a ntage b prod ucing a
more de. ired fini shed produc t for the Indi an marke t, there fo re incrcas mg market
s hare and co no mi es of sca le .

46

anadian F d ral and Provincial govenunent
implem entati n fa
m arket for

h uld pu h for the

anadian - India fr e- trad agreement. Thi w uld open the

anada and th B . . lumber indu try by removin g tariff: and op ning

the door t building ec n mi e

f calc.

free-trad agre m ent will ec n mi cally

b nefi t both c untrie by enc uraging th e tw
and et ice for which they ha e a

c untri

t

produce oth r good

mpetitive advanta ge and increa

the trad e

f other product a each adapt peration to th e de ire of th e oth r and tart to
further tap each oth er' market .

Finally, we examined the effect of the two ex tern al detem1inant , chance
and governm ent,

n factor d tenninants.

bringing abo ut a

hi ft in overa ll competitive po ition of th e oftwood lumber

indu try. As previou ly di cu

hance play

d chance event

an important role by

uch a

arthqu ake

fundam ntally change th e demand of lumber almost in tantaneo u ly a

can

een from

the earthquake in Japan and ed ucate th e market on the advantage of oftwood
lumber.
The role of federa l and provincia l governm ents ha influ enc over all four
factor determinant and

hould act as a cataly t pushing compani e to increa

competiti vene s. Federa l and provincial governments are required to initiate and
negoti ate a

anada - [ndia free-trade agreem nt.

o en1m en t agencies and indu. tr

need to take an acti ve role 111 developing and promoting

anadian so fhvood

lumber ed ucation and edu ca ti nal program. in India .

47

5.1 Limitations and Future Research Directions

Thi

tud

u in g Poti r' di amond framework, with an empha i o n initial

factor end wm nt

(and

ther intemational diam nd ), build

oftwood lumber indu try by nhan ing the ace

a competiti ve

to the lucrative Indian market.

In thi fram w rk, governm nt ha an imp 11ant rol e in removing tariff and nontariff barri er , ena bling criti cal capabilities (like R&D) and lev raging th indu try
in Indi a. The main limitation

f the Pmier model i

the lack of rol e for

multinational enterpri e (MNE ) which had an impOJiant role in furth ering both
firm-specific and country-sp ec ifi c advantage in the real world (Rugman et al,
1991 & 1993 ). Beside , other dimensions of internati onal competitivene s uch as
government condition

and macroeconomi c policy, which Porter ori ginall y

con sidered a exogenous facto rs, may actually be pa11 of the internal di amo nd .
This is an area which need futiher elaborati on and research/ investigation.

48

BIBLIOGRAPHY

Ba k, J. (2006) . Price linkage in the otih American oftwood Jumb r market.
anadian J, urnal o_fFore. t R e arch 36, 1527- 1535 .
Baek, J. (2007) . The J-curve effect and the U ..- Canada fore t products trade.
Journal o_f Fore t Economics 13 , 245- 258.
Baek. J. (2012) . Th long-run d terminant ofU .. lumber impotied from
revi ited. Fore t Poli y and E anomie 14: 69- 73.
B Mini try ofFore t (1991) . Eco y terns ofBriti h olumbia.
erie 6. Viet ria , Re arch Branch Mini try of Forests.

anada

pecial Report

B1itish Columbia, (20 12). Trade and Inv stment. Retti eved from
http://www. bri tishcolurnbia .ca/ dvantages/ lu ster/ Pages!W ood.as px

ubj ect/Bu inesslndu try/Forestry.a px
Bolke jo, T.F ., Buongiorno, J. (2006) . Shmi- and long-run exchange rate effects
on fore t product trade: evidence from panel data. Journal of Forest Economics
11 , 205-221.
Buongiomo, J ., Chou, J.J., Stone, R.N. ( 1979). A monthly mod el of the United
States demand for softwood lumber imports. ForestS ience 25, 641 - 655 .
Buongiorno, J., Chavas, J.P., Uusivouri, J. (1988) . Exchange rate , Canadian
lumber impmis and the US prices: a time seri e analysis . Canadian Journal of
Forest Re earclz 18, 1587- 1594.
Byoungho, J. , Moon, H.C., (2006) . The diamond appr ach to the competitiv ne
of Korea' apparel industry- Mi chael Po11er and bey nd . Journal (?f fashion
Marketing and Management 10, 195-208.
hen, N .J., Ames, G .C .W ., Hammett, A. W. (19 8). Impli cation of a tariff on
imp 1ied anadian oftwo od lumber. Canadian Journal q( Agncultural
Economics 36, 69- 81.

J, (20 l I) . Other mark t : In(ha. Retrie

d from

htt ://www.co fi .o r )/markets/other-markets/

49

OFI, (20 13). W od building: Indu try Mi ion to India reates Po itive Vi be .
R tri ved from http ://www.cofi.org/indu try-mi ion-to-india-create -po itivevibe I
Duflour, D . (2002). The Lumber lndu try: rucia l ontributi n to an ada'
Pro p erity. tati tic
anada. R tri eved from
http ://publication .gc.ca/ ollecti n/ tatcan/31 F0027M/ l F0027MIE200200 l.pdf
Dunning, J.H. (1992). The competitive advantage of countries and the activitie of
tran national corp ration . Tran national Corporati n , 1 February, No. 1, 135168 . Retriev d from http: //www.cofi .org/category/woodb uilding/
For ign Affair and International Trade an ada (20 13).
ftwood Lumber.
Retriev d from http ://www .intemati nal.gc .ca/controJs-controle /softwoodhoi o uvre/index .a px?view=d
Forest Innovation Inve tment (20 12). Exporting B Wood Product to India.
Retrieved from http ://www. bcfii.ca/tools-resources/market-re earch/re earch-bymark t/india/#
Fore t Innovation Investment (20 13). Naturally: Wood . Retrieved from
http ://www .naturallywood .corn/about-u
Grant, R .M. (1991 ). Porter's co mpetiti ve advantage of nation : An asses ment.
Strategic Management Journal, 12(7), 535-548. Retrieved from
http: //www .business.ulster.ac.uk/intlbusiness/courses/bmg900ml /GrantDiamond .

lli1f
International Tropical Timber Organization (20 11 ). Annual Review and
As essment of the World Timber ituation 2011. Retrieved from
http ://www.itto.int/am1ual review/
Jennings, S., Adamowicz, W ., Constantino, L. ( 1991). The Canadian lumber
industry and the macroeconomy: a vector autor gre ion ana lysis. Can adian
Journal o.f Forest Re. earch 21, 288- 299.
Malhotra, N. and Gulati, S. (20 10) . The Ef[! ct of the 1996
- anada
Softwood Lumber greement on the lndu trial 0 r of Lumber: n vent tud .
Retrieved from
http ://works. beprc. s.com/cgi/vicw contcnt. cgi?articlc I 007 &contc t msha malh
otra

so

Moon, H . hang Rugrnan, A .M . and V rbeke, Alain (199 ). A gen ralized
double diamond approach to the globa l competitivene s of K rea and ingapore.
lnternaNonal Bus in ss Revi w 7 ( 1998) 135- 150. Retrieved from
http ://porial.jnu. du.cn/publi h/uplo adFil /2970/eW eb ditor/201 007060928 02603

J2ill'
Myneni
., Dofman, J .H ., m e , . . (1994) . W lfare impact ofth
. . oftw od lumber trad di pute: beggar thy con umer trade policy.
Journal of Agricultural Economics 42 261 - 271 .

anadian

National A ociation of Home Build ers (20 13) . Framing Lumber Price .
Retri eved from
http ://www. nahb .org/generi c.a p ? ectioniD= l 33 &generi c ontentJD= 527
ation al Lumb er Grade Auth rity, (2013) . R etrieved from http ://nl ga .org/
P011 r, M . . (1990) . The ompetitive Advantage ofNation . Harvard Busin ess
R evievv, March-April. R etri eved from http ://kkozak.wz.cz/P011er.pdf
P rter, M .E . ( 199 ). The Competiti ve Advantage ofN ation . The Fre Pre ,

ew

York, NY .
Ra gosta , J .A ., Clark, H .L. (2 000) . Canadian Goverrunent Should End Lumber
Subsidi es and Adopt Competitive Timber System , Comm ents ubmitted to the
Office of the United States Trade R epresentative on Behalf of the oaliti on for
Fair Lumber Imports. D ew ey B allantine LLP, W ashington, D .
Rattan, A . (1999) . Lumb er and Wood M arket in Indi a: Opportuniti e for Briti h
Columbia Companies . BC Trad e and Investment offi ce. Retrieved from
http ://ww w.em .gov.bc.ca/DL/E mpl oymentinves tm ent/Publi cation /i ndi awood .pdf
Rugm an , A .M . and Collinson, . (20 12). International Busine s:
Pearson

ix th Editi on .

du cation Limited, 201 2.

Ru gman, A. M. and D ' ruz, J .R., ( 1993). The "Doubl e Di amond'' Model of
International ompetitivene : T he anad ian xperi cn . Management
!nt rnational Review. 3, 17- 9.
Ru gman, /\. M. & D' ru z, J. R. ( 199 1). Fa t ~ rwa rd : Improvi ng Canada's
internati o nal comp titivene s. Toron to: Kodak

anada lnc .

51

I lndu trial LL . (201 2). M apping th e Indian R m anufa cturing ctor.
R tri e ed from http ://www .bcfi i.ca/tool -resources/market-r earch/ research-bymark t/india/
arker, R. (1 996) . anadian ftwo d lumber export to the U : a coint grat d and
err r corrected y tem . Journa l of Forest Economic 2, 205- 23 1.
n umption of oniferou wood
a -Zmudzin ki , K. (2 0 12). Forcasting Future
in Indi a. Uni ver ity of orth en1 Briti h olumbi a. The is Paper.
Song, N ., hang, .J. & Aguilar, F.X . (20 11 ). U .. softwood lumber demand and
uppl y estimation u ing co int grati n in dynamic qu ati ons. Journal of Forest
Economi 17: 19- 33 .
tat
anada, (20 13) . An verview of the Lumber Indu stry in Can ada. Retri eved
fro m http://www . tatcan.gc .ca/pub/1 1-62 1-m/20 11 089/part-paJiie l -eng.htm
U Census Bureau . (2 01 2). Retrieved from http ://www .census.gov/
van Kooten, G. C. (2002). Economi c A naly i of the anada-U nited tate
Softwood Lumber Di pute · Pl aying the Quota arne. Fore t Science 48, 7 12-72 1.
Wear, D .N ., Lee, K .J. (1993) . U.S . policy and Canad ian lumber: effects of the
1986
Memorandum of Und erstanding. Forest Science 39, 799- 8 15.
Yin, R . &, Baek, J . (2004). The US-Canada softwood lu mb r trade di pute : what
we know and what we need to know . Forest Policy and Economics 6: 129- 143 .
Zhang, D . (200 l ).Welfare impacts ofthe 1996 U . .- anada S ftwoo d Lum ber
(trade) Agreem ent. Canadian Journal of Forest Research 3 1 (Novem ber) : 195 867 .
Zhang, D . (2006) . W elfare i1np acts of th e 1996 United tates- Canada softwood
lumber agreement : an upd ate. Canadian Journal qf Forest Research 6, 25 - 26 1.

52