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Abundance of forests in the territory of the Republic of Croatia was the reason for the development of sawmill industry that has a century long tradition. Although lagging behind the European countries, the Croatian sawmilling industry, along with forestry, represents the first phase of wood processing development, which is based on high manufacturing technology, trained employees and skilled workers. Costs are the core of many business decisions. It is, however, not enough to analyze the costs of a specific or restricted business area, but the costs of the entire business process – from supplier to product/service buyer. The aim of this paper was to compare the selected production process factors so as to make comparison between the Croatian and foreign companies, in order to get an idea of competitiveness of the Croatian sawmilling industry. Factors that were compared were: output cost per unit, costs of raw material including transportation, energy costs, cost of capital (in this case amortization), and the cost of labor. In order to further increase and maintain competitiveness of sawmill industry, it is necessary to make higher investments into technology with the aim to reduce the unit production costs. It is also necessary to determine the optimal technology in terms of quality, quantity and wood species.

Processing of wood and manufacture of wood and cork products, excluding furniture, manufacture of straw and plaiting goods (C16) and manufacture of furniture (C31) were the most competitive activities of the Republic of Croatia in the European market in the late 1980s and early 1990s. Those activities began losing their market share at the end of 1994, and no significant positive change in market competitiveness has been recorded since then. The question is how to achieve and maintain competitiveness, which is the condition of survival in an increasingly demanding environment. Preliminary and previous research on investments points to the assumption that the problem of competitiveness in the observed economic branch essentially boils down to a problem in the quality and efficiency of the investments of associated business entities. This paper tries to give answers to the following questions: What is the investment policy, is there an internal factor for lagging behind in competitiveness, what the other reasons are and how competitiveness can be achieved. By analyzing the investment in key factors of competitiveness in the period 2007 to 2010, consistently established by this paper, the existing data on investment of wood processing and furniture manufacturing entities will be identified, and an AHP investment model will be proposed that takes into account the simultaneous influence of all of the key factors of competitiveness and is the best indicator of the direction to be taken, with the final aim of achieving competitiveness.

The analysis of the existing situation in four companies involved in wood processing has shown that all of these were covered by insurance policies. The study revealed that the observed companies do not see the need for high-quality insurance. A trend was noted, albeit too slow, towards a wider and more comprehensive insurance coverage of assets and assets interests. At the same time there is a high and significant risk of a possible major accident that is not covered by insurance policies. The stability of companies is based on operations security, and better quality of assets and assets interest insurance would result in higher security of operations. Assets insurance is a specific issue and a wider perspective is required in order to properly present the need for insurance. The present paper will show that assets insurance is indispensable. The results of the study indicate that in the forthcoming period the insurance of assets and assets interests will become more essential and more significant.

This paper presents the results of surveys of innovation potential conducted at wood processing and furniture manufacturing enterprises in the Republic of Croatia. The survey was conducted at 30 Croatian enterprises by using a questionnaire containing 89 questions divided in 14 major groups. The survey results showed some differentapproaches and a different current situation in Croatian enterprises. Different results were achieved in small, medium and large enterprises, but total results are below the average mark 3 (good), which can not be satisfactory. Since innovations can be considered as one of the most important factors for competitiveness of Croatian wood processing and furniture manufacturing enterprises on the European and global market, it is obvious that a lot of effort isrequired for making changes that are necessary in order to increase the competitiveness of our enterprises.

Wood processing and furniture production represent a big chance for Croatia to enter the international market. Besides the natural advantages such as world-class quality of wood, Croatia also has the tradition, experience and current technological knowledge in production of semi-manufactured products and final products. Inorder to enter and survive at the competitive international market it is necessary to increase the level of logistics support for production preparation and production in order to increase the use of wood and wood material, to decrease time loss during development and acceptance of the new product and during production preparation, and especially to decrease time required for production. This paper deals with the results achieved during the development and application of the production management system that was based on theoretical principles of JIT (Just In Time) and MRPII Manufacturing Resource Planning) Japanese and American production theory and integrated in ERP (Enterprise Resource Planning) system in wood processing and furniture production enterprises. In this way, the prerequisites are created for the development of the digital enterprise in wood processing and furniture production.

Introduction of a production management information system is one of the ways that could help the management to increase its efficiency. It should enable the monitoring of the whole business of a firm through co-ordination in the process of collecting and using information.