Jabwood International Case Analysis
Problem: Jabwood International is experiencing a downward trend in revenue and sales and may continue this trend if change is not made immediately.
Causes: Due to the financial crisis and economic downturn across the world, Lebanon has seen an almost flat performance in the real estate market driving down the prices of raw materials used in construction such as wood. Advances in transportation and technology have led to increased competition in the timber industry.
A subsidiary of Jabwood based out of Saudi Arabia was closed for non-business related matters. This subsidiary, before closure, contributed almost half of Jabwood’s sales. ...view middle of the document...
Although, many Chinese are hesitant to build with wood because they do not believe it will survive disaster. It would also be difficult for Jabwood to succeed in this market because they do not have any experience in the Chinese business practices, regulations, or cultural customs.
II. Recommendation and Action Steps
Decision: At this time, Jabwood International should expand and penetrate the Saudi Arabian market only.
Justification: The Chinese market would be a great opportunity for Jabwood to grow, but not an option that is feasible at this time. The financial return for setting up in China would not be enough to counterbalance the expense it would take Jabwood to establish a representative office or the time investment required. For Jabwood to be successful in the Chinese market, it would require setting up a representative office in Hong Kong. However, Jabwood only has two second-generation members available with the expertise and the knowledge to take over new management positions. Jabwood has limited their selves by only allowing family members to take on managerial positions. If Jabwood was able to commit to a more long-term solution, I would suggest training up non-family management. However, Jabwood is in need of an immediate solution, which is why I suggest expanding in Saudi Arabia.
Jabwood is already familiar with Saudi Arabia’s culture, business practices, and product demand. Jabwood is aware of the revenue potential as their Saudi subsidiary used to contribute almost half of their sales. Jabwood has the resources to supply Saudi Arabia with a large portion of their required wood. Saudi Arabia has 0% forest area and therefore must import wood. Having already done...