Jabwood International Case Analysis
I. 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. Jabwood is a large company that has a very strict
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Having already done business with Jabwood, I could see how Saudi Arabia would already have the confidence in Jabwood to be a great supplier. From exhibit 8 in the case study, Jabwood would see higher return by penetrating the Saudi Arabia market because it is a familiar market. Saudi Arabia also currently has an import tax exemption on processed wood products, which is what Jabwood would be importing in Saudi Arabia. The time to import product into Saudi Arabia is almost a week less that China. In the same regard, it only takes 5 days to start a business in Saudi Arabia, as opposed to 38 days in China. Action Steps: The first step to penetrating the Saudi Arabia market would be to register a subsidiary directly in Saudi Arabia. As the case study states, the indirect business model did not seem to work. Once established, the two available family members that have the expertise and knowledge to take over new positions should begin assuming managerial roles in Jabwood’s current location in Lebanon. Therefore, experienced management could be transferred to the location in Saudi Arabia to establish their customer basis. This management should schedule meetings with all current and former customers located in Saudi Arabia to discuss a potential relationships. All business out of the Saudi Arabia subsidiary should be closely monitored and evaluated on a constant basis to foresee any issues in raising sales to an acceptable level.