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Transcript of Jabwood International
Expand to China
Expand to Saudi Arabia
Unwillingness to change managerial structure
Significant reduction in revenue
No discussion of future planning
Only two available second generation family members to take over new positions
limited growth within human resources
1) Managerial Structure
Major supplier from Russia – Tanita
Tanita agreed to sell to an additional wood trading company in the region, therefore breaking exclusivity
20 year long relationship
Jabwood depended heavily on Tanita with 60-70% of revenue sourced from the company
2) Broken Exclusivity
3) Significant reduction in revenue
Expand to both
Saudi Arabia and China
Communist System entrenched in the Chinese culture
Chinese law does not guarantee re-transfer of capital, annual transfer of dividends, and transfer of capital in case of termination.
Rapidly expanding economy
Market Demand of 100 million CBM per year (Wood Based Panels and Plywood)
City of Shangai’s decision to replace “sloppy rooftops” with sawn timber.
Preconceived ideas have led to Chinese people being less acceptable of wooden structures due to the misconception that these structures are less suitable to survive natural disasters. More importance put on concrete and steel structures.
TANITA constituted 60-70% of Jabwoods revenue
Lead to reduction in sales / revenue / market share and price premiums
The situation in Syria has also reduced sales by 20%
Potential cash flow problems could arise
Short term view
Broken exclusivity with TANITA effects opportunity
Managerial structure will have to be reviewed.
This expansion will prove difficult in the short term while Jabwood faces the effects of a drop in short term view.
Long term view
Expand in order to utilise the continuing growth.
Compromising on their current managerial structure
Political stability is rated 6.1 (scale 1-10)
very open to foreign investment
Processed wood is exempt from taxes
Encourage business operations by shot time (5 days ) to start a business
Similar culture, religion , language and time zone
Profile Saudi Arabia
SWOT Analysis of Jabwood in Saudi Arabia
Saudi Arabia Recommendation
It is essential that Jabwood returns to a direct business model in Saudi Arabia in order to be more proactive
Regain the market share that they lost when the exclusivity agreement was broken.
Saudi Arabia previously accounted for over 50% of their sales
non family member assumes a managerial role.
This expansion will hopefully lead to increased sales , market share and the prospect of regaining exclusivity with TANITA.
Dual Expansion to Saudi Arabia and China
Take advantage of two markets currently demanding high quantities of wood products
Potential increase their current revenues, and as a result increase their current demand of wood.
Lead to potential new exclusivity agreement with TANITA for the Middle East region and possibly set up an agreement incorporating the Chinese market.
Managerial approach reconsidered (with emphasis on china)
Risk involved with entering an unfamiliar market
The resources needed to sustain periods of little growth that are common when entering a new market.
Financial capabilities due to the recent downturn in performance and the large costs of
$120 000 to open both offices.
SWOT Analysis of Jabwood in China
Established in the 1930’s as a small wood planks shop
Grew from 4000 CBM to 400, 000 CBM over the years
Family run business
offered products and services
4 locations in Lebanon
1990 to 2004 - Rapid growth
Establish distribution around the middle east in Syria , Jordan and Iraq - had exclusive distributors and no physical presence in Saudi Arabia Jabwood has a direct physical presence
2007 closure of Saudi Arabia subsidiary
2009 Jabwood could supply the middle east with most its timber supplies AND peaked at 100 employees and sales of $50 Million
2012 Tanita removes exclusivity from Jabwood
Shira Schwartz and Greg Khoury
The future of Jabwood
Ghemawat’s CAGE framework and the need for managerial changes
First mover vs late mover