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. Jabwood is a large company that has a very strict and limiting business structure. Jabwood’s physical presence remains solely in Lebanon.
Jabwood relies heavily on one major supplier for approximately 60 to 70 percent of its revenue. This supplier intends to offer the opportunity to sell to other wood wholesalers, eliminating Jabwood’s exclusivity.
Possible Alternatives: In order to increase revenue and sales, Jabwood International has many options. In my opinion, the only feasible options would include expanding their business into two countries: Saudi Arabia and China. Expanding into the Saudi Arabia market is a very enticing solution for many reasons. Saudi Arabia does not have its own wood supply and therefore relies heavily on other countries for this need. Jabwood has had operations in Saudi Arabia in the past and is aware of the culture, business practices, and product needs. However, the Saudi market is the biggest market in the Middle East for wood products and therefore is extremely competitive.
Expanding operations to China has its perks. China has a very large population and is one of the biggest construction markets in the world. It is also one of the few countries to survive the global financial crisis. Although, many Chinese are hesitant to build...
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