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1. Evaluate Jabwood using SWOT analysis. Evaluate the competition in each country using Porter 5 Forces framework.

Based on these analyses, which country would you recommend Jabwood to enter? SWOT Analysis- SWOT analysis allows Jabwood to understand its strengths, weaknesses, opportunities, and threats involved in the business. It involves specifying the objectives of Jabwood (improve its financials) followed by the identification of internal and external factors that are supportive or unfavorable to achieving that objective. The internal analysis examines Jabwoods tangible and intangible resources (Resource-Based View) that lead to it having a competitive advantage (VRIO Framework). The value chain also allows managers to see how competitive advantage flows from a system of activities. The external analysis studies the external environment (Porters5 Forces & PESTLE) which permits Jabwood development plans or jeopardizes their position to put them at a risky position. While the internal examination highlights Jabwood s strengths and weaknesses, external analysis draws Jabwood s attention to the opportunities present as well as threats facing them. The following diagram summarizes the SWOT of Jabwood in Lebanon.

Strengths
Brand reputation & brand equity Strong customer realtionships Ability to ship global orders immediately Expertise in the wood industry

Weaknesses
Reliance on one supplier Rigid managerial structure

Opportunities
Expansion to other regions given the expertise in industry and previous experience in Saudi Arabia

Threats
Political situation may harm the businsses in Lebanon New entrant due to high demand and profits Competition with imported goods

Porters 5 Forces Saudi Arabia (SA) - With no supply of its own, the timber industry in SA faces high threat of new entrants given the high demand market and intense price competition coupled with the recent regulation change which meant lower cost for wholesaler. The small timeframe required to start a business and to import further heighten the competition. The intense price competition together with the well-stocked timber yards results in a high bargaining power of buyers. The suppliers on the other hand have low bargaining power when compared to the SA companies that holds substantial amount of power. All these factors results in a high intensity of rivalry in the prospering timber industry of SA. Nonetheless, wood remains the primary material for furniture making and construction in SA. The locals lack experience in working with steels and concrete making it favorable for Jabwood to enter. China- Stringent requirement in the China market are favored by the suppliers which are able to charge higher price for the lack of alternatives. This leads to a low bargaining of power of the buyers. High demand and consumption for wood in China together with limited supply produced locally, China has to depend on foreign export to meet its needs. Coupled with the stringent requirement mentioned earlier, suppliers like Jabwood would have a high bargaining power. However, the timber industry still faces a high intensity of rivalry despite the Chinese preferring other materials such as steel and concrete and lacks the skills with wood work. Recommendation- In deciding the region for the expansion plan, Jabwood will have to consider the market competitive opportunities and the risk involve in each country. While both China and Saudi Arabia offers great opportunities to Jabwood, the level of risk involve in each country differ. With its prior experience in Saudi Arabia, Jabwood faces lesser risk. China being a distant country as compared to Lebanon, poses a higher risk to Jabwood. Nevertheless, according to Risk-Return Tradeoff Principle, China will provide a higher return for Jabwood if the strategic move is successful. To solve its declining sale (that leads to TANITA pulling out from the exclusivity deal), it is highly recommended that Jabwood expand to Saudi Arabia given the lower risk and shorter time required to start the business going. In the long run, with proper restructuring of the management, it will be a strategic move to expand into China. To substantiate, calculation of forecast sales in the next three years shows higher return for China.

2. For your recommendation, evaluate the possible modes of entry. Which mode of entry would be most suitable and why? Modes of Entry Type of Entry Description Advantages Disadvantages

Exporting

Sale of products in foreign countries that are sourced from the home country

Fast entry, low risk

Low control, low local knowledge

Licensing and Franchising

Contractual agreement to use a brand name, patent or property that is owned by another business entity Contractual agreement between two or more enterprises stipulating cooperation in a certain way to achieve a common purpose Transaction in which a firm gains control of another firm by purchasing its stock, or, in the case of a private firm, paying the owners a purchase price

Fast entry, low cost, low risk

Less control, licensee may become a competitor, legal and regulatory environment must be sound

Partnering and Strategic Alliance

Shared costs reduce investment needed, reduced risk, seen as local entity

Higher cost than exporting, licensing, or franchising; integration problems between two corporate cultures

Acquisition

Fast entry; known, established operations Gain local market knowledge; can be seen as insider who employs locals; maximum control

High cost, integration issues with home office

Greenfield Venture

Establishing of a new, wholly owned subsidiary

High cost, high risk due to unknowns, slow entry due to setup time

Decision Criteria Organizational Objectives- To secure and save TANITA exclusivity contract, Jabwood would require quick penetration into the foreign market to boost its sales. The time pressure and mobility of funds will affect the mode of entry and choice of market. Need for Control- As stated in the case, Fayez and Imad stresses on relevance and control as the primary factor when deciding the mode of entry. Additionally, management has to have full control of all administrative and operational tasks in the chosen country. Internal Resources & Constraints- Financial resources required for the expansion is a major constraint for Jabwood. With declining sales and the loss of the exclusivity deal, Jabwood will face difficulty in having to invest heavily in the new market. Recommendation- Having considered the advantages and disadvantages of each entry modes together with Jabwoods objectives, motivation and resources available; exporting will be the best option for it to expand to the new market. With a low intensity of investment ad high control, it is just what Jabwood is looking for when entering the new market. Moreover, having the ability to ship global orders almost immediately, Jabwood can leverage on this core competency to serve the market as soon as it enters.