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Stephen Womack

MGMT – 3680
Case # 1
Jabwood International is a wood trading company with four branches in Lebanon owned by the
Jabado family. Jabwood is contemplating international expansion into new markets specifically, Saudi
Arabia and China to compensate for a decline in revenues. The characteristics of a successful
international expansion must be taken into consideration when going through this decision making
process. Given the risks and tradeoffs in each country, Jabwood must make a decision on whether it
should expand in either market or both and on the mode of entry it should adopt to increase its chances
of success.

In my opinion, although the team differed, having considered the advantages and disadvantages
of each entry modes in the presentation,
together with Jabwood‟
s 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 and high control, it is just what
is looking for when entering the new market. Moreover, having the ability to ship global orders
almost immediately,
can leverage on this core competency to serve the market as soon as it enters.

There were 4 key issues with
Jabwood in Lebanon 1) Limited revenue: Revenue streams have taken a steep decline over
recent years and will take an even further hit with the loss of being the exclusive supplier of TANITA.
Limited funds are available for any expansion, capped at 100,000 CBM to any single market. 2)
Managerial constraints: It is required that management have full control of operations for any new
market. Furthermore, only family members are employed in managerial positions. There are only two
family members available with the required knowledge and expertise to take on new positions. 3)
Political unrest: Recent uprising in the Middle East, especially in Syria. This has led to a closing of all
borders between Lebanon and Syria. 4) Loss of Exclusivity of TANITA: Jabwood served as the exclusive
supplier of TANITA for 20 years in the Middle East, a highly recognized softwood brand from Russia.
TANITA has accounted for nearly 70 percent of the companys revenue. Due to Jabwoods loss in market
share and sales, the rights to sell the product were extended to another timber trading company,
leading to the potential for increased competition and loss in market position.