Jabwood International case study al Affiliation) The use of would started centuries ago as it was important in the use of constructing shelters, making boats and making various weapons such as spears. Almost all vessels at that time were built using timber and this was operational until the recent years. Fortunately, the use of woods in constructions has remained bold in the construction and engineering sector as wood or timber is used in almost every section. The wood industry is majorly divided in two phases namely the supply side of the market consisting of saw mills thus produce trees grown in forests and the wholesalers who deal with the importation of timber from various countries globally.
The division of wood is always in three groups. Softwoods are majorly used for the purpose of construction. Hardwoods are majorly used for the construction of doors, closets, walls and anything that relates to interior decoration. Finally, the wood-based panel is an engineered product due to the availability of modern technology and it is majorly used for the purposes of decoration (Jabado, Obeid & Danhash, 2012).
Many people can be misled by thinking that the soft woods are generally fragile according to their name but that is not the case since these woods and their products are used to erect strong or firm structures in construction sites. Introduction The Jabwood industry started as a small retail shop in the early years of 19th century. With time, a family of intellectuals expanded the enterprise thus making it to be a multi-division company that supplies wood in almost the entire Middle East making the annual sales to be high and promising.
The headquarter of Jabwood was initially in Tripoli it is recently firm in the Lebanon as the presence in the Middle East was in the form of limited permission to sell certain wood brands. At one point in the economic calendar, Jabwood was known as one of the largest companies in Lebanon and the Middle East in form of quality products and services, market reach and the sales volume. The Jabwood industry enjoyed the privilege of such success and dominance in the market because Fayez appropriately followed various strategies (Jabado, Obeid & Danhash, 2012).
One of the most important strategies that took the industry miles away was the effective control of cash flow. There was always a close and careful monitor of accounts receivable and no extension of credit without performance of a fine or detailed background check on the customer. Identification of the possible mode of entry A crisis might make the Jabwood industry to make great losses thus eventual collapse. The major problem in this case study is the political instability. This has already interfered even with their major supplier TANITA, a firm that is located in Russia.
The Jabwood has to find an effective and fast solution to the problem before the situation gets out of control. There are various modes of entry such as exporting, joint venture, foreign direct investment, and licensing. The Jabwood industry should select carefully on of the best modes in their step of expanding internationally. Out of the mentioned possible entry modes, the foreign direct investment would be most suitable. This is because Mahmoud due to his good knowledge and skills as he studied well in the United States as he understood the company well plus having that international exposure thus he will adequately assist in the procedure and factors to consider during the implementation.
The Jabwood should select potential sites in Russia and Africa, as these are their major supplies. The chances of getting these sites is high because the governments from those countries will sign with them the contracts as they are good partners in the timber business. Various have trust Jabwood, as it was the first and up to date the leading industry in timber transactions. Another reason why the foreign and direct investment is a suitable mode of entry is due fact that the issue of political instability that is common in the Middle East will hardly interfere with the business transactions.
The returns on sales will also be abnormal since the charges such as taxes are always favorable for this mode of entry. The focus for organizations is safety and profit maximization and in this concept, the factors are adequately considered. Sequence of expansion and resource allocation The expansion of the Jabwood industry is a sensitive issue, as it requires high capital and there are expectations that through expansion the industry should do better.
In this case, there are two potential states namely Saudi Arabia and China. Saudi Arabia lacks trees that can be used in constructions as the country majorly consists of oil wells (Jabado, Obeid & Danhash, 2012). China majorly prefers concrete and steel for their constructions. According to their engineering skills and little knowledge in timber, they hardly believe that timber can build a firm structure to withstand calamities. The Jabwood industry should do their expansion into Saudi Arabia due to the availability of ready market.
Furthermore, Saudi Arabia has a port for timber that will easily facilitate the transfer of timber and its products to various markets and to the timber yards along Mecca road (Jabado, Obeid & Danhash, 2012). In Saudi Arabia there is high competition and high bargaining power, however, the Jabwood Industry will not be extremely shaken due to its long experience in the market and Fayez has strategies to make sure that the target revenue is reached provided there is sale of many products at affordable prices.
Reference Jabado, R., Obeid, H., & Danhash, B. (2012). JABWOOD INTERNATIONAL: THE RISKY BUSINESS OF EXPANDING EAST. Richard Ivey School of Business, (2012-11-09), 1-11.