Chabros international Group

Chabros International Group Name: Institution: Introduction Chabros International Group faces market management problems that need to be solved to reestablish the company in the industry. Having opened up branches in various countries, the company fails to effectively manage its procurement and distribution logistics that would help it reap the benefits of operating as a multinational company. The details of this report will focus on the financial and managerial strategies that may have contributed to decline in sales and profits for the company. The company faces a number of problems in management supplies and production. First, management and coordination of leading and minor subsidiaries of the company has not been effective. There were no sufficient financial reasons considered when opening subsequent branches in Dubai and others. According to business expansion strategies, performing pre-feasibility tests and financial analysis of new markets provides crucial information needed in decision making. In this case, Chabros management did not perform financial analysis when opening other branches outside Lebanon. The management was enticed by market demands and size of foreign markets but despite evident shortage in supplies, the company engaged in opening more subsidiaries. In its efforts to acquire new markets, the company has not evaluated other countries but has solely focused on Morocco. This report will address misguided strategies that the management followed together with available strategies that may be implemented to reestablish Chabros International Group. Analysis Chabros International Group faces two serious problems: Sourcing logistical strategies and poor Organizational culture. Logistical strategy involves taking control of flow of resources from point of origin, (supply) to distribution. The company’s success was based on its management of the relatively small market in Lebanon. During this period, the company could manage supplies from Italy, China and others hence controlling the outcome of any of its financial projections. Expansion of the company to include subsidiaries in Dubai meant that the company had an additional responsibility of increasing staff and streamlining other factors in order to handle increased demand for its products. In relation to logistical strategies, the company failed to give time for the new markets to respond. In normal situations, introduction of products in new markets require a certain period of monitoring to gauge the response in relation to market trends. However, examining the rate of growth of Chabros International Group reveals that it opened eight subsidiaries in less than nine years, an average of one subsidiary per year. There was no time for the products to settle into the market for the company to start making profits after breaking even. In normal market situations, products in new market may take more than two years to fully settle and generate profits for the company. Logistical problems in new markets were caused by lack of financial viability analysis. From the case study information, it is clear that even with a looming shortage of supplies, Chabros International Group did not conduct SWOT analysis for potential markets. The management was enticed by new large potential markets that were not evaluated. Due to this reason, the company could not manage its supplies in the new markets, which resulted into opening of the Serbian sawmill. Logistics in the supply and distribution require time to analyze markets and devise strategies that ensure smooth flow of resources such as finances, labor and other factors of production. Analysis of potential markets provides opportunities for a company to create a recovery plan in case the main plan fails. Clearly, Chabros International Group did not consider creating recovery plans because initially, there was no financial and market analysis. Chabros International Group had poor organizational structure. An examination of its management of subsidiaries shows that the Lebanon management, which comprised of Chami’s family, managed the parent and subsidiary companies. This management relied on reports from its sales representatives to deduce its position in the market. Subsidiary companies were not headed by a trusted leader who could take charge whenever there was a crisis. Owing to the poor organizational structure, subsidiaries were not controlled effectively despite having a significant number of employees. Although organizational structures differ in different companies, a common structure especially when sub-companies are introduced involves delegation of duties to qualified managers who then report to the Chief Executive Officer. This structure ensures there is a constant flow of information from the ground, which is vital in monitoring existing trends in product demand. It prevents unexpected product crisis that may affect other operations in the company. The case of Chabros International Group does not show proper structures to monitor performance of any of the subsidiaries, although Chabros Dubai was doing well. As noted earlier, Chabros International Group was enticed by potential markets to open branches and offices in the regions of interest. Chami was motivated by the success of Lebanon operations and the immediate success of Chabros Dubai. In his own perspective, there were greater potential markets in the global industry, and he wanted to be part of the global wood market. It was evident that suppliers of the company would not hesitate to invest in large markets such as Saudi Arabia and Qatar. Although Chami wanted to expand the company to reach global markets, he chose to use transnational strategy. Under this strategy, a company does not concentrate wholly on a certain region, but examines local market responsiveness in different countries and cu...