Chabros International Limited
Additional research is not required or desired. Use only the data and information provided by the case study, course readings and Discussions discussion. Format: The report is to be 7-to-8 pages, double-spaced with 1-inch margins, 10-to-12 point type, and posted as rtf or Word document. Use APA format for references. The cover page, references, and appendixes are not part of the page count. The organization of the report is to include: Introduction: A brief, one-to-two paragraph introduction that succinctly states the issues or problems you will discuss in the report. Do not restate the facts presented in the case. Assume that your audience knows the facts of the case. Analysis: 1.What are the major issues and management problems challenging Chabros International Group? Choose two (2) of the following: Strategy/mode of entry; organizational structure; marketing strategy; sourcing strategies/logistics; international and local staffing policy. 2.What motivated Chami to expand Chabros’ operations internationally? What strategy did he follow: International, multinational, global or transnational? 3.What strategies/options were available to Chabros to overcome the financial crisis? Which strategy/option would you recommend? Why? 4.If you decide to follow a market development growth strategy, into which new country would you expand? Rank the candidate countries. Explain how you derived your ranking. 5.If you decide to follow a market penetration growth strategy, which country where Chabros is already present would you further penetrate? 6.Would Morocco be a good country to expand into? Conclusions and Lessons Learned: •What insights does this case give you into the connection between the cultural context and making business decisions and the factors that influence a country’s business practices? •What can the company you chose for your Team Report #2 learn from this case study on the issues you identified? Are there examples of “best practice” you can point to from case studies discussed in Discussions this semester?
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Chabros International Limited
Introduction
The primary goal of every business is to make profits. The achievement of this goal does not always come easy. There are various strategies that must be put in place to facilitate the achievement of this goal. It is crucial for a business organization to understand the market within which it is operating. Management aspects can also be a barrier that may hamper the achievement of projected goals. Chabros International Limited is a profit making business organization that provides high class veneer and wood as both a producer and supplier. Since its formation the company has faced challenges and achievements in equal measure. This discussion takes an overview of the company and the journey it has taken over the years. The discussion will look at the challenges, achievements, strategies used and lessons learnt from the company.
Problems and Issues faced by Chabros
Since its inception, Chabros International Limited has faced a number of challenges. One of the main issues the company faced was a marketing and sourcing strategy. The 2008 global recession which had an effect on many companies globally did not spare Chabros Limited. Earlier on before the recession, the company had expanded to Serbia to meet the growing demand in the wood market. When the global recession began, it almost felt like a slap in the face. There was a huge decline in sales as the majority of the clientele could not afford the tough forces within the market. Chabros had invested heavily in the expansion plan. It was, therefore waiting to reap the benefits of the expansion to a new market. However, before the company could began reaping the benefits, global recession struck. It bit the company so hard that drastic measures became necessary.
The sales of the company dropped below the set target. This had a ripple effect on the operations of the company. It became almost impossible for the company to keep up the newly opened a franchise in Serbia. Usually, when a company ventures into a new market, the first few months do not amount to any gains. This means that the franchise is supported by the mother company up until it can sustain its operations. The newly opened branch in Serbia was depending on the mother branch whose sales had dropped drastically. It was a most difficult time for the company. The management contemplated a number of alternatives. One of the alternatives was to close the newly acquired a franchise in I Serbia. The effect of this was to reduce the cost of operation of the entire business. Making such a move however would amount to a huge loss of the company in consideration of the millions of money invested. The second alternative was to suspend temporarily the operations of the branch in Serbia until at a time when there was certainty.
Expansion of Operations
Faced with a challenge that threatened to see the company close shop, Antoine Chami, the owner and president of the company weighed the various alternatives available. Through the advice of financial experts, he realized closing up the newly opened a branch in Serbia would hurt the company more. This is because the investments that he had made on the Serbian will have gone to waste. He decided to tackle this issue by expanding to other countries. This meant he would expand the operations of the company internationally. This was a most difficult decision to make because it meant that he was taking yet another risk that could have further plunged the company to greater problems. He, however take the risk and expanded the operations of the company to other countries. He looked at the countries that seemed to have high demand for wood products. The expansion strategy followed by the owner of the company was transnational. He began by moving to a few countries such as Serbia and other countries in the Middle East. This was done as a precaution as it was still uncertain what the eventual results would be. It is only after the company performed well that the owner decided to move a notch higher and moved multinational. Today, the expansion of Chabros International is now global. It has its presence in both the Middle East and parts of Africa such as Morocco and Egypt.
Options and Strategies Available
There were various strategies and options that were available for Chabros International Limited to explore. On one hand, Chabros would have chosen to look for ways to boost sales in the regions that the country was already operating. These regions include the United Arab Emirates, Egypt, and Serbia among others. This meant that the company would come up with a new strategy to increase the sales of their products which were fast declining. The other option was to explore other markets in new regions. It was not clear whether the country was ready for expansion. Looking at the situation, it was safer for the company to combine the two strategies. This would involve looking for ways to increase sales in the already established markets. Second, as a way of diversifying risks, exploration of other markets where demand of wood was high was equally viable.
Of the options available, the most viable was...