a. MARKET DEVELOPMENT STRATEGY FOR GROWTH:
If CHABROS International decides to pursue a market development strategy for growth, it needs to follow up with the alternative two of re-boosting its sales through full capacity utilization of the Serbian Sawmill. For this, CHABROS International needs to focus on markets that fall closer in its proximity to efficiently serve the markets, by lowering its transactional costs e.g. transportation costs, custom duties and other tax levies. Not only the countries in Exhibit 14 and 15 will be evaluated in terms of their proximity to the Serbian Sawmill facility but also in terms of the macro-economic variables that will help CHABROS International overcome the crises.
- Economic Indicators’ Individual Assessment & Country Wide Evaluation:
a) Market Size: Population wise as CHABROS International wants to re-boost its sales so it needs larger markets to serve. Therefore, countries with larger population need to be considered. The top countries that qualify for this indicator are Iran and Algeria.
b) GNI per Capita *Based on Purchasing Power Parity*: The increase in sales demands an increase in income and consumption of the target market. According to the GNI figures in the case, the two qualified countries are Kuwait and Bahrain.
c) Wealth of Consumers *Based on Purchasing Power Parity*: The wealth that the typical consumer holds is also a measure to what is the consumer willing to spend on the particular product or service. The two countries that are considered here are Bahrain and Kuwait. Oman and Saudi Arabia is excluded as it is a market that is already being served by the company.
d) Future Prospective Growth per Annum *As per GDP growth*: The gross domestic product of the country is one of the true reflections of the country’s growth nationally. According to the analysis, the two countries here are Iran and Tunisia. Lebanon and Egypt is excluded as it is a market presently served by CHABROS International.
b. CROSS COUNTRY ANALYSIS:
The countries that are short-listed for the market penetration are Iran, Tunisia, Kuwait, Bahrain and Algeria. The cross country analysis for the country shows that Iran is best according to market size 71,956 million, and a high growth rate of 2.7%, whereas Kuwait has a good income level of $43,930 and posses wealthy consumers $53,480 *current international, but is subject to a very low future growth rate of 1.8% and a very small market size that excludes it from the race. The third and the last option under consideration is Tunisia, given its average sized market of 10,328 million, the country has high GNI of $3,480 and holds consumers with good consumption habits holding wealth of 7,460. Tunisia has the highest growth prospect with a growth rate of 3.4 per annum. The analysis reveals that approximately, 33% of the total wealth held by Iranians is being earned through income whereas in Tunisia, 47% of the wealth comes from the income. Except for the market size, Tunisia portrays a better opportunity for the market development strategy persuasion and Iran is out of the race because of the fact that it does not stand out in comparison.
Ø Risks in Market Development:
a) Anticipated estimates turn other way round that is speculation risks
b) In ability to match the cultural aspects of the prospective target market.
c) Failure in boosting sales despite tenacity efforts and huge investments
d) Political and Legal barriers to conduct business
- If you decide to follow a market penetration growth strategy, which country where CHABROS International is already present would you further penetrate?
a. MARKET PENETRATION STRATEGY FOR GROWTH:
If CHABROS International decided to pursue a market penetration strategy, then it needs to serve the same product in the same market aggressively or with a differentiated strategy. CHABROS International at present as evident from the case serves six countries in all which include: United Arab Emirates, Kingdom of Saudi Arabia, Qatar, Lebanon, Oman and Egypt. According to Exhibit 5, the group subsidiaries that were rank first, second and third on the basis of sales were Dubai, Riyadh and Doha as of FY 2009. Out of the $100 million sales generated by the company, lumber contributed 60% share in sales whereas the 40% sales came from veneer (Borden, 2005). The market share for veneer country wise held by the group is above 50% for UAE, Qatar, KSA, Lebanon, and Oman, whereas it is 10% in Egypt. On the contrary, lumber holds 20% share in UAE and Qatar markets, 1% in KSA, 2% in Lebanon, 5% in Oman and less than 1% in Egypt. Moreover, the highest number of employees held by CHABROS International subsidiary is 180 by Dubai, 140 by Loznica, and 70 by Riyadh...................................
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