Chabros International Group: A World of Wood Case Solution

2. Major Issues and Management Problems  

Chabros International Group has two major issues or challenges to be solved. Firstly, it has to counter the crisis faced in terms of down turn of sales due to less global demand. The company has a lot of questions to answer in order to help solve this problem. It needs to find out the areas where the company is lapsing resulting in a downturn of the sales. The global demand of the products of Chabros International Group, especially its market in Dubai, has shown drastic decline. A decline in the demand can cause a negative impact on the profitability of the company. Another issue is to select a growth strategy to increase profits. The dilemma with the growths strategy is to select a single strategy from a set of four strategies: Market Penetration, Market Development, Product Development and Diversification. Chabros International Group is an international company which is not only producing its products in different countries of the world but also distributing it in the international market. The company also serves and caters to premium quality products and every next move needs to be analyzed with respect to growth needs. The problem becomes even more severe when faced with external forces of global demand as the products become less and sales decline in the market that are used to make a profit for the company.

3. Expansion of Chabro's Operations

Chami is considered to be an experienced manager who knows about the work of the company. He had an eye and a vision to take the company to places at profit. He analyzed the products of the company with respect to its quality and sales. Chami strategically planned to capitalize the opportunity that Chabros was a manufacturer and a wholesaler; hence, the expansion of the company would help sell customized wood products to its customers. This would also help achieve economies of scale and thus a benefit for the company. The experience along with the specialization of the company together helped Chabros International Group open up in new markets of the world and sell its products internationally. Analyzing the patterns of the sales of the various qualities of the products he found out that each country had a different market for the sale of the different quality products. Therefore, he expanded its operations internationally to serve and sell each country with a different quality product as demanded. This procedure created a win-win situation for the company as well as the customers since the company got to push its low quality product out of the company and the customer got the product of the same quality as demanded. This situation assisted in the expansion of the company into new avenues and markets (Wagner & Stephen, 2008).

4. International Strategy of Expansion

Chami followed an international strategy to enter into new markets for its growth. Although the new markets were international yet they were very much similar and close to each other in terms of geographical areas and economic and social indicators. The focus of the company was to work in closely bound regions of Middle East and North Africa where the demands of the product were high and the working conditions similar also. The know-how of one market helped enter into another similar market and apply the same tactics there also. The closely located areas and regions of Middle East like Saudi Arabia, Dubai, Qatar and then going into North East also helped working with mitigating risks associated with exchange rates. This international strategy of expansion was beneficial for Chabros International Group as it did not have to work on the feasibility of the new markets in great detail. Similarly, the customers in these areas had a good and positive perception of the products produced by Chabros International Group. Considering other strategies of expansion like multi domestic strategy, transnational strategy or global strategy at the specific point of time would not have been so beneficial for the company when compared to international strategy as it served up the purpose of profits at minimum expense of thorough research and development (Zahra & Shaker, 2000).

5. Strategies to Overcome the Financial Crisis

Chabros had different alternatives to choose from to overcome the financial crisis. Closing down the Serbian Sawmill was one of the options to go for. This would help in cutting expenses and save up to $400,000 per year in salary. However, this option had its constraints also. Serbian Sawmill was recently developed with a high investment of approximately $11 million and after much rigor and effort included also. Closing down a saw mill in one region to cut down the salary could also defame the company in the eyes of the other employees in other areas of the company. Another option available was to focus on the market development strategy by working on the brand equity of the company. This could be done by rebranding the current products with the current customers to bring a positive image or a reintroduction of the brand in the market. The third option available to Chabros International Group was to work in the Moroccan market since it was one market with great potential to reap the benefits from. Moroccan market was certainly one of the best options available to get the company out of the crisis. Moroccan market was flourishing in terms of GDP. Chabros had a potential to supply the Moroccan market with the same quality products consistently. Another of the advantages available to Chabros to serve in Morocco was of no competitors (Grewal & Tansuha, 2001).

6. Market Development Growth Strategy

Market development growth strategy involves serving up new markets with the current products. Chabros International Group had long worked using the Market Development Growth Strategy by expanding into MENA countries. One of the new markets available for the company with great potential was Morocco. Morocco had immense opportunities available to Chabros International Group. Morocco had very few sellers of veneer and a big market for lumber’s demand was served only through imports. Chabros International Group could take advantage of this demand and reap its benefits from there. Moroccans had a positive perception of the products that were made in Dubai and other Middle Eastern regions. Therefore, these products would be warmly welcomed by the Moroccan Market. The economy of Morocco was on a rise, free of recession, resulting in a positive country for Chabros International Group for expansion. The combination of all the strengths that Chabros had plus the opportunities that lied in Morocco made it a lucrative market for growth. Moroccan market had many other advantages with respect to the exchange risk of the currency traded in Morocco thus eliminating any economic hurdles that the market might impose. The socio-cultural forces of the region are also somewhat similar to other current markets of Chabros International Group thus adding to the advantage of Morocco as anew potential market to explore (Craig & Douglas, 2005).

7. Market Penetration Growth Strategy

Pertaining to the economic, social and environmental indicators Dubai seems to be a better option to go for market penetration growth strategy. As indicated in various exhibits in the case, Dubai showed consistent sales even in the case of the financial crisis being faced by the company. In addition to that the economic indicators show a potential for the market in terms of GDP and GNI. Serving Dubai with the same products as before would help the company grow and maintain its position like before. Similarly, targeting the same market with the same products, but rebranding and introducing new market tactics could help flourish and penetrate the market more with increased market share. Dubai is already one of the biggest profitable markets for Chabros International Group, but due to recent financial crisis, the economy went down. This provides the company with an opportunity to look for ways and causes of the downfall of the market in Dubai and penetrate it more with increased customer base and market share (Daniels, Radebaugh, & Sullivan, 2001).

8. Morocco: A Potential Market

Morocco is certainly one lucrative market for Chabros International Group to facilitate and reap benefits from. One of the advantages of working in Morocco for the company is of the exchange risk mitigation. The competitors in Morocco for the same product as Chabros International Group are meager. This opportunity can be used by the company to attain greater market power. Economic indicators of Morocco show a potent market for the products of Chabros International Group. The company has already been catering the similar markets in the MENA region and can work the same way in Morocco also by utilizing its know-how of other similar markets. Morocco holds a positive impression of the products produced in Dubai and other similar regions; therefore, this is success point for Chabros International Group to expand into and venture in the Moroccan Market (Miles, Snow, & Meyer, 2002).

9. Suggestions for Chabros Website

The website of Chabros International Group is of the international standard. All the items on the website are well listed and clarified. As the product is a commercial product, therefore, the brand retention and brand development for the residential customers is very difficult for the company. However, Chabros has worked well on its branding on its website with a proper logo and a color scheme following their product. In addition to this, company has also provided links to connect with customers and stakeholders for any sort of queries. In this way, company receives the required feedback for improvement in particular areas of operations. The website is also a global touch point for customers to look for the catalogue and the newly available products in one click. Company has to maintain its global presence through various means like a website, face book, twitter, and a blog. The pictures and the descriptions along with it provide a good insight and understanding of the quality of the products. The latest happenings of the company like the exhibitions are posted on the website well in time to let the customer know and take advantage of it in case it’s happening in their country.