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Forta Furniture International Expansion

Solution Id Length Case Author Case Publisher
2678 1422 Words (6 Pages) John A. Quelch, Karthik Easwar Harvard Business School : 918547
This solution includes: A Word File A Word File

The case illustrates the situation of Forta Furniture company, where its chief marketing officer Marita Petrescu, is determined to expand the company in certain markets. Petrescu, after attending an international trade show along with her vice presidents of Forta’s two brands, is willing to consider Poland and Bulgaria for international Expansion. However, in the case of Western Europe, she thinks Forta furniture does not have desired resources, and the company is not ready to enter the market and remove the barriers, which are discussed in detail below explanations. Also, Petrescu is also not sure about the suitability of Forta’s brand for international expansion. The reason is that she is facing difficulty in extracting which foreign market may improve the company’s financial position and provide a competitive edge to sustain its position in the chosen market.  However, Petrescu has no other choice except to go international, as Forta’s market share was impacted badly when Romania entered in European Union. The interesting insight of the case demonstrates that the Forta needs to change its strategy, especially when other competitors enter the market with plausible differentiated strategies. Also, multiple routes of international expansion also provide opportunities for Forta to rebuild its position and maintain its sustainability by having a new consumer base.

Following questions are answered in this case study solution:

  1. Does Forta need to expand internationally?

  2. What are the reasons for and against waiting to expand into Western Europe?

  3. What should Marita Petrescu do? Which brand is better suited for which market, and should entry be based on private label or branded products?

  4. What is the furniture store situation in the US compared to Romania?

Case Study Questions Answers

1. Does Forta need to expand internationally?

Yes, Forta should expand its operation internationally as the successful expansion would bring many opportunities in terms of growth. Moreover, the expansion is also necessary for Forta because Romania is becoming a part of the European Union, no doubt an open avenue for the company; however, with this event, Forta also lost its markets share to a giant international venture; IKEA. Also, IKEA being their competitor, opted for this strategy to undercut the prices through vertical integration, which Forta could not afford due to scarce resources. On the other hand, entering into foreign markets and establishing the brand in the host market would help Forta to increase its revenues as the targeted host markets are larger comparatively and consumers of these markets are much wealthier in comparison with the Romanian market. Hence, Forta wouldn’t have to face the price-sensitive issue. Expanding operations would also allow the company to increase its customer base due to their presence in multiple places. Forta’s product, in this way, would reach to the individuals who were not aware of their presence before, hence, it also provides chances for the company to diversify their product range according to customers’ interests and needs. Additionally, Forta could build its competitive edge as well among its potential rivals. Especially, in those regions, where the presence of other competitors is not strong, it would give a chance to Forta to capture the market and gain market share and enjoy being a leader. 

Despite all these reasons, Forta needs to consider many factors to avoid any hindrance when entering a foreign market. As mentioned in the case study, Forta needs to take care of various logistic challenges when entering the host market, including transportation costs, as it is crucial to consider when to deliver larger consignments globally. Secondly, distribution channels also need to be taken care of by Forta for successful internationalization.

2. What are the reasons for and against waiting to expand into Western Europe?

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