Essay about Jabwood International

881 Words4 Pages
Mesaab Ismail
International Management 3680
9/22/14

Problem Statement
Jabwood International is contemplating international expansion into new markets specifically, Saudi Arabia and China to compensate for a decline in revenues.
Problem Causes

The Middle Eastern situation, specifically the uprising in Syria.

The borders between Lebanon and Syria being closed causing the company’s main wood supplier TANITA to expand to other timber companies.

Jabwood’s market share and sales volume had a drop of 20 %.

Jabwood does not have any business in Saudi Arabia which has the Biggest Market in the Middle East for wood products.

Jabwood does not have any business in China which the potential for wood products have increased every year due to the
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Capital can be 100% foreign.
Processed wood products are exempted from import taxes.
Government Stability is at 61 which means it is not likely for the country to go unstable.
Saudi- Arabia is in the Middle East and it also an Islamic country which Jabwood international is familiar with that market.
Cons
Tariffs on lumber are 12%.
28 million population does not compare to the 13 population in China and the citizens who need homes there.
0% forest areas
1 million CBM to import wood.
82 % of the country are urban areas meaning less places required for wood construction.
$686.00 to import per container.
Sawn timber is not needed.
China Expansion
China is a huge market for wood products, Demand for wood is through the roof. The Chinese wood industry has been Prospering since 2010. They have become the biggest producer and exporter of WBP and plywood in the world, they are the second biggest importer of wood products in the world.
Pros
A new regulation in Shanghai allows the replacement of sloppy rooftops to be replaced with sawn timber, this would be a huge market for Jabwood International.
Tariffs on lumber are low.
Only 150 million CBM is produced locally.
The 13 billion population alone makes the demand at an astounding number for wood.
Rural areas are at a higher percentage, meaning more room for building houses.
Cost of imports are at a less cost than in Saudi-Arabia.
Sawn timber is needed.
Cons
First years sales are at 2% of the target

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