Introduction:

Chabros international group is a supplier and producer of veneer and wood and a distributor of a wide range of exterior and interior products that have been specified and used in major high end projects throughout the Middle East for more than 40 years. The company was founded by Antoine Chami’s father and his uncle in 1960. After the death of his father, Chami himself became the owner of the company in 1987. Initially, Chabros began servicing Lebanese Customer in Dubai. Later in 1998, the company started to export woods to Dubai and after one year Chabros established its first subsidiary in Dubai.

Chabros’ mission is to provide its customers with the best cutting edge solution through continuous research. In the beginning, the company was only engaged in the production and sale of veneers but after some time, the company expanded to increase its product lines into more geographical locations. Further, the company was severely affected by the Global Financial Crisis in 2008 but later survived with the help of crisis management and by revising its growth strategies.

Problem Statement:

Two of the major issues which Chabros had faced were related to the growth strategy and Global Financial Crisis which hit the whole economy from 2008 to 2009. In 2009, the sales of the company suddenly dropped by $10 million that was because of the global downturn in demand and Sawmill’s capacity. Another issue was related to the growth strategy of the business as Chabros had focused on wood veneer and lumber for a long time and its main market was limited to MENA region.

Analysis:

Major Issues:

After the Global Financial Crisis, the company had to face a major drop in the sales of its largest market in Dubai. Although the company ranked at number one even after the crisis, but still the company had faced several issues; out of which the most important ones were regarding strategy/ modes of entry and marketing strategy issue.

Just one year before the crisis, the company had invested an amount of nearly $11 million in its Serbian Sawmill. The crisis decreased the profitability and production capacity of the company that resulted in low sales and the decline continued to increase. In addition to that, the company also faced issues related to the marketing strategy of veneer and lumber as both the products were not very common in its home country, Lebanon.

Global Financial Crisis:

Crisis that came in 2007 to 2008 is said to be the worst financial crisis by many economists. The Global Financial Crises is known to be the worst crisis after the Great Depression of the 1930s. Because of the financial crisis, the markets of different economies collapsed. Financial institutions were affected the most because most of the company defaulted to pay-off their liabilities. Further, banks were bailout by the government of their respective countries, stock markets were completely collapsed, housing and mortgage industry were badly affected that resulted in bankruptcy of many companies and extended unemployment.

Motivation behind international expansion:

In 1999, Chabros celebrated the birth of its first foreign subsidiary i.e. the Dubai Subsidiary that was named under the name of Chabros Wood Trading. Chami has been motivated to expand his business internationally for various reasons. The foremost reason was to find the ways to get low cost of production. The owner of the company expanded its business to Serbia to get benefits from the low cost of production. With the help of this, the company could reduce its cost by finding low cost labors for the manufacturing of its products.

In addition to that, the company could expand internationally if the company wanted to make a strong supply chain for the business. Chabros had expanded its business to Serbia so that the company could get access to supplies at low cost and increased its sales as well. Further, another reason for international expansion included diversification that involved expanding the product line of the company as Chabros had expanded its business in manufacturing and selling of Lumber as well. This strategy could be applicable to both small as well as large multi-national.

Further, the company could expand internationally to discover new and unidentified markets. As Chabros was based in Lebanon, which was not a very huge market to expand therefore; the owner and management of the company decided to expand its business into other North African and Middle Eastern market. Moreover, the company had a background regarding the production and selling of veneer which could be a competitive advantage for the company; this would be a valuable advantage for the company which was rare and hard to imitate.

Resource	Value	Rare	Imitate	Organization	Outcome
expertise in evaluating, selecting, purchasing, and selling veneer	Yes	yes	yes	Yes	Competitive advantage

Further, another major motivation for the companies to expand internationally was to increase sales and profits. If a company was generating profits and increased sales after international expansion; then it would be a success for that business. Despite sales and profits, companies like to expand their business globally in order to achieve economies of scale. Like other companies, Chabros expanded its business to MENA so that mass production could be done and economies of scale could be achieved. With the help of its Sawmill, the company would be able to produce goods for its supply in abundance and thus achieved economies of scale. In addition to that, the company had identified that different countries needed different qualities of wood and by expanding globally into different countries the company would be able to purchase a mixed quality of woods from the traders who would benefit them and the company itself.....................

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