Jabwood International
Greg Smith
MGMT 3680
9/22/14
Jabwood Case
Problem statement: After reading the case study I believe that despite other issues, the main problem that exists for this company is the lack of revenue, which lead them to make a decision on expansion to the relatively unknown.
There are several issues that caused this problem. The first and most influential was the fact that a political uprising had occurred in Syria. Consequentially, the borders from Lebanon to Syria were closed. Once the sales numbers fell, a crucial part in the company’s supply network, Tanita decided to take its business elsewhere. According to the data, Tanita constituted 60-70 percent of total revenue, which is an absurd amount to have invested in one venture but the withdrawal also created an additional problem. Not only does the withdrawal directly hurt the company’s bottom line, it also created a lower barrier for competition to enter which in turns means more competitors in the market and ultimately the potential loss of Jabwood’s competitive edge. One last problem to consider would be the small management board, lacking of outside influences, and their inability to foresee trouble ahead while only relying on one joint venture to pull in the majority of revenue. Therefore the issue is the unwillingness to change managerial structure. I understand that the company wanted to keep the firm in the family, but had they maybe had some other idealistic analyst on staff, this expansion could have been dealt with before it was a necessity. In order to solve this issue of generating revenue I believe there are three alternatives that should be reviewed.
1. The first of these alternatives would be to expand into China.
Forecast:
Year 1 Max: 100 thousand CBM*2% = 2,000 CBM*US$300=$600,000
Year 2 sales growth 0% therefore $600,000
Year 3 sales growth 100% therefore 4,000 CBM*$300 = $1,200,000
Strengths:
With China’s laws it allows a high bargaining power for suppliers, which is a positive for Jabwood.
MGMT 3680
9/22/14
Jabwood Case
Problem statement: After reading the case study I believe that despite other issues, the main problem that exists for this company is the lack of revenue, which lead them to make a decision on expansion to the relatively unknown.
There are several issues that caused this problem. The first and most influential was the fact that a political uprising had occurred in Syria. Consequentially, the borders from Lebanon to Syria were closed. Once the sales numbers fell, a crucial part in the company’s supply network, Tanita decided to take its business elsewhere. According to the data, Tanita constituted 60-70 percent of total revenue, which is an absurd amount to have invested in one venture but the withdrawal also created an additional problem. Not only does the withdrawal directly hurt the company’s bottom line, it also created a lower barrier for competition to enter which in turns means more competitors in the market and ultimately the potential loss of Jabwood’s competitive edge. One last problem to consider would be the small management board, lacking of outside influences, and their inability to foresee trouble ahead while only relying on one joint venture to pull in the majority of revenue. Therefore the issue is the unwillingness to change managerial structure. I understand that the company wanted to keep the firm in the family, but had they maybe had some other idealistic analyst on staff, this expansion could have been dealt with before it was a necessity. In order to solve this issue of generating revenue I believe there are three alternatives that should be reviewed.
1. The first of these alternatives would be to expand into China.
Forecast:
Year 1 Max: 100 thousand CBM*2% = 2,000 CBM*US$300=$600,000
Year 2 sales growth 0% therefore $600,000
Year 3 sales growth 100% therefore 4,000 CBM*$300 = $1,200,000
Strengths:
With China’s laws it allows a high bargaining power for suppliers, which is a positive for Jabwood.