How is this case related to Globalization?
Jabwood International case study is related to international business because the trade the company is involved in incorporates different countries. Jabwood is located in Lebanon, and its main product (TANITA) supplier is a Russian company. Jabwood then distributes the product to other companies since the company has exclusive importing rights from the main supplier company in Russia. The case is also related to globalization because Jabwood is now considering expanding the company’s business to China and other Middle Eastern nations in order to increase business. With the current state of technology, Jabwood can make use of the Internet to establish an online market presence and capture the interest and business of many potential and real time customers as possible. The poor state of technology in Lebanon has slowed down the rate of globalization in the country.
Many telephone lines have been part of the collateral damage suffered when political, religious and tribal groups clash over power in the region. This has slowed down technology and the speed at which people on the ground can get the information that they need. The Internet is an important tool for conducting business especially in the current economy. People can ask for information and get it within seconds through chatting on the different applications that are available to users. Competition among businesses is one of the reasons that have contributed to Jabwood International losing its edge and sales. It is possible that the Russian Company that supplies Jabwood international with TANITA has been approached by a rival company, with a proposal to make better sales in comparison to Jabwood International. However, Jabwood International stands to make a lot of money should they get new clients in addition to the sales that they are currently making.
How is this case related to international business?
Jabwood International case study is related to international business as it involves trade between different major countries that have different political entities. The main business is between Russia and Lebanon where the importing and purchasing private companies are located respectively. International business involves trading of companies that might be using different currencies, which promotes trade and income earned between the two nations. This case of Jabwood International was also directly affected by the global crisis of the economy that occurred in 2008. The country’s location in the Middle East region meant that most international businessmen and women left due to the insecurity in the region. The pulling out of foreign currency had a negative effect on Lebanon’s economy, with reduced demand on timber, and therefore reduced business for Jabwood International.
Set SMART objectives for Jabwood
In order to get ahead, remain in business and make the profits that Jabwood International needs in order to excel, the management needs to make S.M.A.R.T goals.
S- Specific goals
Fayez will need to make a decision on whether the company will venture into the China market in order to increase sales, and convince the Russian supplying company that they can still make high sales. High sales will help Jabwood International maintain the exclusive rights to be the only company that imports timber products from the Russian main supplier.
Fayez will also have to decide whether to initiate the re-supplying of timber products to Saudi Arabia. Jabwood had stopped supplying to Saudi because of the unstable political nature of the region at the time. Political instability can mean the loss of cargo in transit if it for example was caught between warfare among warring parties. Unfortunately, the company would not be paid for such losses by anyone and would therefore have to recover the lost money using available savings, budgeted for other company needs.
Jabwood International should make investments that are based on current market knowledge and allocation of a given amount of money that is specific, with a good and accurate expected amount of business. The business deals that are made should provide as much liquid cash as possible so as to grow and reinvest the proceeds into the business. The goals made should have figures to match the resources that will be inputs, and give expected outputs.
The goals that the company makes so as to increase their sales should be realistic. The company should use the links and networks that they have to conduct the necessary market information, to determine the feasibility of venturing into new markets.
Goals set by the company should be appropriate in ensuring that the company’s sales improve, and the Russian company reinstates exclusivity of allowing Jabwood to be the only importer of timber in Lebanon. Such reinstatement will allow the company to regain its market competition and reduce the ability of competitors getting into the market. Such an entry barrier is necessary in ensuring Jabwood has a competitive edge in the industry. Fayez should use the long relationship between his, and the Russian company as grounds for negotiating for an extension as he looks for business in the Middle East and China.
The goals set by Jabwood International should have reasonable timelines within which the sales of the company should go up. The resources that are invested in the venture should be one of the bases for estimating an accurate and reasonable timeline. Luckily, Jabwood International has been in business for long, and can be able to use their long experience in coming up with necessary timelines.
Which International/global issues addressed in this case study?
International issues, such as political instability are addressed in this Jabwood International case study. Differences in religious, cultural and political beliefs have caused a lot of instability in Lebanon and surrounding regions. As of 2011, Lebanon had a population of over 4 million individuals, with a low growth rate of 0.45 %. The situation is not made any better by 87.2 % of the country’s population living in the urban areas. All these factors played a part in bringing the demand for TANITA (Jabwood international’s main product) down. Due to constant wars involving gun fire and other destructive weapons, the state of infrastructure in the country is run down and is expected to require large sums of money to rehabilitate. Important infrastructure such as roads and telephone lines are also included in the budget for rehabilitating important economic structures in the country. The constant disagreements between political parties, sects and religious groups have contributed to a high rate of migration from Lebanon by investors and young nationals who would have contributed to a positive growth of the country’s economy. Most of the young and talented individuals that could have contributed to a fast growth and recovery of the economy have migrated to developed countries, seeking better opportunities. There are constant power blackouts in Lebanon since there is only one company that supplies electricity, and it is keeps on rationing power. Such a factor means that energy supply is inconsistent, which in turn affects other industries that are part of the economy.
Richard Ivey business School. (2012). Jabwood International: The Risky Business of expanding East. Ontario: The University of Western Ontario.