CHABROS -Nishita Shibu

In the beginning Chabros operated only in Lebanon and dealt with only veneers. After the civil
war Chabros started supplying for its Lebanese customers in Dubai. The products were bought from
Lebanon and then shipped to Dubai. As demand in Dubai increased and to cut the cost for shipping Chami
decided to to send a few sales representatives to Dubai to find out about the wood market and market
Chabros products which mainly consisted of lumber sand veneers. Due to the success in exports Chami
decided to open its first internalized branch in Dubai. This idea of his turned out to be successful and he
decided to expand further into Saudi Arabia. Since the market was huge and a huge amount of capital
was required he partnered with two Italians and opened up a branch in Riyadh. But the Italians were vary
of the Saudi way of doing business and later sold their share to Chami.
Due to the success in internalization in Dubai and Riyadh he decided to open a branch in Qatar.
Slowly he expanded in other countries like Egypt, Muscat and Jeddah to name a few. According to the
market preferences he then decided to sell the A quality (superior) wood in Dubai, AB quality in Saudi
and Lebanon and B quality (low) in Egypt.
Chabros soon expanded from just trading wood to production as well. It produces varieties of
European lumber of different qualities and traded these lumbers and veneers fro the US, EU, Asia, Africa
and Australia and exported them to middle east and north Africa and a few European countries. The
branch in Dubai was leading in terms of sales volume but there was some amount to sales drop. It was
then noticed that the lumber sales were more than veneer sales; thus, Chami at that time thought that
Chabros was a market leader in veneer and had more potential to grow its lumber business than veneer
business.

Reasons why Chabros had a competitive advantage:

• Provided its customers a large range and customized products
• Had more than 25 years of experience in evaluating and choosing the best suited product for
specific markets.
• Chabros was a wood manufacturers and also a wood whole seller. This dual strategy gave an
advantage over the competition and showed more flexibility.
• Chabros always bought bigger and quantity and wood to serve huge markets and hence had a cost
advantage of buying in bulk.
• They had the capability to adapt to the culture of different markets and use that to their advantage.
• They had a flexible payment strategy. Even if the customers did not pay on time he never took
any legal action against them and provided them a levy to pay after a certain amount time.

Despite all this Chabros had never worked on a efficient marketing strategy and the brand name
was not always that popular. They also faced problems as they were both manufacturers and whole sellers
of lumbers and veneers. Both veneers and lumbers had different profits and losses in the manufacturing
and whole selling industries. This created an imbalance.

A huge crisis happened in 2009. Chami found out that the sales in Dubai, its largest market had
dropped by 30 per cent. Chami had also invested a lot to buy a Serbian saw mill to increase production.
During the first few years the MENA had bought the whole production but subsequently only ended up
buying half of the products. Chami now had to look at alternatives to boost sales. The growth strategies
available to them were market penetration, product development, market development and diversification.
They needed to suitably chose and come up with a solution as soon as possible.
 Scoring model

Range of actual value Standardized

Market size GNI per capita Wealth of Future Political Legal Commercial Geo distance (km) score
consumers growth rate system system system
0-16400 0-9000 0-11000 0-0.7 0-8.0 0-16 0-32 3200-4000 1
16400-32800 9000-18000 11000-22000 0.7-1.4 8.0-16.0 16-32 32-64 2400-3200 2
32800-49200 18000-27000 22000-33000 1.4-1.9 16.0-24.0 32-48 64-96 1600-2400 3
49200-65600 27000-36000 33000-44000 1.9-2.4 24.0-32.0 48-64 96-128 800-1600 4
65600-82000 36000-45000 44000-55000 2.4-3.5 32.0-40.0 64-80 128-155 0-800 5

COUNTRY SCORE Avg.

Market GNI per Wealth of Future Political Legal Commercial Geo score
size capita consumer growth rate system system system distance
s
Algeria 3 1 1 3 3 2 5 1 2.37
Bahrain 1 3 4 5 4 5 1 3 3.25
Egypt 5 1 1 5 2 4 4 4 3.25
Iran 5 1 1 5 2 2 5 3 3
Iraq 2 - - - 2 1 5 5 -
Jordan 1 1 1 4 4 5 4 5 3.12
Kuwait 1 5 5 3 4 5 2 4 3.65
Lebanon 1 1 2 5 5 2 4 1 2.5
Libya 1 2 2 3 1 2 - 3 -
Morocco 2 1 1 4 4 4 4 1 2.62
Oman 1 2 3 4 3 5 3 3 3
Qatar 1 - - - 4 5 2 3 -
Saudi Arabia 2 2 3 1 1 4 1 4 2.25
Syria 2 1 1 2 1 3 5 5 2.5
Tunisia 1 1 1 5 2 4 3 2 2.37
UAE 1 - - 0 3 5 2 3 -
According to the analysis done above with the given data Chabros has a very high scope of penetrating
further in Egypt. Egypt does not have any great forests or tall trees. The timber produced here is of low
quality and can not be cut into sheets. Chami is already aware that Egypt requires low quality products
and the company has been enjoying a 100 per cent profit in this country. A huge market already exists in
Egypt and the company already has a loyal customer base here. The hyper-arid climate of the desert in
Egypt is suitable for preserving wood in the warehouse as well.

The new country where Chabros needs to internalize is Kuwait. People in this country are wealthy and
have appropriate legal and commercial systems for growth. Ease of doing business is also favorable. The
relative distance from Lebanon is not much and the company is already familiar with the culture,
business practices and the market in Arab countries. This time Chabros should try and work on a good
marketing strategy to increase its brand name and image to not repeat the mistakes that had happened in
the past.