Charbos - Market Penetration Strategy

Question four by Lora Mouammer :

If charbos followed a market penetration strategy, since their position cannot risk investing in a new country with a possibility of failing. They should concentrate in a country that they already have a subsidiary and try to milk all the possible profits.

 After a long consideration of every country we propose that Charbos should further penetrate in Egypt to re-boost the sales to match the mill’s existing capacity.

Where Egypt’s sales subsidiary cuts and sold mainly “lower quality “imported woods both lumber and veneer within the country and nearby the country , they also follow  a low cost strategy in Egypt .

Why Egypt?

• Egypt market size population is around 81,275 million which is the largest among the countries that Charbos is already working in .
• Egypt wealth of consumer  is quite small around 5,470$ but since Chabros are selling low quality wood at a very low price with a very low cost they will generate more profits , and the low wealth of consumer will affect positively  on chabros since they are following low cost strategy .
• The regulatory environment is very conducive to the operation of the business in Egypt .
• Egypt is very close to Lebanon geographically compared to  the rest of the countries that Chabros operates in and  this will help in decreasing the cost of transportation .
• Egypt market is low price growth and it is very helpful for Chabros  since they sell lower  wood quality with low cost .
• Even if the country faces an economic instability chabros will still operate and generate a lot of profits since it follows a low cost strategy.
• Egypt is not political stable according to exhibit 15 its political stability is  around 14.4% which is less than 50% where the citizen are not able to participate in selecting their government , and have the freedom of speech is very low  that might affect chabros business  ,

The second country after Egypt is Lebanon:

• Because Lebanon’s future growth is around 2.6 which is very high compared to  the other countries that Chabros is operating in .
• Lebanon’s market size population compared to Egypt is very small.
• No transportation cost since the headquarters are placed in Lebanon.

Regarding Oman ,Muscat third choice :

• Very small market size compared to lebanon and eygpt .
• The consumer wealth is very high compared to Lebanon and Egypt , but this doesn’t affect a lot since Chabros are selling at a constant price on all of the countries .
• The geographic distance from Oman to Lebanon is very far and this will increase the cost of transportation

Regarding Saudi Arabia :

• Although they have large market size and the wealth of consumers is high , their market growth rate is very low 0.4 compared to other potential countries that Chabros can invest  in .
• Jeddah doesn’t generate a lot of sales compared to the other operating subsidiaries  that area available in the other countries .  

Regarding Doha Qatar :

• There is no indication about the market growth rate so it will be hard to risk investing in Doha .

Regarding the UAE :

• The growth rate is  negative   -0.1 and this  is a sign not to invest further in the countries  .
•  There is no statistics  regarding wealth of consumer
• UAE market size is small compared to other countries Chabros is  operating in  .
• The UAE is very strict legally 72.2% , so it can affect negatively on chabros if there is a legal mistake done.
• Sales has dropped in Dubai by 30% and trying to penetrate further in Dubai might not succeed .
• Abu Dhabi is ranked very low in sales .

Ranking:

1) Egypt

2) Lebanon

3) Oman

4) Riyadh

5) Doha

6) Abu Dhabi

7) Dubai

We ranked them bases on the market growth rate where we found that Lebanon and Cairo’s market was still growing regardless of the financial crisis  , we also took into consideration the sales in every country .