Internationalizing of Logset Oy

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Problem Statement

Logset, a Finnish manufacturer of specialized forestry equipment, has been struggling to pierce into the Canadian market.  For more than a decade, Logset has tried to build its presence but hasn’t had as much success as it had hoped.  Although they managed to sell their machines in Quebec and Ontario, Western and Atlantic Canada remained seemingly unreachable.  Logset is at a crossroads as it needs to grow into new markets if it wants to do more than break-even.  A decision needs to be made as to whether or not to keep pursuing the Canadian market or to try and penetrate another market all together.

Key Issues

1-Finding the right dealer

The right dealer was hard to find as there are many criteria that need to be met.  

• Good connections with the logging industry
• Commitment to the Logset product line
• Significant financial assets (to purchase the inventory)

2-Competition

There are many competitors in this market.  From big players that reach every corner of the country such as John Deere and Komatsu to smaller companies like TimberPro and Canada’s own Tigercat International.  Furthermore, specialized forestry equipment could be attached to certain types of construction equipment thereby making base equipment more versatile and extending its usefulness. An example of this would be harvester heads attached to excavators.  All the top construction equipment manufacturers offered these options making them real competitors.

3-Reduced yearly harvested amounts due to reduced demand in Canada

Changes in consumer behaviors have led to reduced demand for paper products.  Another factor is a slowdown in the American housing market.  Fewer houses are being built.

External Analysis

Political Factors

The provincial governments in Canada determine what the allowable amount of forest that can be cut.  Also, there are currently import duties on equipment manufactured outside of Canada or the U.S.

Economic Factors

Modest growth in demand for forestry equipment is expected in developed markets like Canada (2%-3% annually).  There is also a reduced demand for lumber in the U.S. housing market.

Socio-cultural Factors

A shift to digital consumption of news media has meant a reduction in traditional printed news media.

Technological Factors

The trend is towards equipment that incorporate technologies that reduce carbon emissions, energy use and operating costs.  Including wireless communications and GPS to monitor and manage equipment are other trends in the industry.  Mechanized re-seeding was also being developed along with winch-assisted systems for steep slope logging.

Environmental Factors

Areas that are harvested on provincial land have to be regenerated by re-planting or seeding.