Nice Wood Developing a Competitive Edge - Case Study Example

? Case Study #4: Nice Wood – Developing a Competitive Edge Table of Contents Part Corporate Profile and Nature of Business 3 A.Company Background 3 B. Description of Business and Product 3 C. Core Competencies 4 D. Description of Product 4 E. Key Milestones 5 F. Background for Exporting 5 Part 2: Market Entry and Marketing Strategy 5 A. SWOT Analysis 5 Strengths: 5 Weaknesses: 6 Opportunities: 6 Threats: 6 B. Market Entry 6 C. Product, Place, Price and Promotion Strategy 7 Product Strategy: 7 Place Strategy: 8 Price Strategy: 8 Promotion Strategy: 8 D. Criteria and Sourcing of Export Partner 9 Conclusion 9 References 10 Case Study #4: Nice Wood – Developing a Competitive Edge Part 1: Corporate Profile and Nature of Business A. Company Background Nice Wood Products is a small business organization reported to be located in the Pacific Coast and produces different lumber of standard types and grades which are specifically targeted for the construction industry of their local market. Due to the financial crisis that besieged the local and global economies, the firm is currently faced with the problem of addressing the potential set-back and decline in the construction industry due to the sub-prime mortgage dilemma. In reviewing its alternative courses of action, ranging from: (1) diversifying its markets, particularly focusing on China, as a new target market; and (2) adopting new technological breakthroughs in the wood processing. In this regard, the VP of business development has sought one’s advice to determine which is the most viable option that would drive Nice Wood back on its successful tract. B. Description of Business and Product The nature of the Nice Wood Product business is that in the lumber industry where operations include picking, cutting and curing wood. Their products are composed predominantly of standard types and different grades of lumber that complies with the following specifications: 2x4s and 2x6s used in framing as well as plywood and particle board. Likewise, current technological breakthroughs have been reported to automate several phases in the firm’s operating cycle, including the picking, cutting, and curing phases. The new technological applications provided opportunities for New Wood to facilitate the processes (including cutting wood in a variety of standards; new types of kilns accelerating the curing process and lading technology was noted to significantly enable the processed wood to be placed in containers) and thereby, potentially increase their chances to be more competitive in the international market. C. Core Competencies The core competencies noted for Nice Wood were their “established client base and strong relationships throughout the industry” (Case facts, n.d., p. 1). Further, it was also disclosed that “the company is a close-knit operation and senior management values the skills and loyalty of its workers” (Case facts, n.d., p. 1). These facts indicate the Nice Wood Products possess a team of highly skills workers who could have potentially manifested loyalty and a low turnover. Further, their consistent delivery of high quality products has gained strong relationships with loyal clients who are to stay with them amidst the financial and economic challenges. D. Description of Product The product, wood processed lumber, is classified as industrial goods, where these are used to create or make other products. Likewise, these products could be further categorized into the raw materials subcategory. As raw materials, these “are graded according to quality so that there is some assurance of consistency within each grade. There is, however, little difference between offerings within a grade. Consequently, sales negotiations focus on price, delivery, and credit terms. This negotiation plus the fact that raw materials are ordinarily sold in large quantities make personal selling the principal marketing approach for these goods” (eNotes, 2012, par. 19). E. Key Milestones The key milestones that Nice Wood Products have exhibited so far, are as follows: (1) the revelation of the scouting team of vast opportunities and potentials to explore the international market, particularly China; and (2) potentials for applying new technology to improve wood processing as well as shipping, and explore new markets. F. Background for Exporting The first exploration to export was through the scouting team sent in China, where senior managers recognized vast potentials due to the economic growth and expansion, in conjunction with the unprecedented pace and scale of construction. However, as opportunities abound, the managers likewise realized several impediments including diversity in building standards, incompatibility of lumber grades and standards to those of the home market, and the extremely low prices of lumber in the local Chinese markets. Part 2: Market Entry and Marketing Strategy A. SWOT Analysis Strengths: The company would capitalize on its core competency in producing processed wood products due to the exemplary corporate image previously built that made Nice Wood Products a success in the Pacific Coast. As indicated, their “established client base and strong relationships throughout the industry” (Case facts, n.d., p. 1); including the “close-knit operation and (the fact that) senior management values the skills and loyalty of its workers” (Case facts, n.d., p. 1) are internal strengths that the company could tap and utilize to make them more competitive, not only in the local market, but in the international market, as well. Weaknesses: The only eminent weakness is that since it is reacting to the economic downturn, the company would be expected to meet challenges in terms of seeking ways to finance the application of new technology and to retain their present workforce which, according to case facts, were both costly and banks are reluctant to offer loans in the midst of the economic crisis. Opportunities: From the opportunities seen in emerging markets, these are potentials for Nice Wood Products to increase their sales and net profits as well as their market share as it opts to enter new international markets. Likewise, there are also opportunities seen in implementing new technology which would facilitate various phases of wood processing and even take advantage of the containerization offered by the lading technology. Threats: The threats would come in the form of stiffer competition posed by current organizations in the lumber industry both in the local and foreign market as well as the risks involved in entering new markets and using new technology. B. Market Entry One of the potential markets that Nice Wood Products could look into aside from China is Jebel Ali, located at the southwest city of Dubai in the United Arab Emirates. Jebel Ali is considered a free zone and a highly industrialized area, making it a strategic location for exporting the company’s products. As disclosed in the Dubai Woodshow official website, “Dubai has a huge need for import and re-export market for wood” (Dubai Woodshow, 2011, p. 2). The UAE has been consistently importing wood products from other countries; through the Dubai Woodshow, the participants from various countries could also be potential targets for future exports. As disclosed, the Dubai Woodshow in 2012 would be participated by 12 major countries, to wit: Germany, France, Austria, Italy, America (USA), China, Indonesia, Malaysia, Ghana, Canada, Spain, and Turkey (AME Info FZ LLC, 2012). Nice Wood Products could, therefore, project seeing Jebel Ali as a potential export market for its wood products. Likewise, it is a strategic location to export Nice Wood Products since Jebel Ali is considered “to have become the port most frequently visited by ships of the United States Navy outside the United States. Virtually all sailors who have completed shipboard tours have visited the port at least once” (Jebel Ali Companies - U.A.E, n.d.); as such, it is a convenient and accessible location for exporting Nice Wood’s products. More importantly, as a free port, Jebel Ali was reported to “home to over 6400 companies, including over 120 of the Fortune Global 500 enterprises, from across the world. It is a leading driver of the burgeoning UAE economy” (JAFZA, n.d., par. 1). C. Product, Place, Price and Promotion Strategy Product Strategy: The most appropriate product strategy for Nice Wood Products is the retention of their high quality products using the raw materials sources from their most favored suppliers. However, to compete effectively, the products must be packaged in containers at specification standards and grade levels that comply and cater to the needs and demands of the industrial buyers at Jebel Ali. Place Strategy: Since the Nice Wood Products would market in a new place at Jebel Ali, the organization must be apprised of cultural diversity and should, therefore, orient themselves on business practices and relevant aspects in cultural dimensions that affect business transactions and operations. Management must research on the concept of time, distance, language, special days, and other relevant events that would affect doing business in the area. Price Strategy: Using technological breakthroughs, as noted in the case, pricing could be competitively adjusted to conform to the market prices of lumber in standard sizes, as demanded in the Jebel Ali market. By pricing their products higher, they would not capture the interest of industrial buyers in the area who could opt to purchase the same products at local wood processing organizations. On the other hand, by pricing the products considerably low, industrial buyers could perceive that these are of low quality and would be detracted and opt to buy from traditional sources. Promotion Strategy: As a new exporter to Jebel Ali, it would assist to apply promotional campaigns and advertising approaches which are consistent with the advertising and promotional techniques used by competitors in the area. If national advertisement campaign through television or newpapers would help, then, they should apply this technique. Otherwise, local advertisements within the scope of distribution should be applied to enhance awareness of industrial firms and to make their presence effectively known. D. Criteria and Sourcing of Export Partner The criteria and sourcing of an export partner should incorporate financial investments needed, taxes and foreign policies to be considered, the language and business practices, the demand for the products, and the number of potential industrial organizations that are markets for the products. The incentives provided by Jebel Ali are significant and the information providing value proposition is an enticing invitation to potentially make it a new target market. As indicated, “our value proposition consists of the integration of products and services offered. The “basics” of our value proposition include services and incentives, such as 100% foreign ownership, no customs duty, 0% income and corporate tax, no labor restrictions, no currency restriction, and one-stop shopping for services” (Jafza, n.d., par. 2). As such, Nice Woods Product would save substantial funds and could earmark the savings for investment in needed technology and training current personnel to be culturally aware and competent in addressing the expanding needs of the UAE market. Conclusion Given the alternative courses of action, Nice Wood Products should definitely pursue investing in the new technology to enable them to improve and facilitate their operations and processes and be competitive in the international market. As the review of the options to target a new market, the Jebel Ali is a most attractive and viable option, given the value proposition that includes 100% foreign ownership, no customs duty, 0% income and corporate tax, no labor restrictions, no currency restriction, among others. Through the SWOT analysis and the application of the strategies in products, price, place and promotions, the venture to the Jebel Ali market is the most viable option. References Dubai Woodshow. (2011, April). Frequently Asked Questions. Retrieved April 28, 2012, from http://www.dubaiwoodshow.com/docs/dws2011_faq.pdf. eNotes. (2012). Consumer and Industrial Goods. Retrieved April 28, 2012, from: http://www.enotes.com/consumer-industrial-goods-reference/consumer-industrial-goods. Jafza. (n.d.). Business in Jafza. Retrieved April 28, 2012, from: http://www.jafza.ae/en/about-us/free-zone-business-values.html. JAFZA. (n.d.). Jafza at a Glance. Retrieved April 28, 2012, from: http://www.jafza.ae/en/about-us/jafza-facts-at-a-glance.html. Jebel Ali Companies - U.A.E. (n.d.). Jebel Ali Companies - U.A.E. Retrieved April 28, 2012, from: http://jebel-ali.uaeincorp.com/. Read More