Question #1:
The unstable political and economic situation in Lebanon has motivated Chabros to expand internationally. In the early in the 1990s, the civil war in Lebanon had just ended. However, the country’s economic situation remained relatively unstable. Around that time, Chabros was catering the needs of customer groups in Dubai. This motivated Chabros to expand internationally. It expanded to Dubai, and given Chami’s extensive expertise in buying veneers, Chabros gained a competitive advantage over the local competitors. Chabros success in Dubai encouraged the firm to expand into the Saudi Arabian market. Moreover, the domestic (Lebanese) market is too small for Chabros to reach significant economies of scale to compete effectively against local and international competitors.
Chabros is pursuing a transnational strategy. Given that the sales of veneers were a function of tastes of different customers in different countries, there is a relatively high pressure for local responsiveness. For example, in order to penetrate the Egyptian market, Chabros knew that it had to offer a lower quality wood rather than a high quality good. Chabros sold “A” quality wood to the UAE market, “AB” quality wood to markets such as Lebanon and Saudi Arabia, and “B” quality to the Egyptian market. There is also a relatively high pressure for cost reductions. Chabros was a low cost manufacturer of European species of wood, and this enabled the firm to sell different kind and qualities of European wood at lower prices than those of its wholesale competition. Chabros was also a wood wholesaler whereby it purchased non-European wood from manufacturers at the lowest possible price and competed with manufacturers with the higher prices. This global strategy has helped Chabros harness economies of scale, which ultimately lowered the cost of wood for Chabros. Chabros was serving wider and bigger markets, so it purchased larger quantities and different qualities of wood instead of...