Ach Challenge 1 – Entering International Trade Essay

2212 Words Sep 28th, 2012 9 Pages
1. Introduction
This case study analysis is based on the case “ACH Challenge 1 – Entering International Trade”. American Colonial Heritage Inc. (hereinafter named “ACH”) is a US American producer of furniture that presently only sells its products in the USA and Canadian markets and does marginal exports to the UK. However, these exports have not proved to be successful so far. The company is fictional and the strategic decision to be taken during the case study analysis is dated back in 2006. Thus, no developments after this year are the basis of this analysis. Furthermore, the case is examined from the point of view of Ms Alexandra Jones who is a member of the International Expansion Team at ACH.

2. Problem Statement
ACH is in the
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Industry Rivalry: The three potential target markets differ considerably regarding market size and the competitive structure (number and size of competitors). The Portuguese market is the smallest one (2006: US$ 1.2bln) and 4000 domestic producers of furniture are reported. The Swiss furniture market is the second largest market with a total turnover of US$ 1.64bln in 2006. Here, 825 national producers are reported. The largest potential export market is Denmark (2006: US$ 3.2bln). However, only 450 producers are located in Denmark. Thus, these producers can be expected to be rather large and competitive corporations.

Market Entry Barriers shape the efforts required by the prospective new entrant in order to successfully go in the market. In Portugal, these market entry barriers are mainly formed by the fact that most of the producers of furniture are traditional and long-term established companies. The Swiss producers have a very good reputation for high quality (“Swiss Made). This good reputation may shape a market entry barrier for foreign producers of furniture. The Danish producers are organized in the “Association of Danish Furniture Industries” and informal inter-firm relationships are widespread.
Bargaining power of Buyers : In contrast to Denmark, the Portuguese retail industry is

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