Jabwood Case Study

1619 Words 7 Pages
THE FACTORS THAT MATTER. WHAT SHOULD JABWOOD CONSIDER WHEN EXPANDING.

There are a lot of factors to be considered when a company wants to expand the performance of its activity outside the borders of the home country. However, in the case of Jabwood it is vital that it pays attention to those most important to it. In order for that to be done the company has to think over its case through the prism of different international business and international marketing theories because each theory would generate its own factors. The following lines will look at them.

The theory of international investment is one of those to be considered by Jabwood. The theory rests on the concept of trade seen in the image of a product or service being produced
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However, when producing that good in a new country it is no longer considered an import.

Another factor is the presence of natural resources that a product’s production might require. If they are unavailable, the way to acquire them would be either through import or if you move the production to where they are available.

Competition is also a factor. It constantly puts pressure on the company to lower the manufacture costs and increase the production efficiency. In more practical words, this means cheaper: initial capital, natural resources, and human labour.

The above-mentioned theory is relevant for the case of Jabwood because the international investment theory rests on the idea of ‘mobility of capital’. That is what Jabwood has to decide – whether to move its capital and what part of it precisely (referring to the entry mode it will use to move its business) or not. What is more, it has to choose between four options of expansion: China, Saudi Arabia, both or none. That is why, in this specific case, choosing the most important factors generated by the theory above is
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Whether the production process will take place in the host country or the product will just be imported is a matter of export, joint venture or FDI mode of entry into the new market. They will be explained later in the work. However, judging by the data of the case, the ease of doing business in China is 91/183 and that of Saudi Arabia is 12/183.
Also, the time required to start a business (in days) is 38 for China and 5 for Saudi Arabia. In this train of thoughts, if the production has to potentially move, then China may be the better choice because the ease of doing business is more important than how fast you start it.
If importing the product, the time to import (in days) does not favour China – 24 days – but it is only 7 days more than Saudi Arabia – 17 days.
Another fact to know, if setting down in the host country instead of importing, is that the corporate tax rate in Saudi Arabia is from 20 % to 45 % whereas in China it is a fixed number of 30 %. This favours China

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