Lakewood Forest Products Ready For Exports example essay topic

1. Is Lakewood Forest Products ready for exports? Using the export-readiness framework developed by the U.S. Department of Commerce and available through various sites such as web (from "Trade Expert" go to "Getting Started" and finally to "Assess Your Export Readiness"), determine whether Lakewood's commitment, resources, and product warrant the action they have undertaken. In 1970's, Be das Canadian Ltd. had successfully experienced in selling lumber and salmon to countries in the Persian Gulf.

The company had opened four offices worldwide at that time. However, the company encountered with the biggest problem in selling its products because of the explosion of the Iran-Iraq war in 1983. The price of lumber decreased rapidly in international market. Most of the trading companies also disappeared within this situation.

To solve this problem, the company sent its employees to the world market in order to find new markets and business opportunities. One year later, Lakewood Forest Products was established in order to supply lumber for Korean firm. While Korean firm purchased lumber for manufacturing chopsticks, the company found that chopsticks was interesting market in Asia. Particularly, the Japanese chopsticks market was one of the highest growth rate. Therefore, the company will focus on exporting chopsticks from U.S. to Japan. However, the company should answer questions on the export-readiness framework for assessing the successful opportunity of the company in international market.

According to the export-readiness framework, it divide into two parts that are "Is your company ready to export" and "Is your product ready to export". In term of "Is your company ready to export", this part also divide into two parts that are motivational and organizational factors. To apply this case, the motivational factors of Lakewood Forest Products has a consisting of three reasons for exporting. One reason is that chopsticks market has a strong growth in Asia. The company focuses on this market as a long-term investment. The important thing of investing in chopsticks factory is to find a new business opportunity because the existing products of the company (lumber and salmon) begin to collapse.

Another reason is that the company can produce its product at the lowest costs because of using an advanced technology. The quality of the product is also high because the company use the machine to make chopsticks, and no one had automated the process before. Finally, improving return on investment is the last reason. As a result, the largest of the 450 chopstick factories can produce only 5 million chopsticks a month while an overall market size of the chopsticks is 130 million pairs per day in Japan. Therefore, the ROI of Lakewood Forest Products would be high when the company invest in chopstick factory.

In a part of the organizational factors, Lakewood Forest Products has many reasons in order to support exporting chopsticks to Japan. A good reason for starting chopstick project is that the state of Minnesota want to participate in this new venture for creating jobs. At that time, unemployment rate is increased rapidly because of the decline of the mining industry. However, Private lenders do not agree with this plan. They think that Far Eastern companies have an advantage in term of a cheap labor. In addition, There is a very small domestic market for chopsticks in U.S. Another reason is that Lakewood Forest Products could receive the money and benefits from Hibbing, Minnesota, and the Iron Range Resources Rehabilitation Board.

For example, Hibbing and Minnesota can provide an excellent labor pool and make a loans at $500,000 for the project. The Iron Range Resources Rehabilitation Board could issue its bond in order to make a money about $3.4 million. Approximately 30% of the overall fund of the project come from Hibbing, Minnesota, and the Iron Range Resources Rehabilitation Board. Moreover, Hibbing and Minnesota subsidize training wage, enterprise zone credits, and tax increment financing benefits. The production capacity of Lakewood Forest Products is 7 million pairs of chopsticks a day. That is one of the important factor to ensure exporting successfully.

However, the domestic demand of chopsticks is small in U.S. but the Japanese chopstick market is high, and still over demand. In term of "Is your product ready to export", this part examine that your product require a modification or not, what is the competitive advantage of your product, and so on. To apply this case, Lakewood Forest Products showed that the company do not focus on the domestic market. The company only sent its chopstick to market in Japan.

The Japanese chopstick market represents a growing market in Asia because people eat out more often, and the fear of communicable diseases. Moreover, Lakewood Forest Products has its unique chopstick in term of high quality. The company uses the machine for producing. However, the rejected rate of chopsticks is over 20 percent of production, and the wasted product also is 60 percent of production. In the future, a new machine would reduce the rejected rate of chopsticks. In conclusion, I think that Lakewood Forest Products is ready for exports.

The company has several thing to support its chopstick successfully in Japan. For example, the company has a good internal and external factors. The internal factors are an advanced technology, high quality of chopsticks, and great of production capacity. The external factors are a growing Japanese chopstick market, government regulations and benefits supporting.

2. What are the environmental factors that are working for and against Lakewood Forest Products both at home in the United States and in the target market, Japan? In Lakewood Forest Products case, the company must be considered the environmental factors both in the U.S. and Japan that influence the business opportunity. In the U.S., Lakewood must be considered the environmental factors such as climate and geography, labor force, and economic status. For example, climate and geography is one of the most important factor because Lakewood must access to suitable raw materials easier. In case of the shortage of raw material, it would effects to exporting process in the future.

Therefore, the raw material must be supported in operating continuing ly. Another factor is labor force that influence in term of cost. While Lakewood has an competitive advantage of an advanced technology, the company should focuses on labor costs, and has labor force enough to support the operation of the company. Finally, the interesting factor for exporting is economic status. It shows the opportunity of Lakewood in term of hedging exchange rate to compete with its chopstick competitors. For example, the average of GDP was 3.5, and 2.5 for GDP per capita in the 1980's.

It showed that economic status was stable in the U.S. Lakewood can controlled its selling price of chopstick in the target market. However, Hibbing and Minnesota offered their jobs and training wage subsidies, enterprise zone credits, and tax increment financing benefits for Lakewood. For Japan, Lakewood must be considered many of the environmental factors such as government regulation, nontariff barrier, customer characteristics, culture, competitive offerings, and economic status. For example, government regulation and nontariff barrier are one of the most important factors because Lakewood may be encounter with the protection of domestic industry, or approval procedures in Japan.

Customer characteristics and culture are very interesting factors. These factors will be influence the Lakewood chopstick exporting. In this case, Japanese people often eat out and they also use chopstick when they finish eating that are a good chance for selling Lakewood chopsticks. Another factor is competitive offering. This factor will help Lakewood for determining the unique of the product in order to offer in the target market. In this case, Lakewood offered its chopsticks in term of high quality that was an competitive advantage because the company had an advanced technology.

Finally, economic status in Japan is good condition. It shows that the opportunity of Lakewood in term of growing market to sell its chopsticks. For example, the average of GDP was 4.3, and 3.7 for GDP per capita in the 1980's. When Japanese economic status was good, the people would spend more money for eating because of culture, and customer characteristics. 3. New-product success is a function of trial and repurchase.

How do Lakewood's chances look along these two dimensions? In this case, If Lakewood's new product success is a function of trial and repurchase, the company has a chance to test in many things about product in order to attract its customers such as branding, packaging, appearance, and quality. These things could be attract the customers directly. For example, trademark refers to the legally protected part of the brand. Packaging will vary as a function of transportation mode, transit conditions, and length of time in transit. Because the product spend a long time in channels of distribution, especially exporting product.

Appearance plays an important role in how consumers perceive a product. Lakewood must emphasize quality in its strategies because the company cannot compete on price alone. In Japan, Far Eastern companies has generally competitive advantage in term of cheap labor that also become the main competitors.