Download Country Notebook: Lebanon - MKT432

Country Notebook:
Lebanon
OSB Board
Jennifer Biskey
Jess Engler
Carly Gault
Profressor Leininger
4:00 Thursday
April 29, 2010
MKT 432
EXECUTIVE SUMMARY
Introduction
Lebanon is a country located in the Middle East along the Mediterranean Sea. Its coastal
location as well as close proximity to many other nations makes Lebanon an ideal country for trade.
Through an analysis of their culture, economy, and market we have been able to develop an
introductory marketing plan for exporting OSB board from Michigan to Lebanon.
Lebanon is a democratic republic with a free-market orientation. Although there has been much
civil unrest in the past, presently there is decent political stability. The economy has struggled due to
wars and setbacks but through the use of foreign aid and internal growth Lebanon is trying to rebuild.
The Lebanese culture is very family oriented which stems into their business culture where personal
relationships are very important for business success. There are many well educated and ambitious
entrepreneurs in Lebanon seeking opportunities with foreign investors. This opens up many
opportunities for foreign investment and trade in Lebanon. Many Lebanese are multilingual and the
nation recognizes five primary languages: Arabic, French, English, Turkish, and Armenian.
Economy
Services and banking areas dominate the economy, raising nearly 70% of the gross national
product. Agriculture is also very strong in Lebanon, with 10% of the gross national product. And finally
industry fills the remaining 20% of the gross national product (“Profile of Lebanon: Economy”).
Lebanon’s gross domestic product (GDP) is growing at a rate of 7% in 2009. The GDP’s purchasing power
parity is $47.82 billion. The GDP per capita is an estimated $11,500 in 2009. The inflation rate was 3.4%
in 2009 (“CIA - The World Factbook” ).
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Lebanon has been the recipient of billions of dollars in foreign aid in order to help the country
reconstruct itself. Most of the money has been for development and budget support. Money has been
given at the Paris II and III conferences where more than $8 billion dollars have been pledged by
members (“Global Road Warrior”).
Product
Michigan OSB board would be competing against other OSB board used in Lebanon with the
assurance that the boards sent from Michigan will have met set standards before export (“APA Wood”).
American lumber is priced at a premium as a result of its quality. Lumber from countries in South-East
Asia and Russia are lower priced because they lack quality and standards ratings (“US timber a cut above
Asian wood, Americans say”).
Strategy
Our pricing strategy would be to offer a 10% off discount to customers ordering $200 USD worth
of OSB board to penetrate the market and gain loyal customers.
Our advertising strategy would be to place advertisements in various construction and home
improvement magazines to market to the target market and to develop and print informational
brochures about our product and company to be placed in lumber yards in Lebanon.
Shipping
A freight forwarding company will be used to insure all required documentation is obtained
correctly in order to minimize the risk of not meeting all export/import requirements between the
United States and Lebanon. The freight forwarding company will also help provide specific information
as to where and how shipping would be the most economical. A freight forwarder will be a best option
in order to ensure the company’s first international trade goes smoothly (Kayne).
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Market
The main market our plywood is going to be targeted at is the construction industry and lumber
yards. A lot of reconstruction from the civil war is still ongoing and many companies are remodeling to
because more “green” and energy efficient. For the first two months of 2010, construction permits have
risen 36% (“Construction Permits in Lebanon up 36% in First Two Months of 2010”).
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Country Notebook: Lebanon
I.
Introduction
Lebanon is a country located in the Middle East along the Mediterranean Sea. Its coastal
location as well as close proximity to many other nations makes Lebanon an ideal country
for trade. Through an analysis of their culture, economy, and market we have been able to
develop an introductory marketing plan.
Lebanon is a democratic republic with a free-market orientation. Although there has
been much civil unrest in the past, presently there is decent political stability. The economy
has struggled due to wars and setbacks but through the use of foreign aid and internal
growth Lebanon is trying to rebuild. The Lebanese culture is very family oriented which
stems into their business culture where personal relationships are very important for
business success. There are many well educated and ambitious entrepreneurs in Lebanon
seeking opportunities with foreign investors. This opens up many opportunities for foreign
investment and trade in Lebanon. Many Lebanese are multilingual and the nation recognizes
five primary languages: Arabic, French, English, Turkish, and Armenian.
Based on past political relations and companies going ‘green’, exporting OSB Board from
Michigan to Lebanon is the goal. Due to the reconstruction from damages from the war,
this is an optimal time to export a product such as OSB Board.
II. Relevant History
After World War I, Lebanon became a state. In 1975, Lebanon had a civil war. The main
cause for the civil war was the differences between the power of the Christians and the
Muslims. The Maronite Christians held power in Lebanon, but the Muslims held the
majority of the population. The Taif Accord was signed in October 1989 ending the civil war.
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Following the war, the Israelis occupied the south; there were 450,000 Palestinian refugees
and a strong Syrian military presence (“Lebanon: Country Profile...”).
Syria loosened its power over Lebanon in May 2000 when the Israeli troops withdrew
from Lebanon. After the Syrians left, a government election was postponed three years due
to a disagreement between the Prime Minister Rafik Hariri and President Emile Lahoud.
Hariri was later assassinated in February of 2005. Syria’s last military troops left Lebanon in
April 2005.
III. Geographical Setting
A. Location
Lebanon is located in the Middle East with Syria bordering Lebanon on the north and
east, the south by Palestine, and the west by the Mediterranean Sea (“Profile of
Lebanon: Economy”). Lebanon expands for 10,400 sq km with 10,230 sq km being land
and the remaining 170 sq km with water. For a size comparison, Lebanon is 0.7 times
the size of Connecticut (“CIA - The World Factbook” ).
B. Climate
Lebanon enjoys a Mediterranean climate which receives sunshine for 300 days of the
year (“Profile of Lebanon: Economy”). Because of the Mediterranean climate,
agriculture accounts for 5.1% of Lebanon’s gross domestic product (GDP). Some of the
agriculture products produced by Lebanon include citrus, grapes, tomatoes, apples,
vegetables, potatoes, olives, tobacco, sheep, and goats. The natural resources available
in Lebanon include limestone, iron ore, sale, water-surplus state in a water-deficit
region, and arable land (“CIA - The World Factbook” ).
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The coastline enjoys mild winters while the set of mountains are snowy in the winter.
Summers are hot along the coast and mild in the mountains (“CIA - The World
Factbook.”).
C. Topography
Lebanon has two mountain ranges in its country. The mountains are in the Bekaa Valley.
The eastern mountains are called the Anti-Lebanon ranges while the western mountains
are called Mount Lebanon range (“Lebanon: Country Profile...”).
IV. Social Institutions
A. Family
1. Nuclear Family
Family is very important to the people of Lebanon. The nuclear family is a
shared authority of the mother and father (“Culture of Lebanon...”). Family
status defines access to education and achieving prominence and wealth. Each
member of the family remains loyal to their family and conforms with accepted
standards of behavior so not to bring disgrace to the family honor. Among both
the Christians and Muslims of Lebanon, family loyalty ranked first in order of
importance; followed by religion, nationality, ethnic group, and political party
(Ghazi).
2. Extended Family
It is not uncommon for a family in Lebanon to have a three-generation extended
family. It is considered to be traditional. This three-generation family includes a
man, his wife or wives, their unmarried children, their married sons, and the
sons’ wives and children.
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Families extend their loyalty to the family to employment. In 1960, almost 25%
of the deputies in the Chamber of Deputies “inherited” their seats in the
chamber. Wealthy family members are also expected to share with their
families that are not as prosperous (Ghazi).
3. Dynamics of the Family
a. Parental Roles
Even though the husband and wife share authority, the wife usually has
more influence over the children and the housework (“Culture of
Lebanon...”).
b. Marriage and Courtship
Premarital and extramarital sexual relations are a big disgrace for
families in Lebanon and highly frowned upon. If improper conduct
towards an unmarried woman occurs, it damages her honor to her
family and often the father and brothers will seek “redress” which can
result in killing the woman and man involved, or driving the man out of
the village (Ghazi).
Men may have up to four wives, but most men marry just two wives
due to the economic burden to have such a large family. Typically the
man has children with the first wife and then the second wife is much
younger. It also isn’t uncommon for there to be a marriage between
first cousins. Marrying one’s cousin allowed for the property to be kept
within the family and the female to continue to be around those whom
she was raised around (Ghazi).
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Divorce is very easy for Muslims, difficult for Orthodox Christians, and
extremely difficult for Maronite communities. Marriage and divorce is
decided by religious courts (“Culture of Lebanon...”).
4. Female Roles
The role of women in Lebanon is starting to change. Traditionally, women were
the homemaker and mother in the house. Since the 1970s, women have begun
to enter the workforce, have equal civil rights, and attend college. This change
in women’s roles is due to the lack of manpower due to heavy migration to
Persian Gulf countries (Ghazi).
B. Education
1. The Role of Education in Society
a. Primary Education
Primary education is mandatory and private education is prevalent
(“Lebanon Overview...”). Many parents choose to send their children to
private schools, which are often expensive and religious, to receive
moral guidance. Children are encouraged to learn and be quiet
(“Culture of Lebanon...”).
b. Higher Education
In 1983, nearly 41% of students attending the American University of
Beirut were women (Ghazi). Lebanon has 7 major universities and
specialized colleges. Many schools teach in Arabic, French, and English
since there are three different main languages spoken in Lebanon.
Lebanon wanted to revive the Old Arab traditions. Many of the degrees
offered in the universities in Lebanon include law, medicine, arts, and
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science. More focus is also spent on elementary and secondary schools,
both public and private, to lay a foundation for the universities (“Profile
of Lebanon: Economy”).
C. Political system
1. Political structure
Lebanon is a democratic republic with a parliamentary system of government
which includes a President, a Prime Minister, and a cabinet chosen by elections.
The government is based on the constitutional principle of separation between
the executive, judicial, and legislative branches (“Profile of Lebanon”).
2. Political parties
There are three different categories for political parties in Lebanon; 14 March
Coalition, Change and Reform Alliance Bloc, and Hizballah and Amal Alliance.
Each category has sub-parties with different leaders. 14 March Coalition has
seven sub-parties including the Democratic Gathering Bloc, Democratic Left,
Democratic Renewal Movement, Future Movement Bloc, Kataeb Party,
Lebanese Forces, and Tripoli Independent Bloc. The Change and Reform Alliance
Bloc has four sub-parties which are the Free Patriotic Movement, Metn Bloc,
Popular Bloc, and Tashnaq. The final category, Hizballah and Amal Alliance, is
composed of the following six parties; Development and Resistance Bloc,
Hizballah Party, Loyalty to the Resistance, Nasserite Popular Movement, Syrian
Ba’th Party, and Syrian Social Nationalist Party (“Global Road Warrior”).
3. Stability of government
Lebanon has maintained their independence since November 22, 1943 (“Profile
of Lebanon”). However, due to Lebanon’s history of being a place of refuge for
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many minorities, there is much social unrest. The government does not have full
control in all areas of the country (“Global Road Warrior”).
4. Special taxes
Consumption tax in Lebanon is a Value Added Tax which is 10% but there are
some products which are exempt from the tax. There is no special expatriate tax
regime. Corporate income taxes are 15% on income from profits. Other
corporate taxes include a municipal tax, professional tax, stamp duty on
contracts and bills, forming, propagation or transformation of companies, tax on
advertising, and registration tax on real estate (“Country Trading Profiles”).
Lebanon has signed double taxation conventions with numerous countries
including Algeria, Armenia, Bahrain, Belarus, Bulgaria, Canada, Cuba, Cyprus,
Czech Republic, Egypt, France, Gabon, Iran, Italy, Jordan, Kuwait, Malaysia,
Malta, Morocco, Pakistan, Poland, Qatar, Romania, Russia, Senegal, Sudan,
Sultanate of Oman, Syria, Tunisia, Turkey, United Arab Emirates, Ukraine, and
Yemen (“International Agreements”).
5. Role of local government
There are eight administrative divisions of the government. The governorates
are Aakar, Baalbek-Hermel, Beqaa, Beyrouth, Liban-Nord, Liban-Sud, MontLiban, and Nabatiye (“CIA - The World Factbook”).
D. Legal system
1. Organization of the judiciary system
The judiciary system of Lebanon is composed of three parts. First is the Four
Courts of Cassation, three of which are for civil and commercial cases and the
fourth is for criminal cases. Then there is the Constitutional Council which rules
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in respect to the constitutionality of laws. The final part of the judiciary systems
is the Supreme Council which hears cases involving charges against the
president or prime minister as they arise. Also, there is no judicial review of
legislative acts (“Global Road Warrior”).
2. Code, common, socialist, or Islamic-law country?
Lebanon has a legal system that is a conglomerate of four different systems.
There is an influence of Ottoman law, canon law, Napoleonic code, and civil law
(“Global Road Warrior”).
3. Participation in patents, trademarks, and other conventions
There is a national office for the protection of intellectual property rights in
Lebanon and the nation is a member of the World Intellectual Property
Organization (WIPO) as well as a signatory to the Paris convention for the
Protection of Intellectual Property. Patents have a validity of 20 years from the
date of payment of the registration fee, trademarks are valid for 15 years and
can be renewed indefinitely, designs are valid for 25 years with one renewal
period for 25 years, copyrights last up to 50 years after the author’s death, and
industrial models last 25 years with one renewal chance for another 25 years
(“Country Trading Profiles”).
E. Social organizations
1. Group behavior
Lebanese culture is very family oriented. Family ties are still strong and relevant
in personal, political, financial, and business relationships. Power and leadership
in the political field are gained through family support and business practices
favor hiring family or working with family relations over outsiders. Trust in all
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aspects of life is very important, therefore maintaining close family ties for
everything helps minimize risk (Ghazi).
2. Social classes
While there is no actual structure for social classes, money is the strongest
determinant for classes. Wealth and status are often found between different
religion and family lines (“Culture of Lebanon...”).
3. Race, ethnicity, and subcultures
There are two primary ethnic groups in Lebanon. The Arab population is
composes 95% while 4% are Armenian and 1% is composed of other
miscellaneous ethnicities. Many Christian Lebanese do not consider themselves
to be of Arab descent, instead they refer to themselves as Phoenicians
(descendants of the Canaanites) (“Global Road Warrior”).
F. Business customs and practices
1. Business Ethic and Framework
The majority of Lebanese business is conducted through the use of personal
acquaintances and mutual trust. New businesses can best enter the market by
using acquaintances to establish business partners and contacts. Lebanon has a
free-market orientation and most Lebanese are seen as skillful entrepreneurs.
Many of their multilingual business professionals and academics are seeking
new opportunities and business partners (“Global Road Warrior”).
2. Decision Making
Overall in Lebanon, most decisions are made very slowly and direct criticism is
often avoided with preference to hints or suggestions for changes in order to
compromise. Depending on the intensity of personal relationships business
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decisions may be easier to make or they may be more difficult. Since most
businesses are still small family-operated entities, the decisions usually fall upon
the owner or manager while in larger enterprises the decisions are made
following company structure and operations (“Global Road Warrior”).
3. Meetings
Punctuality for meetings varies. Arriving on time, before, or even after a
specified meeting time are all existent in Lebanese culture. Outsiders are
recommended to arrive on time to be safe, but it is important to realize that
relationships and social formalities are more important than timed schedules.
All forms of meetings usually being with inquiries into health, family, and other
polite, personal, non-business matters. Smoking is acceptable during meetings,
and the smoker should be sure to offer a cigarette before taking one themselves.
Gifts are often exchanged as a sign of respect, generosity, and courtesy towards
the beginning of a meeting. They should always be accepted graciously.
Business cards on the other hand are exchanged at the end of a meeting.
Another general rule for the Lebanese is to stand upon the arrival of an elder,
senior company member, or a woman. Maintain eye contact and make sure feet
are kept on the floor or at minimum make sure the bottom of a shoe is not
pointed directly at someone which would be considered offensive (“Global Road
Warrior”).
4. Women
Unlike other Middle Eastern or Persian Gulf Islamic countries, Lebanon has a
different perspective when it comes to women in the workplace. Legal rights for
women exists making it easier for women to pursue university educations and
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careers in the fields of law, business, and others professions. Foreign women
that hold high ranking positions in business are generally well respected and
treated fairly as long as they behave in a highly professional manner (“Global
Road Warrior”).
V. Religion and aesthetics
A. Religion and other belief systems
1. Relationship with the people
Lebanon has a diverse culture; therefore each different religion maintains their
own authority over its followers, and tries not to affect others. There are no civil
laws determined by religion so personal codes vary from person to person.
Marriage is strictly a religious ceremony, and has no legal status (“Global Road
Warrior”).
2. Membership of each religion
Muslim 59.7% (Shia, Sunni, Druze, Isma’ilite, Alawite or Nusayri), Christian 39%
(Maronite Catholic, Greek Orthodox, Melkite Catholic, Armenian Orthodox,
Syrian Catholic, Armenian Catholic, Syrian Orthodox, Roman Catholic, Chaldean,
Assyrian, Copt, Protestant), other 1.3% (note 17 religious sects recognized) (“CIA
- The World Factbook”).
B.
Aesthetics
1. Visual arts
Painting is a popular form of art, often influenced by French techniques but
altered with an oriental touch. Along the coast traditional pottery is still popular
and local crafts are still crafted and sold to tourists (“Culture of Lebanon...”).
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2. Performing Arts
Popular international festivals provide an array of artistic attractions for
everyone. Oriental and Western music mix with symphonies, opera, and pop
singers. Foreign and local dance troupes perform as well as classical and modern
ballets. Many of these festivals are held in open air at historical sites for an
ultimate culture experience (“Culture of Lebanon...”).
3. Literature
Lebanon has a history of poets and novelists. Many write in Arabic as well as
French and occasionally English. Oral literature is still preserved in villages
(“Culture of Lebanon...”).
VI. Living Conditions
A. Diet & Nutrition
1. Meat & Vegetable Consumption Rates
Meat consumption is 2002 was 63.1 compared to 1961 which was at 22.4. The
calories per person per day from vegetables are 2829. Lebanon is ranked 8th in
food production (Lebanon, Britannica Online).
2. Typical Meals
Lebanese cuisine is Mediterranean: Pita bread, rice is a staple food, hummus,
bean dishes, and pasta, salted yogurt, red meat, and chicken (Lebanon,
Britannica Online).
3. Malnutrition Rates
Boys and girls under the age of 5 is under 10% although the boys percentage is
larger than the girls (Lebanon, Britannica Online).
4. Foods Available
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Oranges, apples, other fruits, variety of beans and vegetables, cereal, root
crops, pulses (dry harvest: peas, beans, etc.) Meat all kinds (Lebanon, Britannica
Online).
B. Housing
1. Types of Housing Available
Most of Lebanon’s population lives in the main cities of Beirut, Tripoli, and
Sidon which are densely populated. Cities in Lebanon suffer from a lack of space.
Most people live in apartments (CIA, World Factbook).
2. Do most people live in one family dwelling or with other families
Last available info for the 1980-88 total housing units # was 820,000 with 33 per
dwelling. Housing needs until 2000 estimated 400,000 units (CIA, World
Factbook).
C. Clothing
1. National Dress
All Christians and Muslims who live in the cities wear European style clothes. In
poorer Muslim towns and in some Muslim areas in the main cities, you can still
find the Muslim chador (veil for women). In the countryside women sometimes
wear traditional color skirts and men wear traditional baggy trousers.
2. Types of clothing worn at work
For men the standard business attire is a suit. Women may wear dresses, skirts
or slacks and blouses. Again, while there is no dress code, urban professional
Lebanese women dress modestly but well. Formal attire may be required for
special events. Some Muslim women will wear very modest clothing and a head
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covering at work. Bring lightweight clothes for the summer months (Lebanon,
Britannica Online).
D. Recreation, Sports, and other leisure activities
1. Types available and in demand
The arts, literature (oral and written), traditional pottery, performance arts,
football (aka soccer), basketball, weightlifting, skiing, windsurfing, kayaking
E. Social Security
Lebanon does a social insurance system. It’s lump-sum benefits only. It covers
employees in industry, commerce, and agriculture. They have certain qualifying
conditions. EX: old age benefit, disability benefits, and survivor benefits all followed by
specific rules (Lebanon, Britannica Online).
F. Healthcare
Healthcare is highly developed in Lebanon. Very little belief of traditional medicine
remains. Lebanon has more doctors than it actually needs
VII. Language
A. Official Languages: Arabic is the official language, followed by French as the second.
There are also English, Armenian, and Turkish speakers. Accents are a much higher
indicator of social status than they are in the United States.
B. Spoken versus written languages: Classical Arabic-is a written language. Also officially
spoken language. Modern Armenian publishing industry, government publication
appears in French.
C. Dialects: Changes from region to region, the dialect of the Druzes is regarded as most
distinctive (Lebanon Info, World Info. Zone).
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VIII. Population
A. Total
As estimated in July of 2009, the population of Lebanon was 4,017,095 (“CIA - The
World Factbook” ).
1. Growth Rates
The population continues to grow at a rate of 1.107% (“CIA - The World
Factbook” ).
2. Birthrates
Per 1,000 populations, 17.1 births occur (“CIA - The World Factbook”).
B. Distribution of Population
1. Age
Of the 4 million people of Lebanon, 25.8% are between the ages of infants and
14 years old; 67.1% between 15 and 64 years old, and the remaining 7.2% of the
population are 65 years old and up. For the total population, there is a 0.95
male to female sex ratio for Lebanon (“Profile of Lebanon: Economy”). The
average life expectancy for the people of Lebanon is 73.66 years with females
outliving males by approximately five years longer (“CIA - The World
Factbook.”) .
2. Sex
In 2009, for every 0.95 males, there was one female for the population (“CIA The World Factbook”).
3. Geographic Areas
In 2008, nearly 87% of the total population lives in an urban area. A majority of
the population live in the coastal areas in the cities of Beirut, Sidon, and Tyre.
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Other areas of the country are sparsely populated. Because the majority of the
population lives in urban areas, that is where a lot of government spending goes,
neglecting the rest of the country (“Lebanon Overview...”)
4. Ethnic Groups
The Arab ethnic group holds a vast majority of ethnic groups in Lebanon, making
up 95% of the population. Armenian’s make up 4% of the population (“CIA - The
World Factbook) .
IX. Economic Statistics and Activity
Lebanon has a liberal economy. Their economy is based on competition and private
ownership
A. Gross National Product (GNP)
Services and banking areas dominate the economy, raising nearly 70% of the gross
national product. Agriculture is also very strong in Lebanon, with 10% of the gross
national product. And finally industry fills the remaining 20% of the gross national
product (“Profile of Lebanon: Economy”). Lebanon’s gross domestic product (GDP) is
growing at a rate of 7% in 2009. The GDP’s purchasing power parity is $47.82 billion
(“CIA - The World Factbook” ).
B. Personal Income per Capita
The GDP per capita is an estimated $11,500 in 2009 (“CIA - The World Factbook” ).
C. Average Family Income
The workforce in Lebanon is approximately 1.481 million people. Lebanon also
experiences a 9.2% unemployment rate in 2007 (“CIA - The World Factbook” ).
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D. Distribution of Wealth
In 1999, 28% of Lebanon’s population lives below the poverty line. The inflation rate
was 3.4% in 2009 (“CIA - The World Factbook” ).
E. Minerals and Natural Resources
The main resources found in Lebanon include limestone, iron ore, salt, water-surplus
state in a water-deficit region, and arable land (“CIA - The World Factbook.”).
F. Surface Transportation
Lebanon has seven airports in the country. Five of the seven airports have paved
runways. There are 43 kilometers (km) of gas pipelines. Railways extend for 401 km in
Lebanon. Roadways measure 6,970 km in Lebanon which include 170 km of
expressways. Lebanon has two ports and terminals which are in Beirut and Tripoli.
These ports offer ports and terminals for the 33 different kinds of merchant marines
(“CIA - The World Factbook”).
G. Communication Systems
In Lebanon, approximately 714,000 households use a main line telephone in 2008.
Cellular phones are also popular in Lebanon with 1.43 million people using a mobile
phone. Individuals using the internet are also popular. Nearly 2.19 million users are
online. Information is also broadcast over 15 television stations, 20 AM radio stations,
32 FM stations, and about 12 unlicensed radio stations (“CIA - The World Factbook”).
H. Working Conditions
As stated earlier, Lebanon’s workforce is about 1.481 million workers. Of these 1.481
million workers, roughly 945,000 were foreign workers whom come from Syria, Asia,
India, and Africa. They are mostly unskilled and employed in areas such as construction,
agriculture, industry, and households. The government supports trade unions. The
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typical work week is 48 hours. Approximately 15,000 people work in the financial sector
and manufacturing employs about 15% of the workforce (“Lebanon Overview...”).
Worker rights are out there, but rarely enforced. Wages remain low. There are often
strikes, labor actions, slow downs, and protests (“Lebanon Overview...”).
I.
Principle Industries
1. What proportion of the GNP does each industry contribute?
Industry contributes 18.7% of Lebanon’s GDP, while agriculture contributes
5.1% and services constitute 72.8% (“CIA - The World Factbook.”).
J.
Foreign investment
1. Opportunities?
There are opportunities for foreign investment in Lebanon, especially since it
has a free market economy and is fairly open to trade and foreign investment.
There is an educated workforce and a good standard of living in an environment
with limited restrictions for investments (“Country Trading Profiles”).
2. Which industries?
The industries which are the most opportunistic include the field of
reconstruction of basic and productive infrastructures, supermarkets, and
general construction (“Country Trading Profiles”).
K. International trade statistics
1. Major exports
The main export commodities include jewelry, base metals, chemicals,
miscellaneous consumer goods, fruit and vegetables, tobacco, construction
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minerals, electric power machinery and switchgear, textile fibers, and paper
(“CIA - The World Factbook”).
a. The major exports for 2009 were $3.5 billion (“CIA - The World
Factbook”).
b. The main customers of Lebanese exports are the United Arab Emirates,
Switzerland, Iraq, Saudi Arabia, and Syria (“CIA - The World Factbook”).
2. Major imports
The major import commodities are petroleum products, cars, medicinal
products, clothing, meat and live animals, consumer goods, paper, textile fabrics,
tobacco, electrical machinery and equipment, and chemicals (“CIA - The World
Factbook”).
a.
As of 2009 the imports were $16.25 billion (“CIA - The World
Factbook”).
b. The majority of imports in Lebanon come from the United States, China,
France, Italy, and Germany (“CIA - The World Factbook”).
3. Balance-of-payments situation
a. The trade balance as of 2007 was $-7,850 million in U.S. dollars
(“Country Trading Profiles”).
b.
Lebanon has received billions of dollars in financial aid due to increased
indebtedness in order to try to rebuild internally. Recent aid has been
promised based upon the completion of benchmarks set for the fiveyear economic and social reform programs. Therefore, their balance of
payments is still skewed negatively (Bureau of Near Eastern Affairs).
4. Exchange rates
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a. The exchange rate for Lebanese pounds (LBP) per U.S. dollar is 1,507.5
(“CIA - The World Factbook”).
b. The exchange rate has been consistent against the U.S. dollar from
2004-2008 (“Country Trading Profiles”).
L. Trade Restrictions
1. Embargoes
The only embargo on Lebanon that has been in existence is for arms goods, in
order to prevent more social unrest (“Practical advice for business”).
2. Quotas
There are no import quotas for Lebanon.
3. Tariffs
Luxury goods such as caviar and alcoholic beverages may have a tariff rate of
100% while tobacco has a rate of 25% and electrical goods 15% (“Muslimtrade
Network”).
4. Licensing
Licenses are required for most agricultural products on a yearly or seasonal
basis, pharmaceutical and chemical products, and various industrial products
including white cement, gypsum, tar, petroleum, fuels, fuels oils, gas kerosene,
silk thread, pyjamas, electrical wire, unprocessed leather, telecom wire, copper
wire, and industrial machinery and equipment (“Muslimtrade Network”).
5. Customs duties
All customs duties are determined by the Lebanon customs department upon
importation. Items must be declared according to Lebanese customs’
requirements (“Customs Law”).
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M. Extent of economic activity not included in cash income activities
1. Countertrades
The only known countertrading done in Lebanon is through a government
monopoly on the trade of cigarettes and tobacco. Lebanese tobacco leaves are
traded for cigarettes from the US (“UK Trade & Investment”).
2. Foreign aid received
Lebanon has been the recipient of billions of dollars in foreign aid in order to
help the country reconstruct itself. Most of the money has been for
development and budget support. Money has been given at the Paris II and III
conferences where more than $8 billion dollars have been pledged by members
(“Global Road Warrior”).
N. Labor force
1. Size
The labor force is 1.481 million with as many as 1 million additional foreign
workers (“CIA- The World Factbook”).
2. Unemployment rate
The unemployment rate estimated in 2007 was 9.2% (“CIA- The World
Factbook”).
O. Inflation rate
The inflation rate as of 2009 was 3.4% (“CIA- The World Factbook”).
X. Channels of Distribution
A. Retailers
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Just over a decade later, Downtown has emerged as Beirut's most fashionable and
desirable neighborhood, with gloriously restored French Mandate-era buildings,
European and Lebanese cafes, world-class restaurants, luxurious boutiques, and stylish
pubs. Maarad Street, with its arabesque arches and sidewalk cafes, is unquestionably
the beating heart of Downtown.
ABC is a major superstore in Lebanon. Also is the Dunes Commercial Center Shopping
mall on Verdun Street in Beirut. Also contains the Empire Dunes cinemas owned by the
Empire chain, a commercial center, residential facilities and the Holiday Inn Hotel.
Hypermarket Bou Khalil first chain of supermarket. There are a lot of other large super
centers (Lebanon Shopping centers, Lebweb).
B. Import/Export agents
Imports in 2009 $16.25 billion (such as: cars, clothing, medicine products, meat, live
animals, consumer goods) Exports in 2009 $3.5 billion (such as: jewelry, base metals,
chemicals, fruits, vegetables, tobacco, textile fibers, paper) (CIA, world factbook).
C. Warehousing
Beirut Cargo Center is the first to introduce this service in the market. For this purpose,
BCC acquired a very sophisticated warehouse in the suburbs of Beirut. The warehouse is
well organized to accommodate the orders placed by local companies, at their
convenience and with extreme security. It is eventually fully covered by comprehensive
insurance policy, but BCC, and for further security measures, has arranged to cover each
shipment by a separate insurance policy in accordance with the value of goods declared
by the clients (Lebanon Shopping centers, Lebweb).
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XI. Media
A. Availability of media
very good
B. Costs
1. Television
9 national television channels (1.18 million in 1997), ranked 76th
2. Radio:
(2. 85 in 1997) Ranked 78th
3. Other media
Internet hosts 45,352-Users 2.19 million; Cell subscribers per 100 in 2006 30.53
(Global Integrity - Lebanon Notebook).
XII. The Product
A. Evaluate the product as an innovation as it is perceived by the intended market
1. Relative advantage
An advantage to this product is that it is a necessity for construction which is a
growing economic activity in Lebanon. The product will already have an
established market and acceptance in the culture.
2. Compatibility
Michigan OSB board would be competing against other OSB board used in
Lebanon with the assurance that the boards sent from Michigan will have met
set standards before export (“APA Wood”).
3. Trialability
OSB board is not an easy product to offer free trials on because of its use
internally in structures as well as product modifications to fit needs of
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customers. However, prices can be adjusted and specials given in order to
encourage its use over other products already established in the market. This
will allow consumers to see that the product is comparable to others being
offered.
B. Major problems and resistances to product acceptance
There should be no cultural problems with accepting a construction product such as OSB
board in Lebanon. It is a product with an established use and market in Lebanon’s
construction industry.
XIII. The Market
A. Describe the market(s) in which the product is to be sold
The main market our plywood is going to be targeted at is the construction industry and
lumber yards. A lot of reconstruction from the civil war is still ongoing and many
companies are remodeling to because more “green” and energy efficient. For the first
two months of 2010, construction permits have risen 36% (“Construction Permits in
Lebanon up 36% in First Two Months of 2010”).
1. Geographical regions
The main geographical region targeted is going to be in Lebanon’s capital of
Beirut. Beirut is locked along the coastline, making it easier for shipping.
2. Forms of transportation and communication available in the region
Beirut offers transportation abilities such as taxis, buses, the airport, and ports
along its city line (“StateMaster- Encylopedia: Beirut”).
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Communication available in Lebanon, as stated earlier, and Beirut include the
telephone, internet, radio, and television.
3. Consumer buying habits
a. Product-use patterns
1. Construction
2. Furniture building
b. Product feature preferences
1. Strength
2. Durability
c. Shopping habits
1. Price
4. Distribution of the product
OSB board is typically sold at outlets comparable to lumberyards in the
United States (Welcome Yellow Pages).
1. Ajjaj Veneers & Timbers Co
2. Derneika Timber Est
3. General Timbers & Veneers Co
4. International Timber & Veneers
5. Pack Wood Timber
5. Advertising and Promotion
OSB board is not commonly a highly marketed good when it comes to
advertising and promotion.
6. Pricing strategy
a. American lumber is priced at a premium as a result of its quality.
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b. Lumber from countries in South-East Asia and Russia are lower priced
because they lack quality and standards ratings (“US timber a cut above
Asian wood, Americans say”).
B. Compare and Contrast your product and the competitions product
1. Competitors product
a. Brand name
Plywood
b. Features
Workability, impact resistance, flexibility, dimensional stability, 2 way
strength and high panel shear strength and stiffness
c. Package
Minimum order quantity-45 cubic meters, supply ability-5000 cubic
meter; pallet or bulk packages also by size, thickness, and grade
d. Competitors Prices
Competitor prices depend on the thickness and type you want, but the
is lowest $10.00 and the highest is $50.00.
e. Competitors promotion and advertising
Brochures, mail, magazines, newspaper, radio, television etc.
2. Our Product
Often lumber in Lebanon comes from south-east Asia and Russia. This lumber is
not graded or tested against any set of standards. Lumber from the United
States is graded and tested against the Lumber Standards of America. Because
of the difference in standards, our product is offered in areas with a premium
price. (“US timber a cut above Asian wood, Americans say”).
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C. Market Size
1. Estimated industry sales for the planning year
In 2000 these firms shipped $3.3 billion worth of goods and spent $2.0 billion on
materials, and employed nearly 24,000 workers.
XIV. The Marketing Plan
A. Marketing Objectives
1. Target Market
Existing Lumber yards
Selling our OSB board through existing lumber yards will open us up to a market
otherwise hard to enter. Appendix A consists of a list of existing building
material companies in Lebanon (“Directory @ Lebanon.com”).
2. Expected Sales and Profit Expectations in 2011
Exact expected sales are not at this time known. Analysis of data will be
gathered at each time of sale to compute expected sales and profits in the
future. More research needs to go into exact costs of manufacturing, shipping,
and price determination for the market.
3. Market Penetration and Coverage
To penetrate the market, the price of the OSB board would start low compared
to other premium OSB board, combined with other offers such as 10% discounts
on bulk orders. After a certain period, review sales data and determine if the
discounts were successful and customer satisfaction with the product.
B. Product Adaptation or Modification
1. Core Component
OSB board
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2. Packaging Component
No direct packaging is needed. On each pallet of OSB board, the company logo
will be painted on.
3. Support Services Component
If problems arrive, lumber yards will be able to call a direct phone line to
corporate headquarters, speaking to a real person, to address the issue.
C. Promotion Mix
1. Advertising
a. Objectives
To promote our OSB board efficiently.
To satisfy the needs of the customers.
To promote an image of our company and product.
b. Media Mix
To place advertisements in various construction and home
improvement magazines to market to the target market.
Develop and print informational brochures about our product and
company to be placed in lumber yards in Lebanon.
c. Message
Our product is a high-quality product.
d. Costs
Print materials
Postage
Display design
2. Sales Promotion
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a. Objectives
To promote our OSB board efficiently.
To satisfy the needs of the customers.
To promote an image of our company and product.
b. Coupons
Offer a 10% off discount to customers ordering $200 USD worth of OSB
board
c. Costs
There is no direct cost to the company while offering a discount.
3. Personal Selling
Visit individual lumber yards with a sale pitch explaining why they should sell
our OSB board.
D. Distribution: From origin to destination
1. Port selection
a. Origin Port
Port of Saginaw or closest to processing facilities.
b. Destination Port
Port of Beirut (“Country Trading Profiles”).
2. Mode selection
a. Railroads
Rail transport in Lebanon is not a good option because of the age and
decay of their main rail line. However, to ship the product within the
United States to a port for sea transport, railways would be an effective
choice.
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b. Air carriers
Air carriers will be the most costly of any transport for OSB boards.
Although the shipment would be faster, other types of transport would
be more beneficial to both importer and exporter. The most frequent
and popular choices for air freight cargo carriers are Trans
Mediterranean Airways, Lufthansa, and Air France (“Lebanon
Opportunities”).
c. Ocean carriers
The port of Beirut sees around 55% of all Lebanese imports which
makes it the most logical and efficient way to get our product into the
country (“Lebanon Opportunities”). The product can be loaded onto
cargo ships in local Michigan ports or they can be transported to a larger
coastal port like New York or Louisiana for shipment.
d. Motor carriers
There are only two main highways in Lebanon. One of which runs northsouth along the coast and another which runs east, which limits the
entry ways into the country (“Country Trading Profiles”).
3. Packing
a. Marking and labeling regulations
There are no labeling requirements to import OSB board into Lebanon.
The only requirements are for pharmaceutical and agricultural goods.
b. Containerization
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Containerization will be decided based upon the types of transport
used. Most likely will be shipment by pallets in order to minimize
packaging.
c. Costs
Costs cannot be computed until all aspects are known.
4. Freight Forwarding
All required documentation will be specified by the freight forwarding company
of choice in order to minimize the risk of not meeting all export/import
requirements between the United States and Lebanon. The freight forwarding
company will also help provide specific information as to where and how
shipping would be the most economical. A freight forwarder will be a best
option in order to ensure the company’s first international trade goes smoothly
(Kayne).
XV. Conclusion
Based on the information available, gathered, and analyzed, exporting OSB Board to Beirut,
Lebanon would be on a trial basis before deciding whether the export is successful or not.
Based on the political relations, exporting costs, uncertainty of profit or loss, and market
penetration make a trial basis advantages. After two years of exporting, a re-examination of the
data, finances, sales, and politics, a clear answer of whether or not to continue exporting our
OSB Board to Lebanon can be answered.
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APPENDIX A
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http://www.timberweb.com/Members/CountryResults/106/1.html
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