Duque Papetiers: Expanding into Other Markets

2021-07-15 06:38:25
7 pages
1818 words
University/College: 
Carnegie Mellon University
Type of paper: 
Essay
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Summary Information

Duque Papetiers is a stationery firm primary doing it business in France. The company deals with printer cartridges, low-cost printers, office furniture, shredders, writing/drawing materials and general office supplies (Lurant, 2014). The company has been doing relatively well in France, and now is considering expanding into other markets in Europe. Even though this idea looks fantastic, the owner of the company doesnt just want to rush it. He wants to make a decision based on data, mainly focusing on per capita spending on stationeries in France and the greater EU region. He has therefore consulted widely for statistical analysis, and report preparation to inform his decisions. This report is consequently comprised out of that need and includes several charts, graphs and other information to help in making the most appropriate decision in expanding his business to European countries. But, it starts by looking at what Donald considers to be the significant external market focus, Germany.

Product Information

The primary products Papetiers deals with are stationeries, and that is the subject of overview in this context. However, to be specific, we have to look at each item sold by Papetiers and their overall performance in the Germany economy. Germanys stationery market is the biggest in Europe, with a turnover exceeding 14 billion euros (MGCC Perspectives, 2016). That only means the German population on average are spending 182 euros on stationery annually. Over the past year alone, the stationery industry in German grew by over 3.5 percent, becoming one of the best performing sectors (Market Report Germany 2016). Similarly, almost firms dealing in stationery experienced a positive growth over the same period. Germanys stable economy may be credited, but the fact that this industry did better than most others means it has something special and forms a basis for anyone to want a stake in the market.

Even though every product posted positive and increased sales, the writing and drawing material performed excellently regarding demand. An industry analysis also expects these two products to continue growing significantly in the coming years. However, paper and paper-related items suffered a negative growth, going against many other items in the same category. This is a result of increased digitalization where people are abandoning papers and paper related items. The overall conclusion for items in this category is that they have no future in Germany, where digitization seems to be taken root faster than any other place. Papetiers has been selling paper and paper items in Northern France, but they will not make good sales in German.

Office supplies and furniture also showered promising results in Germany. The industry, just like the one for writing and drawing materials recorded a positive growth in 2015 and 2016 (Giunta et al., 2016). Therefore the company can also consider the products to be among those likely to perform well in the country. In northern France, Puppeteer has been operating on both retail and wholesale. The two exist in German but are more competitive than it is in France. They sell almost all the products sold by Papetiers. The issue will thus not be just about the product but also other relevant considerations. Papetiers has been offering excellent supply services, and will probably capitalize on that to make higher sales in the foreign country, where competition is even stiffer than back home.

Other than in Germany, an overview in other countries also indicated a huge market for stationery products. For instance, Austria and Slovenia sending on the items were almost close to that of France. This indicates a huge opportunity which can be utilized in Papetiers expansion strategy. A look at other countries in the EU region also showed a huge market for the products. Either of the products would do well in these markets. In fact, the products needed by either Germany or EU citizen are far more than what is on the list for Papetiers.

There is no better avenue for a company to realize its growth prospects than a thriving market, whose customers have a tremendous spending power. That alone is inspirational to bring Papetiers to Germany.

Customer Information

Germanys market is comprised of three market segments that use stationeries most, and are responsible for the high turnover recorded for products like those from writing and drawing. The first segment of the market comprises of school going children. School going children form the highest percentage of those who use stationeries, and particularly writing and drawing materials. They use the materials for daily activities in school. There are also those students who engage in art, which include drawings, they also form a huge market for the products. Therefore school going children form the largest users of stationeries.

A vast part of the Germany population also uses stationeries, mainly writing and drawing material for hobby activities, other than the official functions where they may use them. This means that there are a lot of people willing to purchase on those items, and since they do it either for official duties or hobbies, the market is likely to remain constant, or even show positive growth. Of the 82 million plus Germany population, over forty percent use some drawing and writing materials. This is besides the ones they use for school, work and other places. A significant portion of the materials is either used for learning or as a hobby.

Other than writing and drawing materials which seem to attract more attention in Germany, other items sold by including furniture, shredders also have a significant customer base in Germany. The Northern France firm already sells office furniture, with all other related stuff (Marketresearch.com. 2017). These are stuff which customers continue to demand, and the existing providers do not seem like they are meeting the expectations of customers. Customers in Germany are highly sensitive when it comes to quality. They do not accept substandard products either form their manufacturer or even from outsiders, presenting a challenge to new entrants. However, based on the record Papetiers has been putting in France, they will likely meet the expectations of the market, even do better. Similarly, there are millions of customers in the entire European region whose need for these products is equally as high as that of Germany or France. In either market, customers are still sensitive to things like quality and price, and would quickly forgo one product for another over such issues.

Recommendation for Expansion

Donalds decision to expand his business out of France, to Germany and other countries is not farfetched. It presents a realistic opportunity for the firm to pursue more profits and growth outside France. Donald should consider expansion from two perspectives.

First, the firm is dealing with products whose market is readily available. The company has operated for a long time in France and has been doing well all through. Looking at the population in France and other countries, they can have the ability to not only provide sufficient markets but also purchasing power. Economies like German, Austral, and Slovenia have already shown a significant spending on stationery products. Therefore, the company can expand fully aware that it has sufficient markets, may to justify the likely high costs of such expansionist strategy. On top of that, the spending power of these counties seems to be high. Germany recorded the highest spending per capita on stationery materials. With anticipation for the industry to continue growing, Papetiers can also move in to benefit from this huge spending by Germans. It can also so in other promising economies.

Another reason why Papetiers should move into German or any such other markets is that of the products they sell, or rather manufacturer. Germans are hobbyists and from that place require huge amounts of writing and drawing materials. The same is true for other countries. The local companies may be meeting the demand, but the addition of this company will just add more competition and probably a higher value for the customer. There is no better trigger for creativity and innovation than competition. Papetiers without creativity and innovation will find it challenging to penetrate the Germany market. Therefore they must prepare sufficiently to address all the issues; including ensuring the products offer extra value for customers. That is one way of greeting customer to their side. The same can be employed in other countries where the firm will expand. Apparently, the firm meets all that is required to make a successful entry into the German economy, even though the long-term sustainability is uncertain in such a competitive environment.

However, amidst the pros of expanding into Germany, there are drawbacks for the same. The most immediate drawback will be the likely high costs of stabling the company in Germany. That alone can consume millions of euros at the initial state. The firm is expected to enter into a new territory, governed by different rules and legislation. One of the immediate repercussions is that the company will likely incur higher taxes, demand to adhere to local legislation among others. They will have to deal with the cultural complications of starting a business in a culture so different from one in France. The purpose of bringing up these issues is to let Donald know the likely challenges and plan appropriately on how to handle them. Every single challenge raised has a solution, but the same must be planned way not to bring problems in the implementation phase.

Financial Information

The company will need not less than 50 million euros for its pioneer stores in Germany. The initial cost is likely to be high given the strategy it is using to enter the market one-off, offering their best services. The shop aims to make the first impression and leave it in the mind of customers for as long as it shall be in the market. On average, a single operating in Germany recorded 6 million euro sales annually. Papetiers will be fine to record half these sales since it is new and it knows the challenges it will likely encounter. But with the high cost of labor, taxes and other things, the company will have to act fast enough and boost their sales.

The firm will foot these cost from its revenue in France, with the primary goal of achieving its objectives. The purpose of this expansion, which is also scheduled to happen in other countries to grow Papetiers, improve profitability and possible make the firm a global corporation. All those objectives must be balanced since they can be capital intensive. Ensuring they start generating revenue as quickly as possible can be something good for the company.

Task 2

From the seven countries illustrated above, Germany and Austria shared the top position of highest spenders per capita on drawing and writing materials. France came third, and Slovenia followed. The sending in Poland and Spain were dismal, similarly to those in Hungary.

Task 3

Question A

The following shows the three years total sales (Screen Printout)

Product item 2015 Sales () 2016 Sales () 2017 Sales () Totals Per Item

printer cartridges 25,000 26,000 22,000 73,000

general office supplies 25,000 27,000 23,000 75,000

low-cost printers 15,000 18,000 18,000 51,000

office furniture 25,000 25,000 27,000 77,000

shredders...

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