please read the case, then write a report about it describing the problem(s), analyzing its/their background and circumstances, and suggesting your recommendations, relating all to International Business concepts and discussions which we have covered in these case.

(1: Introduction

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3: Conclusion )

Forta Furniture: International Expansion In January 2015, Marita Petrescu, the chief marketing officer for Forta Furniture, was visiting an international trade show where large furniture brands went to discover the trends that would shape their industry. She was with Constantin Cernat and Alexandra Dobreva, the respective vice presidents of Fortas two brands, Forta and Abilit. It was the first time that Forta had visited this show. Petrescu would take her insights back to Fortas headquarters, where she would meet the next week with Fortas owners. They expected her to recommend whether Forta should expand into foreign markets. Forta was the leading firm in the Romanian furniture market, but its growth had slowed since 2010 as IKEA and other foreign furniture companies increased their penetration into the Romanian market. In response, Forta acquired Abilit in 2013. This was the first big move that the new CEO of Forta, Vasile Mirea, made when he succeeded Alfred Mirea, his grandfather and Fortas founder. If Petrescu recommended expansion, she also had to develop a plan for doing so. Where should Forta expand? How quickly? How much money and how many resources should it invest? Should it do so as a private label or as a customer-facing brand? a Many companies regularly used a private-label entry strategy to get traction in the new market, learn how it operated, and then build their own brands. Petrescu believed after a couple of years selling private-label furniture, Forta could explore options to license, build a brand, or even create a joint venture with a local brand. Petrescu had commissioned two reports analyzing different market opportunities, but she wanted to see the international competition to decide whether Forta could compete on the international stage.

Country Background:

After more than 40 years of communist rule that ended in 1989, Romania, like many eastern European countries, began to transition to free-market capitalism. In 2004, Romania joined the North Atlantic Treaty Organization (NATO). In 2007, it became an official member of the European Union (EU). Romanian companies could now freely import or export products from other EU nations.

Romanian Furniture Market:

Romania was the second-largest manufacturer of furniture in eastern Europe, behind Russia, with over $1.2 billion in retail revenue in 2014. Over 70% of that amount came from domestic firms. As the Romanian economy stagnated, so did furniture sales. The market had recovered only modestly since then. 3 The price advantage that Romanian brands had over international competitors had been greatly reduced when Romania entered the EU. For instance, Fortas market share in Romania had decreased from 18% in 2003 to 12% in 2014. Revenues for the company had steadily grown in the early 2000s, but they had declined from $124 million in 2011 to $115 million in 2014.

Channels of Distribution:

E-commerce accounted for about 1% of category sales, but this channel was growing rapidly. Many smallerretailers carried only one brand because they did not have the space to display and store a wide array of multiple brands. Multibrand retailers provided a larger selection and a more convenient shopping experience. Because single-brand retail stores received price concessions in exchange for giving brand exclusivity, they could charge lower prices. Some larger brands, like Grandeur and IKEA, had opened branded stores to vertically integrate their distribution channel.

Company Background:

After working over 30 years in a factory as a carpenter building tables and chairs, Alfred Mirea opened his own business in 1992. He initially focused on selling refurbished furniture c and other household products to consumers. In 1994, Alfred started building his own furniture from scratch and selling it under the brand name Forta, a word that meant strength and stability in Romanian. In 1998, the company started building furniture on a larger scale at a new manufacturing facility. Fortas plant ran 14 hours each day, six days a week. In 2004, Forta opened a second plant that had the same capacity as the original plant. Together, these plants could produce 1.8 million units annually.

Consumers:

Most Romanian consumers were price sensitive. If a brand could meet the desired price point, customers focused on durability, as longer-lasting furniture would allow them to spend less in the long run. Consumers with disposable income valued craftsmanship and would spend more for high-quality furniture. Brands regarded as high quality enjoyed significant brand loyalty. A company that won a.

International Growth:

In greater Europe, the perceptions of Romanian furniture were less favorable than they were within Romania and the Balkan region. French, German, and British consumers viewed Romanian products as drab and poorly manufactured. Of the 30% of Romanian wooden furniture that was sold internationally, about 60% was sold in the Balkans (with Bulgaria being the biggest revenue source), 30% was sold in the rest of Europe (with Poland being the biggest revenue source),

Conclusion:

When Marita Petrescu studied the competition one final time before leaving the trade show, she was confident that both Forta and Abilit produced furniture that could succeed in the international market. There were some design and style preferences that seemed to vary by country, but with the Abilit design team fully integrated, she was confident the company could address this issue. Nonetheless, she was still uncertain which brand was better suited for international expansion. While at dinner with Cernat and Dobreva the evening before, the two vice presidents had engaged in a heated debate. Cernat had argued, It is important for Forta to be the initial brand to expand, as it is the flagship of the company. Further, Fortas expertise with manufacturing and logistics would ensure a successful expansion. Dobreva was similarly emphatic about Abilit. Im sorry, Constantin, but Abilit offers modern furniture styles that customers want. Our design experts will help us discern the preferences of new markets and develop new designs to bring to market. After the trade show, Petrescu thought about the data from the two country reports one more time. Which brand was better suited for international expansion? Which country found the balance between financial opportunity and likelihood of success? And which entry mode made the most sense? She wondered how she would answer these questions when she met Fortas other senior managers in the coming week