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Country Notebook:

Lebanon

OSB Board

Jennifer BiskeyJess EnglerCarly Gault

Profressor Leininger4:00 ThursdayApril 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” ).

MKT 432 Lebanon: OSB Board of 41

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).


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”).


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.


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” ).


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.


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).


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


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


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, Mont-

Liban, 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


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


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


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


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...”).


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


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


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).


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.


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” ).


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


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


minerals, electric power machinery and switchgear, textile fibers, and paper


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 five-

year economic and social reform programs. Therefore, their balance of

payments is still skewed negatively (Bureau of Near Eastern Affairs).

4. Exchange rates


a. The exchange rate for Lebanese pounds (LBP) per U.S. dollar is 1,507.5


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”).


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


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).


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


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”).


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.


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”).


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


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


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.


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 north-

south 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


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


http://www.timberweb.com/Members/CountryResults/106/1.html


http://www.timberweb.com/Members/CountryResults/106/1.html

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