Duque Papertiers: A Trusted Supplier

Introduction

Duque Papertiers Gros is family-owned enterprise located in the northern part of France. The business has developed a large consumer base dating back for more than fifty years consist of wholesale traders and other small business entities such as small offices, local schools, and small shops but does not engage directly with end consumers. Primarily, it distribute stationery products that include office suppliers, writing/drawing materials, shredders, low-cost printers, office furniture, and printer cartilage. Despite presence of competitors in the region, the firm has develop a positive image and reputable relation with customers perceived as prompt, reliable, and trustworthy supplier. Although he has no analytic skills, the owner and manager, Donald Duque, understands the significance of data-based decision making in business environment. Within the scope of this report, it will assess the stationery market, per capita spending, and subsequently the viability of entering other markets, Germany.

Duque Papetiers Gros Analysis

2.1 German Wholesale Stationers Market, Overview

For many centuries, such German stationery stores as Staedtler, Faber-Castell, Stabilo and Lamy, and Edding have had high profitability and success market performance. Since 2002, Germany has seen a gradual decrease in number of office and stationery suppliers from 7,973 to 4,989 (Statista, 2018). These decrease in sales is attributable to various factors in strategizing appropriate objectives as well as market stratification. Currently, Germany population is aging with fewer young individuals within schooling age than in the past. In this case, sales to schools and back-to-school products that was traditionally main strategy for most organizations has suffered massive setbacks to stationery products. Secondly, changes in stationery industry has been also felt in respective business environment where display and sale such products as pads and pens are easy found in large retail chains. Digitalization of classrooms and learning environment with schools and teachers using new technologies such as laptops and tablets moving away paper products. According to MGCC, 2016, p. 8), Germany records annual revenue in sales of stationery products of €15 billion. Breaking the growth structure, the association of stationery branding in the country listed high demand from foreign market (5%) and local consumer by 2.5% averaged its 3.5% growth in 2015. Most of stationery business in the country engage directly with respective consumers with limited involvement of third parties and middle men. Recently, there is a surging use on online platforms and business-to-business (B2B) strategy by most of firms in the German stationery industry. In 2017, online sales recorded 30% of businesses revenue. Despite having the largest share of export across Europe accounting for more than 19% of stationery sales, the market high entry barriers. Continue your exploration of Challenge The Presiding Arbitrator with our related content.

2.2 Per Capita Spending on Writing and Drawing products

Spending on writing and drawing materials by consumers grow to €32000 in 2017. The increased sales of drawing and writing materials by €7000 between 2015 and 2017 acts as an indicator of profitability and growing industry in a country. The graph below indicate the findings of spending on writing/drawing products per capita across seven countries as provide by MGCC (2016) report.

The graph show distribution of spending drawn from twelve EU nations. According to the findings, countries such as Slovakia, Hungary, Poland, Croatia, and Spain spend less than €10 while Austria, Germany, and Switzerland uses over €35 on drawing and writing stationery. Whereas, France indicated spending €28.3 on these material listed in fourth position among the twelve countries. In essence, the spending figure of respective nation in relation to those of market the company currently operates in hence one can project the condition and potential outcome before entry. It provide an expansion decision making platform. Broadly, a company should prioritise expanding into a market with higher spending rate than it current market (Hohenthal et al., 2015, p. 4; Tukker A. and Tischner U., 2017, p. 5). Using this data, countries with higher spending on material in comparison to that of France (where Duque currently operates) are have high success potential hence should be considered for expansion. In this perspective, the rising per capita spending in the country is a sign of positive performance in form of financial outcome.

2.3 Sales Analysis of Duque (2015-2017)

Appended table

According to Cocheo (2017, p. 151), the 2015/16 year saw a positive in sales of stationery products. Although the company registered a positive revenues and net income in the 2016, it had a negative profit in 2017 (ibid). Essentially, the sales of stationery products has had swinging performance in the market receiving both positive and negative outcome in the past three year. Broadly, it first two years recorded a profitable performance but in the third year it registered a loss. Unlike low cost printers, sales of office furniture had increase in sales but shredders had a steady sales within the same period. As pointed by Sungau and Ngunguru (2015, p.187), steady income comprise of initiation sales in relation to daily pitfalls in order for an organization to have a consistent product bought. A steady sales can be linked to preparedness to handling challenges and changes in the market or expectation by consumers through having a deep understanding. Moreover, sales of drawing material and paper based suppliers had profitable net income for the same period (Appendix 1 formula used in calculation).

Pie chart

Using the correlation coefficient r2=0.5348 and the formula [y=6500x-n+7], the company’s sales for 2018 and 2019 can be forecasted. The estimated sales for 2018 is €188,000 increasing to €194,500 in 2019.

2.4 Feasibility of Expanding into German market

The expectation of market volume by 2022 is $7.262 billion from current $5.64 billion indicating annual growth rate of 6.5%. The findings is projected in robustness of stationery-oriented business where more than 70% recording an increased turnovers in the same year. Statista (2018) indicated an increase in online penetration rate of stationery from 7.5% in 2013 to 11.7% in 2018. Similarly, user penetration of is expected to increase to 18.8% from 16.5% within the same period. This correlate to the findings by MGCC that indicate an annual turnover of over €14.8 billion and the countries expenditure per capita on writing and drawing materials totalling about €35.2 (MGCC, 2016, p. 8). These rank the country second in EU zone in spending in stationery. In addition to expectation of high profits, the consumer culture of using stationery products and high purchasing power indication makes German an optimal market for businesses in the industry to enter. The assertion by Meysen and Kelly (2018, p. 6) and Karam & Planchet (2012, p. 8) depicts need for reliability by consumers to business entities including the suppliers in German business environment. According to the MGCC (2016, p. 8) report, German stationery market has huge number of business entities seeking for a reliable, consistent, and trustworthy suppliers. Additionally, other important element in business environment is having a deep insight and understanding of the components driving the market such as ways in which it operates, integrated culture, values held towards other business entities and consumers, and operation structure. In this perspective, Duque Papetiers Gros need to conceptualise these factors including consumer and business approach towards reliability and fair pricing of the product in decision making on entry into German market.

2.5 Costs of a New Building

Entry into new market, Germany, requires setting up structures and facilities that will accommodate products and its management. Broadly, building a facility necessitate consideration of a lot of factors including the cost of building and management of property. Success in acquisition or building a property is depended on ability to integrate number of existing components such as financial and human resource as well as making aligning to its values and expansion strategy. In the event Donald Duque decides to purchase a building servicing through mortgage payments, he need repayment plan. He believes can comfortably repay the mortgage by making €200,000 in 30 years with 10% interest rate (Formula, appendix 2).

From the table, Donald Duque will have to pay €1,700 monthly. Largely, this will met the company’s need for financing for new building while acting as best option in meeting space requirements and business location setup. As a business entity, Duque Papertiers Gros need to save cost in operation cost including loan/mortgage payment. Payment of €1,700 per month will be work within the organizations and workers financial limits as it allows availability of resources for other projects and expansion while at the same time enabling acquisition of operation centre and asset.

2.6 Mean Value of Orders

The following table shows valuation of products sales and business distribution of profitability. Here, it holds the following hypothesis. First, lack of difference in value of actual (p) and expected average (z). Secondly, average of order and expected mean valuation indicate no variation.

Building from the above results where the mean sample is 240, the consumer acceptance of product lies between 228 and 252. It postulates a higher outcome than the average standard limit of 0.5. This forecast a positive market response to the introduced products or rather a higher acceptance by consumers. Theoretically, the data projects a sales in terms of products number sold in an optimal environment ignoring core factors such as complication brought by consumer demands, competition, and changes within an organization and in the environment it operate in Birkinshaw et al. (2016, p. 11). According to Ranjan and Read (2016, p. 12), the mean value measures an average products sales within a defined timeframe. Harrington (2009, p. 78) claimed that the mean value offers a realistic framework in which a strategy can be drawn or acts as basis of problem solving approach where different components are taken into account with relation to the ultimate goals. For instance, with an expected average mean of 0.59 being above standard limit of 0.5, it places the organization operation in the new market at higher success position. Practically, consideration of a 5% significance rate sets belief explaining challenges that may occur during implementation process. Nevertheless, valuation of order forecast a positive sales for the company if it enters the German market.

2.7 Customer Satisfaction

Consumer satisfaction highlight position where a company is in relation to its competitors in the market. Measured by the extent to which respective consumers of the products are satisfied by the quality of products or services provided. According to Oliver (2014) and Wong and Dioko (2013), key component in consumer satisfaction is understanding their needs and expectation then aligning products to respective market needs. The questionnaire administered to consumer postulate high demands in the market. Asking questions aimed at capturing areas for improvement outlines the consumer needs and expectation from the company and overall market.

Ideally, different markets (France and Germany) vary in terms of culture and perspective towards products hence the results of the questionnaire provides data to base in development of different approaches in these two markets. Furthermore, the data highlights the satisfaction levels while importantly outlining areas that need more effort or remodelling to align with consumer needs.

Conclusions

Duque Papertiers Gros business operation and model in France has led to creation and development of a positive brand from consumer’s perspective being associated to quality and reliability. Operation of an organization within last three years signifying its position towards future sustainability and growth. Consumer values, spending power, culture, satisfaction, and expenditure per capita are fundamental determinants of viability and profitability of the industry (stationery wholesale business) and measurement for penetration into the market. Broadly, the economic status of German population sets high purchasing power for the stationery products also given that most companies in the country has a pricing structure in line with population lifestyle.

References

Birkinshaw, J., Zimmermann, A. and Raisch, S., 2016. How do firms adapt to discontinuous change? Bridging the dynamic capabilities and ambidexterity perspectives. California Management Review, 58(4), pp.36-58.

Hohenthal, J., Johanson, J. and Johanson, M., 2015. Network knowledge and business-relationship value in the foreign market. In Knowledge, Networks and Power (pp. 187-224). Palgrave Macmillan, London.

Magazine of the Malaysian-German Chamber of Commerce (MGCC) (2016). Developments, Trends and Potentials in the Stationery Market – Malaysia and Germany. MGCC Perspective. Kuala Lumpur: The Business Magazine of the Malaysian-German Chamber of Commerce and Industry, pp.2-57.

Meysen, T., & Kelly, L. (2018). Child protection systems between professional cooperation and trustful relationships: A comparison of professional practical and ethical dilemmas in England/Wales, Germany, Portugal, and Slovenia. Child & Family Social Work, 23(2), 222-229.

Ranjan, K.R. and Read, S., 2016. Value co-creation: concept and measurement. Journal of the Academy of Marketing Science, 44(3), pp.290-315.

Wong, I.A. and Dioko, L.D.A., 2013. Understanding the mediated moderating role of customer expectations in the customer satisfaction model: The case of casinos. Tourism Management, 36, pp.188-199.