AaBb A knotty problem Nice Wood Products is a small but successful Pacific Coast

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AaBb A knotty problem Nice Wood Products is a small but successful Pacific Coast firm that produces standard types and grades of lumber for the domestic construction industry. This 2x6s used in framing as well as plywood and particle board. With the financial setbacks includes 2x4s and crisis industry has significant decline in housing starts. Fewer houses are being built and it is likely that for the immediate future, there is going to be a slowdown in the construction industry Nice Wood could ride out the storm. The slowdown is temporary and will likely last only a year or two, after which construction will probably revive. The company has an established client base and strong relationships throughout the industry, which would rise again On the other hand, in allow it to ramp up quickly once housing starts began t the short term, this would mean that the company would experience some contraction, including some layoffs. The company is a close-knit operat values the skills and loyalty of its workers. It does not want to alienate that base through measures that would demoralize employees or undermine their commitment to ion and senior management Eastern promise One strategy that the company had already been contemplating was to diversify its markets as a way of buffering itself against cyclical downturns in its domestic market Specifically, a few years ago, irritated with the intransigence of its free trade partners regarding softwood lumber products, it had started looking at East Asia in general and China in particular, as a new target market. At the time, it had sent over a scouting team made up of several senior managers to get a sense of the market and what it would take to penetrate it successfully. The scouting team reported that China was in the midst of an unprecedented economic expansion the likes of which had probably never been seen in history. The scale and pace of construction was that Nice Wood had to breathtaking. However, there were two significant face. On the one hand, Chinese building standards were very different. Lumber grades and dimensions were unique to China and not compatible with those in the home market. On the other hand, Chinese prices were extremely low by developed world standards. For lumber to compete in China, it had to be sold at prices that were far lower than those in the home market. At the time, these two objections seemed decisive and Nice Wood shelved anv thoughts of cxpansion into the Chinese market. Now with a slowdown

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