Duque Papetiers Gros: Market Feasibility Analysis for Expansion into Germany

This report analyzes the feasibility of Duque Papetiers Gros, a French wholesale stationery company, expanding its operations into Germany. It examines the German stationery market, including annual spending on writing/drawing materials per capita, Duque's sales data, and international standards. The report also assesses the costs of a new building and customer satisfaction. The analysis concludes that Germany presents a favorable market for Duque's expansion, highlighting the potential for increased profitability and market share.

Report for Duque Papetiers Gros
Date: 26th of June, 2018

Table of Contents
1. Introduction...........................................................................................................................1
2. Analysis of Issues for Duque Papetiers Gros........................................................................2
2.1 An Overview of the Wholesale Stationers Market in Germany.........................................2
2.2 Annual Spending on Writing/Drawing Materials per Capita.............................................4
2.3 Analysis of Duque’s last three financial years of sales data (2015-2017)..........................6
2.4 Feasibility of Expanding to Germany & International Standards.......................................8
2.5 Costs of a New Building...................................................................................................10
2.6 Mean Value of Orders.......................................................................................................11
2.7 Customer Satisfaction.......................................................................................................12
3. Conclusions.........................................................................................................................13
4. References...........................................................................................................................15
5. Appendices..........................................................................................................................16

1. Introduction
Determination of market feasibility is extremely important for any organization before
undertaking the decision of business expansion in that specific country. Duque Papetiers Gros
is a French company that specializes in wholesale stationery items. The company specializes in
writing/drawing materials, general office supplies and other stationery items. The stationery
market has turned out to be favourable for the company and in the present situation the
company is looking forward to expand their business in other European countries. For the
company it is important that their management is able to conduct proper analysis of the market
they consider is stable for their business. Duque is currently looking forward to initiate their
business operations in Germany and Belgium. Conducting a proper analysis will allow them to
create a proper framework of a contingency plan to overcome any problematic situation in the
business activity.
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2. Analysis of Issues for Duque Papetiers Gros
2.1 An Overview of the Wholesale Stationers Market in Germany
The German stationery market is one of the most successful markets in Germany and is home
to some of the biggest names in the stationery market. The German stationery industry also has
significant amount of contribution in the economic development of the country. More than half
of the wholesalers and the retailers of the industry have witnessed profits in their business
operations. Companies such as Montblanc, Faber-Castell, Stabilo and many others begin their
journey from the stationery market of Germany (Dash et al., 2018). The stationery market of
Germany is considered highly favourable and has a turnover amounting to almost €15 billion
every year. The demand for German stationery items is increasing every year and the market
suitability will be easier to identify if the production of the stationery items of the country can
be identified.
Figure 1: Production of some specific stationery items in Germany
(Source: MGCC Perspectives, 2018)
The graph above depicts the production of some of the stationery items in the year of 2014.
The production cost of stationery items 2014 amounted to the approximate value of €510
million. The demand of stationery items in Germany is high due to the companies’ benchmark
of incorporating creativity and popular trends in their items (Righetto et al., 2016). The export
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figure of the stationery items of Germany also depicts the international demand for the
products.
Figure 2: Export of stationery items from Germany in 2014
(Source: MGCC Perspectives, 2018)
The graph above depicts the export rate of the German stationery items internationally. The
domestic and international demands for stationery products are similarly high. The exports of
the stationery items amounted to almost €676million. The production and the export rate
indicate that the German market is favourable for Duque Papetiers Gros to conduct business
operations. The idea of business expansion in Germany will allow the company to gain
substantial amount of profit in their business.
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2.2 Annual Spending on Writing/Drawing Materials per Capita
(Bar graph in Appendices)
The annual spending of different countries on stationery items will allow a detailed
understanding of the suitability of the market. If the expenditure rate of stationery items is
higher in the country then it implies that conducting business operation in that particular
country will be suitable for the country.
Figure 3: Annual expenditure of 12 countries on stationery items
(Source: MGCC Perspectives, 2018)
From the above table, it can be said that few of the countries have the highest per capita
expenditure on stationery items. One of those countries is the home country of the company
Duque Papetiers Gros, where the company has already gained success over a period of years in
their stationery business. The French stationery market has turned out to be favourable for the
company. To decide a suitable host nation it is important that a thorough analysis of some of
the countries stationery markets is undertaken. From the per capita expenditure of Switzerland,
Germany and Austria are taken into consideration then the worth is found to be about €105.7m.
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It can be said that if Duque decides to expand their business operations in these countries then
they will be able to gain substantial amount of profit in their business.
From the above table, it is evident that there is not much expenditure in the stationery items
from the Eastern European countries comprising of Croatia, Poland and Czech Republic. The
per capita expenses of these countries are very less which implies that the company will not be
able to gain much profit if they expand their business in any of these countries. The collective
expenditure of these countries provides the amount of €24m. The company will be able to earn
moderate profits if they decide to operate in countries such as Slovenia, Italy, Hungary,
Slovakia and Spain. From the table and the analysis it can be said that Germany proves to be a
suitable country for Duque’s business operations.
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2.3 Analysis of Duque’s last three financial years of sales data (2015-2017)
a. (appendices section for the table formula of annual sales of Duque)
Table 1: Annual sales of Duque for 3 consecutive years
(Source: Created by the learner)
b. (appendices section for pie chart of Duque’s 2016 and 2017 sales)
The pie charts depict the sales of the company for the years of 2016 and 2017 which indicates
that the sales of some objects increased in the year of 2017. However, the sales of few things
decreased in the year of 2017, which is why the sales annual sales of Duque are less than that
of 2016.
c.
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Table 2: Correlation Coefficient
(Source: Created by the learner)
Figure 4: Scatter Diagram of the sales of the company
(Source: Created by the learner)
From the scatter diagram above, it can be said that the existence of R2 represents the value of
correlation coefficient. The value of R2 is found between 0 and 1. When the value of R tends to
0 the value of the correlation is considered false and irrelevant. However, when the value of R
tends to 1, then the value of correlation is considered strong and appropriate. When the value of
the correlation coefficient is 0.5 then it is being said that the value is weak and the nature of its
prediction is irrelevant as well. The table and the figure presented above depicts that the
company sales of Duque in the financial year of 2015-2016 is 0.9 which indicates that the
prediction of the value is strong and appropriate. The sales figure between the years of 2016-
2017 is found to be 0.85, which means that the prediction is strong and appropriate. However,
the sales figures between the years of 2015-2017 combined produce the value of R2 as 0.54,
which implies that the appropriateness of the value of the correlation is less.
d. From the scatter diagram presented above, it can be said that the visible linear progression in
the figure indicates that the sales of the company is expected to rise in the upcoming years. It is
also being assumed that by the end of 2018 the company will witness substantial amount of
increase in their profit margin.
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2.4 Feasibility of Expanding to Germany & International Standards
a.
Table 3: Pros and Cons of expanding business in Germany and Belgium
(Source: Created by the learner)
From the above table, it can be said that the weight of advantages is more than disadvantages.
It indicates that if the company decides to initiate business expansion in Germany and Belgium
then the company will be able to increase its profit margin in the stationery industry.
b. To operate in any European countries there are some international standards which the
organizations need to follow. Complying with the international standards allows the company
to ensure that their businesses are functioning smoothly (Iso.org, 2018). Some of the
international standards are as follows:
ISO 4217: 2015- The objective of this international standard is to make sure that the
companies are able to use the international currency codes to make their transactions easier.
The companies can use the codes in alphabetic or alphanumeric manner.
ISO 50001: 2011- The purpose of this international standard is to make sure that the
companies are able to encourage continuous improvement in their business activities. Various
organizations follow this standard to make sure that they can integrate the quality of their
standards and comply with the environmental rules and regulations.
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2.5 Costs of a New Building
a. With the interest applied at the beginning of every year, the cost of loan repayment on a
monthly basis is found in a way where,
The principle (P) loan amount is €200,000
The time for repaying the loan is 30 years (t)
Therefore, the cost per month is identified to be €1767.99.
(Refer to appendices for calculations)
b. When the interest is applied in the beginning of every month, the cost every month is
identified as below:
Here,
P = €200,000 which is the principle loan amount
R is the size of the payment which is unknown
Interest rate = 10% (r)
Interest every year = 0.1/12 (i)
Total number of days = 360 (n)
The applicable formula for the calculation is:
P = R*[(1-(1+r)^-n)/i]
Thus, the value of R is €1755.
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2.6 Mean Value of Orders
The value of the mean hypotheses and the order of the magnitude is €240.
50 accounts were chosen at random and the value of the sample mean was found to be €230,
which implies that the magnitude order cannot be confirmed as €240.
H0μ = €240
Here, 5% is assumed as the significance level which means that the use of standard deviation is
necessary.
€43 is the standard deviation for 50 accounts and the case here can be considered as
reasonable.
Here, the use of standard error is necessary, which is s√n/, which becomes 43√50/ after
inserting the values. The outcome is 6.08 (decimal moved up to 2 points)
The value of the interval is considered to be 228,252 where it will be easy to identify every
random sample mean.
Therefore, the null hypothesis is €230 and the middle value of Duque is 230.
Thus, the approx value of the order of the magnitude is €230.
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2.7 Customer Satisfaction
a. The company’s initiative to distribute questionnaires in the holiday season turned out to be
an unreliable decision. The company distributed the questionnaires through email services but
it was possible for the company to gain valuable feedback, which will allow them to make
necessary changes in their products and services. The company can try to make necessary
changes in their procedure by initiating the distribution of questionnaire during the time when a
customer confirms a product purchase. It will allow the company to make sure that feedbacks
are generated on time and that the people are able to provide viable ones as well.
The company should ensure the use of their e-commerce website and ensure present their
products and brands in an attractive manner so that sufficient customers are attracted to the
company’s products. Gaining valuable feedbacks on time, will allow the company to make
necessary changes on time and thus they will be able to gain customer retention.
b.
Table 4: Descriptive Statistics of four variables
(Source: Created by the learner)
The descriptive statistics in the table above depicts that the customers are not satisfied with the
products and the services provided to them. The statistics showcase the value of 1.95, which
implies that the customer has not been able to gain the loyalty of the customers. In the table
above, it can be observed that the standard deviation of sales staff and customer service is high
but that of price value is less. It indicates only one thing that the responses generated for the
company are average and that the company needs to improve its products and services.
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3. Conclusions
The purpose of this whole assessment was to identify a suitable stationery market for the
French company ‘Duque Papetiers Gros’. The France-based company is looking forward to
expand its business in a country which provides a higher rate of production and export rate.
After conducting a thorough analysis it was being indentified that Germany is a suitable
country for business expansion of Duque. Identifying the advantages and disadvantages of the
German stationery market allows the company to form a proper plan of initiating the business
or to form a contingency plan in case a problematic situation arises in the business operations.
It also allowed identifying some of the recommendations that will help the company to
improve its products and services.
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4. References
Dash, M., Sharma, K., Bose, A. and Lakhani, A., 2018. Impulse Purchase and Impulse Non-
Purchase in Book & Stationery Retail Outlets in Shopping Malls. International Journal of
Marketing & Business Communication, 7(1).
Iso.org. (2018). About us. [online] Available at: https://www.iso.org/about-us.html [Accessed
23 Jun. 2018].
MGCC Perspectives (2018). MGCC Perspectives, (2), pp.7-20.
Righetto, G.M., Morabito, R. and Alem, D., 2016. A robust optimization approach for cash
flow management in stationery companies. Computers & Industrial Engineering, 99, pp.137-
152.
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5. Appendices
2.2
Figure: Annual expenditure of 12 countries on stationery items
(Source: MGCC Perspectives, 2018)
2.3
a.
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Table 1: Annual sales of Duque for 3 consecutive years
(Source: Created by the learner)
b.
15

26000
27000
18000
25000
29000
27000
30000
printer cartridges
general office supplies
low-cost printers
office furniture
shredders
paper-based supplies
writing/drawing materials
Figure: Sales of 2016
(Source: Created by the learner)
22000
23000
18000
27000
29000
27000
32000
printer cartridges
general office supplies
low-cost printers
office furniture
shredders
paper-based supplies
writing/drawing materials
Figure: Sales of 2017
(Source: Created by the learner)
2.5
a.
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Table: Mortgage Payments
(Source: Created by the learner)
2.7
17

18