Starting a Small Business: Case Study of Bundles for Overseas

This case study explores the challenges faced by Suhail Farwa in starting his small business, Bundles for Overseas, and the potential financial problems that the family could face. It also discusses alternative solutions such as choosing a different product for export, becoming a partner with an already established company in Morocco, or opening the business in another location. Subject: Organizational Behaviour, Course Code: MGMT 3041

MGMT 3041
Organizational Behaviour
Nadir Budhawani
Case Study 1
Saleh Al-Ass’ad 0621845
Mike Richardson 0706531
Robert Lucas 0678310
Theo Hoerner 0759394
Ankur Arora 0703571
Bundles Over Seas
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Suhail Farwa is a Moroccan-Canadian factory labourer, recession survivor, and father of college
graduate twins. Suhail has recently fell under difficult times in regards to his current job. He
finds himself working longer hours for less pay as well as threatened with company benefit
cutbacks. With all this going on in his current career, Suhail is considering starting up a small
business with his brother Mo, with the help of his two children Lameese and Shamir. The idea; to
start up Bundles for Overseas; an import export firm between Canada and Morocco.
Suhail still has most of his family and many contacts living in North Africa, including his brother
Mo, who will handle the distribution side of the business in Morocco. Suhail is excited to start
his small business with his family, but often contemplates if the reward is worth the risk, would
leaving his current factory job be the smartest choice for Mr. Farwa? There are multiple potential
financial problems that this family could face when starting a business like Bundles for
Overseas.
The first symptom is; low profit margins, with only a 10 cent mark up on each pound of clothing
this is very low and even with keeping out costs and expenses this not sustainable for the firm.
More symptoms include; securing an actual supplier that will provide used clothing at 15 cents a
pound, as well as enough to fill a shipping container. If possible to fill the container at that price,
what kind of demand would Mo and the twins be dealing with in Morocco?
The case study states that Mo “knows” that the demand for used clothing in Morocco is
increasing, but what kind of marketing research took place to come to that conclusion, is that
information really viable? If product and demand are not met, financially this firm will not
sustain itself. With this looming financial threat, Bundles for Overseas still holds many great
attributes that are a start to successful small business in the future.
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The first being the roster of employees that this new firm has willing to work for it. Lameese
Farwa is Suhail’s daughter, she is a graduate from Red River College with a general business
degree. Her twin brother; Shamir, also attended Red River College, he currently has an IT
diploma. Both of Suhail’s children would be huge assets to this new firm and its start up, and
both are willing to try for their father, however, there are many cultural differences between the
two countries that this firm exists in, and these differences may sway the twins and their
decisions to work in Morocco.
With Shamir and Lameese as a huge strength to the business, the threat of cultural clash is very
real. Before leaving for North Africa the twins’ parents warn them to not bring “shame” to the
family. Lameese is informed that gender equality is much lower in a country like Morocco which
would be a huge cultural shock to any North American woman. Shamir fears that Northern
Africa will not be technologically advanced enough to fully utilize his IT skills and his new
college diploma. Both twins however recognize the potential opportunity for their careers in
starting up this new business with their father.
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Alternatives
1. Open the business in another location.
Advantages:
● Better Economy.
● Bigger country with more cities and opportunities.
● No sexisim.
● More tourists.
Disadvantages:
● Outside of Morocco.
● Away from family.
● More expensive.
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The first alternative is that they can open a business in a more advanced country near Morocco.
There are many countries around Morocco that are more developed and are doing better
economically. For example, north of Morocco, there is Spain, which has the fourteenth-largest
economy by nominal GDP in the world, and is the sixteenth-largest in the world by purchasing
power parity. It is also part of the European Union, which is basically an organization for
economic trade and growth. Since Spain is close to Morocco, they can open any family business
there and generate easier profits by having someone or a couple of representatives go back and
forth from Morocco to Spain. Spain is also not a very sexist country, the differences between
males and females are very minimal compared to Morocco. Statistics show that there is more
tourism is Spain as well year-round. Which is another advantage of moving the business from
Morocco to Spain. There are other countries around Morocco too, like Algeria.
2. Choose a different product for Export, something more profitable.
Advantages:
● Cheaper
● Better Margins
● Greater Demand
Disadvantages:
● More expensive start up (Products more expensive than clothes)
● Effort needed to research Canadian suppliers
● Effort needed to find retailers in Morocco
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Suhail Parwa Could choose a different product to export to Morocco. It would have to be a cheap
product because 9% of moroccans are below the poverty line and they are ranked 87th in the
world for their economy meaning that they are a relatively poor country.Something that Canada
has an abundance of and is relatively cheap to buy. Something like, Wood, Plastics, and ….
Morocco's Top Imports
Shown in the chart above Morocco’s top imports are: Mineral Products, Machines,
Transportation, Metals, Textiles, Chemical Products, Plastic and Rubbers, Vegetable Products
etc. Out of those top Imports there are a few that match with Canada’s top exports (As shown in
the chart below). The products are as follows: Paper Goods (2.1%) which has an import value of
$913M, Wood Products (1%) which has an import value of $464M, Plastics and Rubbers
(5.2%)which has an import value of $2.31B.
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Canada’s Top Exports
Since they are top Canadian exports this means that they are cheaper to purchase here in Canada,
which means Suhail can purchase them at a cheaper price. If Suhail Parwa decides to purchase
and export one of these products, it will allow him to create greater profit margins. It will also
allow him to have affordable prices in Morocco.
3. Becoming the partner with already established company in Morocco by supplying new
materials or more advanced products.
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Advantages:
● More profit for both companies.
● Establishment of Moroccan Company by trading advanced products.
● Faster operations.
Disadvantages:
● Import duty and taxes
● Lack of knowledge about advanced products
● Moroccan companies not accepting the partnership offer.
Suhail Paraw could reach out and become the shareholder of the already established clothing
company in Morocco, by supplying the materials that Moroccan company are need of or more
advanced products which will help moroccan company to grow into their business more.
Morocco imports Light Rubberized Knitted Fabrics(0.84%), Heavy Pure Woven Cotton(0.34%)
and Synthetic Filament yarn Fabrics(0.42%) from different countries and Canada sells these
materials at relatively cheaper price. So it would be profitable for Moroccan company to buy the
materials from Suhail Paraw.
Address how problem can solved?
This problem can solved by choosing a different product for export, more profitable. Taking into
all the alternatives into the consideration this would be profitable for Suhail. Since the Currency
rate is higher for Canada, 1 CAD = 6.99 Moroccan Dirham. As the economy rate of Morocco is
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below poverty line, If Suhail can sell one of the abundance product found in Canada at the
cheaper rate, he will be more profitable and even after cutbacks, import duties and taxes, he will
make more profit out of all the other alternatives. Since the demand of Mineral products in
Morocco is extreme and Canada exports Mineral products on the extensive basis as Canada is
rich in mineral products ,if Suhail can get be get and about it,It would be more surplus for him.
Suhail could choose other alternatives as well like Transportation,Machines and Metals. They’re
also in huge demand in Morocco as well, They’re 9.5%,18,8%.1% respectively. But It would be
more beneficial and profitable for him if he choose Mineral Products since they’re 26% of
demand out of all other products which is the highest among all.
References
Morocco’s Chart
http://atlas.media.mit.edu/en/profile/country/mar/#Imports
Canadian Chart
http://atlas.media.mit.edu/en/profile/country/can/
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