Duque Papetiers Gros: Report on Expanding into the German Market

This report analyzes the feasibility of Duque Papetiers Gros, a French wholesale stationery provider, expanding its business operations into the German market. It includes an overview of the German wholesale stationery market, annual spending on writing and drawing materials, an analysis of Duque's sales data from 2015-2017, a feasibility study of expanding to Germany considering international standards, costs associated with a new building, mean value of orders, and customer satisfaction. The analysis considers the pros and cons of expanding into Germany and Belgium, compliance with international business standards, and the importance of customer feedback for improving services. The report concludes with an assessment of the market potential and recommendations for Duque Papetiers Gros.

Report for Duque Papetiers Gros

Date: 19th 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.............................................................................................................................14
4. References...............................................................................................................................15
5. Appendices..............................................................................................................................16

1. Introduction
Undertaking a proper analysis of a market and initiating problem solving helps in the proper
understanding of the financial position of the market that the industry is willing to operate into
and to also understand the performance and operational trends. If various organizations initiate
the processing of data analysis effectively then it will allow them to explore their potential and
the ability to provide services in an inclusive manner. The French company Duque Papetiers
Gros is a wholesale provider of stationeries and they specialize in printer cartridges, general
office supplies and paper bases supplies. Germany is considered as one of the best markets for
stationery business, which provides different companies with the opportunity to earn profits.
Duque Papetiers Gros is looking forward to initiate their business operations in European
countries, focusing on Germany and Belgium mainly.
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2. Analysis of Issues for Duque Papetiers Gros
2.1 An Overview of the Wholesale Stationers Market in Germany
The wholesale stationery market of Germany is highly popular and is home to some of the
most prominent stationery companies that are popular around the world. Some of those
prominent companies include the names of Stabilo, Staedler, Lamy and Faber-Castell (Han and
Ma, 2018). These companies have managed to produce products that are highly convenient for
the use of customers and are attractive enough to be of the innovative nature. The annual
turnover of the whole German stationery industry is more than €14.8 billion (Righetto et al.,
2016). According to the report published by MGCC in the year of 2018, annually €182 was
spent by each individual on stationery items. Therefore, it can be said that the market demand
for stationery items in Germany is significantly high. In the year of 2018, the annual revenue of
the German stationery market surpassed the value of €4000 million and it is being assumed that
the revenue will rise by 6.3% in the forthcoming years.
Figure 1: Production of writing instruments in Germany (2014)
(Source: MGCC Perspectives, 2018)
From the statistics presented above, it can be said that the production of the writing instruments
almost amounted to the cost of 510 million in the year of 2014 in Germany. German stationery
is of great demand in other countries, which is why they also gain substantial amount of profit
in import and in export as well. The demand of stationery items in Germanys displays a
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potential idea of how the French company would be able to function if they are able to address
the needs of the population.
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2.2 Annual Spending on Writing/Drawing Materials per Capita
(Bar Graph- Appendices)
Table 1: Per Capita Expense of 12 countries on stationery items
(Source: MGCC Perspectives, 2018)
The table above demonstrates the annual expenditure of 12 countries in terms of stationery
items. From the above table, it can be addressed that Switzerland and Germany undergoes
highest expenses in terms of using stationery items. Therefore, it can be said that there is a high
demand for stationery items in both of these countries, which leaves various stationery
companies with the scope of expanding their businesses in these countries. The German
stationery market is also one of the biggest sectors contributing in the economy of the country.
According to the statistics demonstrated in the above table, the spending of both the countries
on stationery items constitute about €71 million approximately. The market of both these
countries would allow the proper functioning of other company’s business activities.
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The next countries where it will be easier for Duque Papetiers Gros or any other stationery
company to conduct their business operations are Austria and France. Both these countries
have huge potential in their respective stationery market. But since France is the company’s
home nation, its business operations will be more smooth if the management chooses their host
nation to be Switzerland, Germany, Austria or France. The combined per capital expense of
Austria and France is €63 million approximately. The decision of the company to conduct its
business operations in Eastern European countries would not be considered as a wise decision
as the per capital expense of those countries are low and not suitable for expansion of
stationery business.
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2.3Analysis of Duque’s last three financial years of sales data (2015-2017)
A. (Table Formula- Appendices Section)
Table 2: Sum sales of Duque Papetiers Gros
(Source: Created by the learner)
B. Pie Chart- Appendices Section
C.
Table 3: Correlation Coefficient
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(Source: Created by the learner)
2014 2015 2016 2017 2018
156000
158000
160000
162000
164000
166000
168000
170000
172000
174000
176000
178000
180000
182000
f(x) = 1.10436309472959E-28 exp( 0.0379190381957519 x )
R² = 0.543910644194128
Figure 2: Scatter diagram of the sum sales of the company
(Source: Created by the learner)
The presence of R2 in the above scatter diagram depicts the correlation coefficient. R2 is mainly
found between 0 and 1. It can be said that the prediction is strong and is of significant
relevance when R tends to 1. However, the prediction and the relevance are false and can be
considered inappropriate to an extent when R tends to 0. A correlation coefficient is considered
weak when it tends to 0.5 but the prediction and the appropriateness of its nature can be
identified. From the table provided above, it can be said that the company sales between the
years 2015-2016 is approximately 0.9, which implies that the prediction is strong and
appropriate. The approximate sales figure of the company in between the years of 2016-2017 is
0.85, which also depicts that the prediction is strong and appropriate. If the sales figure
between the years 2015-2017 is considered then it can be said that R2 is approximately 0.54,
which depicts that the appropriateness of the correlation is minimal.
D. As per the scatter diagram of figure 3, the linear progression in the sales figures is visible
and it can be concluded saying that the sales of the company are expected to gain by the time
2018 ends. It is also expected that the sales of the company will be more than the sales of three
years combined.
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2.4Feasibility of Expanding to Germany & International Standards
A. The pros and cons of expanding the stationery business of Duque Papetiers Gros to
Germany and Belgium are as follows:
Table 4: Advantages and Disadvantages of expanding stationery business
(Source: Created by the learner)
The above table demonstrates that the density of advantages is greater than that of
disadvantages, which implies that the company will able to earn sufficient amount of profit if
they decide to expand their business operations to Germany and Belgium. The business
environment of the country will be favourable for Duque Papetiers Gros. According to the
table above, the weight of pros is 6.7 which are greater than the weight of cons that is 5.8.
B. For a company to initiate their business operations in any European country, it is necessary
for them to comply with certain business standards that have been set by the authorities of the
country (iso.org, 2018). Following those standards allows the company to conduct business
operations in an effective manner. Given below are some of the international standards:
ISO 9004: 2009- it provides the companies with sufficient guidance about conducting business
activities in a sustainable manner. This particular standard encourages the management to
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initiate approaches that are admirable. This standard does not provide the firm with
certification rather they use it in a contractual form.
ISO 4217: 2015- This international standard is being used by the companies to institute
international currency codes. Using of international currency codes by company like Duque
will make financial transactions easy for them. These companies can use the codes in
alphanumeric or alphabetic manner, which will create convenience in terms of currency
transaction.
ISO 14004: 2016- This particular international standard aims to initiate guidance for the
companies who prefer to establish a management structure that is consistent with their nature
of complying with protecting the environment. This standard makes sure that organizations are
able to achieve environmental aims and objectives, which will eventually improve the
standards of the company’s business operations.
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2.5 Costs of a New Building
A. For calculating the monthly cost of the repayment an interest is applied to the loan at the
beginning of every year
Amount of Loan (P, Principle) = €200,000
Duration for the repayment of the loan (t, Time) = 30
Every month cost = €1767. 99
(Calculations- Appendices section)
B. Instead of the beginning of the year, when the interest is applied every month, the monthly
cost generated is being indentified below:
Here,
The principle loan amount is identified as P (€200,000)
The size of the payment is identified as R (?)
r = Interest rate which is 10%
i = Interest every year which is 0.1/12
n = Total number of days which is 360
The formula applied for generating the payment size is:
P = R*[(1-(1+r)^-n)/i]
Therefore, it can be said that the value of R is €1755.
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