A business strategy for Furnitures International

• Main Author: Yu, Alexandra Y.
• Format: text
• Language: English
• Published: Animo Repository 1997
• Subjects: Furniture industry and trade > Philippines; Business Administration, Management, and Operations
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/2330
• Institution: De La Salle University

The objective of the paper is to develop a business strategy for Furnitures International, a company engaged in the production of rattan furniture for export to the US, Canada and United Kingdom. The local furniture industry has over 15,000 manufacturers mostly engaged in backyard operations. Although the recent peso devaluation would seem to increase our competitiveness in world trade, an analysis of the furniture industry showed that there is a growing competition coming from our Asian neighbors due to their aggressive pricing and the Filipino manufacturer's lack of initiative to improve productivity. The increasing minimum wage in the country is posing problems for the industry in terms of competitive pricing while our Asian neighbors like China and Indonesia have very cheap labor, which allows them to bring down prices. The scarcity of raw materials also poses a major problem to the industry. Michael Porter's Five Forces model showed that the intense inter-firm rivalry exists in the industry, new entrants can easily enter the market, the scarcity of raw materials gives suppliers an edge in terms of bargaining power, and the undifferentiaited nature of the industry gives buyers a higher bargaining power. Because the furniture industry is very broad, it can be divided into several strategic groups based on the materials used and the target markets. There are wooden furniture makers, rattan furniture makers and mix material furniture makers. Furnitures can cater to household, offices or institutions. The market can range from low-end to high-end.