Company Biography
In January of 2002, John Ferrer and his wife Deborah started their own corporation, a large custom furniture
manufacturer located in Boston, MA. Their initial accounts were in the Northeastern region of the United States,
and they annually observed a constant profit increase. By March of 2006, they were able to grow the company
enough to go from five distribution and manufacturing plants to 10 to allow shipping to 48 states. Although they
have two retail stores, one located in Phoenix and one in Boston, their primary source of revenue is online catalog
sales. They have 10 manufacturing plants and distribution centers throughout the country.
John and Deborah’s corporation is known throughout the industry for its exceptional customer service and
superior quality. The contemporary designs lend themselves to a younger market, and the customer base is
predominantly upper-middle class because it is one of the highest priced furniture companies in the market. Part
of the appeal of John and Deborah’s brand is their consistent involvement with the local communities to create
green gardens. They have also been a major contributor to organizations that build houses for people in need.
One of their primary strengths is their vertical integration. They have a team of in-house designers saving the
company design costs and allowing the flexibility to rapidly change designs as the market changes. Their products
have been featured on several prominent home design and gardening shows and have been endorsed by several
well-known designers.
Because of the recent housing market sales decline (8% from 2005–2006), home renovations have slowed
significantly. This has impacted the amount of furniture and fixture sales and continues to impact revenue.
Furniture sales in the United States have decreased significantly, and John and Deborah have recently been
discussing the possibility of global expansion.
Another potential threat to their company is that many higher-end brands have been marketing aggressively and
creating lines for popular retail stores. These allow the lower-income consumers to have access to high-end brands
at a much lower price point. So far, these lines have been incredibly successful and have significantly increased
profits for competitors. Many of these competitors have also had great success in the global marketplace with
these lower cost replicas.
John and Deborah know that it is time to seriously consider expanding their business. They want to be able to
make it through the economic crisis and rely on other ways to increase sales and business. They are open to
looking into the global market, but they want to be sure that it is the right move for the business. They have
requested an advisory board meeting next month in which you will present the global marketing strategy. As the
market strategist, you will play a key role in helping the board decide if this is the right move for the company.
The Problem
You are sitting in Deborah Ferrer’s office. After the customary small talk, Deborah sits forward and states, “I am
very impressed with the work that you have done as the strategic marketing manager. Since John and I started this
company in Boston, we have seen continuous growth, but nothing like what we have seen since you started.
However, the housing market is really starting to impact our profits. This last quarter’s numbers were not looking
good.”
You reply, “The crisis has really hit us hard. We have some stiff competition, too, with the other brands creating
retail knock-offs.”
She counters, “We’ve had great success with your strategies in the domestic markets, but we do need to think of a
new approach and strategy. I have complete faith in your abilities to take this company exactly where it needs to
go. I must say that we are really counting on you, and I know that you will follow through.”
“I will make sure that we do well. Do you have any new projects for me?” you ask.
Deborah smiles and says, “You know me well. I do have a new project for you. I sent you an e-mail just before our
meeting. I’m curious if expanding in a global market would be a good move for our company. I would like you to
look into this for me.”
“Our team is definitely up for the challenge,” you say with enthusiasm.
Deborah shakes hands with you warmly, and you make your way out of the meeting. As you drive out of the
parking garage, you think about your success with the company. You cannot wait to get started.
STRATEGY COMPOSITION
1
The two most threatening competitors in the global furniture market are IKEA and
Ashley Furniture Industries. IKEA has topped the world’s furniture market with ready to
assemble furniture as its main selling point . It has branches in 51 countries and operates from its
online stores and on location stores owned by the company. IKEA stands out for its relatable
layout that guides shoppers. Ashley Furniture on the other hand is the largest in manufacturing
and distributing furniture around the world. It is world renowned for featuring stylish and high
quality living room, dining and bedroom furniture.
SWOT analysis of IKEA
We are going to explore the strengths, weaknesses, opportunities and threats of IKEA.
The strengths include customer knowledge, innovation for effective cost reduction, brand
acceptance, and diversified product portfolio. IKEA commands a mammoth of customers owing
to the brand confidence it has gained over the years. It is also well established in marketing and
product placement in television shows, movies and other recreational media.
The weaknesses on the other hand range from a number of issues. Bad press has been a
share of IKEA’s troubles. Considering the diversification and the fact that they are in many
countries, some advertisement strategies may be considered culturally inappropriate
(Niederwieser et. al. 2016). In light of the dedication to provide low budget products,
maintaining the same high standards at those low costs can be challenging. The many operations
in many countries prevent the company from scaling their product portfolio because of the
cultural differences. The rising cost of raw materials makes it hard for the company to maintain
the low cost objective.
STRATEGY COMPOSITION
2
IKEA has the opportunity to improve on the environmental friendliness of their products
(Kim & Mauborgne 2014). Some weaknesses of the company have been the fact that some of
their products are not environmental friendly. Additionally, the cost effectiveness of IKEA
products works to their advantage since customers prefer cost effective things.
Threats of counterfeiting products exist. Periodic changes in government regulations are
also a threat, not to mention the growing effectiveness of the internet in allowing people to things
on their own.
SWOT analysis of Ashley Furniture Stores
Ashley Furniture Store on the other hand is strong in domestic markets, low labor costs,
high growth rate, and experience in product distribution. The weaknesses manifest in the
competitive markets, the cost structure, and minimal investment in research and development. Its
opportunities lie in strategizing to exploit new opportunities and investing in innovation and
expansion to the global market. It is threatened by the rise in production cost, technological
advances, government regulations, competition and other external risks.
These two companies are direct competitors in that their business transactions are aligned
with those of this company. They utilize the same materials and target the same market
population as do I. they have a competitive advantage in their faithful market population and
their brand value. Customers have established a sense of faith in their products.
I would consider a cooperative strategy with IKEA. Their strengths in customer service
and cost effectiveness would be instrumental in strategizing for my company. While still taking a
leaf from IKEA’s book, I would consider taking a more culturally sensitive approach toward
STRATEGY COMPOSITION
3
other markets as I explore international markets. I will use the classic strategies to formulate a
market profile addressing each aspect of my market.
The balanced score card is a system that connects various facts of an organization (Keyes
2016). It is used for management and planning purposes in organizations to prioritize, monitor
progress, align, and communicate in the organization concerning the day-to-day activities of a
company.
STRATEGY COMPOSITION
4
References
Niederwieser, D., Baldomero, H., Szer, J., Gratwohl, M., Aljurf, M., Atsuta, Y., ... & Iida, M.
(2016). Hematopoietic stem cell transplantation activity worldwide in 2012 and a SWOT
analysis of the Worldwide Network for Blood and Marrow Transplantation Group
including the global survey. Bone marrow transplantation, 51(6), 778..
Kim, W. C., & Mauborgne, R. A. (2014). Blue ocean strategy, expanded edition: How to create
uncontested market space and make the competition irrelevant. Harvard business review
Press.
Keyes, J. (2016). Implementing the IT balanced scorecard: Aligning IT with corporate strategy.
Auerbach Publications.
Lessons From Experience: Quality not Quantity
The story that you are about to hear is from actual events that occur in the field. Its
purpose is to provide you with a real-world example from a seasoned professional in
the business world.
Quality not Quantity
Information and data that are used to determine business opportunities abroad are not
always easy to find. In the United States, the Bureau of Labor Statistics, the
Department of Commerce, the U.S. Census Bureau, and countless trade organizations
and industry publications exist online to help researchers determine future business
trends. However, this is not always the case in developing countries and those with
emerging financial markets.
My role was as a market researcher for business valuation specialists, and I
was challenged with determining the value of companies in cases of sale, mergers and
acquisitions, or liquidation abroad. I have often found that pedestrian search engines
can be unfriendly places for insightful business views. Although using savvy key
words and phrases yields results in bulk when surfing the Internet, relying on business
databases such as ABI/Inform Global, General Business File ASAP Gale, the
Economist Archives, or similarly compiled electronic academic resources typically
yields higher quality and more accurate market research.
One assignment was for a client who wanted to break into the precious stones and gold
jewelry market at the global level. This was in 2008, when the global economy began
to spiral downward. Although the United States (followed by Europe) led the world in
gems and gold consumption up to that point, middle-class and luxury markets in China,
India, Russia, and Brazil were rapidly overtaking U.S. consumers. This was mainly
because of the United States' lack of credit and cash flow, which resulted from the
recession. Many jewelry retailers in the United States had closed their doors or sold
operations to larger, more capitalized companies abroad that year.
Notwithstanding the high intrinsic value that was attached to gold jewelry and
diamonds or their actual trade value based on weight, cut, and purity, the United States
would no longer be the center of consumption. This was because the Eastern markets
were outpacing U.S. demand, and also because of the declining interest by American
youth in the fanfare that was previously associated with these purchases.
Although my research on the subject began by exploring commodities, luxury markets,
currencies, and capital investment via global business databases, a more overarching
element was brought to my attention: the eventual attrition of older consumers who
held fast to the belief that diamonds and gold were the most luxurious items. This led
to a shift in research and a focus on the cultural demands and belief systems of youth
abroad as part of projecting the demand for diamonds and gold approximately 5 years
out.
With rising global publicity on black-market or "blood" diamonds and a growing
global concern for human rights, research indicated that without significant investment
and a marketing plan that focused on short-term gains, diving into gold and diamond
markets abroad might not prove as stable or profitable as investing in semiprecious
stones, fashionable metal alloys, or what some consider as costume jewelry, whether it
was homemade or fashioned by brand-name designers. This required a research
strategy that was focused on current events, foreign fashion, and culture, which took
me to a different place from where I started.
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