City Furniture and Mattress Case Study

Problem Definition

City Furniture and Mattress faces problems with the competition and profitability from different big box chains and local stores. The company is confronted with many decisions, which include becoming again a retailer, closing the manufacturing resource, closing the company Pickering location, refuseing from the company activities, closing the furniture stores,  refusing from the operation and continuing to undertake  wholesale activities. The company had made an option of ceasing its operation in the future of the retail store and focus mainly on the manufacturing side of the business because it was successful in wholesale and manufacturing. It helped Singh and his father get the opportunity to employ their experiences and relationships in order to obtain the needed equipment and raw materials. The margin gained by the company could improve the overall profitability, and Singh has the staffing problems as he had the past; thus, he should focus on that. There has been constant quality and delay issues before Singh considered them and made a decision to change the business direction. The general manager and most part of the owners of CFM made decisions, which determined the company strategy. The CFM was successful in sales. However, the father who is the majority owner, the general manager and the manager of the CFM are linked to the profit and, thus, it increases competition from major and local supermarkets. The general manager has been given roles such as undertaking different options, which include expansion of global outsourcing, expansion of capital, expanding the vertical integration and store network.

Critical Issues

CFM’s company has a low Pickering location on sales, which decreases the overall profitability of the company while the Pickering location rent has increased. The manufacturing facility has undergone problems concerning quality control, and it is not able to produce quality copy designed for technical models. Therefore, the facility is draining cash and losing money from the outlet of its business. Further, the company is also facing problems when hiring skilled employees for the facility because it cannot deliver its products to its outlet in time. Due to these problems, its customers are forced to buy such products from its competitors. In addition, the company’s profit is negatively affected due to such problems it has encountered.

However, the Toronto location is capable of producing an acceptable outcome, but it also faces the threat of margin erosion due to the declines from the industry advantages`. There is an increase in competitive pressure in the marketplaces, which causes difficulties in thriving in to long term. The company should open new stores in order to enjoy the economies of scale. Moreover, this will enable to lower its overall production costs. The company might encounter different challenges, which include difficulties in obtaining the right location. The new site founded by the company might require extra investment such as inventory. Further, the staffing for the new place might be challenging based on some factors in the location such as security. Alternatively, the company can choose to close the store and focus on manufacturing because it can maximize its experience and build a relationship with suppliers in order to obtain necessary raw materials and equipments. It can improve the company margin, thus improving its overall profit.

Situation Analysis

Company Overview

City Furniture, Inc. is a company that operated and owned a chain of furniture in the United States. This company was established in 1948, and it performs its activities in Ohio and Columbus and has furniture stores in Indiana, Illinois, Michigan, Kentucky, and Maryland, etc. The company provides products, which include armchairs, buffets or sideboards, bedside tables, cocktail tables, dining tables, loveseats, media centers. Further, it provides home cakes, chairs, dining chairs, sofas, dressers or chest, full beds, motion products, ottomans, kids’ furniture. In addition, it has end beds, leather sofas, queen beds, sectionals, mirrors, furniture sets, motion products, twin bed, Nightstands’, mattresses. The CFM also provides customers with home accents, recliners or rockers, king beds, loft or bunk beds, sleeper sofas, and it sells its product online. City Furniture company management believes that the company owes its success to a reliable team because most of the executives have been friends since the  school time. They have the duty of delivering its products to the customers on the same day, and they ensure the west process is low and should practice aggressive marketing strategy. The CFM has been in the Auckland market for more than 30 years. In addition, the company has many customers from different parts such as from New Zealand and other parts of the world. Most of the company staff has worked for longer period helping customers to choose the best items, where others have many years’ experience.

Company Management

The CFM company management includes the Singh, his father, who is the majority leader, and some managers as well as the general manager of the company. These people are always responsible for the company decisions, which is arrived by considering the company’s operation results and making a decision to change or solve the company’s problems. The general manager and the majority owners of CFM make decisions, which determine the company’s strategy. Consequently, the CFM performs well while executing its activities especially the sales.

Company Mission

The CFM company mission is to receive the loyalty of its customers through providing them that priced brand name. It should be competitive in household furnishings, mattresses, and appliances, which is provide the highest level of the customer’s service.

Communication with Its Customers

The company is attempting to expand and improve the way it communicates with its customers. Their clients relay their information to the company through email, toll-free customer service number, and conducting directly to the company store associates. The customers can engage in the company channels on all issues such as the issue of the order, merchandise, comments, or questions on corporate philosophy. The company is always reviewing the customer’s questions and comments by the senior management, which is used for making decisions concerning the company’s store as well as corporate processes and policies. In South Florida, CFM Company is one of the top retailers that sell furniture; it has increased its four stores, and is now targeting an expansion of about 30 locations. The company is expecting in the current year a revenue of over $300 million, which is by 15 percent more than the previous year.

Current Strategies

CFM’s sells its products through online websites. This strategy is referred as e-commerce. Other used strategies are catalogues, direct mails, and retail stores for particular goods. Presently, CFM’s is among the biggest e-commerce retail companies in the U.S. selling some of the famous trade names in home furnishing. One of the various strategies used by CFM’S is to provide excellent customer service. When shopping in its stores, the customers are given the chance and the right to get information about the products they are purchasing in order to avoid or to protect them from paying excessively. The market penetration enables the company to sell its products locally, regionally and internationally. The company achieves this through franchising in areas such as the United State. This is also realized through rigorous marketing strategies and opening new outlets in foreign countries. Presently, it runs retail outlets in the whole world, including several countries in the Middle East. Differentiating its products, the company primarily emphasizes on high-end products, which are of casual elegance. CFM’s concentrates on exceptional quality and unique designs that define its trademark. The designs of its product are scarce, unique, and long lasting.

The distribution channel of the company is direct-to-customer procedures and online selling tactics. The main goal is to enhance the company’s profits by reducing the operating costs. Opening various retail sections and shops should enable the company to reach a large customer section and ensure that the customers meet their needs and wants. The management is positive that new plans and strategies for the retail guarantee success, quality products of high-profit margins, and respond to the demands of the customers. The company’s e-commerce approach helps the company by creating free alternative avenues to increase the sales. E-commerce also makes it possible for the company to test new products in the market without bearing the stocking expenses. Increasing the net earnings is attributed to its aptitude of enhancing its web existence.

The company’s main strategy is to expand their group of products to the widest clientele. Strategic goals for the company outlet and other  sections is to add a new product assortment and build a product line focusing on important brands in home fittings, equipments, and furniture. The company brand assortment provides home furnishing and accessories business for wealthy and classy customers. The company adopted a new system of inventory management for retail companies. The result was a powerful retail and system of operations and a competitive advantage in the marketplace. The company is successful in stock and store management, efficient delivery and distribution of products with the use of their famous catalogs and retail websites both locally and internationally.

Since its conception, CFM’s has been significantly growing both the production and sales in the market territory. The company is opening new retail outlets in different countries. It has also opened several subsidiaries since its foundation. All these developments are indications that the company is performing well in the market.

The SWOT Analysis

Strength

The city furniture and mattress company strength includes consistent operating performance. The division of both the client and its business ensure the revenue growth of this company and improves the company efficiency. However, the company’s operating profit increased partially, which is offset against the increase of expenses due to cost incurred on revenue related to promotion cost through social media.

The city furniture and mattress company’s financial position was strengthened in the market through its huge increase in net and operating profits in the past years. The company has managed to acquire knowledge of logistics and distribution of another wholesale business. Furthermore, it has managed to decentralize operating structure. CFM company has attained a wide portfolio; hence, it is willing to tolerate multiple approaches and solutions. The company has the capabilities to provide the supply chain and presenting it nationally.

Weaknesses

The company weaknesses include integration of the retail system, undeveloped marketing expertise, no alignment of divisions. The company lacks shopper data for targeted marketing programs and local insight. The employees, who are expertized, provide the company’s operations, and the information is stored in short supply, which may hinder the future strategy of the company to generate revenue from online services.

Opportunity

The company enjoys the opportunities through acquisition of advantage of Albertsons, development of national banners and being efficient through centralization of operations. It can focus on high margin from other departments and retail business. The improvement of the user experience, reliability, and security has enabled the company to enjoy the advantage of reliable card data for the customer insight. The CFM company can supply the chain nationally.

Threats

The Company is facing threat of high leveraged and does not have established system because it depends on local management knowledge. It also gets the supercenter competition from some companies, which include Wal-Mart in major markets. The company faces challenges such as losing customers from some wholesale business and when centralizing its operation such as standardized stores.

Other Companies within the Same Industry or Competitors

The industry difference has a significant impact on the success of the company since there are many factors affecting it such as the price differentiation, diversity of competitors, product differentiation, and concentration of competitors. The industry does not give a clear edge, which has enabled most large companies to perform different activities such as consult, produce, hardware, and software, as well as provide an operating system, etc. The targeted promoters and detractors are those companies within the same industry, which include Wal-Mart and other big companies.

Rivalry occurs after competitors feel pressure or act on the opportunity in order to improve their position in the industry. There exist several conditions that determine the extent of rivalry in the industry. First, the competitive environment in the furniture industry has few major and strong players as well as several smaller players with less power. There are bigger competitors, though they differ because some of them represent the major international companies with limited proprietary control of the furniture. However, they have sophisticated technological expertise and the national furniture companies. On the other hand, those owning the furniture reserves might have placed less focus on the technology. The impression is that the rivalry among competitors in the industry is high, and they mainly find its explanation in the fact that the majority of companies are ready to replace their changing design of furniture.

Alternatives / Options for Solving the Problem

There are several options of solving disputes within the industry and companies, which include mediation as volunteer process, where both involved parties should agree to mediate. A trained and qualified mediator with good history of issue solution is involved to help solve the problem. The parties are free to reject or accept the reached agreement through mediation. Another option is to solve through court; however, it is very expensive and not quicker due to filing a lawsuit, and then the case is taken to trial. Arbitration provides solutions, though it is a less official version of a court hearing. The complainants present the case to one or more independent arbitration in a streamlined trial procedure. The arbitrators issue the written decision after listening to both sides of the problem. The decision is typically binding because the state and federal law provide enforcement as the judgment or court order, and the business lawyers can help to solve the issues. Arbitration dispute resolution provides several advantages, which include the system that is quicker to solve the problem and cheaper than litigation. On the other hand, the court system requires more time to solve the issue; it is expensive to pay a lawyer, especially if the case is longer considered before it is decided.

Recommendation

The company’s strategy of expanding its group of products to different places is efficiently and effectively employed. This will promote its strategic goals through developing different company’s outlet and other sections shall increase sales and generate sufficient revenue. Moreover, it will enable the company to introduce its new product easy and faster to different customers and can build a product line through considering important brands in home fittings, equipments, and furniture. The company should ensure that brand assortment of home furnishing and accessories business are provided for wealthy and classy customers. It should adopt a new system for inventory management for retail companies. This will lead to a better result of manufacturing and selling through outlet and make the company to be a powerful retail and system of operations which can enjoy the competitive advantage in the marketplace. The company will be successful when it has sufficient stock to avoid shortages, and store management should be efficiently delivered.

Implementation Plan

CFM is required to eliminate those areas, which are costly. The retail store should be evaluated and all those areas, which are not profitable, should be closed. It is important to find a better location and market to promote the success of the retail store. CFM should address the manufacturing facility because if it continues to delay, it will lead to lack of quality control and employees, and such issue can be fixed. The company is required to find qualified buyers and Singh can be involved in this process though he needs someone who has purchasing experience and can prevent the occurrence of purchasing problems. Moreover, since Singh does not have experience in most of the facets of this business, he is required to practice his due diligence in order to avoid falling victim of potential problems, which can eliminate CFM. For example, since he deals with the location issues, it is important to search the right location to market its products. Location play a major part in generating revenue; thus, he should make an appropriate decision, and the size of the location is significant to the business.

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