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DSU – EMBA – Trimester 3 – SDMM – Dr.Krishna Kumar V – Assignment Set 2-A

Case Study: To be attempted individually by each student, answers to questions to be uploaded in the
LMS and also sent by email to vraokrish@gmail.com:
Completion deadline for uploading in LMS and sending me a copy: Tuesday, Jan.07.2019; (Only MS WORD,
No PPT, No PDF)
Case: The Living Room

Note: This case study is strictly for class room learning. This is not to be used by the students or others, for any other purpose
other than for learning the subject under study.

Understanding the case fully and analyzing the various facets therein, for the express purpose of relating theory and practice
and vice versa, is a powerful way of increasing the knowledge and skills of the students. It is expected that the students devote
sufficient time to read the case over and over again and then assimilate the Questions given under, in their full meaning and
then answer them to the point, elaborating key points supporting the answers

A Case Study represents, a situation, at a given point in time or a specific period of an Organisation, requiring study, analysis
and possible solutions, within the material given in the case. Even if the organisation exists today, ‘Do Not’ bring in your
current knowledge about the Organisation, to analyse the earlier period case situation

When you do a Case Study Exercise, restrict yourself to only to the details given in the Case itself. Do not go and search in
the internet for any additional material and try to cut and paste for the Questions you are required to answer. If any external
material is used – cut and paste -the evaluation marks will be ZERO. Do not cut and paste portions from the case and call it as
answer to a question. Answers to Case Questions have to be in your own words/sentences. It has been found, that many
participants, sometimes, send identical answers to questions (!)- In such cases, even if answers are reasonably correct, all of
them may be marked ZERO

Instructions for File upload:

1. Only in WORD Form (No PPT, No PDFs)

2. File Name should be: YrName-HRM-Assign2A (example: Arvind-HRM-Ind.-Assign 2A.docx)

3. On Top of the First Page, Write first “Your Name in Full + Date + HRM – Set 2A – Ind.Assign” and then start writing your
answers)

Study the following Case carefully and then answer all the Questions given at the end
The Living Room: Redefining the Furniture Industry
Introduction
Mr. Jehangir Nagree, graduated in Civil Engineering from Veermata Jijabai Technological Institute,
Mumbai, in 1971. The economic depression of the early 1970s and his uncanny love for wood kindled the
entrepreneur in him leading to the formulation of “The Living Room” (TLR) in 1971. In 2004–2005, the
company recorded a sales turnover of ₹178 lakh, with a net profit of ₹20.88 lakh. TLR as a business was
operational, along with Jehangir's brother, but a family split occurred in 2003.
TLR started with a showroom in Mahim, Mumbai along with a workshop in the vicinity, where skilled local
carpenters made the furniture. “The Living Room” was positioned as a substitute for the family carpenter
who offered a product that was easy to purchase, good in design, genuine and trustworthy in quality.
Jehangir quickly realized the constraint of living space in Mumbai apartments and houses, which
prevented typical families from using a wide range of quality furniture. He designed the “sofa-cum-bed”
which, as the name suggests, was a 3-seat sofa that could be converted into a bed, by pulling the base.
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This was named “Super Wondrette”. This innovation became an instant hit and helped “The Living Room”
establish itself as a brand in Mumbai.
TLR was jointly managed by the founder, Jehangir and his wife, Shakera. Jehangir was a man driven by a
passion for this business. His contagious enthusiasm and commitment served as a motivation to his
employees. Both Jehangir and Shakera personally spent time in the retail outlets, interacting with
customers, employees, and visitors with warmth.
The couple has two daughters, both well-educated, married and working in reputed Investment Banks in
the USA. As a very well-to-do family, they maintained good relations in the society. They travelled abroad
frequently, especially to trade fairs in Italy, to understand the upcoming designs and styles in furniture.
Products
The Living Room made a wide range of home furniture. The sales composition comprised sofa sets: 30
percent; beds, wardrobes, dressing tables and other accessories: 25 percent; dining sets: 20 percent;
kitchen cabinets, wall units and study tables: 25 percent. In August 2005, TLR had also introduced office
furniture like workstations, office tables, chairs, running tables, side runners, etc. TLR typically catered to
small offices, which did not have the sufficient volumes to buy from institutional sellers.
Quality and long life of the furniture were the core strengths of all TLR products. This was ensured by high
standards in manufacturing, workmanship and quality components.
TLR had a large variety of models in all its products. For example, TLR, recognized as a pioneer in
sofacum-bed, introduced new models in this product category. The designing was done in-house after
considering the market trends and customer feedback. The designs were mostly standardized. However,
product dimensions could be changed to suit customers’ requirements. Typical price range of the
products is given in the Exhibit
Product Range (₹)
Sofa-cum-beds 14,950–24,200
Single beds 7,450–16,000
Double beds 9,500–24,200
Wardrobe 13,850–44,000
Wall-unit 13,450–25,200
Sofa-sets 19,960–84,500
Centre-tables 2,250–8,500
Shoe racks 3,200–6,500
Kitchens starting from 26,750
Office tables from 5,750
All the above prices include All taxes, delivery, fitting and one-year warranty
Besides style, utility was the most important aspect in the design of TLR products such as wardrobes,
kitchen sets, etc. Innovative designs were made for maximizing space utilization.
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Brand
Jehangir had a vision to build a brand for TLR products to compete effectively in the highly unorganized
furniture market in India. In the early days the brand name was not important. The product sold based on
its unique design. Over the years, the brand “The Living Room” became synonymous with quality, trust
and value for money (VFM).
In order to reinforce this image, TLR insisted on transparency in all its processes related to customers. The
prices were set at a reasonable level and disclosed at the very beginning of the communication. There
were no hidden costs. There were no discounts and bargains. TLR believed, value for money was not
giving cheap products but giving the customers the best quality, style, and design for the price that they
pay—be it for a sofa-cum-bed priced at ₹15000 or a sofa set priced at ₹45000.
Over the years the expectations from the brand had changed owing to greater competition and more
choices becoming available to the consumers in Mumbai. In addition to VFM, TLR added different style
dimensions to meet the changing customer tastes. However, changing customers’ perception was a
concern. The traditional logo of TLR had been changed in late 2004, to bring about a change in consumer
perception of the brand. The new logo was considered to be trendy and contemporary.
Customers
TLR had four showrooms in Mumbai and one each in Goa and Surat. Customer profile of TLR varied
widely
Exhibit: Profile of customers at five showrooms
Location Area (sq. Ft) Profile
Mahim 6000 The oldest store. Predominantly upper middle-class customers. Customers are more
conservative in spending. Products like sofa-cum-bed are sold most.
Malad 10000 Situated in a locality with high end residential and commercial constructions. Has
office furniture to cater to the BPO offices coming up. Targets the higher end customers with the
imported collection and similar products.
Mulund 8000 A mix of upper middle class and upper-class customers. The store is surrounded
by several competitors in close proximity.
Kandivili 8000 Upper class customers. The locality consists of high-end residential buildings that
were being constructed when the showroom opened. It was the only player in the locality till recently.
Vashi 7000 Upper middle-class customers with conservative spending. The area is
dominated by a strong presence of unorganized players.
According to a typical customer, “I would not come here (TLR) for contemporary designs, to be
showcased in my living room, but only for functional, basic furniture like bed, wardrobe, etc.”
In the initial years of TLR, there was a certain amount of aspiration value attached to its products. Hence,
the customer segments were upper middle-class families and middle-class families who would have saved
money to buy good furniture for their home.
According to Shakera, in those days the typical TLR customers were of two types. One was those who had
been buying the brand for many years or whose parents had bought TLR products before. They bought it
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because of the trust they had in the quality and longevity of the product. The second consisted of
customers who belonged to the younger generation–young couples with a combined income of over
₹50,000 per month, setting up a new home, and willing to spend a considerable amount on furniture.
These people came to TLR not only for the quality but also for the innovative designs and variety. Most
customers, however, looked at all other offers prevalent in the market before making the purchase.
According to the Kandivli showroom manager, here, four customers could bring a business of ₹4—5 lakhs,
whereas in Mahim, it needs more than 15 customers to bring comparable size of business.
For a brand in the highly unorganized furniture market, TLR, was the first furniture company to advertise
on television, in 1974. However, in 2005, most of the advertising was done through newspapers in the
form of inserts, advertisements, etc. The Times of India (Bombay Times) and The Hindu newspapers were
most frequently used. Hoardings were also put up routinely in several places in Mumbai.
The advertisements carried pictures of the products available at various showrooms with their prices.
Mentioning price was considered important to ensure transparency when the customers visited the
showroom and saw the same price. It also emphasized on the competitive prices offered by TLR,
reinforcing its image as a “value for money” brand. In some advertisements, TLR tried to communicate as
being a one stop shop for furniture.
TLR did not undertake many promotions. Discounts were rarely given and all offers were explicit and
transparent. TLR made two types of offers–exchange offers (a fixed percentage discount in exchange for
old furniture) and package offers (a 5 percent discount upon purchasing a certain set of products bundled
together). The competitors, at the same time, tried to attract customers with discounts as high as 60
percent. TLR offers also included accessories like mattresses, bed sheets, pillows, etc. and other gifts like
a gold figurine of Ganesha, a Persian carpet or a silver coin.
Promotional offers were advertised extensively. In exchange offers, all prices (pre and post discount)
were published in the advertisements, to make it transparent and ensure the customer about the
genuineness of the offer. Shakera also appeared on a Television show (Sweet Home) talking about
interior decoration. Word of mouth publicity, based on the goodwill the brand had earned over the years,
also played a major role in communication.
TLR aimed at creating a unique retail experience for its customers, as it was an essential part of
connecting to the brand. Products were arranged in the setup of a living room, or a bedroom, etc. Fast
moving items were put at the furthermost corner of the showroom to ensure that every customer was
routed in such a way so as to maximize the product exposure. Store managers sensed what the customer
was looking at and based on his observation changed the setting periodically to suit the local customer
tastes. Store managers shared their experiences with other colleagues in their weekly meetings.
The showrooms were located at street corners to increase visibility. The outside signage was still the old
logo, brightly illuminated.
They used popular film stars and models as brand ambassadors each year. Some of them included Katrina
Kaif, Ria Sen and Koena Mitra.
Jehangir did not want to focus too much on increasing the customer base to increase sales, but aimed at
increasing sale per customer. In 2004—05, regular items constituted 80 percent of total sales, and
expensive items 20 percent. Jehangir was concerned about increasing this from 20 percent to 40 percent.
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Sales of individual items were tracked both in the regular and expensive category in the meetings every
Tuesday. “Sales per customer” was a key performance parameter and efforts were made to achieve it
through packaged deals.
In 2003, TLR had ventured into Pune by opening a showroom in the franchise model. However, it was
unsuccessful because the franchisee was unable to maintain exemplary customer service, thus adversely
affecting the brand. The franchisee also stocked their own or local products in the same outlet. Based on
this experience, TLR served the Pune market through a different model. Purchases were made at the
Mumbai showrooms and goods were delivered to Pune free of charge.
The organization structure of TLR is described below:
Showroom: At the showroom the store management, layout and arrangement of products, etc, was done
by the Showroom Manager. In some showrooms, there was an Assistant Manager.
Factory: At the Factory, the Assistant Factory Manager looked after production and quality control. The
Hardware Control Manager ensured the proper utilization of raw material, which accounted for 60
percent of the cost of manufacture, and continuously aimed at reducing the wastage.
Administration: Finance and accounts were handled in the Mahim office. All transactions were entered
into a computer and communicated to the Mahim office. Recruitment was done centrally and was
personally supervised by Jehangir and Shakera. The requirement of manpower was communicated to the
Head Office (Mahim office), which then took the decision.
Processes
Employees and Training: The sales people were trained extensively on the technical aspect of furniture as
well as in the method of interaction with customers. TLR believed in long term relationship with
customers and gave genuine advice even if it meant loss of sale. This helped in building trust and
relationship with customers so much that most customers asked for the salespeople by name. Training
programs were organized once a month. The top management also regularly interacted with employees.
All employees at the store were rotated across outlets once in two years. This was done to encourage
free flow of ideas and information across outlets.
Management Control: One of the five offices was chosen for the weekly Tuesday meetings, attended by
the top management and the store managers along with a salesperson (from each of the other
showrooms) to review the weekly sales performance. The objective of these meetings was to analyze
sales performance, customer feedback, product portfolio decisions, etc. This communication reduced the
response time for incorporating customer preferences in newer models and replicating the success
factors of one showroom in another.
Manufacturing: TLR had four manufacturing units in Mumbai and one in Goa. The factory in Goa was the
largest and worked as an assembly line system. Others facilities, located in Mumbai, manufactured a mix
of all the other products. The manufacturing units in Mumbai catered to large variety (customization) and
small volume products. This ruled out the possibility of assembly line operations. Manufacturing was also
done by certain units not owned by TLR, on a contractual basis.
Being one of the oldest players in Mumbai, TLR enjoyed long term relationship with a large number of
skilled carpenters. TLR recruited from this labour pool depending on the work load and paid them on a
piece rate. Access to skilled labour gave TLR the flexibility to provide customized products. Typically,
customization happened at two levels–product and project. Product customization involved changes in
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the design, wood, upholstery and related peripherals. Project customization meant changing the fitment
and measurement of the product to the customer's requirements.
Logistics and Distribution: All imported products were first sent to Bhiwandi1 warehouse. These were
then sent to the Kandivli warehouse and finally to showrooms. Products which were manufactured in the
Goa factory and were to be sold in Mumbai, were sent to the Kandivli warehouse while the products to
be sold outside Mumbai (to places like Pune) were sent directly to the customers’ sites, primarily to save
city entry tax, etc.
The Industry and Competition
The furniture industry in India in 2005 was primarily considered unorganized due to the long reliance on
local skilled carpenters. However, the face of the sector was slowly changing with the effect of several
factors like growth of organized retail, international exposure of customers, entry of foreign players,
greater affinity for branded products, shifts in customer tastes and convenience seeking behaviour. The
outlook of the sector was quite optimistic. Durables purchases peaked in the 20-34 years age group–
double-income couples setting up households were the driving force. The neighbourhood carpenter or
the upgraded craftsman who designed with an eye on foreign magazines no longer satisfied the
consumer
India had a huge middle-class population (an estimated 300 million4 in 2005) whose spending was on the
rise. The average Indian expenditure had gone up by more than 10 percent CAGR in the last 10 years.
However, the percentage spent on furniture was still lower in India as compared to other developed
countries.
Competitive Landscape
At one end of the spectrum of offering in this industry was the local neighbourhood carpenter, who made
products as per the customer's order, design and desire. Moving ahead, there were some players who
employed these carpenters and sold to the customers. They being unorganized, had the cost advantage
of retail space rental, sales taxes, etc. In the organized furniture retail, one segment catered to office
furniture, while the other catered to home furniture. The Indian market in 2005, comprised players like
Style Spa (earlier Gautier), Durian, The Living Room, Furniturewalla, @Home, Off the Shelf, etc. At the
other extreme of the spectrum were the interior decorators who provided the customer with
personalized furniture. Interior decorators usually had a team of dedicated carpenters.
By 2005, the big retail chains had not developed their own private labels in furniture retail. Some of the
reasons identified were the differences in local tastes, neighbourhood carpenter dominance, complexity
in design, etc. However, the threat of the private labels remained as some of the chains aimed to provide
a “one-stop” shopping experience to the customer.
On the survival of local carpenters, Jehangir said, “Organized furniture retail might grow, but the local
carpenter would continue playing a big role in the Indian context.”
Growth Options
Jehangir realized the tremendous opportunity available in the Indian furniture industry. The industry was
fast changing from a localized unorganized industry to one with successful national brands. With the FDI
regulations expected to liberalize, huge foreign investments were also likely. It was clearly evident that
the furniture industry was booming. Jehangir was seriously evaluating the growth options available for
TLR in this context.
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Expansion of Product Portfolio

TLR could extend its presence in the product spectrum, catering to lower or higher value products.
Moving lower would mean direct competition with the local players, solely competing on price. In this
case, it would not be economical to provide the same product quality and after sales service that TLR
currently provided. Not providing the same, on the other hand, could seriously dilute the brand.
TLR also had the option of moving up to high value products. The method of selling of these products was
very personalized. The furniture was to be designed for each of the homes by an interior decorator, who
then ordered the highly customized products. TLR did not have adequate exposure in this market and
hence, would have to use the services of an interior decorator. In this case, the company was likely to
face the challenge of control of relationship with its clients. More important was the challenge of
acceptability in this segment. TLR now was strongly entrenched as a value-for-money brand trusted for
the quality and longevity of its products. How could it reposition itself in this segment? Should it launch a
related brand to cater to this segment? Or should it simply change the communication?
Jehangir from his experience in the industry realized that there was another class—the aspiration driven
upper end of the middle-class segment. They would like to possess the upper-class furniture and
acceptability of the brand would not be an issue. TLR could upgrade to this segment by offering furniture
that was value for money.
In 2005, TLR had entered the office furniture market. It catered to small enterprises, which did not have
the volumes to go in for institutional sellers. With the increase in the number of BPO and IT firms, the
market for office furniture was also growing. TLR could venture into this market, increasing its customer
base to a larger clientele. However, the kind of selling required for institutional buyers was very different
from the traditional approach of TLR, which were primarily direct sales supported by transparency and
single-price.
Future Expansion
With the increasing number of Information Technology Enabled Service companies, the resident profile of
many cities in India was rapidly changing. These cities recorded a high percentage of young and
immigrant population, with dual income households and rising levels of average disposable income. Thus,
TLR saw great opportunities in cities like Bangalore, Hyderabad, Ahmedabad, Lucknow, Surat, Indore, and
Gurgaon However, TLR had no plans to set up manufacturing facilities in these cities.
In the cities where organized furniture retail was prevalent, the challenge would be competition.
However, in smaller cities, the furniture market was still dominated by the unorganized sector. The
challenge would be to create a brand, upgrade the customers and entice them to pay premium price for a
branded product.
In Mumbai, TLR made a breakthrough with the sofa-cum-bed. It leveraged this image to succeed as a
trusted, high quality and VFM brand. However, in the new cities, it may not gain this kind of immediate
acceptance and trust. Thus, the positioning that TLR chose in any of these cities would be critical. Possible
options are to stay as a VFM brand or enter as a high-end player, depending on the acceptability of
branded products, nature of competition, etc.
Other related decisions would involve market communication, brand building and selection of retail
channel to reach the customer most effectively. TLR could continue selling through its original model of
exclusive showrooms, which are fully owned or franchised outlets. In the latter case, the issues of control
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of franchises would be important, as evidenced in the Pune attempt. TLR can also forming partnerships
with existing players in the cities. At the other extreme, TLR could substitute the “brick and mortar”
model by a web enabled business model. It could give the customers the additional benefit of designing
their furniture online. The showrooms could source the components centrally and assemble it at the
front end.
On product offering, TLR should decide either to standardize its offering across the cities or make it more
localized responding to the culture and preferences. What would be the ideal mix of centralized and local
elements to leverage TLR's current efficiencies, experience and scale?
End Note
As he considered the options, Jehangir was aware of the advantage he had over competition—the access
to a skilled carpenter pool—which gave him the flexibility to customize products. He wondered if he could
offer this customization on a mass scale. Such a strategy would give him a unique positioning which may
not be copied easily by competition.
Although Jehangir believed in the growth of TLR, an important concern for him was the scalability of the
current processes and systems. He realized that each decision that he took had to be in tune with the
strengths of his processes and at the same time recognizing its limitations. Can the processes of The
Living Room be made self-sustaining?

3 Questions to be answered: (Total Marks 25) - (Will be pro-rated later, while combining Group assignment
marks) (Marks for Case Question Answers - 20 + Marks for Class Attendance & Class Participation -5)
1) List down, in detail, the company’s strengths and weaknesses & core competence (Marks 5)
2) (a) Identify the elements of TLR’s Corporate Strategy
(b) Identify the elements of TLR’s Marketing Strategy
(c) Explain how these two tie up in this case (Marks 6)
3) Examine the growth option strategies for the company, the related organisational issues in terms of:
(i) Product Range – Existing and New
(ii) Customers Targeted – Current Customers and then for the New Products
(iii) Geographic Coverage – Current areas and Proposed New areas (Marks 9)