City Furniture and Mattress

Team Edward: Ashley Clapham, Jacob Curtis, Tara Lappin, Brandon Kew, Marcus Ke

Presentation Outline

Recommendations Company Background Finances Internal Analysis External Analysis SWOT Strategic Issues Alternatives Recommendations Implementation

Recommendations

Increase the profitability with a longterm focus.

Vertical Integration New payment process Relocate Pickering store

Where does City Furniture and Mattress stand?

Solid ground Run by father and son team: Baskar and Rajeev Goal is to be more profitable Two Stores open

Toronto: great location, $50,400 profits per month Pickering: $700 profits per month

Mission/Vision Statement

Thiknk of some shit tom.

Hambrick and Frederickson

Elements of Strategy Arenas

- Product category: Home furnishings (Living Room, Dining Room, Bedroom) - Market: Lower to middle income - Geographic: Greater Toronto Area - Value Creator: Experienced management team -Market Segment: low to mid price (price conscious)

Ploy
- Vertical integration (gives us high margins)

Hambrick and Frederickson

Pattern - Low-cost - Style

Elements of Strategy cont.

Economic Logic - Low-costs through scale advantages Plan - Now-3 months: build manufacturing warehouse -3 months-2 years: manufacture from warehouse/pay it off -1-3 -2-5 years: Look to build additional stores and outsource delivery services

Competitive Advantage

Singh familys combined expertise in the market along with Baskars legacy advantage
- Baskar opened first retail furniture store (1986) - Later opened manufacturing business producing mattresses and living room sets to support the retail area

- Built relationships to allow leverage with business

S.E.P.T.

Socio-cultural
Consumer focus on low-cost, rather than brand loyalty

Economic
Interest rates (Loan) Unemployment Foreign- Low-cost production in Asia

S.E.P.T. cont.

Technological
Information Technology Re-engineering

Political
Taxes (State/Local) Worker Safety Minimum Wage

Porters Five Forces

5 Forces in the Industry

Current
4 2 5 2 3 16

Future
4 1 5 2 4 16

Customers Suppliers Direct Competitors Substitutes Potential Entrants Total

Strengths

Weaknesses

Experienced managerial staff Direct global sourcing experience Toronto location

Subpar profitability because of Pickering location Customer service issues with delivery

SWOT Analysis inventory space Limited

SWOT Analysis

Opportunities

Threats

Vertical Integration possibility

People willing to browse many stores

Negative price pressure

Low barriers to entry

Fragmented market share Tough market to find new workers

Entering new markets or segments

Strategic Issues

Overworked and unhappy delivery workers

Lack of brand loyalty Unsure how to obtain long run profitability Demographics outside Toronto vary

Alternatives

Store Network Expansion Expansion of Global Sourcing Program Vertical Integration

Store Network Expansion

Advantages

Disadvantages

Past Experience Economies of Scale

Wider reaching media

Finding trustworthy, capable staff Costly investment Not enough potential reward for the risk Staffing Issues

Expansion of Global Sourcing Program

Advantages

Disadvantages

Increased Margins (Higher % of high margin products) Connections globally

Inventory Storage
Significant Financial Commitment Product Selection Risk

Industry trend moving to global mindset

Vertical Integration
Advantages

Disadvantages

Baskar Singhs past experience Fragmented Industry

Staffing Issue

Global Sourcing on the Rise Non-profitable in the short-run

Increase margin by 1530%

Long-term profit potential

Alternatives
Alternatives Store Network Expansion Value Added 3 Cost 2 Fit 3 Risk 3 Total 11

Increased Direct and Indirect Global Sourcing

13

Vertical Integration

14

Recommendations

Short Term
Vertical Integration New payment process

Long Term
Subcontract delivery services Relocate Pickering store and staff to better location Begin selling to local competitors

Implementation
McKinseys 7 Ss

Strategy
Create increased profitability through margin gains

Structure
Small top down authoritative company that can adjust to the environment quickly

Systems
Centralized decision making due to the owners strong background in the industry

Implementation
McKinseys 7 Ss
Staff
Offer internship opportunities - Subcontracted delivery - Keep experienced personnel

Style
- More authoritative and pressing

Skills
- Competitive advantage found in expertise of the business owners in retail and manufacturing of furniture

Shared Values
Passionate and knowledgeable about the family owned business