A Case Study and Analysis of Brothers Furniture Ltd.

A Case Study and Analysis of Brothers Furniture Ltd.

Presented by,Abid Al Reza (Roll: 05)Asifur Rahman (Roll: 17)Fahim Alam (Roll: 53)

Brothers Furniture Ltd.established in 1985.specializes in wooden doors and wooden furniture. Factory location Horindhora, heymaytpur, saver.Annual turnover 5.2 million USD.full-time employees-150Data Sources used for analysis:

Showroom visit- interview of showroom representatives.reputed dailies (The Daily Star, The Financial Express, Prothom Alo)Several websites.Objectives:Strategy analysis of Brothers Furniture Ltd., via using the following tools,PESTEL AnalysisPorter's Five Forces AnalysisSWOT Analysis

Scope:To get a brief overview of the furniture industry of Bangladesh.To identify the external and internal factors of macro and micro environment that has effect on a furniture manufacturing company.To make a qualitative evaluation of afirm's strategic position in the industry.To identify the internal and external factors that are favorable and unfavorable to achieve the stated objectives of Brothers Furniture Ltd.

Limitations:Inadequate primary data Insufficient source of secondary dataAbsent of explicit legislative statements regarding various facts in various legal actsThe analytical remarks were influenced greatly by the subjective judgments of the participants of this report.

PESTEL Analysis:Political InstabilityGovernment Policies Concerning the Furniture Industrysupplementary duty on imported furniture from 20 to 30 percent Proposal for withdrawal of regulatory duty of 5 percent on import particle boards and MDF boardsimport duty on raw materials ranges from 10.72 to 92.30%Political:Economical:GDP growth:

Inflation:

Economical:Exchange Rates:

Disposable income:

Economical:Consumption levelGrowth rate at 13.70 %

Spending on furniture:growth rate is around 20%.

Labor Cost:Lower than competitor countriesUSD 37-120 per monthHourly wage rate is between $ 0.06- 0.40

Sociological:Changes in Family Size:Average household size is 4.4 persons per familyIncrease in the total family number

Attitudes towards Product Quality and Service:

Personal Savings:

TechnologicalTechnological Shifts in the furniture industry:Introduction of modern machinery, innovative designs and use of diverse materials.Introduction of substitute products.Melamine Laminated Chip BoardMDFCane and Metal furnitureUpholstery (Tubular Metal) furnitureAccessibility to Raw Materials:60% of raw materials importedAround 65% of wood imported100% of Wood coating and lock, 60% of ply board, 20% of particle board, 50% of adhesive is imported. Environmental:Increased environmental awareness-- consumer preference is being shifted gradually toward metal and plastic furnitureIncreased diversity in product categories Change in the demand of wooden furniture

Legal:Mostly British laws:Patent and Design Act of 1911Patent and Design Rule of 1933Trademark Act of 1940Copyright Act of 1999

Porters Five Forces Analysis:Intensity of Competitive rivalry:Rivalry amongst Hatil, Akhtar and BrothersIntense rivalry, dominated by larger firms--- Result : OligopolyTHE RIVALRY WITHIN THE INDUSTRY IS HIGH.

Threat of new entrants:THE ENTRY AND EXIT BARRIER IS HIGH.

Threat of substitute products or services:Wrought Iron furniturePlastic furnitureSolid wooden furnitureTHE THREAT OF SUBSTITUTION IS SUBSTANTIALLY LESS.

Bargaining power of suppliers:Vertical integrationGood relation with foreign timber tradersTHE THREAT OF SUPPLIER POWER IS SUBSTANTIALLY LESS.

Bargaining power of customers:Usually targeting the higher class.Institutions and organization having bulk demand.General consumers having event-wise demand.THE THREAT OF BUYER POWER IS SUBSTANTIALLY LESS.

SWOT Analysis:Stable financial condition.A detailed customer database.A loyal customer base, most customers are involved in rebuy.Software based central inventory.High brand valueUse of advanced machineries for production.Skilled craftsmanship.Innovative and exclusive design.User and environment friendly design

Strengths:Strategically placed four outlets in kakrail, Nazimuddin Road, Uttara and baridhara. They always try to keep in touch with the customers. Adequate advertising through television, billboards and newspapers. --ATN news sponsors.Promotional and discounted sales option during the festivalsMost raw materials are imported from China.Environmentally positive attitude, raw material are mostly vinyl boards and only oak wood is used for framing.

Strengths:Weakness:Limited distribution channel.Higher product price.Showrooms are not well decorated.No customization option.No interior designing.No office furniture.No clearance sales .No packaging.No delivery option.Unskilled marketing executives and sales persons.

Opportunities:Interior designing option.Office furniture production will.Approval of famous artists.Approval of environmentalists.Increased export opportunities.Growing concern on forestation will win the hearts of environmentally concerned customers. Growing customer base.Exploring International market.Cost-efficient technology.

Threats:Extreme competition.Downward pricing pressure.Compressed product life cycle.Dependency on the international suppliers.Increased popularity of substitute products.Lack of import barriers.High exit barrier.Oligopoly market. Competitors have an established loyal customer base.Unpredictable political situation.

conclusionOverall condition for the furniture industry is favorable.Brothers Furniture ltd. is a known brand, but not in the same league as its targeted competitor.There is room for massive improvement.Major problem unskilled marketing and sales executives.Thank you