International Business Case Palliser Furniture Ltd.
Palliser Furniture Ltd.
Issue Identification: Today’s world is facing strong influence of globalization in each and every aspect of our lives. It is expressed through: free trade agreements, foreign direct investments, international trade, facilitated movement of labour, capital and resources, as well as a strong competition that eventually gives more power to customers. In addition, it resulted in the economic boom of the developing countries, with substantial dominance of China that mainly benefit from their massive labour force, its low cost and high comparative efficiency. This phenomenon has impacted all industries around the world. In particular, furniture production is going through a trend of moving to China that “in 2002 accounted for 10% of world’s total furniture output and 40% of US furniture market”. This change has forced companies to address their strategies to suit new market trends and competitive structure. As a result, DeFehr, the owner of the Palliser Furniture Ltd., faces the question whether to follow the majority of companies’ strategy and expand its operations into China. If the company chooses to move operations, what type of investment mode should he choose: subcontracting, wholly or partly owned one. If not, what changes should be made in their strategy to take advantage of their geographic location, organizational benefits and political benefits to outweigh the low cost environment offered by the China option.
Issue Analysis: To address the issues of our case we will start from the relevant analysis of Palliser’s external and internal environments, which will lead to the suitable recommendations for its strategy adjustments. This will be done through the row of applicable models that will take a top down direction: Industry → External environments (China and Mexico) → Company’s strategy. As was mentioned in the issue identification part, furniture industry is going through the shift in production locations, stressing its
Issue Identification: Today’s world is facing strong influence of globalization in each and every aspect of our lives. It is expressed through: free trade agreements, foreign direct investments, international trade, facilitated movement of labour, capital and resources, as well as a strong competition that eventually gives more power to customers. In addition, it resulted in the economic boom of the developing countries, with substantial dominance of China that mainly benefit from their massive labour force, its low cost and high comparative efficiency. This phenomenon has impacted all industries around the world. In particular, furniture production is going through a trend of moving to China that “in 2002 accounted for 10% of world’s total furniture output and 40% of US furniture market”. This change has forced companies to address their strategies to suit new market trends and competitive structure. As a result, DeFehr, the owner of the Palliser Furniture Ltd., faces the question whether to follow the majority of companies’ strategy and expand its operations into China. If the company chooses to move operations, what type of investment mode should he choose: subcontracting, wholly or partly owned one. If not, what changes should be made in their strategy to take advantage of their geographic location, organizational benefits and political benefits to outweigh the low cost environment offered by the China option.
Issue Analysis: To address the issues of our case we will start from the relevant analysis of Palliser’s external and internal environments, which will lead to the suitable recommendations for its strategy adjustments. This will be done through the row of applicable models that will take a top down direction: Industry → External environments (China and Mexico) → Company’s strategy. As was mentioned in the issue identification part, furniture industry is going through the shift in production locations, stressing its