In 1944, A.A.DeFehr began creating household furniture from his woodworking shop in the basement of his home. This solo operation soon turned into a booming business with expansion opportunities, but also encountered challenges along the way. In 1964, this one man business, turned into DeFehr Manufacturing Ltd (DML), consisting of 50 employees working out of a 45,000 square foot building. The firm’s sales and annual revenue continued to grow between the 1960’s – 1970’s, with 20% of the sales coming from exports to the United States (U.S.). However, in 1975 they had to withdraw from exporting to the US due to the rising Canadian (CDN): US ratio.
The 1980s were good years for this company. After merging all of the company’s operations and changing the name from DML to Palliser Furniture Ltd, they began expanding to locations in the U.S, and achieved annual sales of over CDN$ 135 million by the end of the decade. By 1997 total annual sales reached CDN$ 325 million.
In order to keep up with competition and continue to increase annual sales, Palliser Furniture Ltd. needs to decide whether to expand operations in to Asia, and/or Latin America, mainly Mexico. If so, what types of strategies will they need to take?
The Canadian and U.S Furniture Industry:
The Canadian furniture industry consisted of a few large operations and many small ones, with a general agreement among manufacturers and retailers that the key success factors were: -overall product quality- customer service
-quick delivery- price
The U.S furniture industry, in contrast, consisted of seven times as many plants, twelve times the number of employees, and fifteen times the shipments of the Canadian industry. Their keys to success also differed, as they believed the factors were: -quality of raw materials- quality of showrooms
-product design- extent of marketing activity