Filmore Furniture Case

Topics: Manufacturing, Sales, Industrial design Pages: 7 (3060 words) Published: March 10, 2015
Filmore Furniture Case

By: Hamaza Azam, Kavan Grewal, Deep Dave, Carl Ribeiro and Austin Mathews

Key Events:
Fred Filmore opened Filmore Furniture in 1970, a company that manufactures small colonial furniture. After 13 years, he retired and sold his business to his son Phil Filmore who was an aggressive manager, strategist and modernized in introducing new product designs and new marketing skills. Phil owns 63% of the business, shareholders own another 31%, and some employees account for the other 6%. His marketing strategies and skills with his engineer Jean Lechaise brought business and increased sales income to 5,100,000 in 1993. His annual salary amounted to 80,000 and he earned another $20,000 on dividends from shares. He died in a car accident and left all his business and shares for her wife Lucinda Filmore.

Problem Statement & Objective:
Lucinda Filmore faces a problem in deciding what she will do with Filmore Furniture after Phil’s Death, and how she will provide for herself and her family. The objective is how to deal with Filmore Furniture in a way that she will still have a steady income and high standard of living for her and her children.

Situation Analysis:
Summary:
Our situational analysis of the Filmore Furniture case will demonstrate several key issues that will help us determine an appropriate course of action for Lucinda. Through SWOT we can see that Lucinda's weaknesses outweigh her strengths, due to her lack of knowledge and experience. We also see that the threats to Filmore's Furniture outweigh the opportunities for the company. Through our analysis of Porter's 5 Powers we have established that the high buyer power and high power of competition in the industry outweigh the low supplier power, low power of substitutes and low threat of new entrants. Therefore the furniture manufacturing industry is a moderately unattractive industry for Luncinda to be in, especially considering her current situation.

Industry Analysis:

Porter’s Five Forces:
Buyer Power - HIGH
The buyers in the furniture manufacturing industry are furniture retail stores. These retail stores include large chains such as Leon’s or The Brick, as well as smaller privately owned furniture retailers. A positive factor influencing the furniture manufacturing industry is that there are a large number of buyers. With that being said competition in the furniture manufacturing industry is also high, which means that existing buyers have the ability to be selective when deciding which companies to purchase their products from. When dealing with large furniture chains a manufacturer may only have to deal with one or two buyers who will account for a large percentage of sales. This means that those specific buyers have significant say in the quality expectations of the product. Also because these buyers are purchasing large quantities, they have significant price bargaining power as well. A manufacturer will want to keep the buyer happy because switching retailers for a significant volume of an expensive product can prove to be very risky. A way to mitigate buyer power is through forward integration into the retail sector. The furniture retail sector is also a very competitive industry, and since forward integration would be a costly endeavour, this may not prove to be a profitable solution with little to no retail experience. The main factors retailers will take into consideration when choosing their suppliers are price and quality. Therefore buyers have high bargaining power as they can easily switch distributors based on lower prices or higher quality.

Supplier Power – LOW
Furniture manufacturers require natural resources such as wood, metals and fabrics. These natural resources are products that for the most part remain consistent to the market. This means that the suppliers to the furniture manufacturing industry are faced with perfect competition. There is little to no difference in products from one competitor...
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