Competitive Advantage

This report provides a detailed analysis on the current state of the furniture manufacturing industry. It examines the industry in both a global and regional perspective and provides insights on the advantages and disadvantages of conducting business in this industry.

Even with a highly fragmented market, there is structured evidence that supports the notion for a given company to have a presence in the United States. It is further imperative that a high end furniture manufacturing company such as Wise-Wise not only establish itself in the US, but also to cater specifically to high end clients. An abundance of wealthy consumers demanding quality and design, and a recovering economy and industry as evident by increased consumption and spending, are major contributors towards companies finding greater opportunities to differentiate and gain maximum market share there. Furthermore, sourcing production to Southeast Asia remains a viable option towards relieving slim profit margins.

IKEA, a manufacturer that targets the mass market, is the only player in the industry that is currently able to use a global strategy. However, given that Wise-Wise is targeting high end consumers, an analysis of two comparative companies, Furniture Brands International and Otsuka, is needed. The analysis reveals that these manufacturers use different strategies (international and multi-domestic and exporting respectively) to compete due to the nature of this segment.

Key Findings:

* Factors that lead to success are innovation, design, quality, and price; not by brand recognition

* The industry is handicapped by end consumer demand, which in turn is a reflection of the culture and the current state of the economy. However, studies indicate that both the economy and industry are projected to recover post 2010

* Cost saving opportunities, though slim in margin, are available whether by outsourcing production to Asia, and/or seeking emerging markets. Green furniture production is a viable option for increasing profit margins.

* New businesses will find themselves in a stagnant, highly fragmented and mature industry. As startup costs are relatively high, all firms will also face threats of cheap imports, imitations, growing costs of raw materials and environmental regulations