City Furniture And Matressess Harvard Case Solution & Analysis

Introduction

City Furniture and MATRESSESS (CFM), initiated its business as the future wholesaler in the market. Over the period of time, it opened up three new stores in Different region with main emphasis on the Toronto and Pickering stores. Though the store of Torontoperformedrelativelywell in terms of sales and customer foot fall, the store in Pickering faced lowsales due to non-commercial area andcustomer footfall leading to low sales.

In such situation, RajeevSingh has to takethedecision in opting one ofthethreeoptions proposed in the reportto pursue in order to dealwith the risingbusiness issue.Moreover,sincethe Toronto market is fermented, the threat of entry is high, makingthemarkettougher to compete in terms of profitsandrevenuers. Moreover, his big market against that have an access to the global markets, hasthe competitiveedgein sellingthe furniture at low prices, due tolowoperational and manufacturingcost in Asia.

In addition, since furniture industry has lacked developing certain brandimage and loyalty, the company faces lowcustomerloyalty and even direct challenge from the nearby competitors who may beoffering a free televisionwith the furniture, driving thecustomers away from the CFM business.

In such situation, the three alternativesproposed though serves some extension and solution toproblem, however requires strong analysis ofthe tradeoffs that the company may have to bearwhilemoving in the market. The three options are (1) Global insourcing (2) Vertical integration and (3) Store Expansion

City Furniture And Matressess Harvard Case Solution & Analysis

Analysis

Internal and external challenges

There are followingchallenges that CFM has been facing in July 2005.

Sales:

CFM opened two stores in two different location, one in Toronto and one in Pickering.The Toronto store offeredpromisingsales and attracted greatcustomer foot fall, mainly due to the localityand high demand for certain type offurniture.Onthe other hand, the Pickering location failed to generatesubstantialprofits or even meetthe breakeven point,mainly due to locational issues.Such has been an issue, sincethe company have high tied up inventory cost associated with thePickering location.

Perhaps, such is huge issue foe the company as it would reduce the overall ROI of the business and will make the Pickering unitineffective, making thebusiness to shut it down.Howevershutting it down is also not an adequate option, as it would crate negative brand image in the mind of the customer,leading to poor sales andthus low market awareness.

Customer Service:

CFM faced great issuerelated to Customer service.Such has been due to limited numberof staff,lowemployee motivationand high workload due to under-staffing .Though the company paid high wages to the employees,such strategy failed to improve the customer service, leadingto rude customerdealingsandinefficient processing of the order, effectingthe overall salesandperceptionof store in the mid of the customer.

Moreover,since in the retailbusiness, customer service plays a vital andcore role in closing the deal and differentiates one store from another, such rude behavior time of high sales may drive the value proposition away from thebusiness, incurring loss and thus failure to cater the markets effectively.

Inventory:

Inventory is also a greatchallenge for the CFM.It is due to thefact thatsince it already has a lot of tied up cost invested in the furniture,along with the act, that thespace utilization has beenmaximum at the Pickering Location,making it difficultto lay in additional furniture, according to the demand.Unless the previous stock is cleared..............

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