City Furniture and Mattress Harvard Case Solution & Analysis

Problem Definition

The main issue that was faced by City Furniture and Mattress was to identify the ways that could help them in order to improve their fortunes. In addition to this, company was not sure about how to gain long-term profitability as well as its ability to attract skilled workers are other issues that are faced by the company. City Furniture and Mattress has also faced difficulty in order to decide whether to close their Pickering location as it has been incurring significant losses while reducing overall profitability of the company.

However, the company is considering three alternatives in order to improve the profitability and overcome all existing problems that includes store network expansion, increase direct and indirect global sourcing and vertical integration.

Situation Analysis

City Furniture and Mattress was founded in June 2003 by Rajeev Singh and his father Baskar Singh in order to serve home furnishing markets in the Greater Toronto Area (GTA) of Ontario, Canada. The company did not had many managers and owners as City Furniture and Mattress was only managed by Rajeev Singh and Baskar Singh. City Furniture and Mattress (CFM) sold various varieties of home furnishing that includes the living room, dining room and bedroom furniture.

Furthermore, the decision making was quite difficult in the City Furniture and Mattress, as the company was constantly facing external and internal challenges that made the decision making more complicated as well as these challenges required high quality decision making capabilities. The main goal of City Furniture and Mattress was to achieve the long-term profitability that gives them a competitive advantage over other existing firms in the industry. However, the decision of both the owners to enter the import/wholesale market proved to be ineffective decision as it impact the profitability and business of the company due to the lack of key capabilities.

Current Strategy

The current strategy of the City Furniture and Mattress (CEM) is to increase the profitability of the company through the marginal gains. The company is currently struggling in the market in comparison with its local and other major competitors due to the reduction in the profitability.

However, City Furniture and Mattress it tries to compete against its rivals by considering three different strategic alternatives that includes new store's expansion, increase direct and indirect global sourcing and lastly, vertical integration that would allow them to enhance their profitability. The company continuously monitors its price competitiveness in order to compete with its competitors. Currently, the strategies that the company has adopted do not have much work for City Furniture and Mattress and resulted in declining profits.


The mission of City Furniture and Mattress (CEM) on the basis of the decision made by the company owners:

“To gain the loyalty of the customers by providing them with high quality household products that include Furniture and Mattress with the highest level of customer services that are competitively priced.”

Current Market

The company is mostly targeting the customers in the low-medium priced segment that are highly price conscious customers. The customers of the company are the end users of their products as the company has the delivery personnel team that delivers the required products to the end user. The customer wants the highest quality products that meet their expectations in term of color, size and design at the reasonable price customers specially prefer products with lower price.

The company tries to keep the prices of its products around 5%-10% above the lowest independent competitor as compared to its rivals in the market. The most basic item of the company started around the price of $400 for the whole bedroom or living set while the most expensive is around 15 times that basic amount. The company allows the participation of the customer throughout the process of making purchases by having significant customer interaction.

Financial and Quantitative Analysis

It is analyzed that total sales of the company for the year 2004 were $3,956,400 from which Toronto Store contributed $3,096,000 whereas $860,400 contributed by Pickering Store (exhibit). However, the majority of the sales of City Furniture and Mattress (CFM) comes from its Toronto Store and indicated 99% of the contribution in percentage while the Pickering Store results are not satisfactory hence, affecting the overall profitability of the company.......................

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Most owners and general manager of City Furniture and Mattresses (CFM), to make some decisions that will determine the company's strategy. CFM has continued to grow in terms of sales, but the general manager and his father, and the owner and manager of CFM, have been linked to the profitability and increasing competition from local and major supermarkets. General manager looked at several options, including capital expenditures, expansion of global outsourcing and expanding the store network and vertical integration. "Hide
on W. Glenn Rowe, Bobby Singh-Randhawa, Karin Schnarr Source: Richard Ivey School of Business Foundation 17 pages. Publication Date: October 31, 2011. Prod. #: W11450-PDF-ENG

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