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Table of Contents

Essay by   •  March 10, 2019  •  Essay  •  1,721 Words (7 Pages)  •  14 Views

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TABLE OF CONTENTS

1. Key events

2. Problem statement and Objective

3. Situational Analysis

    - Summary

4. Industry Analysis

    - Industry definition

    - Porter’s five forces

    - Conclusion

5. Company Analysis

    - SW analysis

    - Historical financial analysis

6. Identification of Alternatives

7. Analysis of Alternatives

8. Recommendation

KEY EVENTS

  • Atherley Furniture Company is situated in Orillia, Ontario and is owned by John Atherley.
  • This company has developed amazing relations and maintained a good reputation amongst its retailers. Its productions include 3 types of chairs made from different fabrics which are named as the ‘Atherley, the ‘Caledonia’ and the ‘Parkdale’
  •  Atherley is the first product of the company which has a good sale. The 2nd model named Caledonia is an advanced product and resulted in huge profits. The other model is Parkdale which is a traditional armchair design and is being produced since a long time.
  • The primary buyers of the products produced by the company are retail stores, departmental stores and high-power customers.
  • Atherley gets its raw materials from wood wholesalers and material providers.
  • Furniture business has declined due to increase in competition which in turn resulted in less profits. This has resulted in closure of numerous furniture companies while some companies repositioned themselves to stay in the market. Atherley Furniture is also losing its grip in the market due to the Parkdale chairs whose sales have been declining from last 3 years.

Problem Statement:

Objective: To take decision regarding to her business whether she should sell or hold on it.

Problem: How to take decision regarding, selling her business or not; to meet her expenses and financial needs.

SITUATIONAL ANALYSIS

SUMMARY:

Atherly furniture organization is basically a wood furniture manufacturing organization. This company manufactures couches, tables, beds and seats etc. This is an ugly organization as it confronts several possible powers from the purchaser, the risk of new entrants and rivalry in spite of the normal energy of providers and substitutes.

After comparing all the qualities, the overall result is that this company is compared with the weaknesses which are helping it to develop in this focused industry. The number of threats are less than the opportunities which help it to expand its business income.

INDUSTRY ANALYSIS

- Industry definition

The Atherley Furniture company is a manufacturing company of wood furniture’s This company has been dealing in the business of chairs since last few years and it also sells beds, table and couches.

- Porters five forces

1. Power of supplier: The providers are offices, wood merchandisers, hardware and material providers like texture and glue.  The assembling business has an energy of their supplier considering the fact as there are parcel supply assets which can be switched by them. They can diminish the production cost by choosing the lowest cost offered to them from the market. The wood suppliers have the power as the business relies upon its assets to make its products.

2. Power of buyer: Atherley’s buyers are department stores, consumers and retail stores. The buyer’s power is extended if the manufacturers runs their own stores. There are several furniture shops in the market to choose from which makes the buyer power even stronger.

3. The threat of new entrants:  Fillmore and IKEA are the potential participants in the business of furniture firms.  There is a high risk in this business as there are skilled and knowledgeable furniture workers in this business.

4. The threat of substitutes: The risk is low as the items are of everyday life use and common. The amount of danger of its substitutes is low-medium. The substitute for a sofa can be a couch prominently.

5. Competitive rivalry: The field of furniture is highly competitive from both local and international markets. The main rivalry is from IKEA and in importing furniture.

CONCLUSION:

Basically, the furniture industry is unattractive and there is a medium level of new entrants and same goes for competition and the substitutes threats. This business depends and relies on the power of their suppliers and customers. Also, the way this company plans new opportunities, the risks of substitutes are not enough.    

COMPANY ANALYSIS

STENGTHS AND WEAKNESS

STRENGTH: -

  1. Atherley has a high reputation in the market which attracts new clients and increases customer loyalty.
  1. They have talented workforce and they are very faithful to the organization as the company gives secured jobs during hard times.
  1. The value of Canadian dollar had dropped during the financial change that helped in expanding the sales of the Atherley.
  1. Customers are very loyal as the company has a good transport system and that they deliver products on time.
  1. Company is known as renovation and creative in the market which makes it unique.

WEAKNESS: -

  1. Owner didn’t have any business knowledge about the company.
  1. Canadian furniture industry suffered from economic recession and import competition which affected the company’s sales. Company faced lots of competition in the market.
  1. People giving different advice to the owner which made him confused.
  1. The company’s expenses are increasing due to Parkdale model which effects the profits.
  1. The employees have less experience and  also they lack in producing new idea.

 

HISTORICAL FINANCIAL ANALYSIS

Atherley produces 3 different types of chairs i.e. Caledonia, Atherley and Parkdale which have resulted the following profit and loss to the company:

  1. Caledonia: The cost of production of this product is very less which has resulted in high profits. Its benefit increased by 2% over the time span of 2005-2008.
  2. Atherley: If we analyse the period from 2005-2008, it clearly reflects that the cost of production has increased by 5% and the profits have decreased by the same.
  3. Parkdale: This traditional armchair model has experienced a decline in sales. Its cost of production has increased by 12% resulting in decrease in the benefits. This model is also considered as the major reason of the declining grip of the company in the business.

IDENTIFICATION OF ALTERNATIVES

Mrs. Atherley can appoint Jean Lafleur who she thought is capable to handle the business.

Mrs. Atherley can keep the business and appoint an experienced employee to work for him and give some amount of share of business as well.

She could sell the company for $2 million and pay the pending debts, after which she will be left with $800,000.

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