Parts of the Business Need to be Strengthened by Raft Furniture Company - Assignment Example

RAFT FURNITURE COMPANY Question SWOT Analysis Strength Weaknesses Human Resource Management Competent marketing personnel with the ability to explain to the customers the rationale behind the imperfection of teak furniture. Quinn and co-founder Heinz Frye have experience and competence in production of teak furniture as they were both former art dealers. The company lacks a competent IT expertise who can develop the companys e-commerce site in order to increase its sales since it has demonstrated much potential with a contribution of £200,000 the previous year. Threats Opportunities There has been immense application of personnel for the first franchised store in Bromley, Kent, this is a reassuring source of labor. Delegating task to the employees and allowing them to do much work for the company can have future devastating consequences. Accounting and Finance Strength Weaknesses The company has been successful in growing its sales across its three stores to £3.3mlast year, up from £2.5m in 2008. The company has started franchising outside London with the view of increasing the sales of the furniture. The company refuses to do discounts of more than 5per cent compared to other competition in the market. The company has to spend a lot of money to pay for FSCs flights and accommodation in their bid to use recycled wood. Threats Opportunities The company has potential of selling luxury leather sofas, with actors James Corden and David Tennant among the buyers of its handmade £3,500 Chesterfield. The company fears it many require to sell the company after an extent of growth due to the fact that Quinn is still a small businessman with no capacity of managing a large company. Marketing Functions Strength Weaknesses The market for furniture made from recycled wood has gained much market exposure leading to increased sales for Taft furniture. There is increased awareness for green furniture in the market. The teak furniture is characterized by some imperfections such as marks on the joints which affects the customer’s expectations. Threats Opportunities The teak to be used in production comes from demolished Indonesian homes. As such, the sources of raw material is sustainable to last the company a lifetime. Customer’s purchase of the green option of furniture has the potential of becoming a habit thereby increasing the sales of Taft furniture. There is increased competition in the market from companies providing perfected furniture. Customers may not be willing to change from this type of furniture to unperfected furniture. Parts of the Business Need to be strengthened The human resource management section can be strengthened by carrying out extensive research to ensure that delegation of task to the employees will result in constructive future effects. The company has demonstrated great potential with the increase in sales through e-commerce. However, this strategy can be explored further to ensure that the company maximizes the potential it has in converting the e-commerce potential into sales. This can be done by hiring a training he best IT expertise. Quinn can also acquire the necessary skills required to handle a large business and therefore boost the revenue of the company in perpetually without the need to sell it. Marketing of Taft’s furniture can be enhanced by promoting the use of green furniture (Hurley 2011). Factors that seem to be influencing the organizational culture of RAFT and explain which of these factors seem most important in determining that culture. There are various factors that seem to be influencing the organizational culture of RAFT Company. Such factors include; The influence of Quinn and his co-founder Heinz Frye, whose influence affect the performance of the business. The development and the size of RAFT company influences its organizational culture are it is a small business seeking to expand through franchising in order to expand. The attitude of the customers towards the products of the company. The furniture of RAFT Company is unique and different from other producers in the market and therefore, is dependent on the role of the market. Question 4: Marketing The likely motivations and buying processes of a typical consumer for RAFT The forest-friendly nature of RAFTs furniture attracts most of the customers. Most of the customers are moving towards green furniture and therefore, are a great source of motivation for consumers who want to protect the environment by buying furniture which has been produced from recycled wood. While it was a great motivation of buyers to buy furniture because of the way if looked, this motivation has changed as more buyers are inclined to buying furniture that seek to conserve the environment by preventing logging of trees. This makes such buyers responsible for their environment by buying a green option. Furthermore, buying green products becomes a habit for buyers thereby increasing the purchase of green furniture. Buyers are also appealed to the furniture produced by RAFT as it is a way of celebrating imperfection in art. The use of recycled teak wood in making furniture which is also characterized by imperfections such as natural marks. This attribute of RAFT furniture makes it artistic thereby appealing to people with aesthetic appeal. According to Quinn, it is the warts and all the attributes of recycled wood that makes it beautiful. (b) The extent and ways in which RAFT are practicing societal marketing and green marketing RAFT Company has to large extent been practicing societal marketing and green marketing as it uses recycled wood to produce its furniture. Deforestation and irresponsible logging of trees to make furniture has potential impacts to the future of the ecosystem. The company uses recycled wood from the demolished Indonesian homes as the main source of raw material for their furniture. The rationale for utilization of Indonesian recycled wood is due to the fact that Indonesian is replacing most of its wooden structures with metallic structures in response to the regular earthquakes that Indonesia is subjected to. This has led to immense supply of the recycled wood to an extent that the company is assured of supply of raw material throughout the life of the company. The company also practices societal marketing by appealing to people to support green furniture in a way that the market has not adopted yet. For instance, the company offers guidelines to the customers who complain about the features of the furniture having imperfections; the guidelines help the customers to be part of the process. Also, marketing of the furniture allows buyers to get unique features as opposed to the mainstream furniture since the features are different for each piece. As such, buyers are advised to appreciate the gnarled factor in RFAT furniture. c) Two human resource management, and two accounting and finance issues currently faced by the company. Human resource management issues The company lacks a competent IT expertise who can develop the companys e-commerce site in order to increase its sales since it has demonstrated much potential with a contribution of £200,000 the previous year. A competent IT experts will help to revolutionize the sales of the company through internet market especially in the wake of technological advancement. The company has given limited attention to delegation of tasks due to the current organizational structure of the company. Delegating task to the employees and allowing them to do much work for the company has proven to have future devastating consequences for the company. Accounting and finance issues The company incurs a lot of expenses in its production expenses. It has to spend a lot of money to pay for FSCs flights and accommodation in their bid to use recycled wood. The company faces threats of expanding and growing to perpetuity due to its organizational structure that is highly dependent on the two founders. As such, there is speculations of the need to sell the business after achieving the goal of growing to 25 franchise stores. Question 5: Globalization of RAFT (a) The extent to which RAFT is a globalized business. A globalized business is the business that carries out transactions across national borders to satisfy the objectives of organization, companies and individuals (Ferrier 2004). The major form of this transaction involve import and export, RAFT can be said to be a globalized business in from the definition of a globalised business due to the fact that it builds its furniture in Indonesia yet the company is London based. Its raw material which is teak comes from the demolished Indonesian homes, which means that there will be transactions between Indonesia and U. K. competition can be another base where a business can be said to globalized, RAFT is also competing with other similar firms across the globe and looking towards making the company grow to levels of companies like the American furniture retailer Restoration Hardware’s use of reclaimed wood. Idea and objectives of the RAFT was derived from American company, another reason that can justify RAFT is a globalized business. (b) The relevance of each of the four drivers of globalization to this case. The four drivers of globalisation include technological, political, market and competitive drivers. Each of this drivers have a significant force that they play to make sure that the company is globalised. Market drivers describes the extent to which a business is converges itself throughout the world. The customer needs and opportunity are taken care through a global channel. Cost drivers refers to the opportunity of scope economics and global scale, sourcing efficiencies that will vary in different countries that a company contemplating to globalise should take advantage. Competitive drivers can be referred to as the actions of competing firms enter in the market and compete between different continents. There is a strong interdependence between countries and this driver can be enhanced by Foreign Direct Investment (FDI). Government drivers are factors such as favourable trade policies, technological standards, and common product (Ferrier 2004). There are also known as political drivers since they are responsible for liberalizing rules of trade and deregulate market lead to lowered tariffs as well as allow FDI. These four drivers are very significant and they have played a very major role in ‘driving’ RAFT to become a globalised business, the next part will analyse each driver and the manner in which it has influenced RAFT to become a global business (Ferrier 2004). Market Driver When there is a steady convergence of customer needs, globalization can be said to be effective. This can be characterized by the fact that customers around the globe can have similar need for a commodity around the globe. RAFT is making furniture in Indonesia, this furniture are needed by consumers around the globe, which can be said to be driving force of the market RAFT around the globe. Cost drivers The manner in which a company will source some of its resources around the globe to make sure that the manufacturing cost is effective, sustainable and lead to profitability characterizes the this drive. RAFT has achieved this by sourcing the raw material in Indonesia and makes the furniture which is sold in shops across London. This would be very difficult to achieve if the company was only relying on recycled timber in London, the cost would be very large an unsustainable for the purpose of business. Competitive driver There are other similar companies around the globe that would pose competition to a company, this involves aspects such as imports and exports. If other manufactures produce similar products and sell them across London will make RAFT to face serious competition, in response RAFT has to increase its market share by globalizing itself. Government Drivers Government drivers are the policies that have influenced RAFT in its operations, this can be both in London and Indonesia. The fact that there are numerous endorsement from Forest Stewardship Council (FSC) is a strong indication that the firm has a global competitive advantage. It can also be said that RAFT is offering FDI to the Indonesia and this will make it have favourable terms with the government. Among the four drivers it can be said that the strongest driver that is making RAFT to become globalised is the market driver, which involves aspects such as online and the ecommerce that the company uses to market itself. Bibliography Aalborg Municipality and European Commission (2002). Sustainable land-use in groundwater catchment areas: the Drastrup Project. European Commission. Campaign to Protect Rural England (CPRE) and Natural England (2010). Green belts: a greener future. CPRE, London Bartlett, C.A., & Ghoshal, S. (1989). Managing across borders: The transnational solution. Boston, United States: Harvard Business School Press. Hurley, J. (2011) ‘Recycled teak business is looking to franchises and ecommerce’, The Daily Telegraph, 13 December [Online]. Available at http:// www.telegraph.co.uk/finance/businessclub/8952002/Raft-sails-to-the-suburbswith- franchise-plan.html (Accessed 24 June 2014). Ferrier, W., & Lyon, D. (2004). Competitive repertoire simplicity and firm performance: The moderating role of TMT heterogeneity. Managerial & Decision Economics, 25, 317-327. Holt, D. B., Quelch, J. A., & Taylor, E. L. (2004). How global brands compete. Harvard Business Review, 82, 68–75. Nisbet, T.R., Orr, H. and Broadmeadow, S. (2004). A guide to using woodland for sediment control. Forest Research, Farnham, Surrey. Read More