Case Study Analysis: Brothers Furnit

Case Study Analysis: Brothers Furniture Ltd

Prepared for

Dr. A. K. M. Saiful Majid

Professor
Institute of Business Administration (IBA)
University of Dhaka

Prepared by

Shabib Raihan 13 48D

Sadman Prodhan 47 48D
Salman Hossain Khan 56 48D

INSTITUE OF BUSINESS ADMINISTRATION (IBA)

UNIVERSITY OF DHAKA
March 29, 2014
 Letter of Transmittal

March 29, 2014

Dr. A. K. M. Saiful Majid

Professor
Institute of Business Administration
University of Dhaka

Dear Sir:

Re: Submission of Assignment on Case Study Analysis: Brothers Furniture.

We would like to submit our Assignment as per your specifications. We would

also like to mention the fact that we have tried our level best to gather and
organize all the information required for this particular paper, and in doing so
have tried our maximum to live up to your standards.

We hope that you would be kind enough to accept this paper and appreciate
our efforts.

Thank you.

Yours Sincerely,

Shabib Raihan, MBA 48D, Roll 13

Sadman Prodhan, MBA 48D, Roll 47
Salman Hossain khan MBA 48D, Roll 56
Contents
1.0 Introduction.......................................................................................................... 6
1.1 Background:......................................................................................................... 6
1.2 Objectives:........................................................................................................... 6
1.2.1 Broad Objective................................................................................................. 6
1.2.2 Specific Objective.............................................................................................. 6
1.3 Hypothesis:........................................................................................................... 7
1.4 Rationale:............................................................................................................. 7
1.5 Scope:.................................................................................................................. 7
1.6 Limitation:............................................................................................................ 8
2.0 Methodology......................................................................................................... 9
2.1 Data Collection..................................................................................................... 9
2.2 Methods for Analysis............................................................................................ 9
2.3 Sample Size.......................................................................................................... 9
3.0 Literature Review............................................................................................... 10
4.0 Analysis of Data.................................................................................................. 11
4.1 PESTEL Analysis.................................................................................................. 11
4.1.1 Political Analysis.............................................................................................. 12
4.1.2 Economic Analysis........................................................................................... 12
4.1.3 Social Analysis................................................................................................. 12
4.1.4 Technological Analysis..................................................................................... 13
4.1.5 Environmental Analysis................................................................................... 13
4.1.6 Legal Analysis.................................................................................................. 13
4.2 Porters 5 Force Model........................................................................................ 14
4.2.1 Bargaining Power of consumer........................................................................15
4.2.2 Bargaining power of Supplier..........................................................................15
4.2.3 Threat of New Entrants....................................................................................16
4.2.4 Threat of Substitute Products..........................................................................16
4.2.5 Intensity of Competition..................................................................................17
4.3 SWOT Analysis.................................................................................................... 17
4.3.1 Strength.......................................................................................................... 17
4.3.2 Weakness........................................................................................................ 18
4.3.3 Opportunity..................................................................................................... 18
4.4.4 Threats............................................................................................................ 19
5.0 Conclusion.......................................................................................................... 20
6.0 Recommendation............................................................................................... 21
Appendix A: References............................................................................................ 22
Appendix B: Schema................................................................................................ 23
Appendix C: Questionnaire....................................................................................... 24
Executive Summery
1.0 Introduction

1.1 Background:
Furniture industry in Bangladesh has grown rapidly from traditional cottage
based to mechanized mass production oriented industries. It is shifting its
focuses from dependency on teak for raw materials to processed wood.
Modern machineries, innovative designs and use of diverse materials made
the products very attractive locally. Now the leading brands are contributing
to the national economy by exporting to international markets.

This paper looks at Brothers Furniture. A name that is synonymous with fine
quality Victorian and Modern productions. Their mission statement is: Buying
the Future today. They guarantee very competitive price as well as complete
customer satisfaction through quality and workmanship.

This paper will examine the environment in which Brothers Furniture

operates using SWOT, PESTEL, Porters Five Forces to inspect the
attractiveness and competitiveness of the industry. Our research will be
conducted in order to indentify the various challenges and obstacles.
Conclusions will also be made.

1.2 Objectives:

1.2.1 Broad Objective

To analyze Brothers Furniture in accordance to PESTEL analysis, Porters 5
force model and SWOT analysis

1.2.2 Specific Objective

To analyze the company politically
To analyze the company economically
To analyze the company socially
To analyze the company technologically
To analyze the company environmentally
To analyze the company legally
 To find out the companys buyer bargaining power
To find out the companys supplier bargaining power
To find out the threat of new entrants
To find out the substitutes of their product
To find out the competition in furniture industry
To find out the strength of the company
To find out the weakness of the company
To identify the opportunities of the company
To identify the threats to the company

1.3 Hypothesis:
H1: Furniture industry has got very few big players in the market

H2: Brothers Furniture is not at a very high end position in the market

H3: Brothers Furniture is the market leader of its category (mid level)

H4: Brothers Furniture is at Shakeout position at Industry Life Cycle

1.4 Rationale:
Understanding the extension of furniture industry and its benefits would give a broader and
clearer perspective to potential investors and existing vendors as well as the customers

New entrants to the furniture industry in Bangladesh will get insight into profitable
products and services. They will get an idea of what kind of products has maximum
coverage, which products attract maximum customers, what are the factors that motivates
customer to purchase, etc.
Brothers Furniture can perceive the extension opportunities in the market. Also, they can
assess the customer satisfaction level and needs that exist.
The collected data has scopes for further market research on relevant topics.

1.5 Scope:
The scope of the report revolves around the practical and theoretical aspect.
Practical experience and data collection from different sources will be
considered in this process and analysing this data the report will be
furnished. The report will also cover information from some books,
magazines, articles and various websites of different furniture companies of
the country and incorporation of this ideas/knowledge in the report will be
introduced as well. The report will cover following broad areas:

Current Scenario of furniture industry in Bangladesh

Market position of Brothers Furniture
Macro-environment Analysis (PESTEL)
Micro-environment Analysis (SWOT, Porters Five Forces model)
Future prospects of Brothers furniture

1.6 Limitation:
Following could be considered as the limitations of the study:

Focus of the analysis could be considered a bit narrow; as we are

considering Brothers furniture only and the exploratory measures
will be taken based only on availability.
No scope for cross-cultural & cross-border comparison
Number of analytic articles available on respective topic is very low
in number
Duration of the study, if a bit longer, could have covered more on
the topic
2.0 Methodology

2.1 Data Collection

In order to attain the aim of this assignment, the research work will be based
on qualitative interpretation based on quantitative analysis. For this purpose,
data will be collected from both Primary & Secondary sources.

Primary Sources: Talking directly to Brothers Furniture & Other affiliates

company personnel; Undertake questionnaire based survey from both
consumers & traders (based on necessity). From the points taken from
Brothers Furniture Ltd personnel we developed a survey questionnaire and
took the response of 25 users. For the questionnaire the option in the
answers are provided by company personnel.

Secondary Sources: Accumulating information from online publications,

research articles, business almanacs (if available) etc.

2.2 Methods for Analysis

Micro-environment analysis (internal environment) will be performed through
SWOT and Porters Five Forces model analysis. This will give insight into the
internal mechanism and stakes of the respective company.

Macro analysis (external environment) will be performed through PESTEL

analysis method. This will shed light on the position of the firm in comparison
to the industry scenario. It will depict the stability of the firm with
comparison to market competitions.

2.3 Sample Size

We randomly took 25 users who used products of Brothers Furniture Ltd at
least once in his lifetime.
3.0 Literature Review

Various kinds of researches have been conducted over the years on furniture
industry. Many of those reports covered issues such as brief description of
the furniture industry, prospects and challenges of that particular business in
both global and local perspective. Leading international furniture retailers
brand IKEAs SWOT, PESTEL and Porters Five Forces model analysis gives us
a global perspective that will aide in analyzing Brothers Furniture Ltd.

A big prospect for Brothers Furniture Ltd. is e-shopping. Their website has
ecommerce functionalities with shopping cart facilities. Local and global e-
shopping models will be assessed and compared in our analysis.
4.0 Analysis of Data

4.1 PESTEL Analysis

A PESTEL analysis is a framework or tool used by marketers to analyze and
monitor the macro-environmental (external marketing environment) factors
that have an impact on an organization.

PESTEL stands for:

P Political

E Economic

S Social

T Technological

E Environmental

L Legal
 Figure 1

PESTEL Analysis for Brothers Furniture Ltd is given below.

4.1.1 Political Analysis

Section A: Question 1 of the survey represents the political issue for Brothers
Furniture Ltd. The question was open ended and from the question the issues
came up like-

Political stability
Export-Import policy
Tax and Tariff policy
Trade restriction
Labor laws and labor unrest

4.1.2 Economic Analysis

Section A: Question 2 of the survey represents the political issue for Brothers
Furniture Ltd. Economic factors affect the purchasing power of potential
customers and the firm's cost of capital. The question was open ended and
from the question the issues came up like-

Economic growth
Interest rates
Exchange rates
Rate of inflation
Per capita income
Labor cost
Market/Industry trends

4.1.3 Social Analysis

Social factors include the demographic and cultural aspects of the external
macro environment. These factors affect customer needs and the size of
potential markets. Section A: Question 3 of the survey represents the social
issue for Brothers Furniture Ltd. The question was open ended and from the
question the issues came up like-

Income level
Social status
occupation
Age
Family size
Cultural factors
Fashion trends

4.1.4 Technological Analysis

Technological factors can lower barriers to entry, reduce minimum efficient
production levels, and influence outsourcing decisions. Section A: Question 4
of the survey represents the technical issue for Brothers Furniture Ltd. The
question was open ended and from the question the issues came up like-

Automation
Social Media (Facebook, Twitter etc)
Technology incentives
Website
Supply chain management
 Ease of accessibility, information and communication

4.1.5 Environmental Analysis

Section A: Question 5 of the survey represents the environmental issue for
Brothers Furniture Ltd. The question was open ended and from the question
the issues came up like-

Protection of nature
Business Ethics
Corporate Social Responsibility
Ethical business operation

4.1.6 Legal Analysis

Section A: Question 6 of the survey represents the legal issue for Brothers
Furniture Ltd. The question was open ended and from the question the issues
came up like-

Consumer rights and laws

Employee protection
Health and safety of labor
Consumer rights and laws
Advertising standards

4.2 Porters 5 Force Model

Porter five forces analysis is a framework for industry analysis and business
strategy development. It draws upon industrial organization (IO)
economics to derive five forces that determine the competitive intensity and
therefore attractiveness of a market. Attractiveness in this context refers to
the overall industry profitability.

The 5 forces of the model are-

Bargaining Power of consumer

Bargaining power of supplier
Threat of New Entrants
 Threat of substitute product
Intensity of competition

Figure 2

4.2.1 Bargaining Power of consumer

This force is strengthening by factors such as intense competition, and wide
choice of substitute products. For Brothers Furniture Ltd this force is quite
strong as there are companies like Akhter Furniture, Hatil Furniture with
whom Brothers is at intense competition. Also there are substitute products
like Partex, Stainless steel products, Cast Iron products, Rot iron products
etc.
Section B: Question 1 represents the Buyers bargaining power. The result of
the survey is illustrated by graphical representation.

Very High (3 of 25)

High (11 of 25)
 Neutral (7 of 25)
Low (3 of 25)
Very Low (1 of 25)

4.2.2 Bargaining power of Supplier

The supply of Brothers Furniture Ltd usually comes from local suppliers and
imported from china mainly. The raw materials used in production are vinyl
boards, frames, Oak wood, gums, screws, nails etc. The basic material is
wood which comes from nature, is limited. As a result it is very important to
maintain a good relation with wood supplier to maximize profit. Brothers
Furniture Ltd values to create the strategic relationships with suppliers, to
empower its suppliers in certain extent so they dont switch to their other
competitors. On the other hand imported supplies do not require extra care
as there is enough number of suppliers in china. So it can be said that
Suppliers bargain power is quite moderate or at the higher end slightly.
Section B: Question 2 represents the Suppliers bargaining power.
Very High (1 of 25)
High (6 of 25)
Neutral (12 of 25)
Low (6 of 25)
Very Low (0 of 25)

4.2.3 Threat of New Entrants

Section B: Question 3 represents the Threat of New Entrants. This force is
considered weak and the probability of development of new competition for
the furniture retailer is insubstantial, due to market saturation, high amount
of capital investment, and skilled labor are required to become a powerful
Brand in furniture manufacturing sector. Other factors such as suffering of
pricy-labeled household items and furniture considered as a low spending
priority due to recessed economies, recent unstable political situation.

Very High (1 of 25)

High (3 of 25)
Neutral (10 of 25)
Low (7 of 25)
Very Low (4 of 25)

4.2.4 Threat of Substitute Products

As mentioned above, threat of substitutes is quite high force here. Brothers Furniture Ltd
specializes in manufacturing functional, moderate-cost, good-quality furniture. But there is
some substitution for wooden products are emerging as wood has a limited source and
deforestation has negative impact on nature. Partex group works with particle boards which are
made from industrial waste, sawdust and other particles. Local furniture manufacturer are using
Stainless steel, Rot iron, Cast iron etc. So it appears that this force is quite high for Brothers
Furniture Ltd. Section B: Question 4 represents the Threat of Substitute
product.

Very High (4 of 25)

High (7 of 25)
Neutral (9 of 25)
Low (4 of 25)
Very Low (1 of 25)

4.2.5 Intensity of Competition

Brothers Furniture Ltd operates in an extremely competitive industry,
defined by many other good quality furniture manufacturers namely Hatil
Furniture, Akhter Furniture, Navana Furniture, Otobi, Hi-fashion Gallery
etc. Some of them are for higher end customer with premium pricing and
others are at fierce competition with each other. Brothers Furniture Ltd faces
intense competition from Akhter, Hatil, Otobi etc. But the competition is
quite stable because every manufacturer have been successful in retaining
their market share for a long period of time and it is observed that furniture
buyers are loyal to the brands. Section B: Question 4 represents the
Intensity of competition

Very High (2 of 25)

High (6 of 25)
Neutral (12 of 25)
Low (4 of 25)
Very Low (1 of 25)

4.3 SWOT Analysis

A SWOT analysis (alternatively SWOT matrix) is a
structured planning method used to evaluate
the strengths, weaknesses, opportunities, and threats involved in
a project or in a business venture. A SWOT analysis can be carried out for a
product, place, industry or person. It involves specifying the objective of the
business venture or project and identifying the internal and external factors
that are favorable and unfavorable to achieving that objective.

4.3.1 Strength
A firms strengths are its resources and capabilities that can be used as a
basis for developing a competitive advantage. Brothers Furniture Ltds
Strengths were searched in Section 3: Question 1 of the survey through
open ended question. The strengths are-
 Strong brand name
Unique Design
Good reputation among customer
Automation in production
Software based central inventory
Imported raw materials from China
Customer database maintenance
Wide customer base

4.3.2 Weakness
The absence of certain strengths may be viewed as a weakness. Section 3:
Question 2 of the survey represents the weakness of Brother Furniture Ltd.
They are-
Lack of patent protection: anyone can copy the product
Absence of high end product
Not advertised at larger scale
Poor website quality

4.3.3 Opportunity
The external environmental analysis may reveal certain new opportunities
for profit and growth. Opportunities also arise from factors influencing
consumer purchase decisions such as desire of quality, special discounts
and offers, and excellent and competitive customer service. Section 3:
Question 3 describes the opportunities.

Demand for Eco friendly product

Zero wastage target for cost minimization
Integrated marketing communication
 Niche for higher end products
Opportunity to go global (Export)

4.4.4 Threats
Social trends showing lowered entrance of first-time buyers into the
housing market affect furniture sale. Increasing competition and
lowered disposable income are factors that motivate buyers to
purchase low price furniture, even at the cost of compromising
quality. Threats such as these, demands the furniture manufacturer to
reform its value chain, and optimize innovative technology in order to
provide good quality at lowered prices. Section 3: Question 4 provides
a good insight on the threats for Brothers Furniture Ltd.

Shifts in consumer tastes away from the firms products

Emergence of substitute products

New regulations

Increased trade barriers

5.0 Conclusion
6.0 Recommendation
Appendix A: References
Appendix B: Schema

Parame Complex Simple Value

ter Variable Variable
PESTEL political Analyze the company position
politically
Analysis Economic Analyze the company position
economically
Social Analyze the social position of the
company
Technological Analyze the company position
technologically
Environmental Analyze the environmental position of
the company
Market Legal Analyze the legal position of the
company
Analysis
Porters 5 Buyer Bargain Bargaining power of customers
power
Force Supplier Bargaining power of the suppliers
model Bargain power
Threat of new Threats of new company entering the
entrants market
Substitute Availability of substitute product for
product customers
Competition Competition between different
companies

SWOT Strength Strength of the company

Analysis Weakness Weakness of the company
Opportunity Opportunities for the company
Threats Threats to the company
Appendix C: Questionnaire

Case Study Analysis: Brothers Furniture Ltd

Questionnaire

Respondents Name:
Address:
Contact no.: e-mail:
Date: ___/___/____ Time:
dd mmyyyy

Request for Cooperation

We, the MBA students of IBA, are conducting a Case Study Analysis: Brothers Furniture Ltd. Please,
spend a little time to fill out this questionnaire. Your feedback is valuable for our research work. We
would like to assure you of confidentiality since the data collected is strictly and exclusively for academic
use. Thank you in advance for your precious time.
We really appreciate your cooperation.

A. Please answer the following questions (open ended)

1. What are the political issues faced by Brothers Furniture Ltd?

[______________________]

2. What are the economic issues faced by Brothers Furniture Ltd?

[______________________]

3. What are the social issues faced by Brothers Furniture Ltd?

[______________________]

4. What are the Technical issues faced by Brothers Furniture Ltd?

[______________________]

5. What are the environmental issues faced by Brothers Furniture Ltd?

[______________________]
6. What are the legal issues faced by Brothers Furniture Ltd?
[______________________]
 B. Please tick the right choice for your overall view on Brothers Furniture Ltd

Very High

Very Low
Neutral
High

Low
Questions
1. Bargaining power of customers is
2. Bargaining power of the suppliers is
3. Threats of new company entering the market is
4. Availability of substitute product for customers is
5. Competition between different companies is

C. Please answer the following questions (open ended)

1. Strengths of Brothers Furniture Ltd?

[______________________]

2. Weakness of Brothers Furniture Ltd?

[______________________]

3. Opportunities for Brothers Furniture Ltd?

[______________________]

4. Threats faced by Brothers Furniture Ltd?

[______________________]
D. Please tick the following questions

1. Your Age
o 18-28 years
o 29-38 years
o 39-48 years
o 49-58 years
o 59 years or more
2. Your location
o Gulshan
o Banani
o Uttara
o Dhanmondi
o Farmgate
o Baridhara
o Khilgaon
o Jatrabari
o Mohammadpur
o Mogbazar
o Other [__________________]
3. Your occupation
o Private Service
o Business
o Government Official
o Not on a job right now
4. Your monthly income
o Below 20000 BDT
o 20000-30000 BDT
o 30000- 40000 BDT
o 40000-50000 BDT
o More than 50000 BDT

Thank You!