Dahlia Case Study Essay

OVERVIEW 1.Time Context The problem has to be solved by the year 1985. 2.Viewpoint Mr. Chua Boon Kang and Mr. Leong Sim Lam 3.Major Policy Statement Dahlia Furniture Private Limited is a local furniture industry, which supplies usually kitchen cabinets, wall units, bedrooms set and dining set. It also has metal and wood furniture sets. 4.Background of the Case a.The Company Dahlia Furniture made its entrance into the furniture industry in 1972 as subcontractors to two large furniture concerns, Ching Lin and Diethelm. It supplied mainly wall units and kitchen cabinets while bedrooms sets and dining sets were subcontracted out or obtained from local suppliers. Business went well and the company decided to branch into retailing. The business was successful in its operation especially during the time when Singapore conducted a massive public housing programs. In fact their sales increased from $4,800,000.00 to $5,500,000 in 1980 to 1981. However, during that year, the company’s sales declined especially in 1983 in which it reached only $289,000.00, and somehow recovered in 1984. Contributory factors to the decline in sales include mismanagement of Mr. Lim. Because of this, reorganizations were happening and most of the employees resigned. Also furniture industry was very competitive. b.The Industry Furniture industry in Singapore began only as an extension of the country’s oldest industry which is the sawmilling. But the demand for the furniture expanded which led to it as the leading local industry. The growth of the local furniture industry has been closely linked to the growth of the country’s construction and building industry. There are now more than 200 establishments manufacturing furniture of which 59 are both manufacturers and exporters of wooden knock-down, 35 rattan and 12 steel furniture. There has been a change in the attitude towards purchase of furniture. Fashion trend has been the latest consideration of the customers. Singporeans have become more willing to spend money to decorate their homes. 5.Environmental Analysis a.SWOT Analysis STRENGTHS †¢Safe Environment †¢Good quality of the products †¢Run the new division with the present set of designers. †¢Dahlia Furniture line was of a higher quality and price than those of other retailers. †¢Dahlia’s furniture line is more for those who want exclusivity. †¢Retail outlets are now carrying wider range of furniture. †¢Dahlias is considered as one of sophisticated furniture dealer with exclusive design for their customers. †¢Dahlia has a long experience in the field of furniture. Since 1972 they are in this field and they have worked at almost all levels of the industry like subcontracting, importing, manufacturing and retailing. †¢They have good support from local manufacturers who are in turn also working as their sub contractor. †¢The company has taken timely decision to go to retail market to get sizeable customers from medium to high class range. WEAKNESSES: †¢The company is in need of competent managers that would be of great help to the success of the furniture company. †¢Dahlia Furniture has the previous dilemma of filling their showroom with salable imported furniture and disregarding the domestic demand that the great impact in the performance of sales. †¢Dahlia has no advertisement. †¢Dahlia’s market share has become eroded by some big players in the decreasing revenues from current product †¢Poor management †¢Many workers resigned due to Ang Mo Kio Factory’s failure in. OPPORTUNITIES †¢Domestic demands for furniture rise by about twelve percent annually †¢ Increasing demand in exports to United States, Australia, Canada, Western Europe and in the Middle East. †¢Singaporeans are more willing to spend money to decorate their homes. THREATS †¢Intense competition between domestic U.S. manufacturers. †¢Powerful competitors. †¢Other companies offer lower prices b.Competitor Analysis Dahlia Furniture, aside from its manufacturing operations, aides the maintenance on the supply of their inventories to some of the local suppliers. Some of them are manufacturers while others are retailers who have their own showrooms. They can be possible competitors of Dahlia. Other competitors comprise of foreign manufacturers and retailers. Some of these are Ikea , Fly, Homestead and soon to operate Scandinavian, Italian, Japanese and American manufacturers. 6.Present Company Departmental Plans a.Product Planning Dahlia mainly supplies wall units and kitchen cabinets. It subcontracts local suppliers of bedroom sets and dining sets. b.Market Planning Dahlia Furniture advertises in Straights Times. In connection to its retailing operations, Dahlia rented a showroom to a department store in Orchard area, in Bukit Timah area and Upper Thompson area c.Production Planning The purchase of Upper Thompson and Ang Mo Kio factories are sought to increase the company’s supply. d.Manpower Planning Dahlia acquired two factories namely Ang Mo Kio and Upper Thompson. The workers of these two factories were also hired. Staffs: Sales person11 persons Clerical workers4 persons Production workers (Thompson Factory)6 persons e.Organizational Planning Dahlia Furnitures is managed by Mr. Chua and Mr. Leong. Other staffs of the company are as follows: Personnel Position †¢Chua Soo Lee General Administartion †¢Robert LamProduction and General Management PROBLEM RESOLUTION 1.Background of the Case On August 1984, Mr. Chua Boon Kang and Mr. Leong Sim Lam bought over Peter Lim’s forty six percent (46%) stake at Dahlia Furniture Private Limited. Although co-owners at one time, Mr. Chua and Mr. Leong have found Mr. Lim’s management of the company to be unsatisfactory. Some reorganization took place as most of the production workers who were doing subcontracting orders solely for Dahlia had resigned due to poor company performance in 1982. Dahlia also sold off seventy five thousand dollars ($75,000) worth of machinery used for mass producing furniture which was previously purchased by a former Managing Director, who has since left the company. Now at the helm, both are uncertain about the long term direction of the company. Meanwhile, they are both concerned over maintaining sales growth in a highly competitive industry. 2.Statement of the Problem What should the management do to maintain sales growth and improve company’s position in a highly competitive industry? 3.Statement of Objectives oLong term – To become the largest manufacturer of furniture and exporter in the furniture industry. oShort term – To maximize the profit of the company. 4.Areas of Consideration ïÆ' ¼Taxes applied to importation: The Singaporean government imposes 5%import duties for goods imported in the country. This area should be taken into consideration because this will affect the entity’s expenses when such importation has been made. ïÆ' ¼The government’s policy regarding foreign labor: In the production of the furniture , the company needs to employ the services of the laborers. The company should determine the amount of labor force needed and if there is a need to avail of the foreign laborers’ services because the government of Singapore discourages the use of foreign labor. ïÆ' ¼Competition : With the advent of the furniture industry in Singapore , more and more competing manufacturers and retailers come to exist not just from the local but as well as with the foreign brands. ïÆ' ¼Trend in the furniture industry: It should be noted that the market demands in Singapore largely depends on the buyers’ perspective of what is the â€Å"in- thing† in the fashion of the furniture industry. The company should be always updated with these current trends so that they will not be left b ehind by other contenders. 5.Alternative Courses of Action 1.Find a competent person to be the General Manager of the company 2.Intensify advertisements of the company – in the domestic and international market through joining product conventions, trade expos, putting up advertisements in local and foreign furniture and interior design magazines , broadsheets and home- Television shopping. 3.To formulate a proportionate inventory acquisition with some products imported and some manufactured, to drive away competition and at the same time, maintain its present image, also to reach all brackets of prospective clientele. 6.Analysis of Alternatives ALTERNATIVE 1 Advantages: †¢When a General Manager for the company is hired, the over- all operations will be supervised – from the production, especially to the sales operation will be given the right attention. †¢Necessary solutions will be implemented in to solve the problems of the company with the right person to handle the position and monitor the operations Disadvantages: †¢The company finds it hard to keep a competent GM to handle the operations of the company either he leaves the company to start his own business or leaves the management for another company. †¢There is a risk that the person positioned as GM be a future competitor just like what happened to one of their previous GM who decided to run his own furniture company. ALTERNATIVE 2 Advantages: †¢Intensive advertisements and promotions in domestic and international market will be the easiest gauge for the company to set awareness to the market the existence of the firm in the furniture industry. †¢Advertisements in all media forms can reach wide-range of customers, from all walks of life. Likewise joining trade expos in which the company can showcase their products and attract future clients. Disadvantages: †¢Putting-up advertisements would be costly, especially those which are shown on high class magazines or the TV channels. The company should limit expenses during this time because the company is just recovering from their losses from past years operations. †¢The market, especially the international market in which the company wishes to conquer, is highly competitive and a huge battlefield for the company. Advertisements may not be enough to outwit the competitors. ALTERNATIVE 3 Advantages: †¢Costs related to importations will be toned down because only proportionate of the inventory is imported and the remaining inventories are manufactured by the company. †¢Cost to overhead and labor will be regulated †¢The company will not have to depend largely on the local suppliers which could possibly be competitors in the long run. †¢The company could cater to middle class clients as well as the mass. †¢Insufficiency of the supply will be eliminated because the goods imported will cover up for the deficit in the manufactured goods or vice versa when imported goods have been delivered in delay. Disadvantages: †¢With the intuition that Singaporeans prefer the imported goods than those of locally made products, the goods manufactured by the company will be disregarded and will turn to change in the proportionate inventory rate. †¢The company will still incur costs for productions and importations 7.Decision Statement After further analysis of the alternatives presented, it will be best for the company to use Alternative 3 which is to formulate a proportionate inventory acquisition with some products imported and some manufactured, to drive away competition and at the same time, maintain its present image, also to reach all brackets of prospective clientele. The last alternative would best fit to answer the problem of the company regarding its inventories, maximizing profit returns and improvement of the company’s position. It should be noted that the company has a dilemma of filling up their showrooms because of the resignation of the workers in one of the factory of the company, the Ang Mo Kio so they turned out to importing goods. In turn, only the medium-class clients and upper income gainers become its customers. With proportionate inventory acquisitions, the company can control overhead, labor and importation costs. In that way, the company will minimize operating expenses leaving the company with greater profits. In using the third alternative, the company can also cater to both the middle class clients for they prefer imported furniture and the mass client for lower priced furniture which are locally made, therefore expanding the market of Dahlia. IMPLEMENTATION PROGRAM 1.Action Plans a.Long-term action plans ï‚ §Putting –up additional showrooms for the mass clientele and for the middle class customers b.Short-term action plans ï‚ §Expansion of the company’s market through advertising and promotions 2.Proposed Company Operational Plans a.Product planning ï‚ §The company should produce unique furniture designs which will attract the customers b.Market planning ï‚ §Intensify advertising and promotion schemes for furniture products not just on the Straight Times for those middle class customers but to other forms of media so that it can reach other people from all walks of life. c.Production planning ï‚ §Upon expansion of the production, Dahlia should re-avail of machineries that will be used for the additional production of furniture d.Manpower planning ï‚ §The company will employ additional laborers to keep up for the additional inventory requirements. e.Organizational planning ï‚ §The management should hire a competent person to be designated in the position of the General Manager. 3.Other problems and proposed solutions †¢Strict competition in the industry oDahlia Furniture should develop innovative products so that they can have an edge over other manufacturers. The management should know its target market. In that way they can cater what their clients wish to have and in return they can develop goodwill and loyalty among their customers. OVERVIEW 1.Time Context The problem has to be solved by the year 1985. 2.Viewpoint Mr. Chua Boon Kang and Mr. Leong Sim Lam 3.Major Policy Statement Dahlia Furniture Private Limited is a local furniture industry, which supplies usually kitchen cabinets, wall units, bedrooms set and dining set. It also has metal and wood furniture sets. 4.Background of the Case a.The Company Dahlia Furniture made its entrance into the furniture industry in 1972 as subcontractors to two large furniture concerns, Ching Lin and Diethelm. It supplied mainly wall units and kitchen cabinets while bedrooms sets and dining sets were subcontracted out or obtained from local suppliers. Business went well and the company decided to branch into retailing. The business was successful in its operation especially during the time when Singapore conducted a massive public housing programs. In fact their sales increased from $4,800,000.00 to $5,500,000 in 1980 to 1981. However, during that year, the company’s sales declined especially in 1983 in which it reached only $289,000.00, and somehow recovered in 1984. Contributory factors to the decline in sales include mismanagement of Mr. Lim. Because of this, reorganizations were happening and most of the employees resigned. Also furniture industry was very competitive. b.The Industry Furniture industry in Singapore began only as an extension of the country’s oldest industry which is the sawmilling. But the demand for the furniture expanded which led to it as the leading local industry. The growth of the local furniture industry has been closely linked to the growth of the country’s construction and building industry. There are now more than 200 establishments manufacturing furniture of which 59 are both manufacturers and exporters of wooden knock-down, 35 rattan and 12 steel furniture. There has been a change in the attitude towards purchase of furniture. Fashion trend has been the latest consideration of the customers. Singporeans have become more willing to spend money to decorate their homes. 5.Environmental Analysis a.SWOT Analysis STRENGTHS †¢Safe Environment †¢Good quality of the products †¢Run the new division with the present set of designers. †¢Dahlia Furniture line was of a higher quality and price than those of other retailers. †¢Dahlia’s furniture line is more for those who want exclusivity. †¢Retail outlets are now carrying wider range of furniture. †¢Dahlias is considered as one of sophisticated furniture dealer with exclusive design for their customers. †¢Dahlia has a long experience in the field of furniture. Since 1972 they are in this field and they have worked at almost all levels of the industry like subcontracting, importing, manufacturing and retailing. †¢They have good support from local manufacturers who are in turn also working as their sub contractor. †¢The company has taken timely decision to go to retail market to get sizeable customers from medium to high class range. WEAKNESSES: †¢The company is in need of competent managers that would be of great help to the success of the furniture company. †¢Dahlia Furniture has the previous dilemma of filling their showroom with salable imported furniture and disregarding the domestic demand that the great impact in the performance of sales. †¢Dahlia has no advertisement. †¢Dahlia’s market share has become eroded by some big players in the decreasing revenues from current product †¢Poor management †¢Many workers resigned due to Ang Mo Kio Factory’s failure in. OPPORTUNITIES †¢Domestic demands for furniture rise by about twelve percent annually †¢ Increasing demand in exports to United States, Australia, Canada, Western Europe and in the Middle East. †¢Singaporeans are more willing to spend money to decorate their homes. THREATS †¢Intense competition between domestic U.S. manufacturers. †¢Powerful competitors. †¢Other companies offer lower prices b.Competitor Analysis Dahlia Furniture, aside from its manufacturing operations, aides the maintenance on the supply of their inventories to some of the local suppliers. Some of them are manufacturers while others are retailers who have their own showrooms. They can be possible competitors of Dahlia. Other competitors comprise of foreign manufacturers and retailers. Some of these are Ikea , Fly, Homestead and soon to operate Scandinavian, Italian, Japanese and American manufacturers. 6.Present Company Departmental Plans a.Product Planning Dahlia mainly supplies wall units and kitchen cabinets. It subcontracts local suppliers of bedroom sets and dining sets. b.Market Planning Dahlia Furniture advertises in Straights Times. In connection to its retailing operations, Dahlia rented a showroom to a department store in Orchard area, in Bukit Timah area and Upper Thompson area c.Production Planning The purchase of Upper Thompson and Ang Mo Kio factories are sought to increase the company’s supply. d.Manpower Planning Dahlia acquired two factories namely Ang Mo Kio and Upper Thompson. The workers of these two factories were also hired. Staffs: Sales person11 persons Clerical workers4 persons Production workers (Thompson Factory)6 persons e.Organizational Planning Dahlia Furnitures is managed by Mr. Chua and Mr. Leong. Other staffs of the company are as follows: Personnel Position †¢Chua Soo Lee General Administartion †¢Robert LamProduction and General Management PROBLEM RESOLUTION 1.Background of the Case On August 1984, Mr. Chua Boon Kang and Mr. Leong Sim Lam bought over Peter Lim’s forty six percent (46%) stake at Dahlia Furniture Private Limited. Although co-owners at one time, Mr. Chua and Mr. Leong have found Mr. Lim’s management of the company to be unsatisfactory. Some reorganization took place as most of the production workers who were doing subcontracting orders solely for Dahlia had resigned due to poor company performance in 1982. Dahlia also sold off seventy five thousand dollars ($75,000) worth of machinery used for mass producing furniture which was previously purchased by a former Managing Director, who has since left the company. Now at the helm, both are uncertain about the long term direction of the company. Meanwhile, they are both concerned over maintaining sales growth in a highly competitive industry. 2.Statement of the Problem What should the management do to maintain sales growth and improve company’s position in a highly competitive industry? 3.Statement of Objectives oLong term – To become the largest manufacturer of furniture and exporter in the furniture industry. oShort term – To maximize the profit of the company. 4.Areas of Consideration ïÆ' ¼Taxes applied to importation: The Singaporean government imposes 5%import duties for goods imported in the country. This area should be taken into consideration because this will affect the entity’s expenses when such importation has been made. ïÆ' ¼The government’s policy regarding foreign labor: In the production of the furniture , the company needs to employ the services of the laborers. The company should determine the amount of labor force needed and if there is a need to avail of the foreign laborers’ services because the government of Singapore discourages the use of foreign labor. ïÆ' ¼Competition : With the advent of the furniture industry in Singapore , more and more competing manufacturers and retailers come to exist not just from the local but as well as with the foreign brands. ïÆ' ¼Trend in the furniture industry: It should be noted that the market demands in Singapore largely depends on the buyers’ perspective of what is the â€Å"in- thing† in the fashion of the furniture industry. The company should be always updated with these current trends so that they will not be left behind by other contenders. 5.Alternative Courses of Action 1.Find a competent person to be the General Manager of the company 2.Intensify advertisements of the company – in the domestic and international market through joining product conventions, trade expos, putting up advertisements in local and foreign furniture and interior design magazines , broadsheets and home- Television shopping. 3.To formulate a proportionate inventory acquisition with some products imported and some manufactured, to drive away competition and at the same time, maintain its present image, also to reach all brackets of prospective clientele. 6.Analysis of Alternatives ALTERNATIVE 1 Advantages: †¢When a General Manager for the company is hired, the over- all operations will be supervised – from the production, especially to the sales operation will be given the right attention. †¢Necessary solutions will be implemented in to solve the problems of the company with the right person to handle the position and monitor the operations Disadvantages: †¢The company finds it hard to keep a competent GM to handle the operations of the company either he leaves the company to start his own business or leaves the management for another company. †¢There is a risk that the person positioned as GM be a future competitor just like what happened to one of their previous GM who decided to run his own furniture company. ALTERNATIVE 2 Advantages: †¢Intensive advertisements and promotions in domestic and international market will be the easiest gauge for the company to set awareness to the market the existence of the firm in the furniture industry. †¢Advertisements in all media forms can reach wide-range of customers, from all walks of life. Likewise joining trade expos in which the company can showcase their products and attract future clients. Disadvantages: †¢Putting-up advertisements would be costly, especially those which are shown on high class magazines or the TV channels. The company should limit expenses during this time because the company is just recovering from their losses from past years operations. †¢The market, especially the international market in which the company wishes to conquer, is highly competitive and a huge battlefield for the company. Advertisements may not be enough to outwit the competitors. ALTERNATIVE 3 Advantages: †¢Costs related to importations will be toned down because only proportionate of the inventory is imported and the remaining inventories are manufactured by the company. †¢Cost to overhead and labor will be regulated †¢The company will not have to depend largely on the local suppliers which could possibly be competitors in the long run. †¢The company could cater to middle class clients as well as the mass. †¢Insufficiency of the supply will be eliminated because the goods imported will cover up for the deficit in the manufactured goods or vice versa when imported goods have been delivered in delay. Disadvantages: †¢With the intuition that Singaporeans prefer the imported goods than those of locally made products, the goods manufactured by the company will be disregarded and will turn to change in the proportionate inventory rate. †¢The company will still incur costs for productions and importations 7.Decision Statement After further analysis of the alternatives presented, it will be best for the company to use Alternative 3 which is to formulate a proportionate inventory acquisition with some products imported and some manufactured, to drive away competition and at the same time, maintain its present image, also to reach all brackets of prospective clientele. The last alternative would best fit to answer the problem of the company regarding its inventories, maximizing profit returns and improvement of the company’s position. It should be noted that the company has a dilemma of filling up their showrooms because of the resignation of the workers in one of the factory of the company, the Ang Mo Kio so they turned out to importing goods. In turn, only the medium-class clients and upper income gainers become its customers. With proportionate inventory acquisitions, the company can control overhead, labor and importation costs. In that way, the company will minimize operating expenses leaving the company with greater profits. In using the third alternative, the company can also cater to both the middle class clients for they prefer imported furniture and the mass client for lower priced furniture which are locally made, therefore expanding the market of Dahlia. IMPLEMENTATION PROGRAM 1.Action Plans a.Long-term action plans ï‚ §Putting –up additional showrooms for the mass clientele and for the middle class customers b.Short-term action plans ï‚ §Expansion of the company’s market through advertising and promotions 2.Proposed Company Operational Plans a.Product planning ï‚ §The company should produce unique furniture designs which will attract the customers b.Market planning ï‚ §Intensify advertising and promotion schemes for furniture products not just on the Straight Times for those middle class customers but to other forms of media so that it can reach other people from all walks of life. c.Production planning ï‚ §Upon expansion of the production, Dahlia should re-avail of machineries that will be used for the additional production of furniture d.Manpower planning ï‚ §The company will employ additional laborers to keep up for the additional inventory requirements. e.Organizational planning ï‚ §The management should hire a competent person to be designated in the position of the General Manager. 3.Other problems and proposed solutions †¢Strict competition in the industry oDahlia Furniture should develop innovative products so that they can have an edge over other manufacturers. The management should know its target market. In that way they can cater what their clients wish to have and in return they can develop goodwill and loyalty among their customers.