Background of the Industry:The US cabinetry industry is heavily dense with a number of competitors. The industry consists of several groups producing different types and categories. The cabinetry industry is split into manufacturers –more than 5000, who are supplying stock to the market, semi-cabinet makers and custom cabinets. These are the three main groups in the US cabinet industry who have intense rivalry going on the industry. The supplying of these different category products is done through multiple distribution channels.
The emergence of retailing trends and customizing the stock cabinets has reduced the dependency upon the manufacturers as they are selling only 1% of cabinets being manufactured by them. The changing trend has negatively affected the custom share of the market and dropped from 26% to 15% in just a year.
Crown Point Cabinetry:The company started it operations in 1979. Norm Stowell founded the business; initially the cabinets were produced from his garage. Stowell mainly focused upon producing high quality cabinets and efficient services. These focuses helped Stowell in growing his operations and by 1992, he had around 100 employees including all of his 7 children. The operations are efficiently growing with substantial growth patterns. Despite this, the bottom line of the company is suffering, which has led Stowell to involve Brian. Brian is one of his children and he has interest in operating business and now he has been given the role of lead executive for controlling the operations of the organization.
Porter’s Five Forces:
Rivalry:The US industry for cabinets has huge potentials for growth and opportunity capitalization for generating higher revenues and sales. The availability of opportunities forces the competitors for adapting new strategies and innovative ideas for attracting a higher number of customers. The industry has a fierce rivalry amongst the competitors in order to meeting the customer’s needs more efficiently. The rivalry has increased to a nationwide level and is increasing with every passing day.
Threat of New Entrants:The company has huge potentials to capitalize on for the new entrants. The threat from new entrants is high in the industry as the barriers to entry are low and the emerging market in the US has huge potentials. The availability of such opportunities easily attracts the new entrants in the market as this business is not capital intensive and does not require a high inflow of capital and resources to start the operations.
Bargaining Power of Suppliers:Cabinet industry is highly fragmented. The US industry is basically split into different portions that have different focus areas. The suppliers are not dominant due to the categorization in the industry and different specializations. The producers are not dependent heavily on the suppliers for making their products available in the industry due to several options available to them. The producers are strengthened enough to negotiate with the suppliers upon their terms.
Bargaining Power of Customers:US cabinet industry consists of different producers who have various specialties or focus areas. The customers have different needs and expectation which need to be satisfied by the producers or else the customers might be influenced by another producer who is offering a better product in against of the paid prices. Intense competition in the industry has shifted the power towards the customers and customers have several options to choose from while purchasing a cabinet set. The bargaining power of customers is high in the US cabinet industry.
Threat from Substitutes:The threat from substitutes is low in the industry as the kitchen fittings have been done traditionally and with the passing years the modernization has been adapted to the traditional designs and patterns. The kitchen fittings and cabinets are hard to replace as there are not prominent substitutions to the product currently in the market. Cabinets are perceived as an important aspect while making a kitchen. Cabinets cannot be replaced with a substitute due to lack of availability of options. The threat from substitutes is low in the industry.Crown Point Cabinetry Case Solution
Strategy:The new strategy of Crown Point Cabinetry focuses on benefitting the employees of the company. The company has a miserable workplace environment. The employees are retiring with no retirement funds. The company is now focusing on providing high quality for the customers so that it can have an increased number of sales. The company has shifted its hiring policies towards hiring people who add value to the quality assurance procedure of the company. The company is now focusing on creating an exciting workplace environment, which is more desirable by the employees and applicants for the jobs......................
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