Household Furniture Industry in 1986 Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Porter Five Forces Model

The porter five forces model examines the market conditions with respect to the ease of doing business. It examines the extent to which different market forces are capable of driving demand and controlling profit terms for the companies in the market. It also determines the extent to which external forces may affect the performance of companies in the respective market.

Rivalry

There were numerous companies competing in the household furniture industry with the various product ranges
This huge presence of the companies result in an increase of rivalry
In 1986 U.S furniture industry was having a size of around $13.4 billion
The top 10 U.S firms possess a part of 22.7% in the overall share by the year 1986
Interco was leading with the share of around 4.1%
Mohasco at second with position 3.3% share
Bassett at third position with 3.0% share
Lane Co was in the fourth position with 2.3% share
La-Z-Boy Chair was in fifth position with 2.3% share
Armstrong World was in sixth position with 1.8% share
Ladd Furniture was in seventh position with 1.8% share
Drexel-heritage was in eighth position with 1.7% share
Universal Furniture was in ninth position with 1.2% share
Dixie Furniture was in tenth position with 1.1% share
Imports has a minor role to play therefore the rivalry has increased
The number of specialized furniture had seen a rapid increase
IKEA arrival in U.S, offering discounts of around 20%-25%
New method of selling through stores had been introduced
Active rental program (7%)
64% credit selling increasing the rivalry

Suppliers

10 companies having a majority share can dominate the supplier
Long leading times, creating the scheduling and inflexibility issues
Limited backward integration in the industry
By the year 1985 some parts were bought from suppliers abroad
No as such issue of switching costs
Local suppliers faced trouble because major purchasing was done from outside
Suppliers give leverage to a few companies
Particle board suppliers
Fiber board suppliers
Hardboard suppliers
Paint, varnish and hardware suppliers

Buyers

Baby boom generation
Age of 35-44
Due to Price
Due to Quality
Due to Finishing
Due to Style
Being buyers, 44% of the couple only knew the name of one furniture company

Substitutes

There is no as such substitute to home furniture

Companies like IKEA, Interco, Mohasco need to maintain prices, quality and style to remain..................

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Profiles of household furniture industry in the United States in 1986. Designed for use with Masco Corp (A) and (B). "Hide
by Michael E. Porter, Cynthia A. Montgomery, Charles W. Moorman 12 pages. Publication Date: April 27, 1989. Prod. #: 389189-PDF-ENG