business plan - furniture factory

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Business Plan - Furniture factory

INTRODUCTION

With a continuous change in the life style of consumers and social changes, there is growing

demand for decoration of dining room decoration in the market. The demand for growth in

fashion awareness is forcing the market to grow to a new height. It has been mentioned in the

article UK dining room and occasional furniture market (October 2004) that in spite of the

worldwide recession, the dining room furniture market is growing at a pace of 1-2% per annum

in the UK.

The company is based in London, UK and it produces metal legs and tables which are made of

metal legs and laminate tops. The company has got an established supply chain and the

operations are managed by well trained staff. To cope with the increase in demand, the company

wants to set up a new factory in Malaysia which will produce range of dining tables made from

mahogany wood which can be sourced from the local wood suppliers in Malaysia.

The company’s current mission and vision is to become the leading provider of dining tables in

the European Union within the next ten years, and that too, at a profit.

The current business plan will explore the business opportunities and the operational aspects of

setting up the factory for manufacturing dining table in Malaysia. Though the primary objective

of the plan is to highlight the operational issues, it should also clear the aspects of marketing,

accounting and finance. The marketing strategy will also be discussed in detail.

The business plan will also take into account all the costs involved in transporting the finished

good from Malaysia to UK.

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BUSINESS OPPORTUNITIES IN THE DINNING TABLE MARKET IN UK

There has been a massive growth in the UK furniture market which has seen rapid growth

because of the boom in the construction industry and lowering of interest rates. A very good

performance of the property market gave a major boost to the furniture market. Consumers

started investing in their own properties and also in the furnishings. It has been mentioned in the

article Growth of UK furniture market outpaces Europe’s, (2006) that UK’s private consumption

is growing at an annual rate of 3% which is quite higher than the European average.

The furniture consumption market in the UK is showing an upward trend continuously for the

past five years. At present, it is the fifth largest furniture consumer country in the world. The

website has also mentioned that in 2005, the home furniture market in the UK exceeded 21

billion Euros at the market price. The article Growth of UK furniture market outpaces Europe’s,

(2006) CSIL forecasts predict that furniture consumption will continue to grow at 2% in the UK

for the next few years.

UK has also become a very big market for contract furniture with total sales figuring at 90

million Euros. It has got a wide range of customer base, which includes architects, boutique

hotels, breweries, cruise boats, education sector in which the company already has got some

presence, furniture specifies, golf clubs, hotels, office furniture suppliers, show home developers,

leading hotel groups.

A large portion of the market is controlled by imports and they cater about 30% of the domestic

market. People of the European Union generally have got a habit of replacing furniture, paving

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the way for a new furniture market. This can be understood from a simple statistics mentioned in

the article Product Market Analysis of the UK Wooden Furniture Industry (2008). An idea about

the market size can be imagined from the idea that 18.8 million pieces or 1600 million kg of

wooden dining room furniture has been replaced in the European Union in one complete year.

Value wise, it has been mentioned that UK has consumed furniture worth 6000 million pounds in

2006. You can get an idea from the following table about the increase in consumption over the

previous years. Table 5 shows a gradual increase in demand of the dinning room furniture in the

UK.

SWOT analysis

a) Strength -- The customer change of attitude towards use of furniture has changed a lot in

the UK. Moreover, people have developed a habit of replacing dinning room furniture

after a few years and this has opened a huge opportunity in the furniture market.

Consumers are also spending more on dinning room furniture and hence the furniture

manufacturing companies are making wonderful business. The company has also got an

established marketing chain that can be of real help in distributing the finished product

throughout the UK.

b) Weakness – In spite of the growing demand, the market has become severely competitive

due to entry of many new players. Cheap furniture has got imported from Asia and this

has helped to reduce the price of furniture in the market. The company has got experience

in making study tables which are used mostly in educational institutions and hence the

company does not have much experience in making and marketing of dinning tables.

Certain information like customer taste and price preferences are missing here.

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business plan - furniture factory

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