strategy formulation
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Table of Contents
Serialno.
Topic Name Page no.
1 Executive summary 72 Chapter-1 Introduction
1.1 Origin of the report1.2 Objective of the report1.3 Scope of the report1.4 Methodology of the report 1.4.1 Design of the study 1.4.2 Sources of Information 1.4.2.1 Non documentary sources 1.4.2.2 Secondary Sources1.5 Limitations & Delimitations
8-12899101112121212
3 Chapter-2 Company Profile2.1 Historical Background 2.1.1 Mission 2.1.2 Vision 2.1.3 Goals2.2 Strategic position2.3 Internal factors 2.3.1 Strategic Capability 2.3.2 Resources of Otobi 2.3.2.1 Physical Resources 2.3.2.2 Intellectual Resources 2.3.3 Core Competences2.4 External Factors
13-151313131414141415151515
4 Chapter-3 PESTEL Analysis of Otobi3.1 Political environment3.2 Economic environment3.3 Social environment
16-18161617
3
3.4 Technological environment3.5 Legal environment3.6 Environmental environment
171818
5 Chapter-4 Porter’s Five Forces Model4.1 Rivalry among existing firm4.2 The threat of new entrants4.3 The bargaining power of customers4.4 Threat of substitute products andservices4.5 Suppliers bargaining power
19-201920202020
6 Chapter-5 SWOT Analysis of Otobi5.1 Strength of Otobi 5.1.1 High quality products and services 5.1.2 Strong national brand image 5.1.3 Market leader in Bangladesh 5.1.4 Fully mechanized system 5.1.5 Awards5.2 Weakness of Otobi 5.2.1 The price is high for most ofthe customers 5.2.2 Not much stores in Bangladesh 5.2.3 Managing the Inventory 5.2.4 Market share has reduced a bit5.3 Opportunities of Otobi 5.3.1 Otobi can be an internationalbrand 5.3.2 Otobi can increase its product line 5.3.3 Office interior influences the people working there 5.3.4 Otobi can introduce its stores in other districts
21-24212122222222222222222223232323232323232424
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5.4 Threats of Otobi’s Furniture 5.4.1 More competitors are coming day by day 5.4.2 Political situation of the country 5.4.3 Low priced companies are a big threat 5.4.4 Chinese furniture is becomingpopular
7 Chapter-6 Corporate and Competitive Strategy6.1 Corporate Level Strategy6.2 Business-Level Strategies6.3 Analysis of Business-Level Strategies 6.3.1 Otobi’s Position 6.3.2 Organizational Strategies 6.3.3 Otobi’s Operational Strategies
25-28252626272828
8 Chapter-7 Critical Business Processes and Analysis 7.1 Flexible Manufacturing7.2 Brand Values7.3 Promotion
29-30292930
9 Chapter-8 Cost Efficiency Model8.1 Economic of scale8.2 Supply8.3 Experience
31-323131
10 Chapter-9 Product/Process/Service Design 33
11 Chapter-10 Strategy Clock 34-35
12 Chapter-11 Strategy Formulation11.1 Input Stage 11.1.1 Internal Factor EvaluationMatrix (IFE) 11.1.2 External Factor Evaluation Matrix (EFE) 11.1.3 Competitive Profile Matrix (CPM)
36-41363637383939
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11.2 The Matching Stage 11.2.1 Strengths – Weakness –Opportunity – Threat (SOWT) Matrix 11.2.2 Strategic Position andAction Evaluation (SPACE) Matrix
11.2.3 Grand Strategy Matrix
40
42
13 Chapter-12 Conclusion 43
14 References 44
6
EXECUTIVE SUMMARY
The Bangladesh furniture industry is one of the most promising
growth sectors. Otobi is one of the pioneers in furniture
industry in Bangladesh. Otobi is becoming a legacy in the
history of Bangladeshi furniture market and they are expanding
their market over the boundary of Bangladesh .Otobi which is
the first Multinational Company in Bangladesh. Day by day they
are doing business globally the fact is there promise of world
class furniture is being kept in the market. Their full of
innovative and modern product line is enriching our home,
office and so many places. Though competitors are emerging in
the market but the name “Otobi: World class furniture” is
still being kept and that is why Otobi is holding the highest
market share in the furniture industry. In writing this report
we came to know about different facets of Otobi’s business
strategy and creating the brand equity about the Brand
“Otobi”. We tried to know about the existing established
strategy, their strength, weakness, threats & opportunity,
their methods and actions. We also tried to show some matrix
in our report which is related to Otobi furniture.
7
1.0 INTRODUCTION
Otobi Furniture is the market leader of furniture markets of
Bangladesh. They started their business in Bangladesh in the
year 1975 with the slogan “Trusted across the World”. And now
they crossed the boundary and operating business also in
India. They are assuming themselves as the market leader for
last 10 years. Though their price is a bit higher but as they
provide the best quality furniture people are ready to get
that with any cost. Not only that they have the biggest brand
image in our country. They have already earned the first place
in the office furniture. That is why now a day corporate
office means, furniture from Otobi. Otobi furniture a part of
Otobi limited which is a combination of four different types
of business. They are as follows
8
Otobi Furniture: Combination of office and furniture
Home appliances: Washing Machine, air conditioner
Carpet: under: Appolo Limited
Decorative Light: Also under Apolo Limited
Otobi furniture has the biggest collection of furniture like
world class chair, computer furniture, home furniture, table,
swivel chair and file cabinet and plastic furniture. Otobi
furniture was given the award of enterprise of the year 2001.
Beside their corporate office in Dilkhusha, Dhaka, they have 8
sales and display center in Dhaka and Chittagong city and
around 100 dealers in the whole country. They have about 16
outlets outside the country.
1.1 Origin of the report
East West University is an institute that promotes eastern
culture & values and meaningfully blends eastern & western
thought and innovation. To do this it provides undergraduate
degree on different subjects. Strategic Management (MGT 480)
is one of the core courses of BBA program. Precisely it
teaches how business organizations formulate and implement
their strategies. This report was assigned to us by our courseinstructor, Engn Kamrul Hasan, as partial fulfillment of the
Strategic Management course objective. It was instructed to
9
follow the rules of long formal business report. The report is
to be submitted by 21 April 2014.
1.2 Objective of the report
The general objective of this report is to display our finding
on history, PESTEL analysis, Porter’s five forces model, SWOT
analysis, corporate and competitive strategy, critical
business process, cost efficiency model,
product/process/service design, strategy clock, strategy
formulation and implementation of old Otobi Ltd. in a proper
business report format. It is vital for any business graduate
because in their careers, they have to submit report formatted
as taught.
The main objective of this report is to spread the knowledge
about the Otobi furniture towards the people. This report will
help the people to get some initial knowledge about Otobi
furniture. People can get information about the company
overview, its mission, vision goals, its strength, weakness,
opportunities, threats, PESTEL analysis, Porter’s model,
strategy clock of Otobi furniture from this report.
This report will also let us know the possible recommendation
for Otobi furniture.
1.3 Scope of the report
10
In this report, we have worked about the Otobi furniture. Here
we have tried to notify history, PESTEL analysis, Porter’s
five forces model, SWOT analysis, corporate and competitive
strategy, critical business process, cost efficiency model,
product/process/service design, strategy clock, strategy
formulation and implementation of Otobi. Basically, in this
report we don’t represent all about the Otobi rather it
contains some basic ideas for better understandings of Otobi
Ltd. In this Report we have tried to show different analyzed
data, pictures and graph that will help anyone to have a
little knowledge about Otobi. As it is designed in a plain and
clear way, it will be helpful for the people and students who
do not have vast knowledge about the subject matter. The
structure of the report will be helpful for the beginner
researcher. As a reference it is reliable and easy to
interpret
1.4 Methodology of the report
The choice of an appropriate is important for any research
study. Authentic research findings need sound scientific
methodology. In the present study the following methodology
has been adapted:
1.4.1 Design of the study
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A schematic diagram is presented below indicating the steps
followed in carrying out the present study.
Figure 1.1: Design of the study
Executive Summary
↓
Introduction
↓
History of Otobi
↓
PESTEL analysis
↓
Porter’s five forces model
↓
SWOT analysis
↓
Corporate and Competitive strategy
↓
Critical Business Processes
↓
Cost Efficiency Model
↓
Product/Process/Service design
↓
12
Strategy Clock
↓
Strategy Formulation
↓
Conclusion
1.4.2 Source of Information: Non Documentary and secondarysources
1.4.2.1 Non Documentary sources
These include both formal and non formal sources. Formalsources cover discussions with experts and eminent scholars.The non formal sources include conversation with professionalsand informal discussion with corporate people.
1.4.2.2 Secondary Sources
We have collected information from secondary source arewebsites, books and some daily news paper.
1.5 Limitations and delimitations
Even though the report finished on time, it does not mean that
we did not face any problem in doing this report. The most
difficult problem that we found during doing this report was
difficult to get information from corporate people and
internet. Maximum corporate people didn’t want to talk about
details of Otobi. It may because of their secrecy .Other
problem that we felt the time to do this report was so limited
13
we believed that we could get more information from the
professionals.
Despite these limitations the results of the present study
would show some significant, directions and suggestions
towards the development of the company. It is expected that
the findings of the study would help the planners and policy
makers.
2.0 COMPANY PROFILE
Otobi Furniture stared its journey in the year 1975. They have
a huge past records to tell. They are the market leader in the
furniture industry for the whole last decade. We know that
otobi furniture is a part of Otobi limited which was the
creator of SAARC Foara of Karwanbazar, Sculpture of Rajshahi
University, and Sampan of Chittagong Airport. All this are the
biggest symbolic assets of our country. In fact the architect
of these sculptures was Mr. NitunKundu who was the father of
Mr. OnimeshKundu, the Managing Director of Otobi Limited.
2.1 Historical Background
In today’s International Business to market any product in the
international market is very difficult because of different
cultural and demographic condition. It is also more difficult
for some of the company to market its product internationally
because of competition. As I have seen for the past few months
of furniture Business in Bangladesh by various local and
14
multinational companies it will be a great opportunity for me
to study a local multinational company in this regard. In
Bangladesh Otobi is one of the leading companies in furniture
manufacturer and selling I would like to study this company
more closely and will try to understand its marketing
strategy. I have tried to integrate their Experiential Retail
strategy in Bangladesh. So basically this report will deal
with the Experiential Retail and Experiential Marketing
strategies taken by them around the globe and also in our
country.
2.1.1 Mission
Otobi is a manufacturing company which manufactures and
supplies the most qualitative furniture with reasonable
pricing across Bangladesh.
The company constantly follows the latest trends in the
furniture industry and introduces to the Bangladesh
market new, interesting and competitively advanced
products.
The company is trying to guarantee a wide offer of
furniture products in different materials, dimensions and
colors for almost every room of your home.
It offers a variety of product line to attract more
customers.
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It fulfills its social duties by fitting in the local
environment as a sponsor and donator and offers to all
employees a relaxed working environment
2.1.2 Vision
The vision of ‘Otobi’ is to become the most leading furniture
manufacturing company in Bangladesh”. By following our vision,
our company will expand its sale net across Bangladesh. At the
same time it will also focus on the foreign markets. The
management will be based on a long term partnership with the
suppliers. The company’s activities will aim towards the offer
of quality products and efficiencies, and strive to achieve
the contentment of the business partners, final consumers and
employees.
2.1.3 Goals
Otobi is committed to provide excellent service and to
exceed the expectations of its customers. It wants the
customers to remember „Otobi‟ as a memorable experience.
Otobi aims to fulfill the objectives of the Company's
growth and to meet the expectations of all its employees.
2.2 Strategic Position
The current strategic position of the company is analyzed in
terms of internal and external factors
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2.3 Internal Factors
Internal factors identify the quantity and quality of the
company’s resources and capabilities and ways of building
unique skills and company specific or distinctive
competencies.
2.3.1 The Strategic Capability
The strategic capability is defined as the capability of an
enterprise to successfully undertake action that is intended
to affect its long term growth and development.
2.3.2 Resources of Otobi
Company’s resources can be grouped into two categories
2.3.2.1 Physical Resources
The Company has a great physical resource. They are one of
the largest furniture companies of Bangladesh. As a result
they had to maintain more resources from other company.
2.3.2.2 Intellectual resource
The intellectual resource includes the brand image, patents,
customer database and is a major asset in a knowledge based
economy. The brand image of Lifestyle Furniture has been
consistently at a impressive average value which is above the
norm value. This is mainly due to the high quality products
provided by the Otobi furniture. Also the client database and
17
the innovative products provided by Otobi products are unique
resource to the company.
2.3.3 Core Competences
Core competences represent the collective learning in the
organization, especially how to co-ordinate diverse production
skills and integrate multiple streams of technologies. The
organizations must consider themselves as portfolio of core
competencies as they are focused on growing the opportunity of
the organization.
From the Otobi Furniture perspective, the innovative products,
well trained staff, market share can considered. The strategic
idea to focus on core competences is indispensably connected
to the concentration of one s own strengths against
competitors' weaknesses.
2.4 External Factors Affecting Company Strategy
There are a number of different external factors that take
place in the macro environment that affect a company’s
business. Tax changes, new laws, trade barriers, demographic
change and government policy changes are all examples of macro
change
3.0 PESTEL ANALYSIS OF OTOBI LTD18
If we analyze the environment of Bangladesh by the PESTEL
analysis for OTOBI LTD we will find a scenario like that
3.1 Political Environment
As we know Bangladesh is a developing country and it’s a
democratic country. But we know that from past the political
situation of Bangladesh is not stable. Whenever the election
is coming to the door the political unrest is raised by a huge
amount.
so for doing business political unrest is very harmful. Otobi
is also about to face that problem if they want to extend
their business in recent years. Recent political situation is
very bad for business. a lot of strikes is hampering the
export and import. For this unrest a lot of company is losing
their orders. Besides this whenever a new government is came
they just rise the tax by changing the policy. But
nevertheless the current political policy passed by the
government ensures loan facilities and investment
opportunities to the business personals this will give
lifestyle furniture a chance to bounce back.
3.2 Economic Environment
Economic conditions affect how easy or how difficult it is to
be successful and profitable at any time because they affect
both capital availability and cost, and demand for the
product. The rise in the inflation rates has inversely
19
affected the price of goods (UK inflation rate rises to 4% in
January, 2011). This sudden increase forced the company to
lower the price of products which in turn reduced the
profitability margin of the company.
Bangladesh is a developing country. its means that the economy
of Bangladesh is growing day by day. the economy and the
buying capability of the people is also increasing. now a day
the GDP of Bangladesh is increasing and also the disposable
income is also increasing that makes the ability of people to
consume more. so for OTOBI it's an opportunity to do business
and expend their business. it's an ideal market. Besides this
because of globalization export and import is also increasing
in the Bangladesh. in Bangladesh the labor cost is very low
because it's an overpopulated country and labor is cheap here.
so OTOBI can easily produce more product in cheap price and
can easily expand market with limited risk. it's an good
opportunity for them to do business.
3. 3 Social Environment
The socio- cultural environment encapsulates demand and tastes
which vary with fashion, disposable income, and general
changes, can again provide both opportunities and threats for
particular companies. The furniture industries throughout the
country faced a transportation threat in the 4thstage of the
game as there was an employee’s strike in the transportation
sector. This resulted in the delay in deliver of the ordered
furniture. But nevertheless, the sudden strikes didn’t have a
20
strong impact on the Lifestyle Furniture as the company
already had excess of inventory in hand. This helped the
company in making additional sales in that particular period
and also overcome the loss that it incurred due to inflation.
The overall market share of the company has always been high
throughout the game.now a days the social bonding is changing
in Bangladesh. Big families are breaking into pieces and
everybody is making a small family. the life style is
developing day by day.Each and every family needs furniture
and now people are very conscious about their furniture. they
want stylish and effective furniture. The growth of population
is very high here and the number of family is increasing. so
the demand of good furniture is high now. So Otobi can grab
all the opportunity from this big market. It’s a good
profitable market.
3.4 Technological Environment
The advancement in technology such as the Digital Marketing
has enabled the company to reaching out to the customer in a
more rapid manner.
OTOBI is using new technology for their production which is
very effective to produce a huge amount of product in time and
it also helps Otobi to full fill the demand of their customer
by providing them their desired product. They bought many
modern machines for their factory from abroad which is very
expensive.
21
3.5 Legal Environment
OTOBI has always been able to keep up the laws and legal
requirements of Bangladesh and the Anti Copy in Design- an
organization that ensures the intellectual property right.
3.6 Environmental Environment
According to Pearson and Robinson, there are five principle
environmental factors that affect a company’s business. They
are the competitors; creditors, suppliers, customers and the
labor market (Pearson & Robinson, Strategic Management, 2002).
Otobi believes in green world, so they are producing
environment friendly product which people can use without any
hesitation. so by this they are getting competitive advantage.
The competitive advantage that OTOBI maintains over the other
companies is the ability to deliver high quality products to
our customers at low prices. This helps our company in
retaining the customers and suppliers.
22
4.0 PORTER’S FIVE FORCES MODEL
According to Porter, the likelihood of firms making profit in
a given industry depends on the five factors
23
Figure 4.1 Porter’s Five Forces
Five Forces model is a generic framework that deconstructs
industry structure into five underlying competitive forces or
variables. These five underlying forces are competitive
rivalry among existing firms, bargaining power of suppliers,
bargaining power of customers, the threat of new entrants into
the industry, and the threat of substitute products and
services.
4.1 Rivalry among existing firms
Rivalry among existing firms is intense in the global market
of discount furniture and the major players in the industry
include Partex Furniture’s, Navana Furniture’s, Brothers
Furniture, Akhtar Furniture’s, Hatil, High Fashion Gallery and
other local manufacturers. However, currently Otobi is the
undisputed market leader in the industry of discounted
furniture in the Bangladeshi market.
4.2 The threat of new entrants
The threat of new entrants into the industry is low, and the
chances of emergence of new competition for Otobi is
insubstantial as the current market is saturated and
significant amount of financial investments and expertise are
24
required to become a discounted furniture retailer in a global
scale.
4.3 The bargaining power of customers
The bargaining power of customers is strong, as the
competition is intense and the customers have a wide choice of
alternative options offered by other branded furniture
retailers, as well as, local furniture producers.
4.4 Threat of substitute products and services
Threat of substitute products and services is low as there
are no too many products and services available that can
substitute the demand for furniture, decors, home appliances
and a range of other products offered by Otobi.
4.5 Suppliers bargaining power
Suppliers bargaining poweris not very high as there are
numerous factories around the country with the capabilities
and resources to form partnership with Otobi. At the same
time, Otobi pursues the strategy of forming strategic long-
term relationships with its suppliers.
25
5.0 THE SWOT ANALYSIS OF OTOBI’S FURNITURE
26
Strengths High quality products
and services Strong national brand
image Market leader in
Bangladesh Fully mechanized
system Awards
Weaknesses The price is high for most
of the customers Not much stores in
Bangladesh Managing the Inventory Market share has
reduced
Opportunities Global Expansion Otobi can increase its
product line Office interior influences
the people working there Otobi can introduce its
stores in other districts of Bangladesh
Threats More competitors are
coming day by day Political situation of the
country Low priced companies
are a big threat Chinese furniture is
becoming
Internal Factor
Negative
Positive
External factor
5.1 Strengths of Otobi Furniture
5.1.1 High quality products and services: The quality of Otobi is much
better than its competitors as they use “Wood-tex” for
their products whereas other manufacturers normally use
“Jute-tex”. Nowadays they are producing large quantity
wooden product with a large number of designs. They are
the only one in the country who are importing Cain
furniture. However, the secret behind the fantastic
quality of Otobi is they have a separate Quality control
department where more than 100 workers are working for
maintain the quality of the product.
5.1.2 Strong national brand image: Almost all the people of
Bangladesh believe that Otobi‟s furniture is fashionable
and long lasting. The customers also buy their products
because they provide warranty and the best after sales
service. Though all the furniture company‟s provides
warranty but Otobi‟s policy is very much committed in
providing warranties unlike other companies. Basically,
they care about the customers more and have successfully
built a positive brand image in the customers mind.
5.1.3 Market leader in Bangladesh: The brand equity of Otobi‟s
furniture is very good. They are the market leader for
the last couple of years in Bangladesh. They are very
much popular for making the best office furniture. This
27
is why nowadays corporate office means furniture from
Otobi.
5.1.4 Fully mechanized system: Otobi uses a fully mechanized system,
modern technology for manufacturing services of
contemporary designs. The raw materials are imported from
Malaysia.
5.1.5 Awards: Otobi has won a lot of awards for being the best
furniture company unlike other companies.
5.2 Weakness of Otobi Furniture
5.2.1 The price is high for most of the customers: Otobi products are
highly priced. It makes it difficult for the middle class
families of Bangladesh to afford it.
5.2.2 Not much stores in Bangladesh: Otobi has showrooms confined to
Dhaka and Chittagong mostly. This makes it difficult to
serve the customers in other parts of the country.
5.2.3 Managing the Inventory: During specials seasons or occasions
like Eid and Puja. They get a lot of offers from
customers. Their product demand increases. But at times
showrooms and dealers are unable to keep up with the
heavy orders placed by the customers. Hence, this creates
a lot of pressure regarding the management of inventory
within the company.
5.2.4 Market share has reduced a bit: Since, Otobi is the pioneer of
branded furniture industry. It had a market share of
100%. But as time passed by the number of competitors for
28
Otobi increased in the market and which eventually lead
to a decrease in their market share. Therefore, Otobi was
not able to handle the competitor‟s pressure effectively.
5.3 Opportunities of Otobi Furniture
5.3.1 Otobi can be an international brand by exporting its products in more
countries (Global Expansion): Otobi should start thinking of
operating in other countries as well. It can start by
expanding its international market to the SAARC nations
starting with the neighboring countries like Sri Lanka,
Nepal and Pakistan.
5.3.2 Otobi can increase its product line: Based on the high demand,
Otobi has started producing furniture made of wrought
iron. It can increase its market share in this sector by
further increase in production because of the huge
demand.
5.3.3 Office interior influences the people working there: These days‟
people are becoming more interested in the office
structure. Since, office environment has a strong
relation with the office design and the people working
there. If the office is designed nicely the employees
feel good to work in this kind of environment. And when
it comes to Otobi, the interior along with the
environment is fantastic. However, these increased
consciousnesses for decoration have aroused people
interest in stylish furniture designs.
29
5.3.4 Otobi can introduce its stores in other districts of Bangladesh: Due to
the increased demand of furniture by the Companies all
around the country. Otobi can open outlets in other
divisional districts like Sylhet, Khulna and Rajshahi. In
this way, they will be able to make profit as well.
5.4 Threats of Otobi Furniture
5.4.1 More competitors are coming day by day: Day by day the
competition for Otobi is increasing. Their competitors
are companies like- Partex, Navana furniture etc. These
companies can threaten the market share of Otobi
immensely.
5.4.2 Political situation of the country: The political situation of the
country can create negative image about the company and
can cause serious problems in its transaction with
foreign countries. Even the political situation can
jeopardize the future growth of the company.
5.4.3 Low priced companies are a big threat: The low priced
companies‟ offers products in a cheaper and reasonable
price than Otobi to the middle class society. Since, we
know that Bangladesh is filled with middle class people
more. Otobi should come up with a reasonable product
price range for the majority of the middle class people
in Bangladesh. Otherwise, low priced companies might take
over Otobi.
30
5.4.4 Chinese furniture is becoming popular for their price and designs: These
days Chinese furniture is becoming more popular. They
come up with the same design but in a cheaper price. This
can be big threat for Otobi.
6.0 CORPORATE & COMPETITIVE STRATEGY FOR OTOBI
31
Strategy is the link between what the organization wants to
achieve- its objectives- and the policies adopted to guide its
activities. It is defined as the match an organization makes
between its own resources and the threats or risks and
opportunities created by the external environment in which it
operates.
Strategies exist at a number of levels in an organization
namely corporate level, business level and functional level.
6.1 Corporate Level Strategy
Corporate-level strategies address the entire strategic scope
of the enterprise. This is the "big picture" view of the
organization and includes deciding in which product or service
markets to compete and in which geographic regions to operate.
Level Of strategy Definition Example
Corporate Strategy Market definition Diversification into new product or geographic markets
Business strategy Market navigation Attempts to secure competitive advantagein existing product or geographic markets
Functional strategy Support of corporate strategy and businessstrategy
Information systems, human resource practices, and production processes
32
that facilitate achievement of corporate and business strategy
Corporate strategies deal with plans for the entire
organization and change as industry and
Specific market conditions warrant.
Top management has primary decision making responsibility in
developing corporate strategies and these managers are
directly responsible to shareholders. The role of the board of
directors is to ensure that top managers actually represent
these shareholder interests. Otobi has developed its mission
and vision keeping its business corporate strategies under
consideration. „Otobi‟ aim is to become the leading furniture
manufacturing company by introducing a wide variety of
products with reasonable pricing all over the country”. Otobi
wants to spread it name in both home and foreign countries.
6.2 Business-Level Strategies
Business-level strategies are similar to corporate-strategies
in that they focus on overall performance. In contrast to
corporate-level strategy, however, they focus on only one
rather than a portfolio of businesses. Without such crucial
information, corporate-level managers are prevented from best
managing overall organizational direction. Business-level
strategies are thus primarily concerned with:
33
Coordinating and integrating unit activities so they
conform to organizational strategies (achieving synergy).
Developing distinctive competencies and competitive
advantage in each unit.
Identifying product or service-market niches and
developing strategies for competing in each.
Monitoring product or service markets so that strategies
conform to the needs of the markets at the current stage
of evolution.
6.3 Analysis of Business-Level Strategies
Porter's Generic Strategies
Overall low cost leadership
Overall differentiation
Niche (focus) low cost leadership
Niche (focus) differentiation
6.3.1 Otobi’s Position
Otobi follows the overall low cost strategies and policies to
become the lowest cost producer and/or distributor of world
34
class furniture in Bangladesh. Otobi concentrates on
construction of the efficient-scale facilities, tight cost and
overhead control, avoidance of marginal customer accounts that
cost more to maintain than they offer in profits, minimization
of operating expenses, reduction of input costs, tight control
of labor costs, and lower distribution costs etc. This low-
cost leadership strategy has earned competitive advantage for
Otobi.
6.3.2 Organizational Strategies
After setting a long term goal and mission, company
immediately decide its organizational strategies. To function
according to goal company need some strategy for their
different department.
Each of the above mentioned functional areas are working in
concert with the other to achieve desired goals.
Organizational or corporate strategy requires a close
connection among the functional areas. An organization follows
some operational strategies to achieve goal successfully. Some35
distinct function or process can help organization to achieve
goal more easily.
6.3.3 Otobi’s Operational Strategies
OTOBI Furniture, Bangladesh also follows some unique and
distinct operation strategy to compete with their competitors.
The strategy OTOBI is following, consistent with the
organizational strategy that used to guide the operations
function.
36
7.0 MAJOR CRITICAL BUSINESS PROCESSES AND ANALYSIS OF
OTOBI FURNITURE
7.1 Flexible Manufacturing
Otobi manufacturers its furniture using state-of the-art
technology, such as computerized numerically controlled
machines and solar kilns. Otobi Limited is a leading crafted
furniture manufacturing company of Bangladesh introduced world
class furniture through its five well equipped production
units in three Factories. Most of the machineries were sourced
from China and Germany with high flexibility of modification
as required for their verities of design. Otobi is now the
market leader in branded furniture, with almost 70% market37
share. Its product has also entered into overseas market as a
part of the expansion strategy. Overall business performance
trend of Otobi Limited is good. 2 years back Otobi launched
Notepad concept which was an innovative range of contemporary
office furniture. And they had succeeded also.
Analysis
Here, Otobi is using flexible manufacturing process, to
manufacture their product according to customer needs and
design ideas. For different customer they introduced different
product line or product segment. By using technology, they
also have upgraded their production process.
7.2 Brand Values
Surrounded in day to day affairs is Otobi’s aspiration to be a
creative organization in every sense of the term. It is with
teamwork and togetherness that challenges are met and
overcome. Creation, perfection and dynamism are the core
values of Otobi. Quality, durability, excellence and neat
craftsmanship are not what Otobi struggles to achieve, but
features distinguished in each Otobi design. The company
maintains its belief of setting its own benchmark and breaking
it time and time again. Expressing continuous innovation the
company is now an inspirational brand in homes and offices,
which is explicitly expressed through its products and
communication. At the heart of all activities in the company
lies a distinctive need to constantly surprise; not just the
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consumers, but their employees too. The company thrives on the
unique "keep reinventing" proposition.
Analysis
By creating a good brand value Otobi captured a big amount of
market share. Otobi produces good quality furniture with a
cheaper price and discounted price round the year. Otobi
reaches every district of Bangladesh with eight showrooms and
100 dealers. In 2004 Otobi starts exporting to India on a
regular basis, making it the first Bangladeshi company to
become global. Otobi builds its flagship 42,000 sqft retail
store in Gulshan, Dhaka. The way they expand themselves it
clearly states about Otobi’s Brand value inside and outside
the country.
7.3 Promotion
The in-house Communication department at Otobi works around
the clock to ensure that all of Otobi's products, services and
promotional campaign receive due attention. Otobi maintains
innovative, year-round promotional excitement to attract its
customers and is visually present in print media, television
and outdoor billboards. The promotion strategy has evolved
over the years, alongside the brand. In the past, Otobi
employed straightforward, product-based adverts in above-the-
line channels. It has moved on to discount campaigns since,
and has developed further into thematic campaigns. In terms of
below-the-line advertising, Otobi is involved in a number of
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activities including direct mails, leaflets, catalogues,
scratch cards and coupons, PR activation for showroom
launches, B2B sales, and follow up of the product condition by
the Otobi Customer Care department. The Business Research
department is also involved in BTL activities, by measuring
the level of customer satisfaction after sales. A recent
campaign which received much acclamation was the Metamorphosis
TVC, which illustrates various types of transformations taking
place within a jungle. The campaign was launched in August
2009, and is being aired on all Bangladeshi channels. Otobi
depicted seven layers of meaning in this campaign: its outer
shell introduced solid wood furniture and its innermost shell
appropriated an essence of continuous reinvention. Within the
intermediary shells, Otobi gathers inspiration from nature and
considers Otobian life as a garden or forest. Life goes on for
travelers who gain motivation and enlightenment from their
journeys for their own metamorphosis. While advertising and
promotions are an integral part of the company's function,
Otobi recognizes the role it can play in furthering the
development process in the country. Otobi is committed to
giving back to the society it operates in, with an emphasis on
a triple bottom line: people, planet, profit.
Analysis
Otobi is promoting their new product every now and then, they
are attends all the trade fare locally or internationally
hosted. They also offer discount and sales in particular
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periods of year. Orienting people with new lifestyle and space
they have been promoting their product round the year.
8.0 COST EFFICIENCY MODEL
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8.1 Economic of scale
A company can achieve superior efficiency through reducing its
cost. There are various functions undertaken by Otobi which
directly or indirectly contributes to achieve efficiency. To
achieve economies of scale Otobi goes for a large volume of
production together. For this purpose, they do not leave out
small orders also. What they do is compile all the small
orders and then go for production.
8.2 Supply Otobi has a manageable number of suppliers. There are three
types of suppliers in Otobi:
Local items- procured from local suppliers
Imported items-procured from overseas suppliers
Stationary items-procured from local suppliers
Otobi believes in having long term contractual relationship
with the domestic and overseas suppliers. The suppliers of
Otobi also feel comfortable to work with Otobi for such long
term relationship. Otobi could establish a very good cross
functional relationship among different divisions. Marketing
department does the marketing forecast, accordingly production
manager carry on acquisition of resources, and thereafter
conversion of inputs into outputs is done through
transformation process. If the marketing department could
identify any change of customer need, immediately the idea is
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forwarded to R&D department. R&D department acts accordingly
and improve or restructure the design.
8.3 Experience
Otobi gives emphasis on the experienced worker. If a little
bit higher pay is also required they are ready to pay, but it
always try to hold up their experienced and old employees.
Otobi shifted their plant from Mirpur to Shyampur, some of the
local workers refused to go to the new location. Otobi gave
them higher payment, accommodation and other facilities to
take them to shyampur. Efficiency is also achieved through
division of labor and specialization. Otobi has divided
itslabor force for various segments and goes for
specialization; chair, table, kitchen cabinet, hospital
furniture, office furniture etc.
Figure: Experience Curve
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9.0 PRODUCT/PROCESS/SERVICE DESIGN
To make the manufacturing process flexible, recently Otobi has
imported modern machineries from Germany. Locally they are
continuously trying to improve their equipment to ease the
manufacturing process. Mr. NitunKundu, the founder of Otobi
was a very creative and innovative person. He always engaged
himself in R&D. He also encouraged his employees to think to
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innovate. Recently Otobi has innovated a number of small
engineering tools which have made the production process
easier and cost effective. The teams which innovate something
new get a good amount of remuneration. Otobi makes the module
product also. These products can be fold easily. Where there
is a limit of space, these kinds of product is very useful.
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10.0 THE STRATEGY CLOCK
According to Bowman model a firm can differentiate between
Differentiation strategies, Low Price Strategies and Risk
Strategies
Figure: Strategy clock of Otobi Furniture
Strategy clock has six different strategies. Those are
I. No frills
II. Low Price
III. Hybrid
IV. Differentiation
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V. Focused differentiation
VI. Failure strategy
Among these six strategies Otobi use ‘Differentiation’
strategy.
We know that Otobi now a day is one of the symbols of status.
The price of Otobi furniture is a bit higher than that of the
competitors. According to the officials of the outlet of Otobi
“As they are giving the best quality raw materials for
furniture, their price is a bit higher.” They also import each
of the raw materials from the country where they get the best
one. But according to them though their raw materials are more
costly than their competitors their price is competitive.
They differentiate them with
Multiple colors
Knock Down System
Elegant Design
After Sales Service
They follow the total quality management system to sustain
their market and customers and this has helped to improve
their product value, quality, productivity that is it has
helped reduce waste and increase customer satisfaction.
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11.0 Strategy Formulation
11.1 Input Stage
In the input stage we collected and imputed basic input
information for the matching & decision stage matrices. This
stage requires strategists to quantify subjectivity early in
the process. We used our intuitive judgment for inputting data
for External Factor Evaluation Matrix (EFE), Internal Factor
Evaluation Matrix (IFE) and Competitive Profile Matrix (CPM).
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11.1.1 Internal Factor Evaluation Matrix (IFE)
Internal Factor Evaluation (IFE) matrix is a strategic
management tool we used for auditing or evaluating major
strengths and weaknesses in functional areas of a business.
IFE matrix also provided us a basis for identifying and
evaluating relationships among those areas. In table: it can
be seen that we have identified 10 strengths and 10
weaknesses. Each of them was given a weight and rating. After
multiplying weight and rating score we got weighted score and
by adding them Internal Factor Evaluation Matrix (IFE) score
(table i) has been achieved which is 2.60.
Internal Factor EvaluationMatrix (IFE)
Strengths Weight
Rating
WeightedScore
1. Has 3% more loyal customer thencompetitor
0.07 4 0.28
2. Machineries now only 80% utilizedwhich indicates to higher productionability
0.05 3 0.15
3. Attractive stores decoration 0.04 3 0.124. Well developed website developed to
provide information to the customers0.07 4 0.28
5. Has 10% large warehouse compare tocompetitor to manage inventory
0.05 3 0.15
6. Has IT experts to provide betterstock management system
0.06 4 0.24
7. Company owned 35 billboards aroundthe country to reduce promotional cost
0.05 4 0.20
8. Can provide best training anddevelopment system in the industry
0.05 4 0.20
9. Has local acceptance for being alocal furniture company
0.03 3 0.09
10 Have enough land and resources to 0.08 4 0.32
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. process raw materials by own
Weaknesses Weight
Rating
WeightedScore
1. Competitors can collect raw materials5% less cost
0.08 1 0.08
2. Less transport facilities thencompetitor
0.06 1 0.06
3. Lack of efficient furniture designersin the company compared to competitors
0.05 1 0.05
4. Increased amount of liabilities 0.04 2 0.085. Complex hierarchal positions so
complexity of chain of command0.02 2 0.04
6. Unable to provide attractive offersin the special occasions
0.01 2 0.02
7. Not considering climate changeswhile designing and promotingfurniture
0.03 1 0.03
8. Decreasing employees’ dedication dueto slow increase in salary andfacilities
0.05 2 0.10
9. Employee turnover rate increased by15% in last 3 years
0.06 1 0.06
10.
Because of inefficient producthandling 7% product damage occur inlast year
0.05 1 0.05
TOTALS 1.00 2.60
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11.1.2 External Factor Evaluation Matrix (EFE)
External Factor Evaluation (EFE) matrix method is a
strategic-management tool we used for assessment of current
business conditions. The EFE matrix is a good tool to
visualize and prioritize the opportunities and threats that a
business is facing. The EFE matrix is very similar to the IFE
matrix. The major difference between the EFE matrix and the
IFE matrix is the type of factors that are included in the
model. While the IFE matrix deals with internal factors, the EFE
matrix is concerned solely with external factor. We have
identified 10 opportunities and 10 threats. As we have
allocated weight and rating to measure IFE score same thing we
have done to measure EFE score. Our EFE score (table ii) is
2.49.
External Factor EvaluationMatrix (EFE)
Opportunities Weight
Rating
WeightedScore
1. Export opportunities of TK 1000million in Western Europe, NorthAmerica and Japan
0.07 3 0.21
2. Online shopping increased by 10% 0.06 4 0.243. Interest to become distributor is
more popular now 0.02 2 0.04
4. Industry market for Bangladesh hasgone up by 15% in last 3 years
0.09 2 0.18
5. Number of efficient graduates areincreasing
0.04 3 0.12
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6. Social media becomes a cheappromotional tool
0.03 3 0.09
7. Large shopping malls exposing storeto large number of people
0.02 2 0.04
8. Urbanizing the rural areas 0.04 2 0.089. Competitors have design but not the
highest level of quality0.06 3 0.18
10.
The substitute of wood is nowbecoming available
0.07 4 0.28
Threats Weight
Rating
WeightedScore
1. Competitor has 115 more stores thenours
0.09 2 0.18
2. Price of raw materials increased by20%
0.06 3 0.18
3. Promotions become more competitive andexpensive
0.04 4 0.16
4. Fuel cost increased transportationcost by 33%
0.05 2 0.10
5. Competitor’s store has differentdepartment for imported furniture’s
0.04 1 0.04
6. Small companies copying furniture’sdesign
0.03 2 0.06
7. Cost of living is increasing 0.01 2 0.028. Bank interest rate getting higher last
3 years0.07 1 0.07
9. Hiring foreign designers mightincrease cost due to lack of efficientdesigners
0.05 2 0.10
10.
Political instability will disturbdistribution channel
0.06 2 0.12
TOTALS 1.00 2.49
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11.1.3 Competitive Profile Matrix (CPM)
The competitive profile matrix helps us to identify our major
competitors and its particular strength and weakness in
relation to a sample firm’s strategic position. We have
compared our strength and weaknesses with our two main
competitors (Brother’s furniture and NADIA furniture).
According to CPM OTOBI (2.80) is in pioneer position (table
iii). Brother’s furniture (2.55) is in second position then
NADIA furniture (1.85).
Competitive Profile Matrix (CPM) OTOBI Brother’s
FurnitureNADIA
FurnitureCritical SuccessFactors
Weight Rating
Score Rating
Score
Rating
Score
Advertising 0.10 3 0.30 2 0.20 2 0.20Market Penetration 0.10 3 0.30 3 0.30 1 0.10Customer Service 0.08 4 0.32 3 0.24 3 0.24Store Locations 0.12 2 0.24 4 0.48 2 0.24R&D 0.11 2 0.22 3 0.33 2 0.22Employee Dedication 0.09 1 0.09 3 0.27 2 0.18Financial Profit 0.07 2 0.14 3 0.21 1 0.07Customer Loyalty 0.06 4 0.24 2 0.12 2 0.12Market Share 0.06 2 0.12 3 0.18 1 0.06Product Quality 0.08 3 0.24 1 0.08 2 0.16Top Management 0.05 2 0.10 3 0.15 2 0.10PriceCompetitiveness
0.08 3 0.24 3 0.24 2 0.16
Totals 1.00 2.80 2.55 1.85
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11.2 The Matching StageIn the matching stage, we matched organization’s internal
resources & skills and the opportunities & risks created by
its external factors.
11.2.1 Strengths – Weakness – Opportunity – Threat (SOWT)
Matrix
We visualized our business’s strengths, weakness,
opportunities and threats (SWOT) using a SWOT matrix. It
helped us to understand your internal capabilities and
external market conditions. We created SWOT analysis and used
it to develop a strategy for your business that gains benefit
from our strengths and opportunities while avoiding weaknesses
and threats. After identifying 10 strengths, weaknesses,
opportunities and threats for each we have developed
strategies which will help us to react in different
situations. Four strategies has been developed (table iv) -
SO strategies use a firm’s internal strengths to take
advantage of external opportunities
WO strategies improve internal weaknesses by taking
advantage of external opportunities
ST strategies use a firm’s strengths to avoid or reduce
the impact of external threats
WT strategies defensive tactics aimed at reducing
internal weakness and avoiding external threats
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SO Strategies
1 Invest on IT to develop online buying, selling andpromotion
2 Utilized 100% of the production capacity to serve newmarket
3 Develop machineries to improve quality
4 Process raw materials by own to export product in lowprice
ST Strategies1 Improve design to retail loyal customers
2 Develop raw materials processing capacity to reduce rawmaterials and fuel cost
3 Renovate stores to reduce disadvantage of having lessstores
4 Develop different production schedule to avoidpolitical and economical uncertainties
WO Strategies1 Develop a quality and design board
2 Increase transportation facilities to deliver productson time
3 Retain IT experts by providing proper remuneration torun online store and promotion
4 Develop proper chain of command and recruit people whocan generate idea for global market
WT Strategies1 Store enough raw materials by analyzing political risk
2 Keeping climate change in consideration regularlyupdate design to protect from copying
3 Develop proper salary and promotion structure to retaintrained employees
4 Provide attractive offers to compete with competitorsselling strategy
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11.2.2 Strategic Position and Action Evaluation (SPACE) Matrix
The Strategic Position & Action Evaluation matrix or short a
SPACE matrix is a strategic management tool which we used to
focus on strategy formulation especially as related to the
competitive position of an organization.
We have used 2 dimensions (Internal dimensions and External
dimensions) to analyze overall organization’s position
through Financial position (FP), Competitive position (CP),
Environmental position (EP), Industry position (IP) and
assigned values to the factors under every position (table
v). Values are ranging from +1 (worst) to +7 (best) and -1
(best) to -7 (worst).
Internal Analysis: External Analysis: Financial Position(FP)
Stability Position (SP)
Return on Investment (ROI) 5 Rate of Inflation -3Leverage 3 Technological Changes -2Liquidity 4 Price Elasticity of Demand -5Working Capital 4 Competitive Pressure -2Cash Flow 5 Barriers to Entry into
Market -3
Financial Position (FP)Average
4.2 Stability Position (SP)Average
-3.0
Internal Analysis: ExternalAnalysis:Competitive Position(CP)
Industry Position (IP)
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Market Share -3 Growth Potential 5Product Quality -2 Financial Stability 4Customer Loyalty -1 Ease of Entry into Market 4Technological know-how -1 Resource Utilization 3Control over Suppliers andDistributors
-4 Profit Potential 5
Competitive Position (CP)Average
-2.2
Industry Position (IP)Average
4.2
11.2.3 Grand Strategy Matrix
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Conservative
FP
CompetitiveDefensive
Aggressive
SP
IPCP
STRONG COMPETITIVE POSITION
RAPID MARKET GROWTH
WEAK COMPETITIVE POSITION
SLOW MARKET GROWTH
In the Quadrant Matrix our position is in the Quadrant I
because our competitive position is strong in the market and
market is growing frequently. We can concentrate on our
current product and look for expanding the business.
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12.0 CONCLUSION
Otobi is operating their services in Furniture business in our
country for the last thirty nine years. It creates a strong
position for furniture as it successfully competing with the
other furniture organizations of Bangladesh. Managing brand is
an essential task in every organization. Otobi has successfullycreated their brand name and able to spread its wing
internationally which is not only promising for Otobi itself but
also for the local brands.
Some organizations succeed while others fail, even if those
companies start their business with same resources because of
the selection or choice of strategy as well as implementation
of that. A company pursues a strategy to attain superior
performance, through achieving its stated goals. Being pioneer
to bring revolutionary changes in the arena of laminated
furniture, Otobi has gained competitive advantages over its
competitors. By implementing functional level strategy
successfully, Otobi could achieve superior efficiency,
quality, and innovation and it has become customer responsive.
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3. http://www.furnituretoday.com/
4. http://www.answers.com/topic/furniture-stores
5. http://www.assignmentpoint.com
6. http://www.superbrands.com/bd/images/PDF/21.pdf
7. http://www.scribd.com/doc/65477339/Report-on-Otobi-
Furniture-s
8. http://www.otobi.com/
9. http://dspace.bracu.ac.bd/xmlui/bitstream/handle/
10361/801/Md.%20Shahriyar%20Hasan.pdf?sequence=1
10. http://www.slideshare.net/
11. http://www.bfidexpo.com/
furniture_overview.php?lang/
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