Strategy Formulation

And Implementation

of OTOBI ltd.

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

4

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

11

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.

15

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.

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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.

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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.

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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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Furniture-s

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9. http://dspace.bracu.ac.bd/xmlui/bitstream/handle/

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