Category: Furniture

Mt. Hood Furniture Pps Sampling Problem.
(Mt. Hood Furniture—PPS sampling problem) You have been assigned the task of testing the accuracy of the final inventory compilation for Mt. Hood Furniture. You may assume that you have separately observed the inventory and that you are satisfied that the inventory was accurately counted. However, you need to test that quantities were accurately transcribed to the final accumulation and valuation of inventory and that the inventory is correctly priced and accumulated. The table beginning on page 617 presents the audited values associated with Mt. Hood’s pricing and accumulation of all items in inventory.

The book values will be given to you by your professor. You may assume that you have performed the tests to determine the proper pricing for raw materials, work in process, and finished goods. The student should understand that the auditor will normally obtain this information only for the items included in the sample. Required 1. Identify the audit objectives that are accomplished by this test. 2. Determine sample size based on the following audit judgments. a. Tolerable misstatement is assessed at $325,000. b. The risk of incorrect acceptance is assessed at 37 percent. c. Anticipated misstatement is assessed at $100,000. . Develop a scenario that is consistent with setting the risk of incorrect acceptance at 37 percent. 4. Select a PPS sample of the above inventory population using the sample size determined in (2) above. 5. Explain the tests that you would perform to test the correctness of pricing of raw materials, work in progress, and finished goods. (The student may wish to consult Chapter 16. ) 6. Determine the amount of projected population misstatement based on your sample. 7. Considering your quantitative and qualitative results, develop a statistical conclusion and an audit conclusion based on your sample.

Mt. Hood Furniture Pps Sampling Problem

IKEA : Furniture Retailer To The World.
IKEA is one of the world’s most successful global retailers. In 2007, IKEA had 300 home furnishing superstores in 35 and was visited by some 583 million shoppers. IKEA’s low-priced, elegantly designed merchandise, displayed in large warehouse stores, generated sales of €21. 2 billion in 2008, up from €4. 4 billion in 1994. Although the privately held company refuses to publish figures on profitability, its net profit margins were rumoured to be approximately 10%, high for a retailer.
The founder, Ingvar Kamprad, now in his 80s but still an active “advisor” to the company, is rumoured to be one of the world’s richest men. IKEA was established by Ingvar Kamprad in Sweden in 1943 when he was just 17 years old. The fledgling company sold fish, Christmas magazines, and seeds from his family farm. His first business had been selling matches; the enterprising Kamprad purchased them wholesale in 100-box lots (with help from his grandmother who financed the enterprise) and then resold individually at a higher markup.
The name IKEA was an acronym: I and K his initials; E stood for Elmtaryd, the name of the family farm; and A stood for Agunnaryd, the name of the village in southern Sweden where the farm was located. Before long, Kamprad had added ballpoint pens to his list and was selling his products via mail order. His warehouse was a shed on the family farm. The customer fulfilment system used the local milk truck, which picked up goods daily and took them to the train station. In 1948, Kamprad added furniture to his product line; in 1949, he published his first catalogue, distributed then as now, for free.

In 1953, Kamprad was struggling with a problem: the milk truck had changed its route, and he could no longer use it to take goods to the train station. His solution was to buy an idle factory in nearby Almhult and convert it into a warehouse. With business now growing rapidly, Kamprad hired a 22-year-old designer, Gillis Lundgren. Lundgren originally helped Kamprad do photo shoots for the early IKEA catalogues, but he started to design more and more furniture for IKEA, eventually designing as many as 400 pieces, including many best sellers.
IKEA’s goal over time was to provide stylish functional designs with minimalist lines that could be cost-efficiently manufactured under contract by suppliers and priced low enough to allow most people to afford them. Kamprad’s theory was that “good furniture could be priced so that the man with a flat wallet would make a place for it in his spending and could afford it. ” Kamprad was struck by the fact that furniture in Sweden was expensive at the time, something that he attributed to a fragmented industry dominated by small retailers.
Furniture was also often considered family heirlooms, passed down across the generations. He wanted to change this: to make it possible for people of modest means to buy their own furniture. Ultimately, this led to the concept of what IKEA calls “democratic design” – a design that, according to Kamprad, “was not just good, but also from the start adapted to machine production and thus cheap to assemble. ” Gillis Lundgren was instrumental in the implementation of this concept. Time and time again, he would find ways to alter the design of furniture to save on manufacturing costs.
Gillis Lundgren also stumbled on what was to become a key feature of IKEA furniture: self-assembly. Trying to efficiently pack and ship a long legged table, he hit upon the idea of taking the legs off and mailing them packed flat under the tabletop. Kamprad quickly realized that flat-packed furniture reduced transport and warehouse costs, and damage (IKEA had been having a lot of problems with furniture damaged during the shipping process). Moreover, customers seemed willing to take on the task of assembly in return for lower prices. By 1956, self-assembly was integral to the IKEA concept.
In 1957, IKEA started to exhibit and sell its products at home furnishing fairs in Sweden. By cutting retailers out of the equation and using the self-assembly concept, Kamprad could undercut the prices of established retail outlets, much to their chagrin. Established retailers responded by prohibiting IKEA from taking orders at the annual furniture trade in Stockholm. Established outlets claimed that IKEA was imitating their designs. This was to no avail, however, so the retailers went further, pressuring furniture manufacturers not to sell to IKEA. This had two unintended consequences.
First, without access to the designs of many manufacturers, IKEA was forced to design more of its products in-house. Second, Kamprad looked for a manufacturer who would produce IKEA-designed furniture. Ultimately, he found one in Poland. To his delight, Kamprad discovered that furniture manufactured in Poland was as much as 50% cheaper than furniture made in Sweden, allowing him to cut prices even more. Kamprad also found that doing business with the Poles required the consumption of considerable amounts of vodka to celebrate business transactions, and for the next 40 years his drinking was legendary.
Alcohol consumption apart, the relationship that IKEA established with the Poles was to become the archetype for future relationships with suppliers. According to one of the Polish managers, there were three advantages of doing business with IKEA: “One concerned the decision making; it was always one man’s decision, and you could rely upon what had been decided. We were given long-term contracts, and were able to plan in peace and quiet…. A third advantage was that IKEA introduced new technology. One revolutionary idea, for instance, was a way of treating the surface of wood.
They also mastered the ability to recognize cost savings that could trim the price. ” By the early 1960s, Polish-made goods were to be found on more than half of the pages of the IKEA catalogue. By 1958, an expanded facility at the Almhult location became the first IKEA store. The original idea behind the store was to have a location where customers could come and see IKEA furniture set up. It was a supplement to IKEA’s main mail-order business; but it very quickly became an important sales point in its own right.
The store soon started to sell car roof racks so customers could leave with flat-packed furniture loaded on top. Noticing that a trip to an IKEA store was something of an outing for many shoppers (Almhult was not a major population centre, and people often drove in from long distances), Kamprad experimented with adding a restaurant to the store so that customers could relax and refresh themselves while shopping. The restaurant was a hit, and it became an integral feature of all IKEA stores. The response of IKEA’s competitors to its success was to argue that IKEA products were of low quality.
In 1964, just after 800,000 IKEA catalogues had been mailed to Swedish homes, the widely read Swedish magazine Allt i Hemmet (Everything for the Home) published a comparison of IKEA furniture to that sold in traditional Swedish retailers. The furniture was tested for quality in a Swedish design laboratory. The magazine’s analysis, detailed in a 16-page spread, was that not only was IKEA’s quality as good if not better than that from other Swedish furniture manufacturers, the prices were much lower.
For example, the magazine concluded that a chair bought at IKEA for 33 kronor ($4) was better than a virtually identical one ought in a more expensive store for 168 kronor ($21). The magazine also showed how a living room furnished with IKEA products was as much as 65% less expensive than one furnished with equivalent products from four other stores. This publicity made IKEA acceptable in middle-class households, and sales began to take off. In 1965, IKEA opened its first store in Stockholm, Sweden’s capita l. By now, IKEA was generating the equivalent of €25 million and had already opened a store in neighbouring Norway.
The Stockholm store, its third, was the largest furniture store in Europe and had an innovative circular design that was modelled on the famous Guggenheim Art Museum in New York. The location of the store was to set the pattern at IKEA for decades. The store was situated on the outskirts of the city, rather than downtown, with ample space for parking and good access roads. The new store generated a large amount of traffic, so much so that employees could not keep up with customer orders, and long lines formed at the checkouts and merchandise pick-up areas.
To try and reduce the lines, IKEA experimented with a self-service pick-up solution, allowing shoppers to enter the warehouse, load flat-packed furniture onto trolleys, and then take them through the checkout. It was so successful that this soon became the company norm in all stores. International Expansion By 1973, IKEA was the largest furniture retailer in Scandinavia with nine stores. The company enjoyed a market share of 15% in Sweden. Kamprad, however, felt that growth opportunities were limited. Starting with a single store in Switzerland over the next 15 years, the company expanded rapidly in Western Europe.
IKEA met with considerable success, particularly in West Germany, where it had 15 stores by the late 1980s. As in Scandinavia, Western European furniture markets were largely fragmented and served by high-cost retailers located in expensive downtown stores, selling relatively expensive furniture that was not always immediately available, for delivery. IKEA’s elegant functional designs with their clean lines, low prices, and immediate availability, were a breath of fresh air, as was the self-service store format.
The company was met with almost universal success even though, as one former manager put it: “We made every mistake in the book, but money nevertheless poured in. We lived frugally, drinking now and again, yes perhaps too much, but we were on our feet bright and cheery when the doors were open for the first customers, competing in good Ikean spirit for the cheapest solutions. ” The man in charge of the European expansion was Jan Aulino, Kamprad’s former assistant, who was just 34 years old when the expansion started. Aulino surrounded himself with a young team.
Aulino recalled that the expansion was so fast paced that the stores were rarely ready when IKEA moved in. Moreover, it was hard to get capital out of Sweden due to capital controls; the trick was to make a quick profit and get a positive cash flow going as soon as possible. In the haste to expand, Aulino and his team did not always pay attention to detail. He reportedly clashed with Kamprad on several occasions and considered himself fired at least four times, although he never was. Eventually the European business was reorganized, and tighter controls were introduced.
IKEA was slow to expand in the UK, however, where the locally grown company Habitat had built a business that was similar in many respects to IKEA, offering stylish furniture at a relatively low price. IKEA also entered North America, opening 7 stores in Canada between 1976 and 1982. Emboldened by this success, in 1985, the company entered the United States. It proved to be a challenge of an entirely different nature. On the face of it, America looked to be fertile territory for IKEA. As in Western Europe, furniture retailing was a very fragmented business in the United States.
At the low end of the market were the general discount retailers, such as Walmart, Costco, and Office Depot, who sold a limited product line of basic furniture, often at very low prices. This furniture was very functional, lacked the design elegance associated with IKEA, and was generally of a fairly low quality. Then there were higher-end retailers, such as Ethan Allen, that offered high-quality, well-designed, high-priced furniture. They sold this furniture in full-service stores staffed by knowledgeable salespeople.
High-end retailers would often sell ancillary services as well, such as interior design. Typically these retailers would offer home delivery service, including set up in the home, either for free or a small additional charge. Because it was ex pensive to keep large inventories of high-end furniture, much of what was on display in stores was not readily available, and the client would often have to wait a few weeks before it was delivered. IKEA opened its first United States store in 1985 in Philadelphia. The company had decided to locate on the coasts.
Surveys of American consumers suggested that IKEA buyers were more likely to be people who had travelled abroad, considered themselves risk takers, and liked fine food and wine. These people were concentrated on the coasts. As one manager put it, “There are more Buicks driven in the middle than on the coasts. ” Although IKEA initially garnered favourable reviews, and enough sales to persuade it to start opening additional stores, by the early 1990s, it was clear that things were not going well in America. The company found that its European-style offerings did not always resonate with American consumers.
Beds were measured in centimeters, not the king, queen, and twin sizes with which Americans are familiar. American sheets did not fit on IKEA beds. Sofas were not big enough, wardrobe drawers not deep enough, glasses too small, curtains too short, and kitchens did not fit American-size appliances. In a story often repeated at IKEA, managers noted that customers were buying glass vases and using them to drink out of, rather than the small glasses for sale at IKEA. The glasses were apparently too small for Americans who like to add liberal quantities of ice to their drinks.
To make matters worse, IKEA was sourcing many of the goods from overseas, priced in the Swedish kronor, which was strengthening against the American dollar. This drove up the price of goods in IKEA’s American stores. Moreover, some of the stores were poorly located, and not large enough to offer the full IKEA experience familiar to Europeans. Turning around its American operations required IKEA to take some decisive actions. Many products had to be redesigned to fit with American needs. Newer and larger store locations were chosen.
To bring prices down, goods were sourced from lower-cost locations and priced in dollars. IKEA also started to source some products from factories in the United States to reduce both transport costs and dependency on the value of the dollar. At the same time, IKEA noticed a change in American culture. Americans were becoming more concerned with design, and more open to the idea of disposable furniture. It used to be said that Americans changed their spouses about as often as they changed their dining room tables, about 1. 5 times in a lifetime, but something was shifting in American culture.
Younger people were more open to risks and more willing to experiment. There was a thirst for design elegance and quality. Starbucks was tapping into this, as was Apple Computer, and so did IKEA. According to one manager at IKEA, “Ten or 15 years ago, travelling in the United States, you couldn’t eat well. You couldn’t get good coffee. Now you can get good bread in the supermarket, and people think that is normal. I like that very much. That is more important to good life than the availability of expensive wines.
That is what IKEA is about. To tap into America’s shifting culture, IKEA reemphasized design and started promoting the brand with a series of quirky hip advertisements aimed at a younger demographic: young married couples, college students, and 20- to 30-something singles. One IKEA commercial, called “Unboring,” made fun of the reluctance of Americans to part with their furniture. One famous ad featured a discarded lamp, forlorn and forsaken in some rainy American city. A man turned to the camera sympathetically.
“Many of you feel bad for this lamp,” he said in thick Swedish accent. That is because you are crazy. ” Hip people, the commercial implied, bought furniture at IKEA. Hip people did not hang onto their furniture either; after a while they discarded it and replaced it with something else from IKEA. The shift in tactics worked. IKEA’s revenues doubled in a four-year period to $1. 27 billion in 2001, up from $600 million in 1997. By 2008, the United States was IKEA’s second-largest market after Germany, with 35 stores accounting for 10% of its total revenues, or around $2. 4 billion, and expansion plans called for 50-plus stores in the United States by 2012.
Having learned vital lessons about competing in foreign countries outside continental Western Europe, IKEA continued to expand internationally in the 1990s and 2000s. It first entered the UK in 1987, and by 2008, it had 17 stores in the country. IKEA also acquired Britain’s Habitat in the early 1990s and continued to run it under the Habitat brand name. In 1998, IKEA entered China, where it had 4 stores by 2008, followed by Russia in 2000 (11 stores by 2008), and Japan in 2006, a country where it had failed miserably 30 years earlier (by 2008 IKEA had four stores in Japan).
In total, by 2008, there were 285 IKEA stores in 36 countries and territories. The company had plans to continue opening between 20 and 25 stores a year for the foreseeable future. According to one manager, an important limiting factor on the pace of expansion was building the supply network. As with the United States, some local customization has been the order of the day. In China, for example, the store layout reflected the layout of many Chinese apartments, and because many Chinese apartments have balconies, IKEA’s Chinese stores included a balcony section.
IKEA also has had to adapt its locations in China, where car ownership is still not widespread. In the West, IKEA stores are generally located in suburban areas and have lots of parking space. In China, stores are located near public transportation, and IKEA offers delivery services so that Chinese customers can get their purchases home. IKEA has also adopted a deep price discounting model in China, pricing some items as much as 70% below their price in IKEA stores outside China. To make this work, IKEA has sourced a large percentage of its products sold in China from local suppliers.

IKEA : Furniture Retailer To The World

Global Furniture Market.
Furniture is a term that refers to any movable object that is built to support most human activities such as sleeping, eating, seating, and many others. Furniture can also be used for decorative or symbolic purposes. It is made from materials such as wood, plastic, glass, and metal. The global Furniture Industry Is a low-tech industry, and it has been growing since the days of non-nomadic cultures. Furniture is meant for specific functionality. The Global Furniture market is expanding because products are being put to an ever-increasing number of uses. Covered In this Report
This report covers the present scenario and the growth prospects of the Global Furniture market for the period 2014-2018. To calculate the market size, the report takes Into consideration the revenue generated from retail sales of furniture In the market. View our full TCO here Key Regions Europe OPAC Americas MEA Key Vendors Ashley Furniture Industries Ltd. Inter KEA Group Sears Holdings Corp.. Staircase Inc. Other Prominent Vendors Furniture Brands International Worth Herman Miller HEN Kimball International Slander Furniture Industries Knoll KIKUYU Furniture La-Z-Boy Masc. Key Market Driver Increased Influence of Globalization on Market
For a full, detailed list, view our report. Key Market Challenge Highly Fragmented Market Key Market Trend Increasing Demand for Luxury Furniture Key Questions Answered in this Report What will the market size be in 2018 and what will the growth rate be? What are the key market trends? What is driving this market? What are the challenges to market growth? Who are the key vendors in this market space? What are the market opportunities and threats faced by the key vendors? What are the strengths and weaknesses of the key vendors? For more insights, view our Global Furniture Market 2014-2018 report.

Global Furniture Market

Premier Furniture.
Premier Furniture Company It was mid-Aprll. and Richard Zimmerman, credit analyst for the Premier Furniture Company, was completing his first round of credit reviews for 1984. Two of his accounts”Deslgners, Inc. of Pittsburgh, Pennsylvania, and Walcott Department Stores of Hartford, Connecticut”had moved well beyond the credit limits set by Premier. It was Zimmerman’s Job to determine the appropriate corrective steps. After his third look at the customer file for Designers, Inc. Zimmerman was still undecided. He had evaluated the account as “satisfactory” In his annual review in early 1983, but his reservations at that time were not lessened by the performance in fiscal 1984. It was evident that the substantial sales to Designers in the last three months did not necessarily signal an Improved relationship. Zimmerman was also troubled by the most recent numbers of Walcott Department Stores. Walcott had been a reliable account since 1951 but had posted a large operating loss in fiscal 1984.
His review was further complicated by the tact that the owners had recently opened stores in Worcester and Springfield, Massachusetts. Although Walcott’s future obviously depended on how the branch stores fared, Zimmerman had no reason to assume their success or failure. 4h*fi, Designers (ffL+Uee, , FM-x-r eve, It was obvious to Zimmerman that the Designers and Walcott accounts invited a raised eyebrow, but given Premier’s credit policy the numbers came as no surprise. quality home furniture for distribution to dealer cooperatives, independent home furnishing retailers, and regional furniture chains.
The company advertised its lines nationally and attempted to maintain intensive coverage of trading areas by istributing through stores strategically located with a particular marketing area. Beginning in 1975, however, Premier found that product quality and service no longer assured success in the broad range of outlets the company had cultivated. Credit terms and financing of dealers became a critical marketing tool, and in the words of credit manager Karl Freund, “Premier soon found itself backed into the position of supporting numerous customers in order to maintain adequate distribution for its products. Unfortunately, Premier’s heavy financing of dealers coincided with a national credit squeeze and higher interest rates on borrowed money. tg¦, Zimmerman was also aware that many of Premier’s customers had waited out more than seven years of a relatively soft market only to suffer a noticeable decline in sales in the late summerand early fall of 1983. As in previous downturns, stores featuring lower-priced lines were hit first, followed by quality retailers at the end of the year.

Although the decline in sales was not severe, the drop in volume and subsequent price cutting reduced the profit margins of some retailers enough to offset profits earned in the first half of 1983. As might be expected, the downturn in the market was quickly passed on to manufacturers. Many of Premier’s customers tightened their belts by reducing orders for new lines and reorders for established lines. They believed that the price cutting in the second half of 1983 had resulted in considerable overbuying by consumers, and they were therefore anticipating a downturn in sales.
The dramatic drop in orders affected manufacturers across the country. Orders for shipment fell 10% from February to March, and then an additional 20% from March to April. E-fifi f&fllikh, lit, Alpha The Designers and Walcott files sat on his desk awaiting his decision, but Zimmerman was still mulling over the contradictions posed by the files. He knew, for instance, that Walcott enjoyed fairly steady sales throughout the year and that 50% were cash or charge sales. The remaining sales were installment purchases which called for 25% down and the balance in 6 monthly payments.
Premier, on the other hand, supposedly sold on terms of 3% in 10 days, net in 60 days”and had established a $50,000 limit on Designers and a $75,000 limit on Walcott. In truth, Premier’s terms had become negotiable. Zimmerman was also frustrated by the fact that Karl Freund expected to see a foot on the brake while the sales manager was pressuring him to ut both feet on the gas. Given his Job, Zimmerman believed that it was in the company’s interest to know the difference between a good customer and a bad risk.
But with the sales manager insisting that liberal financing was the only way to spark an upturn in orders, Zimmerman felt caught in an impossible position. The time had come to seek the advice of the company’s credit manager. Five minutes after collecting the essential information from each file (see Exhibits 1 through 5), Zimmerman placed the folder in the hands of Karl Freund. f&RhF, 1511?±0, , premier, “”fifi, Q, fi-nmew,?-¦, fi-nmeilfr, A credit analyst for a furniture manufacturer is confronted with two customers who have exceeded their credit limits.
The financial performance of each has been weak, and one of the customers has a highly leveraged balance sheet. Industry conditions are weak; the manufacturer apparently has excess capacity; and the credit analyst is caught between the conflicting demands of the sales managers and the credit manager. The case provides an opportunity for ratio analysis. The Premier Furniture Company of Newfield, North Carolina, centers on manufacturing high-quality home furniture for distribution.
By 1975, Premier found that product quality and service no longer assured success in the markets they were in; therefore, credit terms and financing of dealers became a critical marketing tool. Regrettably, Premier’s weighty financing of dealers corresponded with a national credit squeeze and higher interest rates on borrowed money. In 1984, Richard Zimmerman, the credit analyst for the Premier Furniture Company, took over the task of assessing the financial health of Premier’s customers. Two of their accounts, exceeded the credit limits previously set by Premier. Premier had to make a decision on Designers Inc. d Walcott”they needed to fgure out the difference between good customers and bad credit risk. premiefiwzb,

Premier Furniture

IKEA and Ashley Furniture Industries.

Introduction
For most ambitious companies in today’s complex business environment, gaining competitive advantage and achieving expansion in capacity often requires internationalizing operations and entering new markets with the goal of building a broader and more diversified customer base. However, internationalization typically presents the problem of how to establish the company’s business or brand in a foreign market, considering the cultural and contextual differences in global markets (De Mooij, 1998). Due to the spread of globalization and the convergence of markets and economies, it has been increasingly acknowledged that a broad range of products and services can potentially have a global appeal and generate considerable revenues across the world. As long as the marketing activities designed to promote products and services are tailored to suit respective markets in line with the prevailing cultural and environmental realities, there is every possibility of achieving commercial success (Kandampully and Duddy, 1999).
Accordingly, global marketing requires a flexible framework or structure that enables companies to respond dynamically to observed differences in the respective markets in which they do business (Philip et al., 1994). This makes it possible to organize, plan, and control global marketing activities effectively and efficiently (Keegan, 1989). This report therefore focuses on the marketing activities of the furniture market, specifically on two leading international furniture manufacturing and retailing companies: IKEA and Ashley Furniture Industries, with a view to establishing the kinds of marketing activities they have adopted to establish their presence in specific countries.

IKEA in Russia
As the largest furniture retailer in the world with extensive operations in several markets across the world (Armitstead, 2010), IKEA’s entry into the Russian furniture market was in line with its sustained global expansion driven by strong product development and differentiation, attention to operational detail, and emphasis on consistent cost control (Thomas White, 2011). In spite of the relative strengths that IKEA have accumulated with its long history of international retail business, it is widely argued that internationalization of retailers is a decidedly challenging and complex proposition. This is because, in contrast with, for instance, manufacturing, international retailers often do not have the benefit of using a traditional export strategy because they need to develop and manage several stores located in their new markets (Dawson, 1994). For IKEA therefore, it was imperative to devise knowledgeable strategies that would not only ensure efficient development and management of its stores in Russia, but also effective marketing activities that would give it competitive advantage in the tough Russian market. Consequently, the company found it necessary to adapt its promotion and communication strategies for Russia in order to present its product range to the Russian public in a manner that paid due attention to local characteristics and cultural realities of the market. However, this requires a strategic balance in line with the interactive approach to global marketing suggested by Gillespie (2004) that companies operating in foreign markets need to determine how best to maintain their traditional values and brand ideals, while also adapting their brand image to suit the requirements of the foreign markets. As such, IKEA’s marketing activities in Russia attempt to preserve the company’s Swedish heritage whilst adapting its strategies to suit local circumstances.
Product Formulation and Packaging
Through its popular flat packaging and product design, Product Formulation and Packaging is a central aspect of IKEA’s marketing activities in Russia. The company mainly packages its products with the strategy of aligning the relevance of its furniture products range with the local needs of the Russian consumers, and presents the company’s offer in a manner that is compatible with Russians’ traditional home decoration styles. Although, IKEA has been criticised severally by Russian consumers that its product designs are sometimes not reflective of the Russian market as they tend to be generically designed and often reflective of designs better suited to other climes (Bloomberg July 2, 2009). IKEA denies such criticism citing that: “It is essential to note that we are a global company which strives to deliver our best in markets where we operate by adapting our designs and processes, it should be noted however that this takes a gradual and learning process which we are constantly striving towards, it should also be noted that several of our products formation have Russian orientation therefore it is not completely true that we don’t think like Russians, of course we do (Bloomberg July 2, 2009)”. Strategies used by the company to achieve this objective include extensive use of surveys and home visits, reliance on customer feedback and shop floor feedback, friendly and interactive store designs, and constantly explaining the philosophy behind the low price/high quality of products through multiple media, catalogues, and shop floor staff. These strategies collectively help IKEA to retain its traditional product design and corporate brand image however with less adaptation to the Russian market as noted by many consumers. This could be because IKEA as a global brand understands the Russian market less or deliberately adopts the strategy of not essentially adapting or standardising its products to the Russian Market but perhaps remain as a brand which offers standard furniture product which should fit into any market (See: Nytimes, Jun 22, 2009).
Market Driving/Promotion
It is worthwhile to point out that IKEA adopts a market driving approach in Russia, and this is possibly because of the fast developing and rapidly changing demand that characterizes the market (Tarnovskaya et al, 2005). Central to its market driving approach is the use of corporate branding which entails the alignment of its internal organizational systems and external networks with its core attitudes and values in order to present the image of a strong corporate brand. The company’s unique collection of values and attitudes, which is internally known as the “IKEA Way”, represents an expression of a wide array of operational details including its product range, distribution system, history, management style and so on – all of which coincide functionally and permeate the formulation of strategy, product development, and organizational processes of the company. One major challenge to the market driving force of IKEA in Russia however is that of the business ethics in Russia which tends to be corrupt and is said to be riddled with institutional bribery and many forms of corruption (theage, March 2, 2010). In terms of promotion, Indeed, IKEA relies heavily on Television and billboard advertising in its local marketing in Russia. Apart from highlighting the high quality and relatively low costs of its products in the advertisements, the company also seeks to attract potential customers by using humour and attention catching devises. One of the most important elements in IKEA’s corporate branding that has underpinned its marketing activities in Russia is its “cost consciousness” value, which is a well advertised testimony to the affordability of the company’s product range. Although while IKEA has consistently positioned itself as an affordable brand, it is believed by many Russians that IKEA’s products are above the market average (theage, March 2, 2010).
Another of the strong market driving approaches of IKEA in Russia is that it has found it important to develop a network of local suppliers in the Russian wood industry in order to help sustain its low product price strategy and preserve high standards that are consistent with its corporate brand values. IKEA strives to achieve this difficult task by increasing the competitiveness and competencies of Russian suppliers in order to create the conditions that could lead to their integration into the company’s global supply network. Supply chain and distribution channel issues are at the heart of IKEA’s marketing considerations in Russia, especially because the company’s competitiveness and unique selling proposition relies substantially on comparatively low product prices (Sanders, 2010).
Distribution Network & Pricing
One of the key marketing activities that IKEA considered crucial was the selection and development of an effective distribution system as a way of bypassing the high import duties in Russia and use alternative channels to get its goods to the country (Jonsson, 2005). In order to achieve this objective, the company has explored possibilities of producing more of its products locally; this does not only help resolve the problem of distribution and high import duties, it also adds to the appeal of the products and makes them more marketable to the local populations. As a result of its local production in Russia, IKEA is able to offer relatively low prices to Russian furniture consumers. However, given that there is a limited degree to which the company can reduce product prices without compromising high quality, it also relies on market knowledge to find good local suppliers that not only understand Russian preferences, but can also offer the lowest prices (Jonsson, 2005). Indeed the price element is important for IKEA because furniture was traditionally seen as expensive in Russia, and thus quality furniture was something that was out of reach for majority of the ordinary Russians. It must be pointed out nonetheless that many Russian consumers still see IKEA’s products as relatively expensive to the average price of furniture in the market.
IKEA in China and Taiwan
The activities of IKEA in each of the country it operates are quite distinct as would be shown in how it operates in China and Taiwan in contrast to its operations in Russia and other places. In Russia for example, customers are more aesthetically inclined and thus look forward to quality furniture which are contemporary and yet has Russian intonation. In China customers want quality furniture with western influence. As there are several local furniture companies in China, Chinese consumers prefer a western furniture company where it would be convenient to buy furniture locally yet with style, design and western aesthetic. However, in attempting to market its furniture products in China and Taiwan, IKEA maintained its characteristic international marketing strategy of thinking globally and acting locally in order to build long-term relationships with customers and capture customer value. In this regard, IKEA uses three principal marketing activities in the Chinese and Taiwanese furniture markets: product design/packaging, price, and promotion/advertising. Its marketing activities in both countries take advantage of the cultural similarities and geographical proximity.
Product Design/Packaging
As in its operation in Russia, Product Design and packaging also represents the main element in IKEA’s market offering in China and Taiwan because the company’s localisation in China and Taiwan aims at appealing to local/cultural tastes in home furniture. Accordingly, not only are the range of furniture products that IKEA offers in the area strive to match customers’ preferences, the products showrooms are also designed and arranged to suit the Chinese cultural styles (Armstrong and Kotler, 2006). In order to meet the tastes and preferences of its diverse Chinese and Taiwanese customers, IKEA offers almost 8,000 products that are roughly categorized into about 21 product ranges more than it offers in Russia showing that IKEA goes with the flow and acts according to the need of the specific markets in which it operates. In designing these products, IKEA manages to retain its Swedish heritage while also considering traditional Chinese furniture preferences. In contrast with the usual style of Chinese furniture – which is typically darker and characterised by fancy carvings – IKEA’s furniture designs adopt a much lighter and simpler style that nonetheless incorporates Chinese themes (Miller, 2004). Furthermore, rather than undertake completely new designs for the local market (which may be difficult to apply to a wide product range due to cost overruns), IKEA prefers the strategy of implementing slight alterations of key product features in line with the dictates of the local market. This is has proved an easier approach for IKEA than making brand new designs; it is also less costly and has proved as effective. In terms of product packaging, IKEA prefers to use simple-looking and recyclable materials for wrapping its products. The idea behind this product packaging strategy is two-fold: it seeks to save cost otherwise associated with fancy product wrappings (thereby making the products cheaper for customers), and it also emphasises to the local furniture consumers that IKEA is concerned about environmental-friendliness in the production, transportation and protection of its products (Kling and Goteman, 2003).
Price
Price is an important aspect of communication and it represents a decisive element in the interaction between buyers and sellers (Usunier, 2000). Accordingly, IKEA’s marketing activities in China and Taiwan strongly involves the price element, which the company has used to attract and retain customers for its furniture products. Although IKEA’s initial target market when it first entered the region was the category of individuals with top-tier urban income, it has increasingly adjusted its strategy by reducing prices to accommodate a wider customer-base as is the practice in Russia. In order to achieve profitability in spite of these price reductions, IKEA has had to implement cost-saving methods such as sourcing materials for its products locally instead of relying on imports as it used to do at the beginning of its operations in China (Song, 2005). Overall, IKEA’s pricing policy serves as a strategic marketing tool for creating customer value. The price-based marketing activity attempts to capture the highest possible customer value at the lowest possible cost – principally by sourcing locally for the furniture production materials.
Promotion/Advertising
IKEA’s promotion activities in China and Taiwan is based on the idea that promotion is arguably the most culture-bound aspect of the marketing mix – especially because promotion often needs to be adapted in the local market for cultural and language reasons (see for instance Usunier, 2000). Accordingly, IKEA’s promotion activities as it is in Russia involve the use of advertising in local newspapers and television stations to promote its new product ranges and upcoming sales. In using such promotional devices, IKEA ensures that its messages are exclusively transmitted in the Mandarin language (which is the most widely spoken language across Chinese and Taiwan), and that they retain cultural relevance in order to target the local customers effectively. This is in line with the idea that it is important to put a ‘local face’ in advertisements and promotions in order to gain the attention of customers (see Mummert, 2007). Accordingly, the main form of promotion used by IKEA in China and Taiwan is advertisement, and such advertisements often communicate messages in the local language, coupled with culturally relevant themes.
Ashley Furniture Industries in the United States & Canada
Ashley Furniture Industries is one of the largest furniture manufacturing and retailing companies in North America that sells home furniture products and accessories through its own retail furniture stores as well as through independent furniture dealers (see Ashley Furniture, 2011). Its marketing activities in the United States and Canada mainly involve product, price, and distribution network. It is also important to note there are differences in the activities and strategies of Ashley and IKEA because the companies operate in two different markets where consumers are different, the macroeconomic environment is different and market conditions are different while indeed consumer preferences and choices are also different.
Product
Like IKEA. Ashley Furniture maintains a product strategy which involves providing a fully integrated product line for all aspects of home furnishing including bedrooms, living rooms, and dining rooms. The company’s North American operation is a vertically integrated enterprise that oversees every aspect of product development from design to manufacturing. Using an efficient production system, the company is able to maximize productivity while also minimizing waste-generation (Data Monitor, 2007).
Bearing in mind the furniture tastes of the American and Canadian customers, Ashley Furniture Industries’ products are mainly categorized into three divisions: case goods, upholstery, and millennium. Products in the case goods division include bedroom sets, dining room sets, wall units, and table sets. Its upholstery division consists of products such as sofas, sectionals, and loveseats. Its millennium collection comprises products with the highest quality offered by the company, mainly premium furniture products for top-tier customers (Ashley Furniture, 2011). The idea behind Ashley Furniture’s product design and development process is to ensure that there is sufficient variety in product range to suit the needs and interest of different consumer segments in the US and Canadian markets.
Price
Product pricing is a central aspect of Ashley Furniture’s marketing activities, particularly because the company’s products are targeted at budget-minded consumers that are looking for the best quality furniture products at the best prices (Abbas, 2010). A sharp contrast can indeed be drawn between IKEA and Ashley in terms o price given that both companies have different pricing strategies. Indeed, Ashley Furniture uses an innovative strategy of offering a vast array of product combinations that are grouped together not only on the basis of matching materials, but also on the basis of pricing. This helps the company achieve two strategic marketing objectives: customers can easily choose product combinations that suit their needs in line with their respective budgets. Ashley Furniture is able to offer at products at relatively affordable prices because of a number of cost-saving systems it implements across the production process. For instance, an in-house design team is responsible for creating the product designs – thereby saving the company considerable costs it would have otherwise incurred on design fees. These efficient, cost-cutting systems enable the company to transfer some of the cost-savings to customers in the form of lower prices, and this is a significant aspect of the company’s marketing to its United States and Canada target markets (Data Monitor, 2007). The company’s vertically integrated structure helps it to save cost at every stage of the production process and ensures the delivery of high quality furniture to customers at relatively low prices.
Distribution Network
The use of a strong retail distribution network is one of the most effective means by which Ashley Furniture markets its products across North America. In order to ensure availability, affordability, and prompt delivery of its products, the company maintains a network of over 300 retail stores (known as ‘Home Stores’) in strategic locations across the United States and Canada (Data Monitor, 2007). It also supplies its products to independent furniture retailers in these two countries; it also delivers orders from strategically located warehouses, serviced through a sizable fleet of delivery trucks. Ultimately, Ashley Furniture is able to reach a large proportion of customers in the USA and Canada due to the effectiveness of its extensive retail and distribution network. The company’s distribution network takes advantage of the geographical proximity between Canada and America to ensure that there is significant synergy in the production and distribution of its furniture products in both markets.
Ashley Furniture Industries in Japan
While there are no considerable differences in the operations of the company’s operation in Japan, US and Canada except the standardisation and adaptation to the Japanese market. Ashley Furniture Industries maintain a number of store licensees in Japan for the distribution and sales of diverse products in its furniture collections. The company’s marketing activities in Japan mainly involve product design/packaging, social media and website-based sales and promotion, and distribution network.
Product Design/Packaging
Using an in-house, full-time design group, Ashley Furniture is able to create furniture styles that complement the decorating styles preferred by Japanese customers. In adapting its furniture designs and packaging to suit local Japanese cultural tastes, the company nonetheless ensures that it uses its central, international workmanship and construction systems in order to retain the same level of quality (Ashley Furniture Homestore, 2011). However, a significant aspect of the product design process is centrally coordinated to reflect the company’s furniture design collections, allowing only for slight packaging elements to correspond with prevailing cultural themes that appeal to local Japanese customers.
Social Media and Website Sales & Promotion
Ashley Furniture also relies heavily on social media platforms to promote its products and increase sales in the Japanese market (Media Sauce, 2010). The company takes advantage of the almost universal internet usage in Japan, as well as the high use of social media among different age groups in the country to advertise its products by communicating strong messages through social media. Similarly, a significant volume of the company’s sales in Japan is done through its home store website, which offers consumers the convenience to choose their preferred products/product combinations, and price ranges online without having to visit the home store (Ashley Furniture Homestore, 2011). Although Ashley furniture also sells its products through its website in other locations in which its home stores are present (see Data Monitor, 2007), its approach to website and internet-based sales and promotion in Japan is more elaborate in view of Japanese consumers’ preference for internet shopping, and the high rate of social media use in the country.
Distribution Network
Ashley Furniture enjoys the benefit of a strong distribution network boosted by the fact that the company sources a significant volume of its manufacturing inventory from nearby China (Data Monitor, 2007). Sourcing from China not only helps Ashley Furniture keep costs low, it enhances the distribution system for the sale of the finished furniture products in strategic parts of Japan particularly in its major cities. The considerably large number of retail stores and warehouses that Ashley Furniture operates across china also facilitates easy accessibility and prompt delivery of products to customers, and this helps the company counteract the threat posed by local Japanese furniture makers.
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Asia-Pacific region”, National Business Daily [online], Available: http://www.nationalbusinessdaily.com/content/default.asp?Article_ID=291 [Accessed 8 November 2011]
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IKEA and Ashley Furniture Industries

IKEA: Furniture for the Masses; Strategies for the Future.
IKEA: Furniture for the Masses; Strategies for the Future

IKEA and H&M:

    IKEA and H&M are taking similar approaches to two different markets. IKEA sells relatively inexpensive, trendy furniture. H&M specializes in inexpensive designer knockoff clothing. Both companies market their products to young, hip consumers who want a fun shopping experience that won’t leave them broke. The first similarity between the two companies is their approaches to opening a store. It’s all about hype, hype, and more hype. IKEA’s Atlanta opening inspired potential customers to camp out for nearly a week (Capell, 2005) in hopes of getting their hands on $4,000 in gift certificates.  H&M promoted its L.A. opening for months beforehand. According to the L.A. Times article, H&M, “…ran a multimillion-dollar advertising campaign featuring Madonna and, in early August, splashed her image across the west face of Hollywood’s Roosevelt Hotel.”
Once the customers are in the store, both IKEA and H;M use the layout of the stores to keep the customers interested. IKEA is set up in a circular design, where customers can browse from the starting point, walk around, and end up back where they started. While they’re shopping, they will find furniture set up in rooms that one might be tempted to move into – they’re that realistic. H;M sets up its clothing by color.
    The two stores have something else in common, and it’s not necessarily a plus – offering customers lower prices comes at a price. For IKEA, it means that all furniture is sold in a flat box which the customer will take home, open, and from which they will extract parts to assemble. Two years ago, an episode of CBS’s “The Amazing Race” featured a challenge in which contestants had to choose between two tasks: counting items or assembling an IKEA computer desk. Those who chose to assemble the computer desk did not find it to be an easy task – regardless of their construction or assembly experience. Many were confused by the directions and the explanation of the different parts. The benefit to customers is that IKEA is dedicated to cutting costs in order to pass those savings down to the consumer.  “’We look at the competition, take their price, and then slash it in half,’ says Mark McCaslin, manager of Ikea Long Island, in Hicksville, N.Y.” (Caswell, 2005). As for H;M, they face the same limitations as other stores of its ilk, such as Forever 21 and Bebe: the clothes are trendy, but aren’t meant to last a lifetime. With styles barely surviving a few months, the clothes don’t have to last any longer than the current trend.
    Low prices don’t always lend themselves to huge profits, which is why customers need to buy in bulk. At IKEA, furniture is displayed in intricately-designed rooms, which encourage customers not only to buy the bed, but the sheets, the comforter, pillows, and dresser. Customers come in looking for one item and leave with a carload. At H;M, many items don’t last long. Lagerfeld’s limited editions will fly off of the shelves based on the name brand rather than the item’s potential to fit into the customer’s wardrobe or lifestyle.
IKEA and Hofstede
    IKEA’s approach to store management is much like a carnival. Shoppers are expected to be able to come into the store and have fun. Wide aisles mean easier browsing, and the circular design allows customers to stop without holding up traffic. Hofstede’s five dimensions of management can be applied to IKEA’s management style:
1.      Power Distance: This involves the degree of inequality among a population. IKEA deals with this distance by positioning its products so that the lower middle classes can afford them, and the upper classes will want them because they’re trendy.
2.      Individualism: This is the degree to which people prefer to act as individuals rather than members of groups. IKEA’s customers feel as if they’re getting one-of-a kind items, and occasionally, they are. According to Caswell, “IKEA replaces one third of its product line every year.” For those consumers who enjoy being part of a group, they’re members of a large, worldwide group – IKEA shoppers.
3.      Masculinity/Femininity: IKEA’s products are androgynous. The same item that will find its way into a bachelor pad might also appear in a family home or a woman’s place.
4.      Uncertainty Avoidance: This is the degree to which people prefer structured to unstructured situations. The beauty of IKEA is that it offers both. Structure comes in the design of the store and the setup. The unstructured part is due to the turnover in available products.
5.      Long/Short Term Orientation: This involves whether IKEA is geared towards those who are thinking long-term (saving money, getting good value in their purchases) or short-term (fulfilling social obligations). In this respect, IKEA doesn’t have much to offer. Furniture isn’t going to be a long-term prospect because it isn’t designed to last that long. Consumers meet their own needs with their purchases, not that of anyone else.
IKEA and Porter:
    Michael Porter’s article, “Competitiveness in a Globalised World…,” deals with the research about how companies compete globally. Porter enjoys using the term “competitiveness”, but doesn’t enjoy defining it for the business layman, so IKEA will be analyzed using other aspects of Porter’s article. He discusses the idea of clusters, wherein firms are interconnected. IKEA practices clustering first through their Klippan brand of furniture, which is sold at their stores. This brand is much sturdier and designed to be “kidproof”. IKEA has also begun offering prefabricated homes in which to put all the new IKEA furniture.
    Porter mentions the U.S. as a global power. For that reason, IKEA entered the United States market in the mid-1990’s. Its first attempt to enter and compete in the U.S. was a disaster, an anathema in a country where most of its products are imported. The problem was that of poor research. Stores were placed in poor areas and items were significantly overpriced for that particular market. One such store was located in a city called Fontana, California (IKEA website). The steelworkers of Fontana and immigrants of the surrounding areas did not take well to the expensive, brightly-colored furniture. As IKEA found out in 2004, Hipics require larger dining room tables with more chairs, as well as larger sofas. Eventually, IKEA redesigned its products to be compatible with every country in which they intended to compete.
    In conclusion, IKEA’s various marketing strategies and company norms have led to its position as a leader of trendy, inexpensive furniture. Its plans to have such well known individuals such as Martha Stewart lend their names to its products will only ensure its success, as Stewart did for Kmart and Isaac Mizrahi did for Target. The only question left is this: what can IKEA possibly have left to accomplish?

IKEA and The Stuga:
   Swedes are, by nature, a rational and logical people. Due to their nature and their belief in common sense, Swedes rarely have arguments during business transactions. The “stuga” is the Swedish summer home, and it is the dream of most Swedes to spend their summers there. The stuga, like the Swede, is simplistic and based on common sense. If it is not necessary, it is not built into the stuga.
    How can one relate the stuga to IKEA?  IKEA has become the ideal store from which to purchase furniture. The furniture is basic, simple, inexpensive and relatively simple to assemble (not counting the “Amazing Race” experience, of course).  The regular turnover means that a customer can shop with the masses and decorate as an individual. The stuga is a metaphor for Swedish values in that it represents the love of tradition, individualism through self-expression.  Therefore, IKEA can also be considered a metaphor of Swedish values.

IKEA: Furniture for the Masses; Strategies for the Future

Case Analysis of Stately Furniture and Decor (SF&D).
1.      List 4 tasks of one Process.
The case study suggested a redesign of customer order process utilizing information technology. Enumerated below are four task of this process:
a. Information disseminations

– To develop a close coordination and, efficient dissemination and delegations of duties for various departments upon receipt of orders
b. Information system development
– To create a system that is efficient, accessible, easy to use by at all staff levels and well-dependable information by various departments of the company
c. Systematic Planning
 – To improve strategies of production planning and control.
d. Production improvements and sales projections
– Projection of sales, facilitates sales forecasting, analyzing competitor prices and address customers’ comments and suggestion for better service and manufacture of furniture
2. Describe the markets or customers of this process. How does this process effect the mission, strategy or goals of the organization?
            The markets or customer of this process is the whole organization, specifically worked by the information system’s department. And the results will benefit the consumer of the manufactured products. The process will be able to facilitate the working strategy of each department and helps to attain the mission of providing high quality furniture at a competitive price on a timely basis. The process will also help to continuously pursue the goals, of becoming more competitive in the world market and giving customer’s high quality, competitive pricing, and timely delivery, of the organization.
            By the use of information technology, the sales and marketing department will be able to inform all other department through the system with every confirmed order. Accounting and finance department will be able to provide price analysis in short time. The production team will be able to equip with raw material supplies and work readily of the customer’s order upon confirmation of acceptance by customer from the sales and marketing department. The quality control team will be able to assure that the procurement team has high quality products to supply the production and faster delivery of raw materials needed.
            While the human resource department will be able to know how many more workers are needed to be hired based on customer’s order so the production will be able to manufacture orders at customer’s preference.
            Finally, the department heads and president of the company can easily oversee all the concerned needs and supervise the activities using the information system.
3. For each of the 4 tasks, list the resources needed to complete that task (e.g. Organizational resources or components can be a role, person, technology, business rule, etc….)
a. Information disseminations
            i.  Sales and Marketing Department
            ii. Order receipts and design specification
b. Information system development and updates
            i.  IT personnel
            ii. Information system
c. Systematic Planning
i.   Accounting & Finance
ii.  Production Department
iii. Quality Control Departments
iv.  QC facilities
v.   Procurement and inventory of supplies
vi.  Production and delivery schedules of customer’s orders
d. Production improvements and Sales projections
            i.   Comments and suggestions of customers
            ii.  Sales’ forecast and projection
            iii. Research on prices of raw materials and manufactured products.
4. Sketch a value Added Chain Diagram for Stately Furniture and Decors (SF&D)
5. Sketch of a partial Swimlane Diagram of tasks enumerated in the process.
References:
Broker, Glen. Process Definition Overview. http://users.snip.net/~gbooker/ISYS205/process_definition.pdf
Conrad, Swen. ARIS for SAP NetWeaver Modeling Tips and Tricks for Business Process Experts. https://www.sdn.sap.com/irj/sdn/weblogs?blog=/pub/wlg/6341

Case Analysis of Stately Furniture and Decor (SF&D)

Guillermo Furniture Store Flex Budget.
Abstract The purpose of this paper is to explain, firstly, how the cost relationships and behaviors at Guillermo Furniture Store determine decision-making prerogatives for the manager. Next this paper explains what control system might Guillermo use to help it achieve his store’s organizational goals. Lastly this paper provides a break-even analysis on the current situation considering the possible effects of selling the flame-retardant separately for Guillermo. Guillermo Furniture Store Flex Budget In 1980, The Guillermo Furniture Store was enjoying a profitable business in Sonora, Mexico.
During 1990 the company began to lose its high profitability. It was able to identify the problems. Now it had to make amendments to survive and make good profit. It realized that proper accounting needed to be done, and costs etc needed to be evaluated before decisions were made. Hence, a number of things needed to be considered. The first and foremost thing that must be considered for Guillermo Furniture Store is, how the cost behaviors at Guillermo can affect the decision making prerogatives as well as the strategies that the managers can adopt.
There are many different ways in which the cost relationships and behaviors can affect the decision the manager takes. Costs are receptive to any changes in production and sales and cost behavior is one of the best ways of describing this change. However, in order to be effective, the data must be comparable to similar and relevant data. If the correct, present and previous data is properly analyzed, Guillermo will be able to determine its CVP (cost volume profit) relationships easily.

The way in which Guillermo allocates cost, will be the deciding factor in, how efficiently and easily cost behavior and relationship analysis can be done for it. It is a general rule in accounting that, if a cost is easily traceable to its origin and can easily be allocated under the right head, then analysis becomes easy. Basically there are four major heads in accounting; service departments, production departments, products and services, and customers department. The costs allocated to each can further be simplified into direct and indirect costs. Once allocation is complete, the next step is important.
Managers of the various departments must watch how these costs are behaving in their departments. What are the costs sensitive to? Etc. The managers must keep a track of the costs associated with the production and services department, because these costs are interrelated to other costs and also have an influence on the actual cost of products and services. The higher the cost incurred the higher will be the price of the product for the customer. Another important aspect of costs which help managers in making decisions is customer profitability and how costs affect it. Costs are allocated in the different departments on certain bases.
These bases are called cost drivers. When managers constantly monitor them, they can build relationships between the costs and their drivers. One way in which managers can determine their decision making behavior is, to have rules and regulations for allocation of costs under different heads. For example rent is usually allocated on the basis of floor area occupied . Besides this it is important that fixed and variable costs are separated, because many decisions of production can change on this basis. If the above steps are taken, it will become easier to manage things for Guillermo.
Another important thing for Guillermo is the types of control systems that it uses. A management control system helps in gathering data of costs etc which helps in making financial and production decisions and evaluating the performance of the departments, the company and employees (Horngren, 2008). Guillermo has to make certain changes if he wishes to achieve his goals. For this, just like any other organization he has to make sure his teams understand their role and accept the change. In order to ensure that the change is not met with resistance, he will need to explain it and that means communicating the change properly to the employees.
Guillermo has many options regarding the control system he can adopt. However, developing the ideal control system for Guillermo would depend on which alternative he selects. The right one will make his business profitable and prosperous once again. Basically Guillermo has three options. Firstly, he can reduce his production cost by using technology (i. e. he can automate his production process). This would mean an initial cost of buying machinery etc, but in the long run the cost of production would go down.

Guillermo Furniture Store Flex Budget

Cane & Rattan Furniture.
Cane is a traditional material for garden furniture. To sit on, cane is warmer and softer than metal, because it does not conduct body heat. Cane is a natural material for use in a natural setting. Cane has a warm soft color and bends easily into elegant curves. Another property of cane furniture is its light weight, an advantage when you want to move furniture around and a disadvantage in windy conditions. Cane is used to make chairs, table, and benches.
The most serious worry with cane garden furniture concerns its durability. Providing cane is well ventilated, it will in fact last a long time out of doors.Moisture keeps cane supple and prevents cracking. Many people therefore leave cane furniture outside during the summer and place it undercover during the winter months. Another solution is to treat the cane with a wood preservative. Some cane furniture is pre-treated and sold for outdoor use. Other cane furniture is untreated and intended primarily for use in conservatories.
Paint makes cane attractive but does little for its rot resistance. The material known as ‘cane’ in fact comes from two different plants: bamboo and rattan • Bamboos are a tall, woody grass.Bamboo is light strong and durable. A single bamboo clump can produce 15 kilometers of usable cane in the lifetime of the bamboo plant. • Rattan is a climbing palm belonging to the genus Calamus. It has long many-jointed stems which are widely used to make ‘cane’ furniture. Rattan grows wild in forests throughout Southeast Asia.

It is mostly harvested by women and children, sustaining the forests in which rattan grows and providing poor people with a source of income. • Synthetic Rattan (Thermoplastic): Was invented for the purpose of replacing natural rattan (Cane) and bamboo.Preserving the natural beauty of the forest, this natural looking product resembles the real thing so closely; it will be hard to tell the difference. Synthetic rattan products offer superior quality; it does not wear as wooden fibers typically do. Synthetic rattan products are woven neatly, allowing smooth joints that lay flat; without tracks or cracking. Synthetic rattan products are stronger and studier than the wooden fiber. Synthetic rattan products do not absorb moisture, dust, or mold.
Synthetic rattan products do not attract weevils, insects or other wood destroying bugs.Seeing the flexibility and ease of use cane and bamboo furniture are always in demand. The strongest point with Cane and bamboo furniture is the pocket friendly and durability. Peoples are using Wicker beds, Sofa sets, Multipurpose use furniture and lots more for their indoor requirement. The same way these are extremely famous for outdoor uses also. For your garden these provides you chair and tables set with high durability and canopy and umbrellas to suit your requirements.MRP Ranges: Normally these furniture starts from 499/- to goes up to lakhs.
[pic] Bedroom SetMRP: 39999/- [pic] ConsoleMRP: 6999/-(L)5999/-(S)

Cane & Rattan Furniture

Consumer Behavior on Furniture.
As the economic conditions Is tough and challenging In recent years. Cost of living Is increasing, especially for those new home starters, Like new couples, families with new-born member, or moving out of parents home. For the general new home starter, money terms and financial issue is a big concern on their everyday life. The need and purchase of furniture would be an inevitable process as they need to start building up and furnishing their new home. They would opt for products that offer the benefits of good living standard, but without sacrifice too much of their earning or income.
In the situation and target group we focus on in this analysis, KEA and Preterit would be more likely be the choice to be made In the final decision. Purchasing off-the-shelf product, rather then tailor-made, good customer value and affordable price are a few major criteria In such case. However consumers would have different consideration for their decision depending on their Individual factors. From having the wants and demand to the step of making purchase decision and consumption. There are deferent factors that would influence and affect the consumer decision.
There are two sources that influence buying behavior. The first one is formal sources which are kind of well-planned and paid sources. The second source is informal, which is kind of a not pre planned and non-paid sources like family, informal sources, social class and culture etc. Marketing Efforts Product KEA offer product with Scandinavian design and attractive appearance, KEA provide materials to suit the many different needs and precise preference. The large catalogue of choice in products maximize the chance of finding products to your needs.

Preterit offer very generic type of product that perform the basic practical and functions. Preterit have few numbers of choices in each category, if you have some very specific preference, it might be hard to match your exact want and desire. Promotion Both KEA and Preterit have utilized web page, social media and also sales promotion to attract customers. KEA have a strong buzz each year, promote using television advertisement, often using humor that create buzz and recall rate. Preterit focusing on adverting in newspapers, and leaflet with coupons.
Also PIP memberships as a loyalty programmer that encourage repeat purchase. Price Both KEA and Preterit has set affordable price for their product that attract many customer and purchase. Also note that since the products KEA offer are unique and with brand, customer are more Justified if they are paying a bit more. However Products that Preterit offer are more generic and very uniform, customer might switch to other brand with similar product offered by a lower price supplier, so that Preterit have to compete with price or otherwise provide products with better perceived value and customer benefits.
Place Preterit which has almost 30 retails covered in Hong Kong, when compared to KEA which has only 3 stores in Hong Kong but a larger comprehensive stores. The slightly remote distance and limited distribution channel might be a bit pull back if you are a busy person or if you only want to make small quantity purchases. But if the customer would like to buy a range of product or simply enjoy the shopping experience of ‘KEA. This desire will become a driving force strong enough to stimulate the action of visit and purchase. Family Family is a basic concept in society.
The main structure of family is married couple, nuclear family and extended family. Besides, single-parent family and unmarried family are included as well. Consumer can be easily influenced by parents, siblings, and relatives based on their past experience. Nuclear family and extended family may prefer to buy from Preterit. The perception from Preterit is classic design, fair quality, and ready-made model. KEA provide Scandinavian design with good quality and flexible combination as well as wide range of color for selection which reinforce the motivation of married couple to buy from them.
Informal sources Informal sources are basically unpaid and unplanned. The opinion leader could be our friends, neighbors, colleagues, teachers, and idols. Nowadays, it is quite common to ask opinion leader about the brand and product before consumer make the decision of purchase. Preterit and ‘KEA, he will ask opinion leaders and the comments from opinion leaders will influence consumer’s behavior. Other non-commercial sources Other non-commercial sources including different types of social media and editorial content are unpaid.
Consumer can compare Preterit and KEA products by browsing following sources Editorial content from newspapers, magazines Blob, Forum Photo sharing websites Brand community Discount and promotion websites TV Programs Social class Social class has its own characteristic of values, attitudes and behavior that distinguish the member of various social classes, see below diagram In terms of income, lower middle class consumers only can afford lower price products from Preterit because of limited budget.
Middle class consumers have sufficient money to spend on KEA products which can reinforce their self-image and taste. Culture and Subculture Culture is shared, learned, symbolic system of values, beliefs and attitudes that form and influences perception and behavior. It is learned through transmitted from enervation to generation, which included Formal learning from parents and siblings Informal learning, such as teachers and idols Technical learning, such as school and professional institute Product preference and brand loyalty always influence from one generation to another.
For example, parents will bring along their kids to KEA for shopping because they enjoy shopping in KEA with different products for selection and even kids can select kids’ furniture for themselves. The positive brand image begins in early childhood and extends throughout a person’s entire life. On the other hand, subculture is a group of people share similar beliefs, values, and common experiences. Subculture group can be differentiated by age, ethnic, religious Consumer Decision Making In decision making process, more than one alternative must be available, even decide not to buy.
We focus on new couples how they make buying decision on -bed. Input As we discussed previous in external influence, furniture company’s marketing strategy (APS) influence new couple’s perception, attitudes and teach them to learn or change their attitudes towards their products. These marketing strategies can hang society’s existing code of behavior, culture or subculture is likely to affect how and what consumers purchase in long term if successful. Need Recognition When new couple move out from their parents, even rent or buy a new house, they perceive a need to buy new furniture.
Two different problem recognition styles – actual state types & desired state types are described on our case. Actual state types, they recognize double size bed is needed. Desired state types, they already have double size bed but desire new design attractive bed, e. G. Princess bed. Purchases Search New couple usually search their memory first, browsing internet, go to shopping and they may engage in extensive search of outside if no experience. Evaluation of Alternatives Evoke set come to their mind such as ‘KEA, Preterit and so on.
These evoke set might be influenced by their parents that used before and acceptable. They have already established the basic criteria for evaluation, but not completely established preferred among the choice of brands, than they search for additional brand information. Three specific level of consumer decision making – limited problem solving are examined. When new couple evaluating those brands, they based on their perceived quality of Perceived risk associated with the brand, e. G.
Consumer may not handle self- assembly furniture by themselves after evaluation, and also information costs saved with that brand, e. G. KEA only 3 stores, time consuming to visit and too far away from their home. While the couples collecting information about evoked set brands, two decision rules in their mind – compensatory and uncompensated decision rules. Compensatory decision rules, they evaluate those brand’s similar attributes and weighted it, than make a ranking. For example, the size of bed of KEA and Preterit are also fit for their home, they Just weight the price between brands.
Uncompensated decision rules when couples evaluate such size of bed exceed, they will forgive that brand. They may make decision to postpone or withdrawal from purchasing after shopping if they cannot find a suitable bed. Psychological Field Motivation As we know that consumer needs is the essence of marketing concept. However each consumer have their vary needs and wants depending on the culture environment and affection. Therefore individual are triggered by motivation that drive their individual action.
Apart from the primary perspective of having the physical product and its function of furniture that serve the generic goals, in addition, there are also acquired needs. Some might want to have a bit more comfort, safety, reliability for the protection of young kids at home. Some might have the affection and would love to have a warm and pleasant interior and environment so that they can provide a coos atmosphere for their friend and relative when visit, to fulfill the social needs The motives and needs can have positive and negative directions that impel positive rives and negative drives.
In most situation for the consumer, it is largely driven by positive motives, for examples, KEA has always inject and project the warm and happy home environment and scene in their promotional materials such as catalogue and advertisement which create a positive desire for consumer to dream of and the need and want of having the pleasant home using the KEA furniture product. Associate the warm and pleasant image with the brand ‘KEA. Motivation can have the bi-direction of positive and negative, it can also be distinguish into rational motives and emotional motives.
There are certain types of consumers who would be apparently acting with viewing the amount of benefit they can get from the product related to the cost spent. On the other hand, there are certain type of consumer who would act with emotional motives and subjective ideas. The motives can be aroused by the mood of the showroom or the fashion and trend on design style, color and material used. Perception Perception is more about the subjective of how people think about it rather than the actual objective fact of what it is.
The dynamic of perception consists of the aspect of “Selection” “Organization” and Interpretation” altogether composes a meaningful coherent picture from individual. Perception can be developed and influenced by advertising and promotion as well as other marketing mix that intended for the positioning. For instance, each year KEA has a new shooting of “low-price” featured ad shown on television. Using the televisions advertisement media has the advantage of reaching the mass, but catching the audience attention in the clutter is a challenge.
Kea has use many witty ideas and humor to catch attention and convey the message of “low- price”, the use of dramatic visual and theme, exaggerated facial expression, music, mound and motion with the contrast color, figure and ground, bold size fonts, helps to catch attention in order to promote the message. The same applied on the Kea catalogue and in-store poster, using sharp, bright color and big bold fonts on the minimal background, simply spell out the message in a clear way and to catch attention in a glance.
Also, the imagery used in the catalogue are in pleasant color and soft tone, some images will also include models / actors of kids playing happily or family and friends lying back comfortable on couch, creating a warm and sweet feeling and lead to the nonuser to grouping and associate Kea brand and product with sweet and comfortable home in a positive way. TV ad that last for only seconds is very limited, message have to be brief and sharp, it is smart to leave a open-ended closure that the catalogue is out now, to let the consumer to response and find out more from the catalogue by mail, in-store or online.
Personality Personality defined as the inner psychological characteristic determine and reflect Consumer who choose KEA need to adopt this new idea and practice that they need to get very involved when purchase KEA product. Consumer who has high consumer innovativeness and low in dogmatism are more likely to accept ‘KEA. Many of the KEA products allow consumer customized and DID to suit their personal need, letting consumer to have some involvement. So to some extended consumer who choose KEA has the need for uniqueness, and willing to have some involvement with the high optimum stimulate level.
KEA furniture emphasized on design and attracted too many customers who with style conscious, featured many pictorial, nicely photographed visual images on catalogue and other promotional materials. These will be appealing to visualizes type f consumer which should be appropriate for the intended target customer as they position their product / furniture tends to be more like a stylish product than a technical product. Attitude A learned predisposition always influences their attitudes toward or avoids the object.
Transcription attitude model consists of cognitive, affective and connotative components, consumers perceive and learn about company’s products such as a stylish and self-assembly of Kike’s products, price competitive and assembled products of Preterit’s products, consumers evaluate those particular products & services attributes, form a preference and intent to buy. KEA has provided customized, DID, Nordic stylish & self-assembly products, and Preterit provided a localized design, assembled products. Those specific brand’s product features is influence consumer attitude, both perform attitude-toward-object model.
For examples, KEA illustrate FAX wardrobe’s features, consumers can customize their individual need with huge range accessories to create their dreams wardrobes. Muff can be based on space, budget, amount of clothing and home-style to create an ideal wardrobe” consumers evaluate the wardrobes functions, what and how it can provide and belief the wardrobes can satisfy their need. Attitudes are also influence by company’s marketing strategy, a societal marketing strategy of KEA ‘people & plant’ which influence consumer’s attitudes towards their brand, attitude-toward-the-ad model is examined.
TV ads, Backbone, APS provide an important source to influence consumer’s personal experiences, family and friends. These marketing strategies can change consumer’s attitudes due a brands is in conflict with consumer attitude. For aforesaid example, an environmentally-oriented ‘People & Planet Positive’ strategy, their attitude may change toward to ‘KEA, Resolving woo conflicting attitudes is examined. Advertisements with product specification, real life scenario presented in catalogues which changing the basic motivational function in KEA catalogs.
Learning Advertising promotional videos, price & store displays are cues of ‘KEA, Preterit to stimuli consumer’s motives directly, consumers responded to surfing their websites they looking for or go to the shops to look around displayed furniture & price. If consumer is rewarded, they learned to associate the purchase with a pleasant feeling and are likely to repeat the learned behavior and become a loyal customer. For instant, KEA store displayed in real life scenario which may serve as a cue for consumers, and constitute their response that they consider ready to buy.
Reinforcement increases the likelihood that specific response will occur in the future as the result of particular cues. ‘KEA, Preterit are well-know and favorable brand, according to classical conditioning theory, ‘KEA, Preterit are an unconditioned stimulus, the unconditional response is consumer perception, KEA implies that the products are stylish, Preterit implies that the products are practice and popular, conditioned response would be consumer ring their furniture because of the belief that they embody which their name is associated.
Instrumental conditioning is examine while consumer learn, for example, stores carry the wardrobes they prefer at prices they can afford to pay by shopping a number of stores (KEA, Preterit, DISC, etc. ), one they find KEA wardrobe meets their needs, they are likely to make decision to buy. While consumer is satisfied, they are more likely to repeat buying furniture at ‘KEA, KEA store loyalty is reinforced. To reinforce the behavior, KEA perform a positive reinforcement by repeating ‘design better home & low price’ messages.
By assuring customer satisfaction with their products, the service & buying experience. For examples, KEA business provides home design service a close personalized relationship with customers is also another form of nonproductive reinforcement. A systematic reinforcement encourage customer to repeat purchase, consumer receive their cash coupons after they brought a certain amount. Output When couple find a brand product such as KEA wardrobe fit their need, they decide to purchase. After they used, they evaluate the wardrobe’s performance, a postprocessor evaluation is perform. A positive discrimination is when the

Consumer Behavior on Furniture