Forta Furniture International Expansion Harvard Case Study Solution & O
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Steps of Case Study Analysis & Solution:
Forta Furniture International Expansion Problem Statement
The problem statement refer to the concise description of the issues that needs to be addressed. It identifies the issues or gap between the current and desired type of the organization, and thus requires to be stated in order for the management to look
for change. The main idea of the problem statement is to answer the 5 w’s that include the answering who, what, where and why, to allow the organization resolve the problem, by stating it in clearly in 2 to 3 lines.
Basically, developing a Forta Furniture International Expansion problem statement is an extensive process and requires the proper brain storming of the teams in order to identify the underlying loopholes or inefficiencies within the organization. Also,
it offers the specific insights to the management in understanding and looking at the factors that have been hidden from the management sight, effecting the performance slowly and gradually.
Moreover, clarity of the Forta Furniture International Expansion problem statement is important to maintain, in order to avoid the misunderstanding between the shareholders and stakeholders. The clear problem statement is developed by stating the factors
and the operations getting effected and its overall impact on the organization specific the areas, such as Profitability, sales or brand equity. Also, the purpose of the problem statement is to describe the external environment and its effect on the
overall organization in short and long-term. Moreover it also delineates the impact of such changing factors on the users, and other stakeholders.
Forta Furniture International Expansion SWOT analysis
The acronym Forta Furniture International Expansion SWOT stands for strength, weakness, threats and opportunities. It is a useful tool that is widely used for strategic planning and management in many organizations. It is effectively used in building
strategies for the organization to maintain its competitiveness in the market. It is simple yet powerful tool that help the organization in identifying its existing resources, capabilities, deficiencies, the existing opportunities and threats prevailing
in the market.
Forta Furniture International Expansion SWOT analysis mainly have two dimensions internal and external dimensions. Internal dimension includes all the factors that could affect the organization which is the strength and the weakness while the external
factor includes the environmental factors that is the opportunities and the threats.
Components of SWOT analysis
Forta Furniture International Expansion SWOT analysis is a process that include four areas that are further divided into two dimensions i.e. internal and external factors. In SWOT analysis the strong and weak aspect of an organization is determined by
evaluating the elements within the environment while the opportunities and threats of an organization are determined by examining the element outside the environment. In this way SWOT allows the comparison of organization’s resources and capabilities
with the competitive environment in which it is operating.
Structure of Forta Furniture International Expansion SWOT analysis
In order to carry out the analysis it is important to understand each element of SWOT i.e. strength, weakness, opportunities and threats.
Forta Furniture International Expansion Strength
Strength is a characteristic that adds value to something by making it more special, unique and advantageous when compared. In this element of SWOT the abilities and the key properties of organization are discussed that gives an organization an advantage
over other organizations by making it more competitive. It defines the characteristics and situations of an organization which makes it more effective and efficient when compare with its competitors.
It defines the areas in which the organization hold a command or is good at doing it and that provides the organization and important capability. It can be a skill, a resource, image, market leadership, relation with buyer or supplier or any other
advantage relative to its competitors that fulfill the needs of the market by providing the organization with a comparative advantage.
Forta Furniture International Expansion Weakness
Weakness refer to the situation in which the existing capabilities and the resources the company holds are weaker or not sufficient compared to others organizations in the market. In other words it means the aspects in which the organization is less
efficient and needs to improve in order to align with the market trends. As these aspects negatively affect the overall performance of the organization by making it weaker compared to its competitors.
Forta Furniture International Expansion Opportunities
Opportunity is an advantage and the driving force for an organization. It is the convenient time or situation that is present in the environment and will help the organization in achieving its goals. It is a factor that contribute positively towards the
growth of the organization. It is a condition existing in the external environment that allow the organization to take an advantage of the organizational strengths, and help in overcoming the weaknesses and to neutralize the threats present in the
Forta Furniture International Expansion Threats
Forta Furniture International Expansion Threats are the factors that prevent the organization from the actualization of an activity. It is an unfavorable situation that exist in the environment making it difficult for the organization to achieve its
defined goals. It is a situation that arises as a result of the changes that took place in the immediate or distant environment, preventing the organization from maintaining its existence and superiority in the growing competition and are disadvantageous
for the organization.
All the environmental factors are consider as a threat to an organization that could affect the efficiency and effectiveness of the organization.
Limitations of Forta Furniture International Expansion SWOT analysis
However there are certain limitation attached with it. Forta Furniture International Expansion SWOT analysis is only a one stage of the business planning process and do not provide the organization with an in-depth analysis or research that could lead to
a firm decisions. Apart from this it only cover the issues that are definite and doesn’t priorities them. In addition to this it does not provide any solution or alternatives decisions. As a framework, SWOT does processes a value but it doesn’t
provide the organization with any specific direction on how the key aspects can be identified. It significantly rely on the capabilities of the manager that how effectively it can prioritize and determine the most important element. Another limitation
associated with SWOT analysis is that it provide equal weight to each factor regardless of their impact or relevancy.
Forta Furniture International Expansion Porter’s Five Forces
Forta Furniture International Expansion Porter five forces reflects the competitive environment of an industry. It is a strategic tool that is used to avoid or minimize the risk of losing the competitive edge that the organization has and to ensure the
profitability of the products in the long run. The company holds its vision closely as it allows them to orientate its innovation in terms of choices regarding the investment and strategies. Within the industry the businesses profitability is dependent
upon the following forces:
Threats of new entrants
Threats of substitute
Bargaining power of suppliers
Bargaining power of customers
Structure of porter’s five forces analysis
Forta Furniture International Expansion Competitive rivalry
The competition among the firms help in identifying the lucrativeness of an industry where companies are competing hard in order to maintain their power within the industry. Forta Furniture International Expansion competition is moreover on basis of
diversity, the development within the sector and the barriers related to entrance in the market. The competitive rivalry is the analysis of the brands and the product, its strengths and weakness along with the strategies, competitors and the share in the
Threat of new entrants
It is in the favor of the companies that exist in the market to create barriers for the new entrants to prevent them from entering into the industry. The organizations could be the new companies or the companies that are planning to diversify itself in
the market. The barriers can be both industrial and legal. Apart from this the size and the reputation of the companies that are already operating in the market also play an important. Furthermore the cost related to the entry, access to raw materials,
barriers related to culture and technical standards also play a major role and can affect the decision of the new entrants in the market.
Threat of Forta Furniture International Expansion substitute products
The Forta Furniture International Expansion substitute products are an alternatives that are available in the market at comparatively better prices. Such products prevail due to the technological and innovative advancement. Due to which the products
being produced by the companies that are already existing in the market and is using the same technology are than replaced by the other company’s products that are comparatively better in terms of price and quality and are being produced from sectors
with significant profits. The substitute products are dangerous as the companies are under constant threat of being replaced.
High threat of substitute leads to low profitability as it limits the industry profits by placing a price ceiling due to the fear of being substituted by other product. Apart from this it also affect the growth potentials of the industry as a whole but
reducing the profitability margins.
Bargaining power of suppliers Forta Furniture International Expansion
Powerful suppliers possess Forta Furniture International Expansion more power to capture significant value for themselves by demanding high prices while limiting the quality and the quantity of the product or services or by transferring the cost on the
participant of the industry. Many condition imposed by the suppliers generally include the increase in price while compromising the quality and quantity.
A bargaining power of a supplier in the market is strong if:
It is more concentrated than the industry it is selling to.
It is not heavily relying on the industry for its profits
If the participants in the industry have to incur high cost for switching suppliers or the firms are located adjacent to the suppliers manufacturing facilities.
The product being offered by the suppliers are highly differentiated.
And when there is no close substitute available for the products being supplied by the suppliers.
Forta Furniture International Expansion Bargaining power of customers
The buyers having strong bargaining power can highly influence the profitability of the suppliers operating in the market by imposing condition that are not much favorable for the suppliers in terms of price, quality or service. Therefore choosing
clients often become crucial for the organizations as to avoid the situation of being highly depended on the buyers. The level of interest and concentration of buyers toward the product gives them more or less power.
Powerful buyers could flip the side of the powerful supplies by forcing the prices to move downwards and by demanding high quality and services by creating a competition between the participants in the industry on the basis of price and quantity.
Customer are deemed strong if they contain negotiating leverage specifically if the industry is sensitive to price, the buyers can pressure suppliers for further price reductions.
The customer are assumed to have strong buying power in case:
If the number of buyer are limited or each of the buyer purchases large quantity relative to the size of the suppliers.
The products in the industry are standardized or are undifferentiated.
The cost of switching is comparatively low.
Limitations of Forta Furniture International Expansion Porter’s five forces
Though the model from a strategic point of view is an important tool but there are certain limitation associated with the application of the porter five forces model. The framework use a classic perfect market and relatively a static structure of market
i.e. it only incorporates the aspects of the present day and only incorporate the events that took place within the short term period. Apart from the model only provide the overview of the environment and does not define the industry clearly. As it can
be difficult to group the companies having similar business lines and to call it an industry. Therefore Porter framework due to its limitation is too inert to be depending upon outside the short term to medium, term objectives. It emphasizes more on
external factors and ignore the specific factors that are more specially related with the firm. The model doesn’t incorporate new business model and the changing dynamics of the market and the impact of globalization. Moreover it does not consider non-
Forta Furniture International Expansion PESTLE Analysis
Forta Furniture International Expansion PESTLE analysis is one the significant and widely used tool or framework mostly by organizations with the intent of considering the market environment before commencing the process of marketing. In fact, the
analysis of the environment needs to feed all planning aspects as well as it should be continuous. The internal environment of an organization includes internal customers or staff, wages, office technology and finance etc. whereas the micro environment
includes the external customers of an organization, distributors or agents, competitors and suppliers. Additionally, the macro environment includes legal and political factors, sociocultural forces, economic forces and technological factors.
The factors or forces are discussed below;
These are the forces that tends to be altered by the influence of government on the infrastructure of country. The political factors may involves environment regulations, employment laws, tariffs, tax policy, trade restrictions, political stability and
reforms. It is noteworthy, that the charities needs to be included where a government are not willing services and goods to be provided.
The Forta Furniture International Expansion economic factors or forces involves interest rates, inflation, and growth of economy, cost of living, working hours, wage rate and exchange rates. Combining these factors, it last greater and inevitable impact
The culture or social influence on certain businesses vary from country to country. It is significant to consider these factors. The social factors includes safety and health consciousness, various demographics, population growth rates and cultural
Notably, Forta Furniture International Expansion technology is one of the most important way of being competitive in the highly competitive market arena. Not only this, it drives globalization, the factors includes environmental and ecological aspects,
and available services as well as products. An organization should innovate and be compatible with the technologies.
The Forta Furniture International Expansion legal factors involves the certain laws and regulations which might effect on the business operations of an organization. It also includes impending and current legislation that tends to impact on the industry
in areas including competition, employment, safety and health. An organization should consider the influence of the national and international laws where the organization would originate the business operations.
The Forta Furniture International Expansion environmental factors include all those factor lasting impact or influence, the surrounding environment most likely determine environmental factors. The factors involves awareness of the seasonal or climate
change or terrain variation. The analysis of the environment including internal and external elements is vital for organization since it impacts on the performance of an organization.
Limitations of Forta Furniture International Expansion PESTLE:
The limitations are discussed below;
The external factors are dynamic and can be change at a rapid pace. Overtime, the changes might be occur in less than one day, therefore the companies should make it tricky in order to predict how and why these forces might influence the future or
present of the certain project.
There are many occasions, in which the environmental changes have an adverse influence on the project that might not be noted in the initial stages of project, indicating that the uncertainty sis still there even after the pestle analysis have carried
out. This in turn might defeating the prime reason of the pestle analysis.
Forta Furniture International Expansion Conclusion
To conclude, PESTLE analysis is considered as an effective tool of planning and it offers viable and effective technique foranalyzing and scanning the operating environment of an organization. The effectiveness of the analysis highly depends on the
accuracy of the collected data, updates to accommodation changes in timely manner and other tools trimming down the PESTLE limitation to some extent.
Forta Furniture International Expansion VRIO Analysis
The Forta Furniture International Expansion VRIO analysis is basically the extension of the Forta Furniture International Expansion PESTEL analysis, which allows the oragnation to understand the resources, competitive edge, value proposition and its
value in the market. The Basic idea of the Forta Furniture International Expansion VRIO model is to analyze the factor that are valuable for the organization. Such may include the supply chain efficiency, value chain maintenance, technology or other
factors, that offer value to the company and in return allows the organization to offers similar value to the customer.
Forta Furniture International Expansion Financial Analysis
Forta Furniture International Expansion Financial analysis is the assessment of the stability, viability as well as profitability of a sub-business, business or project. It is the process that is widely used for identifying the financial weaknesses and
strengths of the corporations, this can be done by building the relationship between items of the profit & loss account and balance sheet. It can be used for examining the business operations from the variety of perspective for determining the ways that
can be used to strengthen the business and understating the greater financial condition or situation. The process scan the financial statement to evaluate the relationship the disclosed items. In other words, the analysis keep focusing on the past
performance evaluation in terms of profitability, liquidity, growth potentiality and operational efficiency. The analysis of the financial statement involves the methods use in interpreting and assessing the outcome of the current and past financial
position or performance since they associate to particular interest factors in investment decisions. Thus, the analysis of the financial statement is important mode of assessing the past performance as well as planning and forecasting the future
Users of Forta Furniture International Expansion Financial Statement Analysis
The users of the financial statement are listed below;
Management:the controller of the company most likely prepares the ongoing analysis of the financial results of companyin relation to the unseen operational matrices by outside entities.
Investors: both prospective and current investors tends to examine the financialstatements for leading the ability of company to continue generating cash flows, issuing dividends and growing at historical rate.
Creditors:one who has landed funds to the organization likely show his interest in its ability paying back the debt, thus keep focusing on measures of cash flows.
Types of Forta Furniture International Expansion Financial Analysis
Significantly, creating the financial ratio add meanings to the accounting and financial data of the business. Therefore, being the use of the financial ratios would provide assistance thereby leading to the overloaded information. Theratios are sub-
divided into the major groups that tend to cover the financial areas.
The sales amount of an organization depicts the business size. The sales implications for the selling and purchasing power, economies of scale and amount of market share. The % change in sales invocates that how rapidly or quickly the sales has been
growing over the period of time, thus leading to answer the question regarding growth in relation in competitors and general economy.
Asset Management – Forta Furniture International Expansion
Asset turnover: this measure is widely used in order to measure the ability of the company in generating sales from the fixed assets. Not only this, it also indicates that an organization has a lot unproductive assets for instance inventory, receivables,
equipment and plant for its current sales’ level.
Fixed assets turnover: it is supposed to be vulnerable to the asset valuation issue. It is most important ratio in companies which are capital intensive. It is comparatively low importance for the companies with minimum need for capitals such as leased
retail operations and wholesale distribution. In case an organizationis decreasing fixed asset turnover so it means that the production has been running at lower than capacity.
Forta Furniture International Expansion Financial Structure
Financial leverage multiplier: it is the connection between return on equity and return on assets of an organization. It provides the way of looking at the relative equity and debt amount that has been using by company in order to finance the assets.
Current debt to equity ratio: it is the mix if the debt of an organization. In case of high current debt to equity ratio, it means that the company would be in problematic situation while paying its bills.
Equity turnover: in case of high debt to equity ratio, it might because of the too little equity or too much debt burden on an organization. In case of high equity turnover ratio, indicating that the shareholders have efficiently used equity.
DuPont’s Forta Furniture International Expansion Profitability Model
It is considered as the best model as it does not reveal anything regarding the liquidity of an organization. Also it likely reveals about the organization’s expense. One of the unavoidable advantage of this model is thatit has begun establishing
benchmarks – across companies and over the period of time which can be used for flagging the potential issues areas where more than one ratios are reflecting the key problem or issue.
Trend or Percentage Forta Furniture International Expansion Analysis
The useful snap shot can be taken by analyzing the financial condition of an organization in a particular time period. Also, there are many questions that can be bets answered by comparing the figures in percentages. For instance; which are the areas of
company getting stronger or weaker? Which areas are in need of immense attention? Etc. for the purpose of answering these type of question, it is important for organization recasting the financial statement in to the percentage terms. The major advantage
is that it enables the significant comparison between time periods. There percentages are most likely providing analysts or managers with the fast or rapid way for finding key issues or problems. Additionally, the attention can be paid to certain
weakness and strengths through seeing the appropriate changes over the period of time.
Comparative Forta Furniture International Expansion Analysis
The evaluation of the performance of company is often easier in case of having benchmark or standard performance for the comparison. The suitable benchmark can be found with some problems such as unique attributes problem and averages problem etc. it is
not appropriate setting an average as an objective. An upper performance quantile can be the most appropriate performance standard (D’Aveni, 2007)
Operational Forta Furniture International Expansion analysis
The assessment of the operational efficiency in the initial stage as a whole for business or any of the business sub-division is likely performed through a percentage analysis of income statement. Individual expenses or cost items are associating to
gross sales revenue adjusted for all allowances and returns. The sales’ common base permitting a ready comparison between key expenses from time to time against industry databases and competitors in the market over longer stretches of time
Forta Furniture International Expansion Market Indicators
Relative movements in price: targeting for the purpose of creating the shareholder value depends on the relative performance of price. The movement in price are likely expressed in mentioned ratios and absolute dollar terms. While the typical investor
shows their greater interest in absolute change in shares value, the insights from the stock performance to the appropriate average and to the market for some industries are supposed to be helpful to assess the company’s particular trend (Rappaport,
By having a closer look over the matrices used for financial analysis, it is to say that the financial statements holds notable importance because it evaluates the management performance, plans and corporate strategy for future.
Forta Furniture International Expansion Cost:
The cost includes if the option proposed is cost effective or can be afforded easily by the company without effecting the overall profitability and other operations of the company. The consideration of cost is important in the alternative generation in
order to attain the maximum feasibility with overall business strategy and the budget allocated.
Forta Furniture International Expansion Evaluation of Alternatives
Alternative are the different ways of achieving a same end goal through two or more different methods. It is not a close substitute of a first define choice or other alternatives or must provide the solution of the problem in a particular way. For
instance, lower price, special offer, and money back guarantee etc. are all the different ways for achieving the same objective that increased sales. Alternatives are generally mutually exclusive in a way that if we combine two or more alternatives
together it will eventually create a new alternative.
Forta Furniture International Expansion – Recommendation
Once the options are developed and evaluated, the recommendation is made, on the basis of the best suited option that offers the maximum value to the company and address the problem succinctly. The recommendation is mad in away, that not only offers the
solution the problem, but also depicts the implementation process and the course of action that the organization needs to take in order to be successful.
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