Question: How strong are the competitive forces in the furniture manufacturing industry? Do a five-forces analysis to support your answer.
Answer: Although Herman Miller company is one of the largest office furniture manufacturers in the world, it competes with several manufacturers that have greater resources and sales as well as many smaller companies. In the United States, the company 's most significant competitors are Haworth, HNI Corporation, Kimball International, Knoll, and Steelcase.
Five forces analysis
Intensity of rivalry
The office furniture manufacturing industry market in the United States is very competitive since many companies offering similar products. Companies compete primarily on price, product and service…show more content… During the five years to 2011, the prices of these inputs have been volatile, making it difficult for manufacturers to anticipate future spending and reduce costs. In general, rising commodity prices have negatively affected the industry, increasing purchase costs for manufacturers.
Bargaining power of buyers
According to the research of IBIS World, department store sales depend heavily on the financial health of the consumer sector, including per capita disposable income. During periods of economic recession and decreasing income of people, consumers cut their spending by delaying purchases or substituting brands’ products with lower level products. This is heavily influenced by the unemployment rate and general economic growth. In the periods of strong economic activity people’s disposable income increase, and vice versa.
Threat of substitutes
Furniture has been used for thousands of years and built mostly of wood. There is little evidence indicating that wood furniture will be totally replaced by some other material in the foreseeable future. In the industry of furniture manufacture probability of substitutes is almost impossible. Current global trends have a favorable influence on increase in demand for furniture, due to ever faster obsolescence and shorter furniture lifetime, i.e. due to frequent changes in design and manufacture technology. Possible threat of trend changes exists, i.e. furniture made from other materials than wood, that is,