International Business Case Palliser Furniture Ltd.

The short product life cycle in this industry requires competitors to continuously evolve. This continual innovation is difficult for new entrants to achieve. Also, existing products, such as Apple’s iPhone, have built brand loyalty and associated switching costs for consumers, which pose as barriers to entry for new competitors.

As previously stated the buyers in the furniture manufacturing industry are furniture retailers. Therefore they will require furniture to continue business. There are no substitutes that provide the same use as furniture. In relation to the furniture industry as a whole, there are still very little substitutes to furniture aside from a higher use of closet space or unorthodox measures by consumers. An example of this would be one's choice to live without furniture, which in most cases is very unlikely. Furniture has become a household necessity and consumers have little or no desire to change their lifestyles by eliminating that need. Therefore the threat of substitutes to the furniture manufacturing industry is very low to the point where it is almost non-existent.

Despite being well-established, over the last three years, sales at Atherley Furniture Company have remained the same while profits have declined by almost 24%. Their chair division produces three different types of chairs, the Atherley, the Caledonia and the Parkdale. Each model has its own production plan and production costs. The increasing production costs, alongside the intense competition the company faces, have become a great cause of concern for John Atherley.

Bargaining Power of Buyers: The bargaining power of buyers is high in the department store retail industry. The volume of buyers is high, and buyers are very price sensitive in this industry. The products are not highly differentiated, and there are numerous stores that offer the same, or similar, products, giving buyers the opportunity to search for the lowest prices and information. The industry has substitutes available in the form of specialty, differentiated products and stores. This increases the power of buyers,

Bargaining power of buyers: Businesses and individuals all fall under the customer's category for this industry. Big customers do get volume discounts and can negotiate prices with sales representatives. However smaller customers have to take what is being offered to them. The only say they have is that they can switch between the players, but due to intense competition, the prices offered are generally the same across the service band.

IKEA’s products like the PAX wardrobe, the BILLY bookshelf, the LACK table and the SULTAN bed, sold in IKEA store are to a large scale sourced from a global network of suppliers. To take the sliding doors of PAX wardrobe as an example, IKEA just sourced different parts of the door form different countries but within consideration of total cost. Table 1 shows an overview of 8 major component of the

The bargaining power of customers is high. First of all, the customer size is tremendous globally, which also has an accelerating growth rate in recent years. Customers’ leverage is strengthening as a result of this. Another inevitable factor is that with countless retailors online, there is low switching cost for customers to find other alternative companies that suits their desire to conduct purchases. Moreover, consumers today are more sophisticated. Consumers are less commit to impulsive-buying, yet are more willing to study about product features and evaluate their options before purchasing online. Their purchase pattern can also be hard to learn too.

Buyers (consumers) have a great deal of bargaining power because the buyer has a variety of brands to choose from and a lot of options to choose from such as precook, fresh, roasted and boneless.

The market greatly depends on how powerful buyers are in terms of their willingness to pay certain prices. The following determines the bargaining power of buyers

Bargaining power of buyers -Buyers are not in concentrated groups and do not buy in large amounts. However, within the entertainment industry, customers have a lot of alternatives and have no switching cost. However the introduction of DVDs, influenced customers to purchase DVDs since the cost is almost the same cost of rentals. This makes buyer power moderate (Xie & Lin, 2008).

There are two different buyers in the industry; businesses and consumers. The bargaining power of business buyers is high. Business buyers are the biggest purchasers of Corning’s products. They purchase Corning’s glass and ceramics as by-products for subsequent manufacturing of other goods. Business buyers are sensitive to the price of Corning’s products, as slight differences in material prices would impact the cost of production. Conversely, the bargaining power of the consumer buyers is low. Consumer buyers do not have as much bargaining leverage when compared to business buyers.

the China market IKEA China has been allowed to exceed and expand its sourcing of

The task force is considering a variety of options for its analysis. One option is to keep the global network with its current structure and capabilities. Other options include shutting down some plants or limiting the capability of some plants to producing only one chemical. Closing down a plant eliminates all variable costs and saves 80 percent of the annual fixed costs (the remaining 20 percent accounts for costs that are incurred related to the plant shutdown). Similarly, if a plant is limited to producing only one chemical, the plant saves 80 percent of the fixed cost associated with that particular chemical. The two options being seriously considered are shutting the Japanese plant and limiting the German plant to a single chemical.

The bargaining power of buyers is affected by the concentration and number of consumers, when buyer power is strong, they gain the power to choose between producers and ultimately equip themselves with bargaining power which then the producers will have to conform to in order to produce profit, under these conditions the buyer has the most influence in determining the price of products. Also when buyers have strong bargaining power in the exchange relationship, competition can be affected in several ways. Powerful buyers can bargain for lower prices, better

The import of furniture is becoming more and more intensive during the last two years. In 2006, the imported furniture increased with 38% in the second half of the year and in 2007 it reached 44%.