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Manufacturer of Upholstered and Wooden
Furniture
Background
The firm is a manufacturer of upholstered and wooden office furniture. At certification, the firm had 30 employees and annual sales of
approximately than $2 million.
A highly competitive market has battered the firm for years. Canada and Mexico have been flooding
the U.S. market with goods produced from inferior material and cheaper labor.
Russia has entered the picture with its vast supply of cheap raw material that can
offset the cost of transportation to the United States. In addition, Japan has
been exporting its imitation wood products at reduced rates making it difficult
for many U.S. firms to remain competitive. During the mid 90’s, the percentage
of imported furniture continued to rise, on average 14 percent per year, making
it very difficult for U.S. producers to keep abreast of the market.
Moreover, the firm also competes in a domestic market that has for years experienced the
trend of mergers and acquisitions resulting in a glut of used office furniture
in the marketplace.
Assistance Provided
The recovery strategy highlighted two areas deemed critical for the continued
operation of the business, management information systems (MIS) and marketing. On the
MIS issue, the NYS TAAC discovered that accounting, job costing,
procedures, methods, and standards were not being captured in a manner that
provided management with timely or useful information. A plan was developed to
design a new information system, design the necessary hardware, and spec the
necessary software. Once management purchased these components, technical
assistance was provided to integrate the information system and customize the
software to the business. It was estimated
the system could be developed for $30,000.
Marketing is important for both the short-and long-term. It was discovered the
firm lacked a formal, structured, comprehensive marketing plan. The
development of a marketing plan was viewed as the foundation from which new
business development could take place. A marketing plan was developed for
$30,000.
Project Results
A MIS consultant evaluated a number of management information systems before
making a recommendation to the owners. Once the firm purchased the required
components, the consultant implemented, converted, and provided complete
training for all suitable personnel. The new system eliminates excess paperwork,
which has increased productivity and provides management with timely information
to effectively operate the business.
A marketing expert developed a detailed and attainable marketing plan for the
firm. Budgets were addressed, sales forecasts were planned and clearly
laid out, new geographic sales territories were introduced, and the selling
tools necessary to produce results were completely spelled out.
Results have pleased everyone involved with the firm and the technical
assistance. The owners were recognized at the 1998 New York City Entrepreneur Of
The Year Awards. Cited in the award was the owners' abilities to effectively
manage and keep the company afloat during a period when furniture markets were
under attack. They were able to do this by staying abreast of technological
needs (MIS), and anticipating customers’ needs (marketing). As a result of the
publicity surrounding the owners receiving the New York City Entrepreneur of the
Year award, CNN showcased the firm in a segment of "Managing" on its financial
news network.
Since completion of the projects, employment at the firm has increased to 40,
and annual sales have increased to over $3 million.
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