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City Furniture And Matressess Case Solution & Answer

Delivery:

Delivery has also been a great challenge for CFM. It is due to the fact, that since delivery media substantial part of overall purchase experience of the customers, the delay in such areas,leading to dissatisfaction. The area of operation has been a challenge, mainly due to limited human resource and the inability to recruit the similar capablein dividual’s right at the time of need. Moreover since it already have limited employees, it has the challenge in retaining them, which in other case may incur substantial loss and delay in searching the equally capable staff member.

Such situation is alarming for CFM, dueto the fact thatdeliveryplays a core role in creating an exquisitecustomer purchase journey, and delayin the delivery may result in the customer dissatisfaction, leading to low customer retention andloyalty.Moreover the issue of reduced Workforce also have negative effect on the business, due to the fact, it increases the bargaining powerofthe employee on the companyand makes it more dependent on the human skills, making the business more vulnerable to market risks.

Competition

The increasing competition is also anotherchallenge for the CFM.Itis due to the fact, that since majority ofthe market player insource the furniture eitherfromAsianmarkets directly orindirectly. Such gives them the competitiveedge over otherplayers, making thempursuethe Economiesof scale strategyeasily. Such is a threat for CFM, due to the fact, that suchincreasedcompetition and cost benefit maymakethe company to reduce its pricesas well,making the profits shrink and hencelow profitability.

CFM options/Alternatives

In order to resolve the above issue, the company has following alternatives:

Alternative: 1- The Company may pursue the store expansion strategy in the existingmarket:

Pros:

  • Such will allow the company to increases its market awareness through market penetration, acquiring the profits through economies of scale.
  • Also, since the marketwill be known and same, expandingin similar domain will notcost additional research and understanding of customer behavior, leading to low market risk.
  • Moreover, such will allow the company to grip the market from all ends, penetrating and coveringmajority marketshare.
  • Inaddition, expanding in the samemarket through store expansion will be easier due to pre-developed market understanding.

Cons:

  • Such optionwill incuradditional cost andmay increasesthe tied up inventory cost.Itis dueto the fact, thatsince every locationmay not have same customer flux, it may create issue in selling at an increased rate.
  • Moreover since such option may require the companyto invest in themarketingstrategy, it has previously failed in attracting the customer to storethrough newspaper advertisement and radioannouncements.
  • Also, finding the right rental option and leases is also an issue for the company, making it the option complex to pursue smoothly.

Alternative: 2- The Company may pursue global insourcing strategy to deal with theincreasing cost issues.

Pros:

  • Such will reduce the cost to 40% and will allow it to offerthe furniture at reduced rates,increasingthe profit through cost leadership.
  • In addition,sincethe company already havestrongstance in global expansion, and globalpurchasing, expansion insuch direction, will offerthe competitiveedge to the companyleading to effective operations.

Cons:

  • Such requiresthe companyto invest a greatdeal in globalsourcing, since purchasing at bulk will reduce the overall inventory cost, however will make the high amount outstanding in ledger.
  • In addition, additional space will berequired for additional products tobe placed on display that may incur additionalcost and does notguarantee the definite sales…………….

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