ALGONQUIN COLLEGE
Divine Furniture Manufacturing Company
BAI2311_010 Intl. Market Entry Strategies
For: NORMAN LOMOW
Brian Phan
10/4/2012
Table of content
1. Executive Summary .......................................................................................... 2
2. Situation analysis .............................................................................................. 2
3. Assumptions ...................................................................................................... 3
4. Core problem .................................................................................................... 3
5. Evaluative criteria .............................................................................................3
6. Alternatives and Analysis of alternatives ....................................................... 4
7. Decision and Justification ................................................................................5
8. Implementation for Divine Furniture ............................................................ 5
9. Apprentices ......................................................................................................6
10. Bibliography ....................................................................................................7
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1. Executive Summary
Divine Furniture is company that manufacture and sell high end, quality CEO desks and cabinets to
businesses that located in Canada. Divine Furniture was struggle with their sales for the first few years
however the sales were picked up and shows a profit after the 5th year. The sales have become steady but
Mr. Divine believe that the market has become too competitive since China and German manufacture
company start making inroads into Canada. Therefore, Mr. Divine decides to move on to the European
market especially the London UK market while still focusing in the domestic market. The problem that
Mr. Divine is facing when he decides to expand into the London UK market is what market entry
strategies he will use.
There are many possible market entry strategies for Mr. Divine to choose to enter the new market.
However, after carefully analyzing Mr. Divine current the situation and the London UK market, I
recommend that the use of an agent is best suited and beneficial for Mr. Divine. This is because of the
current economic state in Europe and Mr. Devine’s inability to invest. In the body of this case, Mr.
Divine will able to understand why the use of an agent is the best strategy compare to other strategies. In
this paper, Mr. Divine will find an implementation plan and how to operate his business in London UK.
2. Situation analysis
Divine Furniture is a well-established company that has been in the furniture manufacturing business
since 1984 and has the characteristics of being a successful company in the furniture industry. Divine is
famous for producing high quality material and workmanship on high end desks and wall cabinets as well
as excellent customers service. Divine’s strong customer support for its product enhances customers
experience and a positive environment with the company. Most people, when they look for furniture for
their office, they look for (1) quality of the woods, (2) designs, (3) how well they company support its
products, (4) price. Divine has those characteristics. Divine currently runs 22 showrooms across Canada
and staffs are able to speak English and French which is very convenience to customers in term of
questions and advices. Divine is a well-finance company which means that Mr. Divine can easily ask for
a loan in a bank. Divine also has great relationship with its suppliers and operating about 100% capacity
of the warehouse. This means that Divine is doing very good, furniture come in and out quickly.
On the other side, Divine has a small customers’ base because of the niche market. And having a
small customers’ base will be a disadvantage in the long run because they eventually run out of people to
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sell their products. This niche market is also threatened by new entrants (German, China) forcing Divine
to expand and searches for new markets. This also means that Divine is lack of competitive advantages
and not able to compete with other companies. Divine’s current base of selling process solely on personal
selling in showrooms limit them from reaching out to other customers.
In order to achieve better results, Divine has decided to expand into United Kingdom’s market
especially London because London market is the threshold to European market. This is because London is
the world's second largest financial centre and Europe's second largest city economy. The benefits of
expanding into this market are massive. Divine will gain a lot of expertise in doing business oversea and
being exposed to new ideas, designs for its product and technologies that will attract more customers and
expand customers’ base. This expansion is also a chance for global branding, the more people know about
Divine’s products, the more people will buy. Also, this is an opportunity for Divine to reposition the
business by charging a new price or the way he does his business in order to attract more customers to
create a competitive advantage.
Everything sounds promising; however Divine still has to compete with local companies, as well as
German and Chinese company that already established in the London markets. Also, Europe is a bad
shape and still recovering from the recent debt crisis, many European countries and some European banks
are having trouble raising money from normal commercial sources at acceptable cost; therefore not many
headquarters and businesses can afford or reluctant to purchase our luxury CEO desks and cabinets.
London is a city that focus on green therefore there might be regulations that reduce our productivities.
3. Assumptions (omit this part)
4. Core problem
The core problem for this case is what market entry strategies Mr. Divine should use to enter the
London UK market.
5. Evaluative criteria
There are many possible market entries strategies for Mr. Divine to choose when it comes to entering
the London UK market. However, first, I need to figure out the reasons why Mr. Divine wants to expand.
And then, I could list out all the possible market entries alternatives that best fitted and beneficial for Mr.
Divine’s criteria to expand. These criteria include gaining market share, making more profits, brand
recognition, and repositioning of the business. These criteria are important for Mr. Divine because: 1) the
competition in Canada has taken away some of his customers, therefore if he wants to gain more market
share, he has to go international. 2) And because that he has a small customer base, he can’t make a lot of
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profits. However, when he enters the London UK market, he will have more customers to make profits
and this will also attract investors to invest in his company. 3) Mr. Divine also wants the global
recognition of his brand as a manufacture who supplies high end, quality CEO desks and cabinets. And
this will not only attract more customers but also investors. 4) He could have a chance to reposition his
business to create a competitive advantage.
6. Alternatives and Analysis of alternatives
Upon knowing the criteria, I will be able to list some of the market entries strategies alternatives.
Here are some alternatives that might interest Mr. Divine:
1. A distributor
2.
An agent
3. Open a branch office
4. Or, e-commerce
Now I will be analyzing these alternatives to figure out which market entry strategies is the best
suited for Mr. Divine circumstances. First, a distributor is one of the most effective ways to gain market
share because a distributor has all the access to the customers that locate in London UK. And therefore, it
is also a great way to promote Mr. Divine brand without spending a lot of capital. The downside of this
method is that Mr. Divine doesn’t gain much profit since the distributor gets a cut from it. Moreover, he
will lose control of his furniture once it gets to the distributor’s location and so he can’t reposition his
business.
Second, an agent, in the mean time, allows Mr. Divine to gain market share because he has the access
to customers and he only get commission for each sales. As for profits wise, agent is better than a
distributor because agent gets pay by commission. A possible high chance of brand recognition, because
many people will know about the furniture through the agent. Mr. Divine can also reposition his business
the way he wanted.
Third, opening a branch office is great entry to gain profits because Mr. Divine can keep all the
profits. And this is also the best entry strategy to reposition his business because he has all the control.
However, he will not able to gain the level of market share and brand recognition he wanted because he
doesn’t have many customers in the London UK to start with.
Fourth, e-commerce is great way to enter a market because it doesn’t cost Mr. Divine a lot of money.
However, Mr. Divine will spend money on advertising and promotion campaign as well as web site
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designer. As for this method, Mr. Divine will be able to make a huge profit because there aren’t many
operational costs associate with selling the furniture. However, Mr. Divine will not gain market share
because he starts from a scratch and therefore not many people know about his brand. Mr. Divine will be
able to reposition his business using this method.
7. Decision and Justification
After analyzing the market entry for Mr. Divine to enter the London UK market, I have concluded
that the use of an agent is the best suited for the company current situation. This is because this is not the
right time to invest in UK market due to the unstable economic. There are so many problems in the UK
results from the current debts crisis. The benefits of this strategy is that Mr. Divine doesn’t have to
acquire a lot of resources, finance and still be able to have access to customers through the agent. Mr.
Divine will obtain most of the profits and the agent provides useful information on the London UK
market such as likes and dislikes about furniture and the industry. Mr. Divine can also reposition his
business in the new market the way he wants it.
8. Implementation for Divine Furniture
For the implementation plan, I recommend Mr. Divine finds an agent first. There is variety of
methods that Mr. Divine could use to look for a qualified agent that meets the company requirements. Mr.
Divine can go to Linkedin (a social networking site), Biztradeshow (a website that lists all tradeshow
dates and locations), or get in touch with Canadian a high commission in London locate at 38 Grosvenor
Street, London W1K 4AA, United Kingdom, phone number is 020 7258 6600 to look for a furniture
agent.
After finding a qualified agent, Mr, Divine has to negotiate a term of payments and responsibilities
that is beneficial to both parties. This agent can receive commissions every time he makes a sale and the
percentage of his commission is depending on how big of the sales. Second, Mr. Divine has to contact
with the EDC (Export Development Canada) to obtain insurance, documents require for international
trade (such as certificate of origin) and any financial needed for the export. Third, Mr. Divine needs to
expand his production line by acquire more timbers to make the furniture. Fourth, he will need o find a
freight forwarder that familiar with the import systems in the UK.
Lastly, Mr. Divine will need to set up a company web page that has information about the company
and the products. Also, include a support system that deal with all complaints and issues that occur to the
customers. The Apprentices includes the implementation plan chart that layout everything that is needed
to be done and by when.
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9. Apprentices
Matrix on analyzing the Alternatives
Alternative
Criteria
Distributor
Agent
Branch office
E-commerce
Market shares
5
5
3
3
Profits
3
4
4
5
Branch
recognition
5
5
3
3
Reposition
2
4
5
5
Total
15
18
15
16
Closed to 1 is least effective and closed to 5 is the most effective
Implementation plan for Mr. Divine expansion into the London UK market
Implementation Plan
Activities
Find an
agent/Negotiated the
term of payments and
responsibilities
Time line
Week 1 Week 3
How/Where/For
1. Go to Linkedin
(http://www.linkedin.com/groups/UK-Furniture-Agents4073442)
2. Biztradeshow
(http://www.biztradeshows.com/unitedkingdom/united
kingdom-tradeshows.mp?industry=furniture-shows)
Contact EDC (Export
Development Canada)
Expand production
lines and acquire
more timbers
Week 3 Week 4
Week 4 Week 6
3. High commission in Lodon
(phone number is 020 7258 6600)
1. Finance
2. Insurance
3. Documents related to international trades
(http://www.edc.ca/Pages/default.aspx)
1. Canadian timber company
(http://www.canadiantimber.ca/)
2. Dick’s lumber
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Find a freight
forwarder
Week 7 Week 8
(http://www.dickslumber.com/lumber_wood/ti
mbers.asp)
1. GBS (http://www.gbsfreight.co.uk/)
2. Freight net
(http://www.freightnet.com/directory.php)
3. JC trans
(http://www.jctrans.net/Company/List_0__CAN
ADA__0_3__2.html)
Setting up company
web page
Week 8Week 9
1. Global website creation
(http://www.globalwebsitecreations.com/)
2. List of website designers in Canada
(http://canada.topseos.com/rankings-of-bestweb-design-companies)
3. Pixeleru
(http://www.pixelera.com/?gclid=CIfUj4G75rICF
XPNOgodvToA_g)
10. Bibliography
Coral Nafie. (undefined). Before You Buy Wood Furniture. In Interior Decorating. Retrieved 03/10/2012,
from http://interiordec.about.com/cs/beforeyoubuy/bb/byb_wood_furnit.htm.
undefined. (2008). Executive Desks. In Brent Cross Office Furniture. Retrieved 23/09/2012, from
http://www.bcofficefurniture.com/categories.php?cat_id=2.
undefined. (2009). Hunts Office Furniture and Office Interiors. In Huntoffice. Retrieved 23/09/2012, from
http://www.huntsoffice.co.uk/.
undefined. (). Furniture Trade Shows in United Kingdom. In Biztradeshow. Retrieved 23/09/2012, from
http://www.biztradeshows.com/unitedkingdom/unitedkingdom-tradeshows.mp?industry=furniture-shows.
undefined. (). Canadian High Commision . In Google. Retrieved 23/09/2012, from
https://plus.google.com/111546617434115368283/about?hl=en.
Satyajit Das. (13 Aug 2011). Eurozone's problems present UK with great risks. In The telegragh.
Retrieved 03/10/2012, from http://www.telegraph.co.uk/finance/comment/8700084/Eurozones-problemspresent-UK-with-great-risks.html.
. (2010). London - the ideal location for your serviced office. In Serviced Offices London. Retrieved
03/10/2012, from http://www.avanta.co.uk/UK/offices/serviced-offices-london.
. (2012). home. In Somod furniture. Retrieved 03/10/2012, from http://www.somodfurniture.co.uk/.
. (2012). The UK’s leading specialist in Oriental furniture and Chinese antiques since 2002. In Orchid
furniture. Retrieved 03/10/2012, from http://www.orchidfurniture.co.uk/.
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