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Formway furniture

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Executive summary …

Executive summary

This report summarises and evaluates several innovations that have been introduced to Formway Furniture Ltd since 2000.
Purpose
The purpose of the report is to present recommendations that will guide Formway to continue to adapt, prosper, and grow from the foundations of the new capabilities the company has established since 2000.
Scope and method
The investigation undertaken evaluates secondary sources of data obtained from public sources. No contact was made directly with Formway or its associates. The business case method (Turner et al, 2009) was used as the basis for evaluating the source data informed by a sequence of questions specified by Mellalieu (2011).
Main results
The main results found are that since the year 2000, Formway has gained corporate recognition through its brand enhancement and the utilization of new techniques. The company has also analyzed the operation management and the enhancement of operations enhancements besides the technological innovations by 2011, Formway has now achieved the following key competitive strengths by introducing a state of the art chair, which has the comfort, consumer value and the reflection of the advancement of science and technology in itself.
Main recommendations
On the basis of my investigation I recommend that Formway Furniture:
1. INVESTIGATE the market opportunities for other furniture complimentary products including tables and office furniture
2. ESTABLISH a diverse portfolio to reduce the business risk
3. To capture the existing market because of technology and the innovativeness of the company
4. TO generate a powerful strategy for the global expansion of the company, and the reduction of costs and increase in revenue

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  • 1. Case analysis of a new venture: Formway Furniture since 2000 User_V7zbrc ID 123456 Course BSNS 5391-2011-2 Assignment 1 August 2013 An assignment submitted in partial fulfillment of the requirements for the course Innovation & Entrepreneurship, Department of Management and Marketing Unitec Institute of Technology, Auckland, New Zealand
  • 2. i FORMWAY FURNITURE TABLE OF CONTENTS List of illustrations................................................................................................... 2 Acknowledgements ................................................................................................. 3 Abbreviations .......................................................................................................... 4 Executive summary................................................................................................. 1 Part ONE: Background to the new venture at Formway ........................................ 2 1.1 Innovations introduced at Formway since 2000 ...........................................................2 1.2 The elements of Formway’s environmental strategy....................................................2 1.3 Opportunities that add value .........................................................................................3 1.4 Key external drivers for change at Formway................................................................4 1.5 The nature of a ‘design-led’ company ..........................................................................4 Part TWO: Implementing the new venture ............................................................. 5 2.1 The superiority of the Formway LIFE chair .................................................................5 2.2 New processes and practices adopted by Formway......................................................5 2.3 External resources utilised by Formway.......................................................................5 2.4 Benefits and consequences of introducing the LIFE chair to the market .....................6 2.5 Formway’s innovation practices ...................................................................................6 Part THREE: Conclusions, recommendations and personal reflection .................. 7 3.1 Alternative strategic directions for Formway ...............................................................7 3.2 Conclusions and recommendations...............................................................................7 3.3 Lessons learned from my study of Formway................................................................7 References ............................................................................................................... 9 APPENDIX A: The role of new venture teams for environmental management at Formway.................................................................................................................. 9 APPENDIX B: A comparison of the sustainable principles adopted by Formway Furniture and Interface Floorig .................................... Error! Bookmark not defined.
  • 3. SMITH ii List of illustrations Cover Figure: Formway’s Be chair. Source: Barrett (2009) Figure 1: The five elements of Formway’s environmental strategy................................................. 2 Table 1: Sources of opportunities that add value.............................................................................. 3
  • 4. iii FORMWAY FURNITURE Acknowledgements I owe thanks to several people and organisations that have helped in this investigation. Thanks to the staff of Te Puna Ako who helped me improve my report writing and editing skills. …. I thank Associate Professor Peter Mellalieu for the helpful Executive Report template used as a basis for the layout of this document. …. Finally, I thank the members of my BSNS 5391 team who peer reviewed earlier drafts of this assignment and encouraged the development of my writing skills.
  • 5. SMITH iv Abbreviations LCA Life Cycle Analysis LCM Life Cycle Management
  • 6. 1 FORMWAY FURNITURE Executive summary This report summarises and evaluates several innovations that have been introduced to Formway Furniture Ltd since 2000. Purpose The purpose of the report is to present recommendations that will guide Formway to continue to adapt, prosper, and grow from the foundations of the new capabilities the company has established since 2000. Scope and method The investigation undertaken evaluates secondary sources of data obtained from public sources. No contact was made directly with Formway or its associates. The business case method (Turner et al, 2009) was used as the basis for evaluating the source data informed by a sequence of questions specified by Mellalieu (2011). Main results The main results found are that since the year 2000, Formway has gained corporate recognition through its brand enhancement and the utilization of new techniques. The company has also analyzed the operation management and the enhancement of operations enhancements besides the technological innovations by 2011, Formway has now achieved the following key competitive strengths by introducing a state of the art chair, which has the comfort, consumer value and the reflection of the advancement of science and technology in itself. Main recommendations On the basis of my investigation I recommend that Formway Furniture: 1. INVESTIGATE the market opportunities for other furniture complimentary products including tables and office furniture 2. ESTABLISH a diverse portfolio to reduce the business risk 3. To capture the existing market because of technology and the innovativeness of the company 4. TO generate a powerful strategy for the global expansion of the company, and the reduction of costs and increase in revenue
  • 7. SMITH 2 Part ONE: Background to the new venture at Formway 1.1 Innovations introduced at Formway since 2000 This report summarises and evaluates several innovations that have been introduced to a New Zealand-based design and manufacturing company, Formway Furniture Ltd, since 2000. Purpose and scope The purpose of the report is to present recommendations that will guide Formway to continue to adapt, prosper, and grow from the foundations of the new capabilities the company has established since 2000. Method The investigation undertaken evaluates secondary sources of data obtained from public sources. No contact was made directly with Formway or its associates. The business case method (Turner et al, 2009) was used as the basis for evaluating the source data informed by a sequence of questions specified by Mellalieu (2011). Company background Formway Furniture Ltd was established in _____. During the 1970s and 1980s, the company transformed itself from being a manufacturer of inexpensive furniture for the New Zealand domestic markets of schools and offices towards being a ‘design-led’1 export-oriented manufacturer (xxx). Since 2000, Formway built on its ‘design-led’ focus, and introduced several new product and process innovations. In summary, these innovations were The company has a history of success in the particular brand, which gives maximum quality to the consumer at the most adequate costs to the company and consumer. This has been the main strength of the company and the company has evolved its product and has launched its product globally in countries including Australia. 1.2 The elements of Formway’s environmental strategy As part of its innovations since 2000, Formway pursued an environmental strategy focussed around five key elements, illustrated in Figure 1. Product design and eco-innovation The company has innovative product design and this design utilizes the recyclable material. This material is helpful in making the company to make its products more environment friendly, and there is least effect on the environment because of this product. Supply chain management The supply chain process is enhancing the function of the company and managing the existing resources has given the capability to meet the production requirements. The company has urged the supplier to comply with the environmental standards for the preservation and the company is in continuous process to make itself and its stakeholders to be more responsible for the people, community, and the environment. 1 The term ‘design led’ is explained in Section 1.5
  • 8. 3 FORMWAY FURNITURE Figure 1: The five elements of Formway’s environmental strategy SouLaren(2008, p.7) 1.3 Opportunities that add value According to Frederick and Kuratko (2010), there are several sources that a company such as Formway could utilise to aid its identification of new opportunities to ‘add value’ to the company’s operations. Table 1: Sources of opportunities that add value Source Example Trends (societal, technological, economic, government) ... Introduction of cloud computing The corporate demographic factors Use of furniture in offices The innovation in technology Ensuring the comfort by analyzing the anatomy of human body Changes due to legislation For example regarding the training and development is the opportunity, and it can improve the effectiveness of the operations of the company
  • 9. SMITH 4 Source Example Economical factors The increase and decrease in incomes can affect the supply and demand balance, and the decrease in incomes may result in less consumption of the product Source: Author, based on Frederick & Kuratko (2010), pp. 155-157. 1.4 Key external drivers for change at Formway There are several possible explanations for Formway’s decision to design the LIFE chair, and adopt an environmental strategy. For instance, according to xxx, several managers at Formway noticed that to meet the challenges of innovation and preserving the environment, the company should adopt the new designs and engineering methods to enhance the products for quality and corporate social responsibility guidlelines. The corporate social responsibility is not the aim of the company; however, the company is seeking the business benefits from the initiatives of innovation. Considering the sources of opportunity for adding value presented in Table 1, it is my assessment that the most likely external drivers for innovation at Formway were the compliance with the corporate social responsibility guidelines. The use of the data for the comfort-ability of the consumers has been taken, and this is quite helpful in making the most tangible product, which possesses high consumer value and is highly innovative. The threat of the new entrants is reduced because a large capital is required to enter the technology driven market of the furniture and to compete with the company. The consumers may select the alternatives product if they found the process high, and these are the consumers, which have key role in determining costs. The supplier dependency results in increased risks, and the more the company is dependent on limited suppliers, broader is the scope of the risk. The buyers seek the consumer value in the products and they may seek high quality at adequate costs, which can result in the reduction of profit margins of the company. 1.5 The nature of a ‘design-led’ company Formway’s CEO, Alan Buckner, suggests that being ‘design led’ is an essential component of the company’s success. What is a ‘design led’ company? Farrelly and Beverland (2008) state that a specifically, a design led company is distinguished from traditional companies through the experience of the company, and the distinguishing features of the product, because the company has specialization regarding the particular product. These companies usually does not have diverse portfolio, which is a threat to these companies, the companies are dependent on single product, thus obselecense of this product may be a potential threat for the company Some international examples of design led companies include ….. In New Zealand, several companies in addition to Formway have become ‘design led’. These companies include …. (Action Asia, n.d.; Macfie, 2011) Formway has adopted the principles of being design led in the following manner. Firstly, ….(Barrett, 2009)
  • 10. 5 FORMWAY FURNITURE Part TWO: Implementing the new venture 2.1 The superiority of the Formway LIFE chair The chair has many new and unique features which makes it more advanced than the previous models. This chair is an innovation in the furniture industry, and is a symbol of innovation. The most advanced technology has been utilized to make the chair the masterpiece of technology and comfort. The chair has movable parts, the seat and the back assemblies can be transported. This has made the portability very easy for this chair and the seat back removal can reduce the volume of the chair, and it can be packed in a box to be transported, and when it is fixed to be in the usable condition, then it become easier to transport it and it takes less volume. In contrast to the previous models of the chairs, the Formway is using the recyclable material to make the chairs. The use of recycle able materials is showing the incentives of the company to utilize the material which have been used previously, so no new material is required, which means that the natural resources shall be less utilized. The use of recyclable material is helpful in preserving the natural environment, and it will also help the company in the corporate social responsibility initiative. The corporate social responsibility can be improved by participating in the practises which keeps the use of less wood and less cloth. This can serve also the cause of innovation, cost saving, and the preservation of the environment as the chair contains 30 % recyclable material. The construction of chair does not require the intensive use of material; the product is useful in improving the efficiencies. The use of material requires being effective. The effectiveness in material comprises of two categories, one of which is the reduction of waste material, and the other is the cost of material. The efficiency in material use is helpful to reduce costs, and it requires enhancing of the labour skills. The labour skills can be enhanced using the training and development programs. 2.2 New processes and practices adopted by Formway The company has adopted new practises and the weight of the chair has been reduced. The reduction in weight has not resulted reduction of the strength, chairs is useful in the recognition of brand as quality brand. The Furniture should be durable, this concern has not been compromised because for weight reduction. The reduction in weight is the consequence of technology and the use of three dimensional knit back fabrics, which has improved the look of the chair, and has resulted in the more increased strength as compared to earlier models. The company is seeking the research and development and has institutionalized it in the culture of the company by adopting the dedicated research of the Melbourne University. This research will help in the understanding of the future environment, the present threats and challenges to the company, and the discovery of the new opportunities 2.3 External resources utilised by Formway The finance structure is helpful in the performance of the company; both the debt and equity resource management can affect the net earnings of the company. Debt provides the leverage to the company, as its cost is less but it affects the earning of the shareholders, whereas equity is expensive and long term source of capital. These types of capital have different advantages however the company should maintain a mix for these two such that the debt does not increase as it will increase the risks related to the credit and the debt.
  • 11. SMITH 6 The company can utilize the retained earnings and can acquire the new capital through the above mentioned sources. There are usually two sources of capital; however, the company can issue the mixed capital for the company, and it may be the share options. Issuing share options to the employees is helpful strategy in aligning the employees in connection with the success of the company, however it will not bring the external revenue to the company, but it will retain the capital within the company. 2.4 Benefits and consequences of introducing the LIFE chair to the market The chair is green guard certified. The company will capture international market through the innovative design and attractiveness of the chair. The company has many competitive advantages and which are going to deliver the result in the form of increased market capturing. The company has 18 % fewer components as opposed to its competitors; this is the result of the corporate experience of the company. The company has a deep understanding of this business; it has passed a sufficient time in the industry. Presently, it is the leading company on the basis of its innovative methodologies. The benefits of introducing this chair include the competitive advantage over the competitors; this product has sufficient lead over the competitors in it technology-wise. The product is lighter in weight, portable, less harmful for the environment, and has recognition for the brand and corporate social responsibility. The company is using less harmful materials in the production process, which result in certification of the company as environment friendly that generates the goodwill for the company, and helps in developing the brand image of the company. 2.5 Formway’s innovation practices The company has recognized the need of innovation. The innovativeness of the company is quite helpful to meet the challenges of competitiveness, Innovation can help in developing the brand image and also helpful in mitigating risks due to change of technology. The innovation is always focused on technology; however technology is the consequence of innovation. The innovation of the chair will change the trends of the chair making and the competitors may adopt the policy of the company. The product of the company may get obsolete, but the research and development department has paid particular attention towards renewing the engineering process of the chairs. The innovation process is mainly focused in inventing the new ways of changing the design specification such that the product becomes more useful as compared to the previous products in its specifications. This is the prime objective of the company to utilize the technology and research in the product, which represent the most contemporary trends in the products of the company.
  • 12. 7 FORMWAY FURNITURE Part THREE: Conclusions, recommendations and personal reflection 3.1 Alternative strategic directions for Formway The company has entered into various geographic regions for the purpose of expansion in business. The company is New Zealand based company, an entrepreneur innovation and passion. It has managed its operations and has special concerns about the sustainable development. For this purpose, the company has innovative policy in both the finance and operations management. It has urged to adopt the new ways of material management, which has resulted in less costs of the product and the increased efficiency of the product. Foamway is a symbol of growth and quality. The company could utilize the regional expansion beyond Australia, and can expand its business to China, which is very competitive market in regards of cost. For the purpose of cost reduction, the company can also house its production in China, which will help in cost reduction, and this can be the opportunity for the company. For the purpose of cost reduction the company could utilize low cost material and labor; this can be done in China by utilizing the competitiveness faced in China as flexibility. The company could seek the acquisition if subsidiaries in China which will help in maintaining growth of the Revenue worldwide and reduction of costs. The product made in China can be utilized all over the world, because it will have low production costs, however the distribution costs will be increased, and for this, the company needs to develop new strategy. FOR the purpose of regional business development, the company must get the confidence of the shareholders, which are actually the owners of the company. The company has focused its business on making chairs, it is a product driven company, which is the threat to the company. The company has focused on making chairs, and has no other alternative product, thua competition can affect the performance of the company, which is a major threat for the company. 3.2 Conclusions and recommendations On the basis of my analysis, I recommend that Formway Furniture: 1. The company should spread its business worldwide so that the other countries can also get the benefit of the innovation. For this purpose, the company should seek China to house its production, in this way the company can capture global market. It will have the benefits of cost reduction and increase in revenue; these factors are the most critical factors in the success of the company. Thus, company can attain strategic goals for business expansion and growth. 2. The diversification can reduce the risk for the company, as company is too much dependent on single product it requires attention of the company. The rise and falls due to the economic variances may affect the consumption of the product. The new technology keep flourishing, so any new design from the competitor can leave the company behind from organization goals, which are the key determiners for success of the company. 3.3 Lessons learned from my study of Formway The company has emerged from the small background and is now seeking to discover the new opportunities. It focuses on the production of the furniture and specifically the chair. The specification of this chair is helpful in gaining the consumer value, it will bring the corporate success to the company by meeting the goals of increased revenues and reduced costs. These two
  • 13. SMITH 8 factors are always the determining factors of the business. The company has unique product specification and the brand recognition of the company, the consumption of the company can be boosted through appropriate marketing plans. The product has the potential to capture the markets, company must experiment the innovative ways of product development. IF the company can focus on any specific product, it may have the risk for the absence of diversity, but the company will have the specialization, which will bring the competitive advantage to the company against the competitors who have different products at a time.
  • 14. 9 FORMWAY FURNITURE References Action Asia Business Leaders Seminar Two. (n.d.). Asia New Zealand Foundation. Retrieved August 31, 2011, from http://www.asianz.org.nz/our-work/action-asia- business/networking/action-asia-business-leaders-seminar-two Barrett, M. (2009, October 15). Product design: Be by Formway. Prodesign. Retrieved July 18, 2010, from http://prodesign.co.nz/product-design-be-by-formway/2009/10/15/ Farrelly, F., & Beverland, M. (2008, October 15). Become design-led. Idealog: the magazine and website of New Zealand creative business, ideas and innovation. Retrieved August 31, 2011, from http://idealog.co.nz/magazine/17/become-design-led Formway Furniture: Leaders in design - TechNZ. (n.d.). Retrieved March 1, 2010, from http://www.frst.govt.nz/files/images/Manufacturing_Formway.pdf Frederick, H., & Kuratko, D. F. (2010). Entrepreneurship: Theory, Process, Practice (Asia-Pacific Edition) (2nd ed.). Melbourne: Cengage Learning. Retrieved from http://www.learnpreneurship.com/learn/mod/resource/view.php?id=505 Home - Formway. (n.d.). Retrieved March 1, 2010, from http://www.formway.com/ Macfie, R. (2011, June 4). Unleashing our potential within [Adopting design thinking]. New Zealand Listener, (3708), 26-31. Retrieved May 17, 2011, from http://www.listener.co.nz/commentary/design-thinking-as-business-strategy-new-zealand- success-stories/ McLaren, J. (2008). Life Cycle Management - Sustainability and society bridging piece [Case study of Formway Furniture]. Wellington, New Zealand: Landcare Research. Retrieved from http://www.landcareresearch.co.nz/publications/researchpubs/LCM_Briefing.pdf#search=%2 2mclaren%22 Mellalieu, P. J. (2011). Unitec BSNS 5391 Innovation and Entrepreneurship. Course Handbook and Syllabus. Auckland, NZ: Unitec Institute of Technology. Retrieved from http://www.scribd.com/doc/36191676/Course-Handbook-and-Syllabus-Unitec-BSNS-5391- Innovation-and-Entrepreneurship Ministry for the Environment (2007). Sustainable Design at Formway Furniture. (INFO 182). (2007). Retrieved March 1, 2010 , from http://www.mfe.govt.nz/publications/sus-dev/case- study-sustainable-design-at-formway-furniture-feb07/ Ministry for the Environment (2010) Sustainable design at Formway Furniture, Case 3.2, pp. 101- 102, Ch. 3 in Frederick, H., & Kuratko, D. F. Entrepreneurship: Theory, process, practice (Asia-Pacific Edition) (2nd ed.). Melbourne: Cengage Learning. Turner, K., Ireland, L., Krenus, B., & Pointon, L. (2009). Doing case studies and writing reports. Essential Academic Skills (Revised., pp. 125-148). Melbourne, Australia: Oxford University Press. Retrieved from http://openlibrary.org/b/OL10135765M/Essential-Academic-Skills

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