Wilkhahn Asia Pacific - A strategy and performance evaluation of an international commercial furniture company


Term Paper (Advanced seminar), 2002
18 Pages, Grade: 1,5 (A)

Excerpt

Table of contents

1. Introduction

2. Company Overview

3. Strategic intent and strategic mission

4. Identifications of symptoms

5. Current Strategy

6. External Analysis
6.1 General environment
6.2 Industry Environment
6.3 Industry Analysis – Porter’s five forces model
6.4 Competitor environment
6.5 Key Success Factors (KSF)

7. Internal analysis
7.1 Resources
7.2 Organisational Capabilities
7.3 Core competencies
7.4 SWOT analysis

8. Strategic-fit evaluation of WiAP’s Business level strategy

9. Synthesis - evaluation of strategic solutions
9.1 Strategic Solution 1: Integrating technology and furniture
9.2 Strategic Solution 2: Launching ‘Office by Wilkhahn’ line

10. Recommendation
10.1 Implementation plan

11 Conclusion

12 Bibliography

13 Appendices

1. Introduction

The objective of this report is to evaluate the strategy and performance of Wilkhahn Asia Pacific (WiAP). The focus will be on the business-level strategy. An analysis will be conducted to identify if a match between the strategy pursued by WiAP and the internal and external environment exists. Subsequently, we will synthesize the information gained from the analysis in order to identify possible problems and generate alternative strategic solutions. Finally, we will offer recommendations to WiAP on future strategies based on an evaluation of the strategic solutions.

WiAP is a subsidiary of the German multinational commercial furniture manufacturer Wilkhahn GmbH. WiAP started its operation in Australia in 1999 with its regional headquarters in Sydney and sales offices in Melbourne and Brisbane. The company has grown rapidly and has recently established a presence in Asia through sales offices in Singapore, Hong Kong and Kuala Lumpur. After the first two very successful years, Wilkhahn Asia Pacific has recently experienced a decreased sales performance.

We have considered Wilkhahn as an interesting firm for our report, given that it is a multinational company with presence in Australia. Given our own nationalities, German and Swedish, we found it interesting to evaluate the performance of a northern European firm operating in Australia. The reason we choose the office furniture industry is that one of us has previously worked in the industry in Europe.

With the help of WiAP’s Managing Director, Michael Prenzlau, and his staff, we were able to collect valuable information about the office furniture industry (external environment) and the company itself (internal environment).

2. Company Overview

In 1907 Wilkhahn GmbH (parent company of WiAP) was founded as a chair manufacturer near Bad Münder, in Germany. The company distinguishes itself by means of consistent, modern product design and fair cooperation with staff and partners in the market. New materials and manufacturing technology, innovative forms and trend setting design solutions in industrial design made Wilkhahn a pioneer in the contemporary furniture design.[1]

Wilkhahn’s product portfolio includes high quality commercial furniture for offices, airports, and conference centers. All products’ price structure includes a 30 percent price premium compared to the average market price. The products can be divided into the following four segments:(Refer to Appendices 1. Product Portfolio)

- Task chairs – Office chairs for employees
- Executive offices – Executive chair and desk for management offices
- Conference - and Board rooms – Large static table and conference chairs
- Training facilities – Innovative solutions for multipurpose tables

The product design is mostly made by the in-house design department, Wiege. and the objective is to make furniture that is timeless, expressed by Wilkhahn as “modern but not fashionable”.

The R&D activities for each new product normally take between one to three years and the total cost often reaches three million AUD. A successful product will stay on the market for over twenty years, one example is the FS-range of chairs that was introduced in 1980 and has sold over four million units. The FS-range is currently responsible for one third of WiAP’s total sales.[2]

Wilkhahn has grown to become a large multinational firm with wholly owned subsidiaries in Austria, Belgium, France, Great Britain, Netherlands, Spain, Switzerland and Australia. License partners can be found in Japan, North America and South Africa and dealers are spread all over the world.

WiAP was established in 1999, it currently employs 45 people and the expected turnover for 2002 is around 10 million AUD[3]. WiAP imports the components and assembles Wilkhahn furniture in its factory in Sydney; this factory serves the entire Asia Pacific region.

3. Strategic intent and strategic mission

Strategic intent

The ideal state of WiAP and Wilkhahn is to be the innovative leader in the executive commercial furniture market worldwide.[4]

Strategic mission

The mission of WiAP is to penetrate the executive furniture market in the Asia Pacific region. WiAP wants to “be of greater value to its market partners by adding more intelligent value to their sales services, products and support structures”[5].

4. Identifications of symptoms

The below mentioned symptoms are indicators of the problems or challenges that WiAP faces today. The real problems must be identified and solved before an improvement in WiAP’s performance can take place.

The major symptom shown by WiAP is the decrease in sales that started in the beginning of 2001. Refer to Appendix 2: Sales performance.

Another “problem” that was stated to us is the following: (note that it is not the real problem)

- The WiAP task chairs are above the budget for most large task chair projects. The normal budget for a large task chair project is less than AUD 500 per chair, but Wilkhahn’s price starts at AUD 600-700 per chair.
The task chair segment used to be a good source of cash flow for the company as it often contains large number of units. WiAP supplied 3000 chairs to PriceWaterhouseCoopers in 1999 but the sales of task chairs are expected to only account for 2 percent of total WiAP sales in 2002[6]

5. Current Strategy

Corporate-level strategy
WiAP is currently operating a single business, where more than 95 percent of revenue comes from assembly and sales of executive office furniture. The prices are at the top end of the market and Wilkhahn basically has two chair families, FS and Modus and several different table ranges.

International Strategy
WiAP has adopted an International Strategy,([7] with a compromise approach to the local-global dilemma. Only minor adaptations of product offering and marketing strategies are made to adapt to the different local cultures. The manufacturing is concentrated to the Sydney facilities and the R&D is limited to Wilkhahn GmbH in Germany. The only activity that is located outside of the Sydney Headquarter is sales.

Business-level strategy

WiAP is currently pursuing a Focused differentiation strategy[8] (FD Strategy) in the Asia Pacific region. The target market is narrow and the source of competitiveness is based on unique product attributes.

Abbildung in dieser Leseprobe nicht enthalten

A firm that is pursuing the FD Strategy uses unique product attributes to create value for the customers, in WiAP’s case innovation and high quality is the attribute of differentiation. In this report we will focus our analysis on the innovation attribute, as quality is rather subjective. The strategic intent of WiAP also states that the aim of the company is to be the innovation leader.

To successfully pursue the FD strategy WiAP must continuously develop product features of differentiation that create value for the customers. WiAP must also be unique at something or be perceived as unique by its customers. We will discuss these points in more detail when we evaluate the strategic fit of WiAP’s current strategy.

6. External Analysis

The purpose of the external analysis is to identify the factors that impact the strategic decision of WiAP. By analysing these factors we will be able to evaluate the strategic fit between WiAP’s FD strategy and the environment it operates in.

First we have looked at the general environment and the industry environment, followed by an industry analysis through Porter’s Five Forces model. We created a strategic group map of competitors to see the current position of the important market players. Finally, we have listed the key success factors for the commercial furniture industry based on information obtained from the Commercial Furniture Industry Association of Australia.

6.1 General environment

In the general environment we have identified the increased globalization of both products and production as well as the role of technological change. Also worth mentioning is the rapid growth of telecommunication and information technology (IT).[9]

[...]


[1] [1] Wilkhahn Profil brochure

[2] Interview with Michael Prenzlau, MD of WiAP, 28-05-2002

[3] Interview with Olaf Menschel, Director Operations and Finance WiAP, 16-05-02

[4] Interview with Michael Prenzlau, MD of WiAP, 28-05-02

[5] WiAP Strategy presentation 2002

[6] Interview with Michael Prenzlau, MD of WiAP, 28-05-02

[7] Professor William Purcell’s lecture week 6, International Strategies, International Business Strategy

anson, D., Dowling, P., Hitt, M., Ireland, R. and Hoskisson, R. 2002 Strategic management, Pacific Rim edition, Australia, Nelson Thomson Learning[8]

[9] Hill, C., 2002. International Business, International edition, New York, McGraw-Hill Irwin

Excerpt out of 18 pages

Details

Title
Wilkhahn Asia Pacific - A strategy and performance evaluation of an international commercial furniture company
College
University of New South Wales, Sydney  (Faculty of International Business)
Course
International Business Strategies
Grade
1,5 (A)
Authors
Year
2002
Pages
18
Catalog Number
V15052
ISBN (eBook)
9783638202909
File size
388 KB
Language
English
Tags
Wilkhahn, Asia, Pacific, International, Business, Strategies
Quote paper
Silke Tischendorf (Author)Marion Enander (Author), 2002, Wilkhahn Asia Pacific - A strategy and performance evaluation of an international commercial furniture company, Munich, GRIN Verlag, https://www.grin.com/document/15052

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