Introduction:

Industry Analysis of the UK Furniture Industry will be conducted in this report by applying different models. Business consultancy is highly dominated by experience in the sector, expertise, industry knowledge, and required organizational capabilities to serve clients. This is a report which will suggest the management team of a project about a certain project. Therefore, the concepts of project management, models and tools of strategic management will be widely used in this report. The report is purely applied where models and tools of strategic management and project management will be applied. A company has been selected as a case study; the name of the company is Lee Longlands and Co. Ltd. This is a medium-sized company with 117 employees and $22 million annual revenue (Zoominfo Technologies LLC., 2020). Lee Longlands designs, produce and sells furniture products in 06 stores across the United Kingdom (Lee Longlands, 2020).

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SWOT analysis of e Longlands and Co. Ltd

SWOT analysis reflects on the strategic position of a company by evaluating its strength, opportunities, weaknesses, and threats (Schilling & Shankar, 2019).

Strength of Lee Longlands:

Lee Longlands has been doing business for 118 years in the furniture industry (Furniture News, 2020). The company has established itself as a quality furniture designer, manufacturer, and marketer who will manage all activities from designing to goods delivery. It implies that Lee Longlands is a vertically integrated company which has full control of all the business functions. It allows Lee to optimize the processes of design making, manufacturing, customer services and delivery.

Weakness of Lee Longlands:

BBC (2020) termed Lee Longlands a historic furniture company in business for almost 120 years. The source also revealed that Lee filed for administration due to the devastating impact of the lockdown and the COVID-19 crisis. The reason is that it failed to manage the financial issues and pay the creditors. It happened due to lost sales amid the lockdown. However, a company with experience of more than 100 years should have the capability to survive a crisis of a short period (Ginter, Duncan, & Swayne, 2018). In fact, Lee Longlands could even increase sales with its online presence and interactive and horizontally integrated transactional ecommerce website. Primary research shows that 70% of the respondents somehow agreed that Lee Longlands got enough time, but it failed to establish itself as a sustainable business. It also shows that the highest number of respondents said the same. Another query of primary research revealed that Lee Longlands’ effort fell short of the requirement in digital marketing, a vertically integrated transactional e-commerce website. 80% of the respondents agreed with the above statement. The mean value is 2.2, the median value is two, and the mode is 2, which implies that majority of the respondents agreed with the said statement.

Opportunities of Lee Longlands: Reach PLC Subsidiary (2020) mentioned Lee Longlands as a “Historic Retailer” with experience of more than one century. Lee Longlands already have a good reputation, market knowledge, and industry experience, which the company can capitalize on to expand the business further globally. Long-standing experience also opens opportunities for diversification. Primary research given in appendix 1 shows that 90% of the respondents agreed that Lee Longlands failed to expand the business and bring variations in the portfolio. Therefore, there is an excellent opportunity for Lee to diversify the business and expand globally to strengthen its sustainability of the business.

Threats for Lee Longlands: As the above data and information revealed that only a lockdown of 3 months fell Lee Longlands into a severe problem, such a similar crisis would fall the company into a crisis of existence. In such a situation, expanding brick-and-mortar stores will increase the risks for Lee through increasing costs. Rather it is advised that the company should reduce the number of brick-and-mortar stores and should emphasize its online presence. Primary research reveals that 80% of the respondents are not satisfied with the current position of the online presence of Lee Longlands.

Industry Analysis of the UK Furniture Industry

Porter’s Five Forces Model of Lee Longlands

Hill, Jones, & Schilling (2014) revealed that Porter’s Five Forces reflect on the industry trends, competition and relative power of different stakeholders. UK furniture industry worth £63,194 (after conversion) in 2020, the market is expected to grow at 2.6% by 2023.  (Statista-2, 2020).

Above figiure shows that UK customers spend the highest amount in bedroom and living room furniture.

Below analysis is based on Porter’s Five Forces model:

Threat of new entrants: It refers to relative ease with which a new company can enter the competition (Wheelen et al., 2017). Given the background of Lee Longlands, it is not tough for a new company to start online furniture business, even more strongly than Lee does.

Above figure shows that the number of competitors in the UK retail furniture industry has been on the increase steadily since 2014 to 2018 reaching 6,379 retail manufacturers. This implies that there is high chances that new competitors would easily enter the business. Therefore, Lee Longlands must differentiate itself from others and enhance business sustainability.

Threat of substitutes: It refers to the relative alternative options with which customers can meet their needs (Rothaermel, 2016). People need furniture to lead their lives. Therefore, the threat of substitutes to furniture is really low.

Bargaining power of customers: It implies relative bargaining power of customers with businesses over price, quality, and terms and conditions (Lasserre, 2017). Since the number of manufacturers are growing, relative power of customers has also increased in the UK furniture industry.

The above figure shows that the value of expenditure of furniture has been increasing sharply since 2011 to 2019 reaching at £17,012 million. This clearly shows that the number of customers have been on the rise as expenditure in the sector is increasing. Mordor Intelligence (2020) reported that UK is the second largest home furniture consumer in the Western Europe (WE) contributing to 17% of WE demand. Above data shows that UK furniture customers have high power of bargaining because of their significance.

Bargaining power of suppliers: It refers to relative dominance of suppliers that provide raw materials to the company (Rothaermel, 2016). Lee Longlands itself is a furniture designer, it can source the materials from any corner of the world. Therefore, bargaining power of suppliers is medium to low.

Industry Rivalry: It refers to existing competitive environment in the industry (Lasserre, 2017).

The above figure shows that the UK furniture industry exists in a relatively low fragmented competitive environment where the market is highly competitive without dominant players. However, as the image shows, IKEA, Bed Bath & Beyond Inc. etc., play an important leading role in the UK furniture industry.

Possible Solutions for Lee Longlands

Based on the problems found in the above scenario analysis, this section aims to find possible solutions to solve the problems.

Ansoff Growth Matrix of Lee Longlands

This model critically evaluates the available growth opportunities of a company and provides a details justification of the framework explaining why certain strategic options are superior to others (Ansoff et al., 2018).

Ansoff Growth Matrix has a number of strategic options for growth: market development, diversification, market penetration, and product development. Market development and diversification present more risk, consequently, more rewards and growth opportunities. Market development refers to enhancing the market landscape in a new market with existing products and services (Ansoff et al., 2018). Secondly, diversification refers to expanding business to a new markets with new products and services. This contains highest amount of risks as well as rewards.

Identified problems in scenario analysis	Proposed solutions for Lee Longlands
Lack of online presence	Market development
Lack of growth and variations	Diversification

The above analysis of the Ansoff Growth Matrix and above table shows that Lee Longlands should adopt market development strategies to overcome the current crisis of lost sales. As part of the process, Less Longlands can build an interactive and horizontally integrated transactional ecommerce website, can do SEO and be active in social media. Overall, it should be active on the internet instead of brick & mortar stores. Lee Longlands can consider reducing the number of stores to 01 to 02 and be highly active on the internet as advised above. This makes a significant impact on Lee Longlands because of a number of reasons. Firstly, the cost of maintaining stores would be saved, which can be used in online marketing and to reduce product prices. Secondly, an online presence could enable Lee Longlands to be a furniture company in the whole United Kingdom. Thirdly, a short-term crisis such as COVID-19 would not negatively affect the company’s sales. Primary data presented in the appendix also suggested that Lee Longlands should enhance its online presence and visibility.

Another proposed strategic direction: diversification, would provide Lee Longlands with an excellent opportunity to grow the business not only in the UK but also globally. As part of the strategic direction, Lee Longlands could diversify the business by starting a new venture of furniture decoration plan and design support to offices globally. This could include every furniture and decoration plan, from office lighting to sitting chairs and desks. This is a promising strategic direction for Lee Longlands because the company has experience of almost 120 years, and it can better do design consultancy globally.

Porter’s Generic Strategies of Lee Longlands

Porter’s Generic Strategies present different strategic directions to a company in regard to how a business should be operated (Moutinho & Vargas-Sanchez, 2018).

The model has different options for a company: cost leadership, differentiation leadership, cost focus, and differentiation focus. Among them, leadership strategies work in a broader perspective, whilst focus works in narrower perspectives (Moutinho & Vargas-Sanchez, 2018). Among the above four strategies, cost leadership strategies aim to reduce costs significantly and offer customers reduced prices. In contrast, differentiation leadership adds exceptional value to products and charges higher prices to customers.

Identified problems in scenario analysis	Proposed solutions for Lee Longlands	Proposed strategies
Lack of online presence	Market development	Cost Leadership
Lack of growth and variations	Diversification	Differentiation leadership

A cost leadership strategy would be most suitable for market development because customers would place more orders online if the prices were reduced. Customers will even place more orders even during an economic crisis such as COVID-19. Lee Longlands can reduce costs by closing some of its brick & mortar stores the same way other companies are doing. For example, famous retailer Zara has decided to close 1200 stores and enhance its presence online (The Wall Street Journal, 2020).

For diversification, Lee Longlands should use a differentiation strategy because this is a highly sensitive industry dominated by Excellency of design and innovation, quality of materials and added values. Therefore, it is suggested that Lee Longlands use a differentiation strategy.

Risk assessment and stakeholder analysis of Lee Longlands

The below table shows that the two proposed solutions are highly risky, however, they are supposed to be highly rewarding.

Identified problems	Proposed solutions	Proposed strategies	Risk assessment	Affected stakeholders
Lack of online presence	Market development	Cost Leadership	Low risk	Employees, management of Lee, customers
Lack of growth and variations	Diversification	Differentiation leadership	Highly risky	Employees, management of Lee, customers
Expensive operations	Closing brick & mortar stores	Close stores and be active online	Highly risky	Employees, management of Lee, customers

SAF model to assess above identified possibilities

Hill (2017) revealed that strategic directions should be evaluated on the SAF model to critically reflect upon the overall acceptance of the proposed strategic direction.

There are three elements in the SAF model: suitability, feasibility, and acceptability.

Suitability: This dimension measures a strategic direction based on if the project is environmentally suitable, technically suitable, financially suitable, utilizes the strategic strength of the company, and solves the identified problems (Hill, 2017). All the identified options are based on the strategic capabilities and strengths of the company and they use the strategic capabilities of the company.

Proposed strategic directions	How suitable?
Diversification through starting a research-based design consultancy.	It is well matched with the capabilities of Lee Longlands, which has experienced more than one century in the industry.
Cost reduction through reducing brick & mortar stores.	It is suitable because it will enhance Lee’s dominance and presence in the market. Moreover, all the options are technically and environmentally suitable.
Being highly present online through building a horizontally integrated transactional ecommerce site.	It will highly enhance the company’s presence in the whole country, enhancing the sales horizon.

Acceptability: It measures the acceptability of the outcomes/results of the proposed strategic direction to the viewpoints of potential stakeholders such as investors (Hitt & Duane Ireland, 2017). All the proposed strategic directions will enhance Lee Longlands’ visibility to the market, reduce costs and enhance sustainability in the industry.

Proposed strategic directions	How Acceptable?
Diversification through starting a research-based design consultancy.	It will open a new window of opportunity globally, having a high chance of sales increase.
Cost reduction through reducing brick & mortar stores.	It will increase sales and thus will generate more revenue and returns for investors and management of Lee Longlands.
Being highly present online through building a horizontally integrated transactional ecommerce site.	It will enhance Lee Longlands’ visibility to the customers.

Feasibility: This dimension measures if a project is technically, and financially feasible (Hill, 2017). The proposed strategic directions are feasible as given below:

Proposed strategic directions	How Feasible?
Diversification through starting a research-based design consultancy.	Lee Longlands has the strategic capability to implement the project.
Cost reduction through reducing brick & mortar stores.	There are no technical barriers to implementing this proposed project.
Being highly present online through building a horizontally integrated transactional ecommerce site.	This is also feasible because opening an ecommerce site and doing relevant jobs to enhance visibility is a common task nowadays.

Conclusion:

The UK furniture industry is the second largest consumer of furniture in Western Europe. British furniture customers spend most of their furniture budget on living room and bedroom furniture. Lee Longlands has been doing furniture business in six stores in the UK for about 120 years. Instead of doing business for such a long period, the company filed for administration recently because it failed to manage the financial accounts to pay the creditors. It happened because of the COVID-19 impact. The report has mainly identified three problems and advised three suggestions. The researcher has also conducted primary research and linked the findings with secondary research. It was found in the report that lack of active online presence, lack of tactics of digital marketing, lack of business diversification, and increased cost are the main challenges for which the company faced a financial crisis and filed for administration. This report suggested three strategic directions to solve the above-identified problems. Firstly, Lee Longlands should close some of its physical stores to reduce costs. This saving could be used to reduce product prices to enhance sales. Secondly, it was suggested that Lee Longlands should build an interactive and horizontally integrated transactional ecommerce site along with major tactics in digital marketing to enhance its visibility to target customers. Finally, it was suggested that Lee Longlands should diversify its business.

Reference

BBC. 2020. Lee Longlands store in administration due to lockdown. [Online] Available at: https://www.bbc.com/news/uk-england-birmingham-53119614#:~:text=An%20historic%20furniture%20company%20has,almost%20120%20years%20in%20business.&text=The%20family%2Drun%20business%20said,impact%20of%20the%20coronavirus%20lockdown%22. [Assessed on 24 July 2020]

Emerald Works, (2020). The Ansoff Matrix. [Online] Available at: https://www.mindtools.com/pages/article/newTMC_90.htm [Assessed on 26 July 2020]

Furniture News, 2020. Lee Longlands in administration but optimistic. [Online] Available at: https://www.furniturenews.net/news/articles/2020/06/1269515423-lee-longlands-administration-optimistic [Assessed on 24 July 2020]

Lee Longlands, (2020). LEE LONGLANDS STORES. [Online] Available at: https://www.leelonglands.co.uk/stores.asp [Assessed on 23 July 2020]

Mordor Intelligence (2020). UK HOME FURNITURE MARKET – GROWTH, TRENDS, AND FORECAST (2020 – 2025). [Online] Available at: https://www.mordorintelligence.com/industry-reports/uk-home-furniture-market [Assessed on 26 July 2020]

Reach PLC Subsidiary (2020). Historic Birmingham retailer Lee Longlands placed in administration. [Online] Available at: https://www.business-live.co.uk/retail-consumer/historic-birmingham-retailer-lee-longlands-18455406 [Assessed on 25 July 2020]

Statista, (2020). Number of furniture manufacturers in the United Kingdom (UK) 2008-2018. [Online] Available at: https://www.statista.com/statistics/290332/manufacture-of-furniture-number-of-enterprises-in-the-united-kingdom-uk/#:~:text=In%202018%2C%20the%20number%20of,the%20UK%20increased%20to%206%2C379. [Assessed on 25 July 2020]

Statista-1, 2020. Annual expenditure on furniture and furnishings in the United Kingdom (UK) from 2005 to 2019, based on volume*. [Online] Available at: https://www.statista.com/statistics/301022/annual-expenditure-on-furniture-and-furnishings-in-the-united-kingdom-uk/ [Assessed on 25 July 2020]

Statista-2, 2020. Furniture. [Online] Available at: https://www.statista.com/outlook/17000000/156/furniture/united-kingdom#market-globalRevenue [Assessed on 26 July 2020]

The Wall Street Journal, (2020). Zara Owner to Close 1,200 Stores as It Outlines Post-Coronavirus Future. [Online] Available at: https://www.wsj.com/articles/zara-to-close-1-200-stores-as-it-outlines-post-coronavirus-future-11591794618#:~:text=Zara%2Downer%20Inditex%20SA%20ITX,out%20its%20post%2Dpandemic%20future. [Assessed on 27 July 2020]

Zoominfo Technologies LLC., (2020). Lee Longlands and Co. Ltd. [Online] Available at: https://www.zoominfo.com/c/lee-longlands-co-ltd/62097314 [Assessed on 23 July 2020]