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Introduction:
The report writing will be written in accordance to the context of the “case study of the Forta Furniture Company”. Forta Furniture is a Romanian owned Furniture Company (Pradnyaswari,2022). The Forta Company have two brands under its name namely- the Forta and the Abilit. Some of the key people working in the company are as follows- Marita Petrescu as the chief marketing officer and Constantin Cernat and Alexandra Dobreva who are the vice presidents of the Forta Company owned brands respectively. As stated in the case study, up until the entry of the IKEA Company, Forta furniture Company was known to be leading the furniture industry in the Romanian market. However, after the entry of the IKEA Company who not only sells the same products (as such as the Forta Company) but also offers superior quality product because of which it started leading the furniture industry in the Romanian market, leaving behind the Forta Company (Das,2021) Therefore, Maria Petrescu (who is the chief marketing officer in the Company) is looking to make some investments in some foreign and international market where the company can potentially develop and flourish. Therefore, for this report writing, I will be assuming the role of a consultant of an international market and will be helping the Forta Company in their quest for searching for an international market where they can potentially make investments. Andersen,2021).
Part 1:
Identification of an international market for expansion of the company’s business using the push and the pull factors:
The potential international market where the Forta Furniture Company can further establish and expand its business is the Denmark market. Forta is expected to gain 1% market share in year one, 3% market share in year two, and 4% market share in year three, for a total of 8% market share in its first three years on the market. Given that Forta’s cost of capital remains constant over the duration of the projected period, all revenue streams in years two and three should be discounted by a factor of 10 percent every year for the next three years. Sales in retail stores generate a 25 percent profit margin for the retailer.
- Push factor:
Push factors are the type of factors or attributes that ends up pushing a company or an organisation out of its domestic market. The factors that push, the Forta furniture company to further look for expansion in the foreign markets are as follows-
- The entry of the IKEA Company who not only sells the same products (as such as the Forta Company) but also offers superior quality product because of which it started leading the furniture industry in the Romanian market, leaving behind the Forta Company
- Second is that the furniture industry within the Romanian market started to decline due to the stagnancy of the Romanian economy.
- Pull factor:
The pull factors are the type of factors or attributes of an international market which ends up making it look attractive for starting a business for organisations. Here, are some of the factors of the Denmark market which might be a very good business opportunity for the Forta Furniture Company in order to make its footprint in the international market (other than its native market)
A brief introductory background about Denmark as a country:
Denmark is known to be a Scandinavian country which is a part of the Northern part of Europe. Denmark is known to be bordering the North Sea and the Baltic Sea. The country is known to have many varied islands (that are popularly referred to as the Danish Archipelago) and is also known to consists of large peninsula. The country is known to follow the constitutional form of governmental system. The market system within the country is said to follow the modern type of marketing economy with a system that consists of free pricing. Also, as of 15th of march 2022, Denmark is known to have a population count of about 5,826,799 (Ugarte,2018).
Denmark furniture market:
As per a report that was published in the year 2022, the furniture market within the country i.e., Denmark is known to amount to about $ 4,016 million. Also, the furniture market in the country is said to be growing every year by about 4. 34 %. The Denmark furniture are also referred to as one of the best in the world because of its resilient centric designs, durability and use of woods that are of high quality. The largest segment in the Denmark’s furniture market is the furniture for the living rooms (it has a market volume amounting to about $921 million dollar). IKEA is known to have about five store in Denmark
A clear justification of your recommendations based upon the following topics:
Channels of distribution within the Denmark market:
The channel of furniture distribution within the Denmark market is segregated into specialist distributors on large scale (such as the chains of furniture, groups who buys the product and franchises), the furniture retailers that are independent, independent retailers that are in small- scale and lastly the distributors that are non- specialist (such as through brick- and- mortar store and through e- commerce channels) (Grzegorzewska,2021).
Consumer’s preferences of insights about the customers:
The preferences of the Danish consumers keep on changing with regard to buying furniture due to the ever- changing dynamics with regard to preferences of the living style. But yes, the Danish people they look- out for furniture that not only have resilient centric designs but also very much durable, quality centric and aesthetically pleasing. Also, through a report it was found that a large segment of the Danish consumers seems to prefer buying furniture for living rooms.
Part 2
- SWOT analysis
| Strength | – Denmark is known to have a very stable economy which will in turn be very good for the Forta furniture company.
– Also, within the Danish furniture market, there seems to be very little corruption thus, freeing the Forta furniture company of most of the possible liabilities of setting up its brand within the Danish market (Atwater,2021) – The Danish furniture market is known to be one of the best in the world and therefore, by establishing the company’s brand in such maestro of a market, the Forta furniture can gain many competitive advantages (Hansen,2021). – |
| Weakness | – One weakness of the Danish furniture market is that the geographical size of the country is very small and therefore, there is high possibility that the market might become somewhat saturated for the Forta furniture Company (Łukiewska,2021) |
| Opportunity | – In this case, the Forta furniture company can concentrate on expanding its presence in the electronic commerce sector, while taking advantage of the fact that the Danish furniture market has not yet been completely integrated into this field. Aside from that, the Forta Furniture company has the potential to establish a significant number of brick-and-mortar stores in the Danish market (Fajarwati,2021). |
| Threat | – The Forta furniture company might face competition from Danish furniture local companies such as Carl Hansen & Son, the Actona Company, the Hammel furniture company and vice versa. |
- PESTEL analysis
| Political | – Denmark is a part of the European Union which benefits the country with many varied trades. And so, the Forta furniture company will also benefit from it. |
| Economic | – The Denmark market is known to have very robust sector with regard to service and is also known to have very stable GDP. Hence, it will add many advantages to the business of the Forta Furniture |
| Social | – The country is known to have a very stable social order (unlike many of the European countries) and hence, the Forta furniture won’t have to worry about facing any discrimination with regard to its origin (Christensen,2021). |
| Technological | – Denmark is a very much tech- savvy country and therefore taking advantage of this, the Forta furniture company can work on increasing its online presence via varied social media platforms offered by the country’s market. |
| Environmental | – The country is very keen on encouraging sustainability and therefore by being associated with the Danish market, the Forta Furniture company can come across as a sustainable brand. |
| Legal | – BREXIT is one legal factor that could impact the Forta Furniture company in case it decides to open its business in the Denmark market (Mubtasim-Fuad,2021) |
Identification and explanation of what your analysis suggests is the most appropriate strategy into the new market for the Forta with justification:
The best mode of entry identified for the Forta Furniture Company about the Denmark’s furniture market will be through partnering and alliance form of market penetration method or market entry mode. The reason why, the chosen mode of entry is identified to be the best potential entry mode of entry within the Denmark furniture mode is because, the Denmark furniture market is known to be one of the best furniture producing market all over the world and therefore, it would be unwise for the Forta furniture company to directly exporting its brands and products into the market won’t prove to be much of a benefit for the company. Estimates indicate that Forta might achieve a 1 percent market share in year one, an additional 1.5 percent market share in year two, and another 2 percent market share in year three, for a total of 4.5 percent market share as a private-label entrant in the first three years. To operate as a private label, Forta would be forced to pass over 30 percent of revenues to the retailer and another 25 percent to the consumer-facing brand, according to the agreement. The item in issue would be sold for a retail price of $199 on average by the store. Approximately $4 million is projected in marketing expenses, with an extra $3 million in other investments, according to the estimations of the company.
Conclusion:
The report writing will be written in accordance with the context of the “case study of the Forta Furniture Company”. Through this writing, we came to learn that the Denmark furniture market is truly robust and holds many potential opportunities for many of the furniture companies as such as the Forta Furniture Company.
Reference:
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