1. Introduction
International expansion is assumed to have a significant role in business growth to involve new audiences in businesses. Two types of factors are mostly involved with the reason for international expansion of brands which are pulled factors and push factors. The report will be presented with the strategy over-explanation of the Netherlands for Forta Furniture, based in Romania. The paper will provide the potential development opportunity to the Netherlands to critically examine the strengths and weaknesses of the company. The study aims to evaluate international market expansion opportunities for Forta Furniture.
2. Identification of international market for potential development
Before concluding expansion to the international market, it is important to draw differences between the local and international markets. Romania shows a high production ratio in the furniture industry and revenue that has been generated in 2022 is about US$1656m in 2022 (Statista.com, 2022). Along with that, the Romanian market has annually grown by 9.22% in 2022. On the other hand, the market amount of furniture in the Netherlands was US$10865m in 2022 and is expected to increase by 3.84% between 2022 to 2026 (Statista.com, 2022). Hence, there is a huge gap between the market share between both countries and engaging with the Netherlands market can be effective for Forta Furniture to achieve new growth from the international market. Other factors such as political, social, technological, environmental and legal can be effective to the company while expanding in the Netherlands furniture market.
| Parameters | Factors |
| Political | ● Favourable regulation for EU countries
● Impact of Brexit on EU disband in the years to come |
| Economic | ● The furniture market is expected to increase by 3.84% between 2022 to 2026 (Statisat.com, 2022)
● Highest income economy in the world with 913.865 billion GDP in 2020 (Data.worldbank.org, 2022) |
| Social | ● High standards of living with ranked 3rd in HDI 0.944 (Worldpopulationreview.com, 2022)
● Sociocultural issues resulting from immigration |
| Technological | ● Good access to technology
● Technological landscape with excellent connectivity in social media as 3.7 million individuals in Instagram every day (Statista.com, 2021) |
| Environmental | ● High developmental index in renewable energy use with 11.1 per cent energy consumption in 2020 (Trade.gov, 2021)
● Geographical perspective with a high level of flooding |
| Legal | ● Liberal Dutch regulations
● Workers regarding irregularities for both foreign workers and temporary staff (Business.gov.nl, 2020) |
Table 1: PESTEL analysis of Netherlands
Figure 1: GDP of Netherlands
(Source: Data.worldbank.org, 2022)
EU trade regulations are in favour of business entities from the EU and being a Southern European business, Forta Furniture may have a simple business association in an expanding country. The Netherlands has the highest economic growth rate and the revenue growth of the furniture market is expected to increase by 3.84% between 2022 and 2026. The Standard of living of the Netherlands is high and ranked 3rd place in HDI after Switzerland and Denmark (Worldpopulationreview.com, 2022). In that way, the company will be able to achieve a prominent market for luxurious furniture. The country has a reputation for renewable energy use and with that, the prediction line of the company can be developed with the utilising renewable energy. The Netherlands has the highest number of social media users, in that way marketing and engaging with customers will be easier for Forta Furniture. Avoiding workers regarding irregularities can negatively impact the company, which is why it is necessary to maintain them to avoid working disruption.
3. Justification of the recommendation
a. Primary opportunities and challenges/threats of Forta Furniture
| Strengths | Weaknesses |
| ● Well manufactured and durable manufacturing capability
● Variety of products at a wide range of prices |
● Single-brand channel used by Forta Furniture
● Lack in insights knowledge from on customers’ preference |
| Opportunities | Threats |
| ● Being part of European territory
● Favourable impressions of Romanian furniture to European countries |
● Numbers of competitors IKEA and Grandeaur
● Consumers in Romania are price sensitive |
Table 2: SWOT analysis of Forta Furniture
As per the above analysis, Forta Furniture has a variety of products that can bring the opportunity to attract new customers from the international market. Romania always prefers a medium range of products and they are highly price sensitive. On the other hand, customers in the Netherlands have a high standard of living, in that way price will not be a concern to the company anymore in the international market. However, the company now needs to focus on improving their single business as it has been the reason for low productivity. IKEA is the biggest furniture manufacturer in the Netherlands and there are other tough competitors in the market. Hence, Forta Furniture will need to adopt the most justification to compete in the market with these brands. Forta Furniture already has a reputation in western countries in the EU and with the range of products, the company will be able to develop into a recognised brand in the northern Europe countries.
b. Critical reflection on strengths and weaknesses of Forta Furniture
IKEA had almost 8% of the market in Romania and is expected to cover more markets in the upcoming time. Grandeaur was another large national brand in the international market that has given tough competition to Forta Furniture. As examined by Faia et al. (2019), while expanding in an international market it is necessary to go through the competition in the expected market. From the investigation on the Netherlands furniture market, it has been seen that the country already has a range of companies that compete with each other. As per further reports, Aramis Invest, Mobexpert and IKEA are the biggest market players in the industry (Statista.com, 2022). Hence, Forta Furniture is to utilise its efficiency to compete in the international market. Here is an overview of the value and resources of the company that can be useful to identify useful resources of the company and their effectiveness in competitive advantages.
Figure 3: Leading companies in the furniture industry
(Source: Statista.com, 2022)
VRIO Analysis of Forta furniture
| Resources | Valuable | Rarity | Inimitable | Organised | Competitive
position |
| Brand image and position among competitors
|
✔ | ✖ | ✔ | ✖ | Sustainable competitive advantage |
| Integration of rare resource | ✖ | ✔ | ✔ | ✖ | Unused competitive advantage |
| Access into cheap capital | ✔ | ✔ | Long term competitive advantage | ||
| Opportunity for international expansion | ✔ | ✖ | ✔ | ✖ | Temporary competitive advantage |
| Intellectual property rights
|
✔ | ✖ | ✔ | ✔ | Unused competitive advantage |
Table 3: VRIO analysis
Unused organisational resources such as tangible resources and intangible resources can give a long-term competitive advantage to Forta Furniture. Based on the VRIO analysis, here it can be said that integration of rare resources, cheap capital, intellectual property rights and opportunity for international market expansion can be useful in developing competitive advantage. Brand image and position among competitors provide opportunities to develop good relationships with partners and there the company is required to develop an efficient brand image to expand to the market.
4. Appropriate entry strategies
Explanation strategies for Forta Furniture International are based on the SWOT, PESTEL and VRIO analysis. Business explanation strategies can be followed as
- Forta Furniture International is need to focus on developing a good brand image among customers by using technologies
- To avoid legal disruptions, intellectual property rights are needed to follow by the company
- Corporate and business level objectives should be developed on the target of the company to expand to the market
Push-pull theory
Various motivations for becoming a part of business expansions and there are several reasons bound as pull and push factors in business expansion. As per the words of Gódány et al. (2021), push factors refers to the factors that force an organisation to take an exit from the domestic market. Here, push factors are involved with negative reliability from the domestic business area. On the other hand, the pull factor refers to the factors that attract organisations to expand their business to a market. Here, pull factors are involved with broad opportunities on a market and with the analysis of the case scenario, where it can be said that the reason for Forta Furniture to expand in the international market could be to push factors (Ojiaku et al. 2018). As per the above analysis, customers from the Romanian market are price sensitive and it has been negatively impactful to the business growth, On the other hand, the business revenue of the company has decreased by 12% in 2014 and after the business expansion of IKEA into the Romanian Market in 2007 it severely impacts the market share of Forta Furniture. Based on the above evidence here it can be said that the business expansion of Forta Furniture will be considered the result of push factors from the domestic market.
5. Conclusion
The study has been investigated with the business explanation opportunities and barriers for Forta Furniture, a Romanian furniture manufacturing company. From the analysis on the domestic and international market where it is suggested to the company to have differentiation for competitive advantage in the target market. The single distribution channel can be a barrier in expanding to the international and needs innovation approach for new channels. From the overall investigation here, it can be concluded that expanding markets to the Netherlands will bring new opportunities for business growth to Forta Furniture.
Reference List
Business.gov.nl, 2020. Working conditions for employees in the Netherlands. https://business.gov.nl/regulation/working-conditions-employees/
Data.worldbank.org, 2022. GDP (current US$) – Netherlands. https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=NL
Faia, E., Laffitte, S. and Ottaviano, G.I., 2019. Foreign expansion, competition and bank risk. Journal of International Economics, 118, pp.179-199.
Statista.com, 2022. Furniture – Romania | Statista Market Forecast. https://www.statista.com/outlook/17000000/148/furniture/romania
Gódány, Z., Machová, R., Mura, L. and Zsigmond, T., 2021. Entrepreneurship motivation in the 21st century in terms of pull and push factors. TEM J. Technol. Educ. Manag. Inform, 10, pp.334-342.
Ojiaku, O.C., Nkamnebe, A.D. and Nwaizugbo, I.C., 2018. Determinants of entrepreneurial intentions among young graduates: perspectives of push-pull-mooring model. Journal of Global Entrepreneurship Research, 8(1), pp.1-17.
Statista.com, 2021. Social media audiences in the Netherlands 2021, by social network. https://www.statista.com/statistics/579626/social-media-penetration-in-the-netherlands-by-social-network/
Statista.com, 2022. Furniture – Netherlands | Statista Market Forecast. https://www.statista.com/outlook/cmo/furniture/netherlands
Statista.com, 2022. Leading companies in the furniture industry. https://www.statista.com/statistics/1147537/romania-companies-in-the-furniture-industry-by-revenue/
Trade.gov, 2021. Netherlands – Energy – International Trade Administration. https://www.trade.gov/country-commercial-guides/netherlands-energy
Worldpopulationreview.com, 2022. Standard of Living by Country | Quality of Life by Country 2022. https://worldpopulationreview.com/country-rankings/standard-of-living-by-country
