Question

Until recently, Woodbest Limited has been the leading producer of wood furniture in Malona city. Following the arrival of a major competitor in the city, Woodbest is seeking to explore innovative ways of maintaining its position in the market. In the meantime, it is relying on its competencies in the acquisition of materials, production, transportation of finished products and installations. The perfect coordination of these activities and its five-year maintenance-free policy for customers have so far kept the company in competition but it has to use strong strategic initiatives to stay ahead of the new competitor.
As a consultant in Operations Management, you are to:

Describe, with an example each, any three (3) competitive operations strategies that can be used by Woodbest to stay ahead of the competition.

Describe any two (2) growth strategies that can be used by the company to increase its capacity of operations.

Draw a value chain to illustrate the activities of Woodbest Limited.

Answer 1

Competitive strategies :

1. Lower operating costs by outsourcing furniture manufacture to countries with lower and inexpensive wages, such as Malaysia, China to acquire a strategic advantage over domestic manufacturers whose operating costs are likely to be much higher. Lower costs can be incorporated in pricing and promotions that can draw more customers in.

2. Use technology to automate processes and reduce human error. The use of IT systems and ERP can help in reducing time and effort for daily activities and reduce defects along the manufacturing process. This can free up valuable human resources to focus on key aspects.

(Whitehouse, 2019)

3. Become more customer-centric in the offerings and refine operations accordingly. Customers can drive demand based on changing requirements and Woodbest can capture and incorporate feedback and suggestions where possible to ensure voice of customer is always heard. This can lead them to cater to more suitable and appropriate requirements e.g. packaging, delivery options, maintenance requirements, that can increase their competitive edge in the market.

Growth strategies :

1. Lower raw material costs while retaining quality, by importing from/forming alliances with countries that have Fair trade agreements such as Mexico, which has a high availability of domestic wood species. This can help Woodbest lower production costs which it can then pass on to its customers, which might appeal to a price-sensitive customer base thereby giving them a competitive advantage. Mexico also has lower labour costs which can benefit Woodbest. This can expand the market from just domestic to other countries as well, with both parties being able to market products in their countries.

2. Acquire a wider product range and include higher quality finished products by forming an alliance with product manufacturers in Denmark which is known for high productivity and quality of products. Danish furniture is among the most sought after in the world, 80% of production is exported. Woodbest can then offer a wider range of high-quality products to different sections of customers.

(Gazo, Quesada, 2005)

Value chain