International Business Case Palliser Furniture Ltd.

Palliser Furniture Ltd. Issue Identification: Today’s world is facing strong influence of globalization in each and every aspect of our lives. It is expressed through: free trade agreements, foreign direct investments, international trade, facilitated movement of labour, capital and resources, as well as a strong competition that eventually gives more power to customers. In addition, it resulted in the economic boom of the developing countries, with substantial dominance of China that mainly benefit from their massive labour force, its low cost and high comparative efficiency. This phenomenon has impacted all industries around the world. In particular, furniture production is going through a trend of moving to China that â€Å"in 2002†¦show more content†¦The main reason behind it is the availability of cheap furniture for the customers, which affect all five forces of the Porter’s model. As a result, Palliser has to look for the opportunities such as expanding their product line or reducing the cost of production to have competitive edge 4) Bargaining power of buyers is medium-high because of the low switching costs and wider spectrum of similar products selling at competitive prices due to the influence of developing countries 5) Threat of substitutes is low, in comparison with technology that constantly evolves, furniture cannot be easily substituted. But its insignificant impact is fully neutralized by high competition problem. At this point our analysis will proceed down to the specific external environments in which Palliser currently operates - Mexico, and consider to expand - China. For their discussion we will use the SWOT model. In particular, external forces, such as opportunities and threats will be touched upon first. Mexico: Opportunities Threats 1. Mexico’s location to Texas provides lower distribution cost structure for Palliser 2. Mexico has more experienced workers in the furniture industry 3. Leather for products was delivered from Brazil to Mexico, where it was easier to process it due to lower environmental restrictions 4. Palliser condition in international business operation is a