Household furniture

From the perspective of a small business with minimal international exposure, this paper focuses on the U.S. sector of the wood products industry. It further breaks down our industry into the primary internal and external forces with which we must deal entering the new millennium. First, it is important to examine the industry forces that drive all enterprise. Hart Manufacturing would be in the center of these forces, also referred to as a vice. Substitutes and new entrants have, to date, not. been a major factor in the domestic furniture market. Substitutes for bedroom furniture are rather limited to sleeping bags on the floor. The capital cost of entry into our niche is so high and its rate of return so poor that very few have entered over the last 50 years. The customer side, however, is made up of a large number of stores where pricing is controlled by a handful of large chains. The reverse is true on the supplier side for medium density fiberboard (MDF), for example. Our supplier choices are limited because of the small number of suppliers and their geographical distribution resulting in higher freight costs. Perhaps now it is understandable why the term "vice" is used. A few large suppliers dictate manufacturer's costs with selling prices dictated by a few customers who are price leaders. These conditions did not exist during the decade before the 1990s when a consolidation trend started on the customer side.