Vous êtes sur la page 1sur 45

Furniture Industry

Diamond Porter Model

Group Members:
Muneeb Fazal 12716
Sheikh Rafay
14749
Adeel Saleem 12890
Fahad Yousuf 12889
Niha Jawaid
13803
Tauheed Dyer 13596

Overview of Furniture Industry


The wooden furniture industry represents 95 percent of the total market in
Pakistan
Pakistan's share in the world market for furniture is negligible, despite the
fact that it has a valuable record of craftsmanship and innovation in this
sector
Pakistan's exports kept increasing by 10 percent annually until 2007-08.
However, the past decade can be considered as an opportunity lost for the
nascent industry
In FY08, Pakistan exported furniture worth $12 million, while the amount
fell to $9 million in 2009 and further declined to around $8 million in 2010

Factor Conditions

Raw Material Availability


In Pakistan, almost 50 percent softwood comes from state forests
in NWFP, Northern Areas and AJK, whereas most hardwood is from
the plains area of Punjab and Sindh
Ninety percent of hardwood comes from farmlands and the
remaining 10 percent from irrigated plantations
Problems:
1. Sheesham availability is inconsistent
2. Currently, Pakistan has the worlds second highest rate of
deforestation, with virtually no effective replantation programmes

Quality of Raw Material


Billions of rupees is wasted on import of wood because local
sawmills do not work properly and are not competitive to the
world regarding finishing of logs

Logging and sawmill practices not only waste Pakistans


natural resources, but they also deteriorate standards of living
within the country and produce poor quality wood products at
higher prices

Human resource and skill


availability
HR present in abundance
Skills are traditionally inherited
Carpentry is a family trade
Problem: no training and education centers available to boost
entrepreneurship and craftsmanship in this sector

Capital Availability
The capital resources of Pakistans saw-mills would be better
utilised in more value-added industries, such as the
manufacturing of finished goods that use lumber
The artisans requirement are minimal, but there is a lack of
working capital for wood working craftsmen

Availability of Infrastructure
Poor road connectivity

Lack of communication
Inconsistent power supply and source
High Transport Costs
Distribution Chain Problem

Demand Conditions

Local Demand
Household Furniture
Institutional Furniture (schools,hospitals)
Contractual Furniture (shops, banks, hotels).

Local Demand
Reasons for increase:
Increase in consumer spending (average increase of 26% in last
3 years).
New housing and non-residential building starts.
About 95% demand is for wooden furniture.
80% of the local demand met by Chinioti Furniture (known for
its superior quality and beautiful wood carvings).
70-80% of it is made of sheesham wood.
In Karachi, plywood is used the most in furniture

Local Demand
Seasonal Demand:
Nov-Feb : Wedding season, high demand for furniture especially bedroom
sets increases for dowry.
Summers: Home renovations, visits of relatives from abroad high demand
for dinning room furniture.
Ramazan and Eid times also have higher demand for furniture.
Average Spending:
Furniture manufacturers sell Rs. 0.5 million worth of furniture for a single
wedding.
Even poor spends on average Rs.50,000 on furniture given to their
daughters.
The prices vary greatly, depending on the area, type of wood and the

International Demand
Total world trade in furniture is estimated to be in the tune of
$23.2 billion, of which the share of wooden furniture is 77
percent.
Pakistans exports of wooden furniture amounted to $12m in
2008, decreased to $8m in 2010.
The most important reason for this decline is the depleting
sheesham reserves. Importing such wood costs 4 times more.
The major importers of Pakistani furniture are Italy, USA, Canada,
Japan, Saudi-Arabia, the UAE, Germany and Spain.
Furniture exports are about 0.47% of the total exports of the
country

Regional Competitors
India:
Pakistans exports of wooden furniture were $8 million in 2010
while Indias were $280 million.
This makes Indias share in the export of furniture world market
0.2%.
China:
Chinas exports of furniture were $9.5 billion in 2010. They
were higher than the exports of Germany and Italy combined.

Related and Supporting Industries

Related and Supporting


Industries
Industries in the Furniture and Related Product Manufacturing
subsector make furniture and related articles, such as
mattresses,window blinds, cabinets, and fixtures.
The processes used in the manufacture of furniture include the
cutting, bending, molding, laminating, and assembly of such
materials as wood, metal, glass and plastic.
Design and fashion trends play an important part in the
production of furniture.

Related and Supporting


Industries
Woode
n

Glass

Polish

Sugar

Hardw
are

Wooden Industry
All the softwood in Pakistan comes from forests in the
Northern areas.
All the hardwood in Pakistan comes from the plain areas
of Sindh and Punjab.
The solid wood industry in Pakistan is
infant and small scale.

Consumption of Wood in
Pakistan
All the sectors that use wood as a raw material or consume wood
are:
Construction
Furniture
Match production
Mining applications
Plywood manufacture
Production of sports good
Construction of train, bus and boats

Sugar Industry
The chipboard is the trash from sugar mills.
It is an artificial type of wood which undergoes the process of
lamination and then used

Hardware Industry
Furniture hardware are those products that are used to
support the furniture look, design and durability.
Example: (Furniture frames,
Furniture Legs, Furniture arms)

Glass Industry
With the trends shifting people are now shifting from wooden
furniture to glass furniture.
Glass furniture is:
Easier to maintain
Spacious
Fireproof
Waterproof
Rich and expensive look

Types of Glass furniture

Polish Industry
There are different types of polish in furniture.
Spirit
Chanutti
Kane
Shisham
Laker

Firm Strategy, Structure and Rivalry

Firm Strategy, Structure and


Rivalry
The way in which companies set goals, implement strategies and manage
its hierarchical structure is important for success
Influenced by management style and culture of the country.
No single management style guarantees success.
For example, In Italy manufacturing firms are medium sized operating in
fragmented industries with a strategy towards meeting the needs of
small market niches. In Germany, successful organizations tend to be
hierarchical with a highly disciplined management structure. They
emphasize on technical content ith strategy of precision in
manufacturing.

Firm Strategy, Structure and


Rivalry
Rivalry in the home base is also important as it creates pressure
to innovate.
Domestic competition is more direct and impacts earlier than
foreign competitors towards innovation and efficiency.
Only through high domestic competition we can hope to
compete successfully at the global level.

Firm Strategy, Structure and


Rivalry
Pakistans Furniture industry can be divided in two main types;
cottages and small-scale industry.
Most units are not mechanized and use out-dated tools
Manual labor is employed for the production of furniture.
There are about 700 registered units in the country, operating
on a single shift/300 days per annum basis.

Firm Strategy, Structure and


Rivalry
Threats to Furniture Industry:
Not mechanized, Outdated tools
High cost of the furniture business
The prices of all raw materials used in making furniture
which include chipboard, timber, foam, polish chemical
materials, color paints and hard ware have increased.
Timber production on the other hand has gone down
drastically because of unchecked deforestation.

Firm Strategy, Structure and


Rivalry
Imported chipboard is used for bedroom sets.
About 60% raw material is imported from China.
Mostly imported item are chipboard, hardware items and
glass.
More than 80 % of the furniture demand in the country is
met by Chinioti furniture.
This industry, combined with the handicraft industry, is
employing about 50,000 people.

Chance Occurrences

Chance Occurrences
Chance event are occurrences that have little to do with
circumstances in a nation and are often largely outside the power of
firms (and often the government) to influence.
Examples:
Acts of pure invention

Discontinuities in input costs such as oil shocks


Shifts in world financial markets
Surges of regional demand in the world
Political decisions by foreign government
Wars

Chance Occurrences
Chance events often take shape in the form of technological
discontinuities.
A technological discontinuity is represented in a new technology or
in the re-packaging of a set of existing technologies that results in
quickly obsoleting a product or service.
Chance events are important because they create discontinuities that
allow shifts in competitive position and provide opportunities to other
nations to supplant.
They can nullify the advantages of previously established competitors

Exports of Pakistan (SBP)

Imports of Pakistan (SBP)

Chance Occurrences
Examples of Chance
The advent of microelectronics was enormously important in
neutralizing American and German dominance in numerous
relevant industries. It gave Japanese industries a competitive
position.
A surge in demand for ships gave Korea the opportunity to enter
the shipbuilding industry against Japan
The apparel industry developed in Singapore after western nations
placed quotas on apparel imports from Hong Kong and japan.

Chance Occurrences
The surge in demand for more traditional-stylish furniture has
impacted the designs of furniture in Pakistan.
This impact has caused a significant change in the offerings of most
companies within the industry which now boast a mixture of several
cultures.
Craftsmanship has changed in our country.
This chance-shift has affected our exports and imports for
wood and furniture.
Most notable example would be of Interwood.

Government

Important Organizations
Pakistan Furniture Council (PFC): Organizes trade expos, and works and
sets aims for trade exports.
1. Export target of $5 billion for the next five years
2. Training to the existing workforce
3. Remove hurdles at the lowest level by educating and providing training to
furniture entrepreneurs on global standards, especially in solid wood
handmade furniture, which is in high demand,

4. Aims to ensure industry friendly legislation to support both vendors and


clients by managing tax regime
. All Pakistan Furniture Exporters Association (APFEA): Trade
organizationlong the same lines, and facilitates manufacturers.

Timber Mafia
The direct link between Pakistans timber mafia and the countrys
deforestation is thatthe government regularly took bribes from the
timber mafia in exchange for permits to fell trees
The outcome is that forests have beenruthlessly exploited by law
enforcement agencies, politicians and bureaucrats for their own
vested interests
Furniture grade Sheesham trees take more than 50 years to grow.
But the timber mafia in the country ends up cutting Sheesham
prematurely for use in low value-added structural or even for use as
firewood.

Current Scenario
Corruption
Chinese furniture has also hit the local industry by 70 percent
and the sales of locally manufactured household furniture have
gone down by 30 percent
Effect of Timber Mafia
Foreign firms do not trust Pakistani companies because the
latter often fail to meet quality standards
Exports of furniture have gone down since 2007 due to political
and economic turmoil coupled with load shedding.

Environmental Effects
The affects on the environment have their own adverse
affects. The depleting forest to land ratio in this country is
triggering raging floods, hotter summers, colder winters
and a weather that cannot be predicted for the coming
years making our farmers, our mainstream industry, at a
huge risk.

Recommendations
Government should immediately introduce and implement
a reforestation plan that is focused on replanting
A minimum of ten trees should be planted for every tree
cut, and a heavy penalty should be placed on cutting these
trees prior to their maturity period, which is
approximately fifty to sixty years
Allocating idle industrial zones and premises to the
furniture industry will also help in boosting its exports

Recommendations
Export fairs should be arrange to attract the international
buyers
Easy access of credit, tax holidays on expansion, frequent
road shows and visits to international exhibitions, along
with assistance from government officials for marketing
furniture in Europe are some of the initiatives that can
benefit the industry.