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Italian Furniture Industry Introduction: Italy is the leading furniture exporter and the second largest furniture manufacturer in the world. Among the competitive factors determining the success of Italian furniture is the fact that the Italian furnishings industry is at the forefront in terms of quality of planning and product aesthetics, and Italian design has a clear role as a global trendsetter. Italian design is a by-product of a virtuous circle composed of quality workmanship, a winning manufacturing model (the industrial furniture districts), constant technological innovation and a strong creative attitude to the marketplace. This is an important success factor for the furniture related sectors (furniture components, woodworking machinery, and household appliances) and is fundamental for the image of Italian furniture. Italy used to be extremely successful because of its small companies and their artisans, but today the global market requires to be seen as big. Italy is still the sixth largest economy in the world, but Italy is less and less dominant in each industry. Italy is no longer as well represented in cars, computers and food. The difference between the French and Italian luxury goods companies is that the French have much larger, more structured companies. They are industrial INB 410- International Competitiveness 1

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Page 1: Italian Furniture Industry

Italian Furniture Industry

Introduction: Italy is the leading furniture exporter and the second largest furniture

manufacturer in the world. Among the competitive factors determining the success of Italian

furniture is the fact that the Italian furnishings industry is at the forefront in terms of quality

of planning and product aesthetics, and Italian design has a clear role as a global trendsetter.

Italian design is a by-product of a virtuous circle composed of quality workmanship, a

winning manufacturing model (the industrial furniture districts), constant technological

innovation and a strong creative attitude to the marketplace. This is an important success

factor for the furniture related sectors (furniture components, woodworking machinery, and

household appliances) and is fundamental for the image of Italian furniture.

Italy used to be extremely successful because of its small companies and their artisans, but

today the global market requires to be seen as big. Italy is still the sixth largest economy in

the world, but Italy is less and less dominant in each industry. Italy is no longer as well

represented in cars, computers and food. The difference between the French and Italian

luxury goods companies is that the French have much larger, more structured companies.

They are industrial conglomerates. It's the Italian ability to understand, worldwide, what will

be successful globally. Italians have an image of being particularly good at defining style in a

way that is appreciated worldwide.

The Italian furniture tradition occupies a special place in the overall history of furniture with

Italy being the birthplace of the classical Renaissance and the Italian Renaissance furniture

that came from it had an immeasurable effect on world furniture, with its echoes of the

classical empires of antiquity, Rome and Greece, the foundation stones of the western

furniture tradition.

While much of the furniture industry in modern day Europe has declined into obscurity or

narrow experimentalism the modern Italian furniture industry remains comparatively robust

and capable of producing marketable, popular, yet still stylish, furniture for contemporary

homes.

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Most countries in Europe have a "country" or rustic furniture tradition and in Italy we find it

best expressed in exceptional furniture.

Methodology

The report has been written on the basis of information collected from secondary sources.

The secondary information has been collected from Internet, article and lectures of INB 410

courses. I use the goggle search to find the information. I have sorted the relevant data from

all these secondary sources for the further analysis. The analysis and recommendation were

followed by the knowledge gathered from text book, the articles and lectures.

Limitations

On the basis of our capability and the environment we faced some limitations preparing the

case.

As the report was bind by the deadline, the time was our main limitation. Compared to the

topic’s importance the time was too short.

The information which is getting from internet is not enough for analyzing this report.

But after all our limitations and flaws, we have tried to prepare our assignment more

dynamic, relevant with all our efforts.

History of Furniture

Furniture is the collective term for the movable objects which may support the human body

(seating furniture and beds), provide storage, or hold objects on horizontal surfaces above the

ground. Storage furniture (which often makes use of doors, drawers, and shelves) is used to

hold or contain smaller objects such as clothes, tools, books, and household goods. (See List

of furniture types.)

Furniture can be a product of artistic design and is considered a form of decorative art. In

addition to furniture's functional role, it can serve a symbolic or religious purpose. Domestic

furniture works to create, in conjunction with furnishings such as clocks and lighting,

comfortable and convenient interior spaces. Furniture can be made from many materials,

including metal, plastic, and wood.

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Furniture has been a part of the human experience since the development of non-nomadic

cultures. Evidence of furniture from antiquity survives in the form of paintings, such as the

wall Murals discovered at Pompeii; sculpture, and examples have been excavated in Egypt

and found in tombs in Ghiordes, in modern day Turkey.

Furniture types

Definition 1: Objects such as tables, chairs, beds, desks, dressers, cupboards, etc. usually

kept in a house or other building to make it suitable or comfortable for living or working in.

Storage Seating Surfaces Sets Sleeping or lying

Other

Armoire

Bookcase

Cabinet (furniture)

Chest

China cabinet

Cupboard

Curio(furniture)

Dresser (Chest of drawers)

Filing cabinet

Hall Tree

Hatstand

Knoll sofa

Sideboard

Wardrobe

Bean bag

Bench

Bergere

Chair

Couch

Fauteuil

Footstool

Love seat

Ottoman

Recliner

Settee

Sofa (couch)

Stool (type of chair)

Tuffet

Watchman's

Coffee table

Desk

End table

Folding table

Gateleg table

Table

Bedroom set (group)

Dinette (group)

Dining set (group)

Vanity set

Bed

Headboard

Hutch

Folding Screen

Headboard (furniture)

Built-in furniture

Garden furniture

Aquarium furniture (definition 1 above)

Park furniture (such as benches and picnic tables)

Stadium seating

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chair

Definition 2: Accessories or fittings that are required for a particular function, situation, or

setting.

Door furniture

Street furniture

Aquarium furniture (definition 2 above)

Custom Southwestern Furniture

Rustic Furniture

Definition 3: Things that could be bought at the Flea Market Montgomery.

Living room

Bedrooms

Dinettes

The Classical World

Early furniture has been excavated from the 8th-century B.C. Phrygian tumulus, the Midas

Mound, in Gordion, Turkey. Pieces found here include tables and inlaid serving stands. There

are also surviving works from the 9th-8th-century B.C. Assyrian palace of Nimrud. The

earliest surviving carpet, the Pazyryk Carpet was discovered in a frozen tomb in Siberia and

has been dated between the 6th and 3rd century B.C.. Recovered Ancient Egyptian furniture

includes a 3rd millennium B.C. bed discovered in the Tarkhan Tomb, a c.2550 B.C. gilded

set from the tomb of Queen Hetepheres, and a c. 1550 B.C. stool from Thebes. Ancient Greek

furniture design beginning in the 2nd millennium B.C., including beds and the klismos chair,

is preserved not only by extant works, but by images on Greek vases. The 1738 and 1748

excavations of Herculaneum and Pompeii introduced Roman furniture, preserved in the ashes

of the 79 A.D. eruption of Vesuvius, to the eighteenth century.

Early Modern Europe

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The furniture of the Middle Ages was usually heavy, oak, and ornamented with carved

designs. Along with the other arts, the Italian Renaissance of the fourteenth and fifteenth

century marked a rebirth in design, often inspired by the Greco-Roman tradition. A similar

explosion of design, and renaissance of culture in general, occurred in Northern Europe,

starting in the fifteenth century. The seventeenth century, in both Southern and Northern

Europe, was characterized by opulent, often gilded Baroque designs that frequently

incorporated a profusion of vegetal and scrolling ornament. Starting in the eighteenth century,

furniture designs began to develop more rapidly. Although there were some styles that

belonged primarily to one nation, such as Palladianism in Great Britain, others, such as the

Rococo and Neoclassicism were perpetuated throughout Western Europe.

19th Century

The nineteenth century is usually defined by concurrent revival styles, including Gothic,

Neoclassicism, Rococo, and the Eastlake Movement. The design reform of the late century

introduced the Aesthetic movement and the Arts and Crafts movement. Art Nouveau was

influenced by both of these movements.

Modernism

The first three-quarters of the twentieth century are often seen as the march towards

Modernism. Art Deco, De Stijl, Bauhaus, Wiener Werkstätte, and Vienna Secession

designers all worked to some degree within the Modernist idiom. Postmodern design,

intersecting the Pop art movement, gained steam in the 1960s and 70s, promoted in the 80s

by groups such as the Italy-based Memphis movement. Transitional furniture is intended to

fill a place between Traditional and Modern tastes.

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Asian history

Asian furniture has a quite distinct history. The traditions out of China, India, and Japan are

some of the best known, but places such as Korea, Mongolia, and the countries of South East

Asia have unique facets of their own.

Traditional Japanese furniture is well known for its minimalist style, extensive use of wood,

high-quality craftsmanship and reliance on wood grain instead of painting or thick lacquer.

Japanese chests are known as Tansu, and are some of the most sought-after of Japanese

antiques. The antiques available generally date back to the Tokugawa era.

Chinese furniture is traditionally better known for more ornate pieces. The use of uncarved

wood and bamboo and the use of heavy lacquers are well known Chinese styles. It is worth

noting that China has an incredibly rich and diverse history, and architecture, religion,

furniture and culture in general can vary widely from one dynasty to the next.

Italian furniture

Italy is the leading furniture exporter and the second largest furniture manufacturer in the

world. Among the competitive factors determining the success of Italian furniture is the fact

that the Italian furnishings industry is at the forefront in terms of quality of planning and

product aesthetics, and Italian design has a clear role as a global trendsetter.

Italian design is a by-product of a virtuous circle composed of quality workmanship, a

winning manufacturing model (the industrial furniture districts), constant technological

innovation and a strong creative attitude to the marketplace. This is an important success

factor for the furniture related sectors (furniture components, woodworking machinery, and

household appliances) and is fundamental for the image of Italian furniture.

According to Francesco Trapani (CEO of Bulgari) Italy used to be extremely successful

because of its small companies and their artisans, but today the global market requires to be

seen as big. Italy is still the sixth largest economy in the world, but Italy is less and less

dominant in each industry. Italy is no longer as well represented in cars, computers and food.

The difference between the French and Italian luxury goods companies is that the French

have much larger, more structured companies. They are industrial conglomerates. It's the

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Page 7: Italian Furniture Industry

Italian ability to understand, worldwide, what will be successful globally. Italians have an

image of being particularly good at defining style in a way that is appreciated worldwide.

The Italian furniture tradition occupies a special place in the overall history of furniture with

Italy being the birthplace of the classical Renaissance and the Italian Renaissance furniture

that came from it had an immeasurable effect on world furniture, with its echoes of the

classical empires of antiquity, Rome and Greece, the foundation stones of the western

furniture tradition.

While much of the furniture industry in modern day Europe has declined into obscurity or

narrow experimentalism the modern Italian furniture industry remains comparatively robust

and capable of producing marketable, popular, yet still stylish, furniture for contemporary

homes.

Most countries in Europe have a "country" or rustic furniture tradition and in Italy we find it

best expressed in Tuscan furniture.

Brief History of Italian Industrial Design

From The Beginning to the Second World War:

Generally speaking in the second half of the 19th century Italy was in late in the field of

industrial development. One of the most important manifestations concerning the relationship

between industry, applied arts and architecture was the International Turin Exposition in

1902, where we could recognize the great Art Nouveau's triumph; this was the first chance

for a world-wide comparison between Italian industrial tradition and the other big

international countries', especially the European powers. It was an extremely successful

exposition with great influence on Italian industrial design and on its specificity. It was in this

period that furniture design came to life (design of fanciful furniture conceived by authors

like Duilio Ciambellotti, Ernesto Basile and the Bugatti brothers). It was the time of luxury

industry, that's to say fancy objects industry, including Florentine Richard Ginori porcelaine

(whose art director from 1929 was Gio Ponti). Other examples could be Salviati's and

Venini's glasses (wich fixed the great Murano's tradition). Obviously Italian liberty came to

life thanks to the huge Italian atistic tradition; smiths, glass craftsmen, cabinet makers,

carvers, potters took nature as an example for buildings, furniture, pots, glasses and lamps'

decoration.

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The vanguard movement that more influenced the idea of an aesthetic revolution of the world

was Futurism; it was closely related to fascism and its 'spiritual leaders' were Tommaso

Marinetti and Umberto Boccioni. Even if futurist objects didn’t ever exit from craft

dimension, the revolutionary power of their idea kept intact.

It was near to and anticipated the Bauhaus movement, too.

Italy knew an intense industrial design development during the First World War, from 1910

to 1920 which were decisive years mainly for car, plane and general mechanical industry.

War is a really important component for industry organization because of its faculty to

become serial, so it was possible to apply to it the industrial design's principles.

The following step was the organization of a new group of young people which looked at the

European rationalist movement (called Italian rationalism) whose point of departure and

centre of interest was architecture. In 1930's their work was very important and significant

and their experiences were promoted by the "Triennale" di Milano where we could find the

most significant confrontations between Italy and Europe; they were always more interested

in furniture and interior planning.

Rationalist movement also came out as a battle against the existing antidemocratic

dictatorship. In 1933 lots of the leaving prototype created (designed by Albini, Bottoni,

Figini, Pollini, Lingeri, Terragni) were inspired by the standardisation concept rended

through new industrial materials like securit glass, buxus, linoleum, steel, even if fascist

regime architecture remained the predomininating and most modern one in Italy during the

period between the two world wars, so the most representative personality of the period was

Giuseppe Terragni whose best creation was the 'casa del fascio' in Como whose furniture

suggested again the Bauhaus' language (simple geometric forms and the employment of

materials that gave the idea of transparency and lightness). In Terragni, simple geometric

forms and confort joined together and this was one of the most evident

Italian rationalism designs. Fascism accomplished a remarkable propagandistic effort and

young Italian rationalist architects put it to use, but their vanguard work was in contrast with

a market modern objects demand lack; so, talking about rationalist furniture, it is correct to

say that it was at a experimental stage yet.

Actually the project's culture knew great growth between 1920's and 1930's thanks to trade

journals engaged in a modern living concept. The most important were "Domus" (founded in

1928 by Giò Ponti) and "Casabella" (originally called "La casa bella"). This second review

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became the Modernism's official voice thanks to Giuseppe Pagano and Edoardo Persico's

articles. During these years the "Triennale di Milano" came to life (the first four editions -

from 1923 to 1940 - took place in Monza); it took place inside the Giovanni Muzio's

masterpiece building and it was the biggest opportunity to show new project's ideas.

During this first stage Italian designers choose to uniform their style to the international style,

afterward Italian originality became worldwide famous and recognizable mainly in research

and home prototypes fulfillment. Rationalists created refined objects and furniture which

were craftmade products anticipating real "industrial design". The most interesting

personalities in this stage were Giò Ponti, Mario Asnago, Claudio Vender, Franco Albini,

Piero Bottoni and the above-mentioned Giuseppe Terragni. Pietro Chiesa is another standing

out figure in that time; he projected in collaboration with Giò Ponti a rich set of technically

and formally innovative lighting devices as the "luminator" (1936). It was the first indirect

light lamp, that's to say a lamp created by upwards reflection, never conceived in Italy before.

Automobilistic industry is among big off the shelf productions the first to follow an

international model; Fiat Company in particular made use of craftsmen knowledge to give

propulsion to the automobil's evolution. So the typical winning Italian model came to life just

in 1930's fusing aesthetic/aerodynamic research and mass production. There were Fiat cars as

popular models, Lancia cars addressed to wealthy customers, Alfa Romeo cars for speed

lovers and extraordinary exclusive cars designed by Pininfarina. We should mention some

storic models like Fiat Balilla and Fiat Topolino (economy cars of the first period) and Fiat

500 and 600 (economy cars of the second period). Dante Giocosa won in 1959 the Compasso

d'Oro prize for his 500 project and this was a really rare case in automobile history. Fiat 500

is nowadays a collectible piece and it has been reshaped so many times during the last forty

years.

Vespa Piaggio was another revolutionary novelty in automovil design field; it was designed

by Corradino d'Ascanio and constructed for the first time in 1945 by Enrico Piaggio. It was

an absolute novelty bacause of its innovative framework nowadays extant. Among its

innovative features we could find enclosed engine studied to avoid clothings damages,

comfortable driver position (the most confortable as possible), easily replaceable tires, it was

simple to park and to get on. During the last fifty years the market has known more than one

hundred Vespa models. At the same time the Innocenti company made the 'lambretta'

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(designed by Cesare Pallavicino). Vespa and Lambretta are two important pieces of Italian

history and they keep at be a people heart's piece..

In a rising but not completed production process yet, Olivetti Company took a leading role in

the field of industrial design in a wide range of employment from advertising to building

trade.

From the Second World War to Present Time:

During the Second World War a big part of the Italian construction legacy had been

destroyed, so it was important to find new ideas to reconstruct the country: this was an

interesting challenge for designers and architects who were called to renew Italian dwelling

places in a technical and functional way. Some companies carried out interesting sperimental

works; these were Feal company creating steel fittings, Olivari company creating door

handles and Bticino company creating electric power control devices. In 1950's also the new

modern furniture companies obtained extraordinary findings, particularly stackable kitchens

industry and home appliances industries. This last mentioned Italian industry became in a few

time the second world-wide exporter after United States, with objects created by Alberto

Rosselli, Marco Zanuso, Achille Castiglioni, Piergiacomo Castiglioni and Gino Valle (he

cooperated for a long time with Rex-Zanussi company).In 1950's industrial objects became a

symbol of this new renaissance period; Italy suddenly found out that modernity means

welfare, comfort and a best type quality of life. So next to home appliances we could find

furniture, lamps, a vaste range of objects for home and free time, radio sets and television sets

that gave life to a typical 50's gay image. In the same years the new furniture's shapes for

serial industrial production had an important role. Young rationalist architects could finally

put in practice their training knowledge. Some important names of the period to mention are

Franco Albini, Ignazio Gardella, Luigi Caccia Dominioni, Vico Magistretti, Ettore Sottsass,

Marco Zanuso, Achille and Piergiacomo Castiglioni and the BBPR group (Banfi, Belgiojoso,

Peressutti, Rogers).

The Italian design excitement and sedimentation found its peak in 60's, when a great number

of ordinary objects were produced. There was a rapidly increasing national and international

market demand, people usually bought objects more for their names then for their real worth.

In these years other designers had a big importance: Mario Bellini, Vico Magistretti, Gae

Aulenti, Angelo Mangiarotti, Enzo Mari, Rodolfo Bonetto, Marco Zanuso.

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Massimo and Lella Vignelli made great success in the United States as representatives of the

purer Italian design.

In the second half of the 70's the 'post-modern’ or 'neo-modern' became the most significant

movement in Italy. The new phenomenon emerged thanks to vanguard designers (Branzi,

Deganello, De Lucchi, Sottsass) and above all thanks to Alchimia group (founded in 1976 by

Alessandro Guerriero) and Memphis group producing unusual objects which didn't belong to

any tendency. The style was extremely provokative and kitsch and it became in a few time

the guiding style of the new Italian design.

Instruments for Italian design promotion were the Compasso d'oro prize, exhibitions like the

Triennale and the new Salone del Mobile in Milan and the big objects-manifests like Italian

ocean liner laying up for United States.

Nowadays furniture design is the biggest Italian industrial design range for which Italy is the

worldwide leader, but we can also find lighting design, automotive design and the emerging

graphic and web design.

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Competitive Strategy

In order to gain competitive advantage, it is very crucial to adopt accurate competitive

strategy. The two deciding factors for competitive strategy are industry structure and

positioning within an industry.

Every company starts by doing business in the local market and after achieving their goals

and when the local market gets saturated they go abroad. In today’s era of globalization

almost all the nations want to achieve competitive advantage in one or more industries. No

country in the world can achieve competitive advantage in every industry; it can achieve

competitive advantage in one or a few particular industries.

Competitive advantage of a nation helps its firm to compete and gain advantage over other

countries firms. Competitive advantage is a must in today’s competitive and global business

arena.

We start from the premise that the only meaningful concept of competitiveness at the national

level is that of efficiency of productivity, for example the value of output produced by a unit

of labor or capital. Hence, a nation’s standard of living in the modern age depends on its

aggregate capacity to achieve a high level of efficiency of productivity, and to increase it over

time. From this frame of reference, contrary to classical economic theory of competitive

advantage of nations maintains that nation’s competitiveness depends on the capacity of its

industry to innovate and upgrade. Companies get advantage against the worlds best

competitors because of pressure and challenge. They get befits from the fact that their local

rivals are quite strong competitors, aggressive home based suppliers and demanding local

customers. In the world of increasingly global competition, the role of the nation has grown.

Varies differences in national values, culture, economic structures, institutions and histories

all contribute to the competitive success of a nation. But once the firms of a nation have

achieved competitive advantage through innovation, it needs to sustain it by relentless

improvement. Competitors will eventually overtake any company that stops innovating and

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improving hence, holds the theory; the only way to sustain a competitive advantage is to

constantly upgrading product, moving towards more sophisticated approaches. It is sustained

through a lot of research and development to find or create something new rather then

imitating competitors. Information plays a huge role in the process of innovation and

improvement. Sometimes it comes from simple investing in research and development or

market research. Innovation also may occur a company diversifies, bringing new resources,

skills, or perspective to another industry. Innovation usually requires pressure, necessity and

even adversity.

There are two major competitive strategies which are multi-domestic strategy and global

strategy.

Multi-Domestic Strategy

Multi-domestic strategy is when a firm has a head office in a country and when it goes abroad

for business it has totally different firm structure, strategy and product for those countries.

These firms don’t follow the same strategy of business in every country rather they go to

different countries with different firm strategy. For example, if we take Singer it used to do

furniture business in the U.S. but when it came to Bangladesh, they saw that there was a big

market for consumer electronics products and because of the growing garments industry there

was a big sewing machines and other necessary machines for garments industry. So, they

quickly started doing consumers electronics business in Bangladesh. So, they changed there

strategy when they entered into the Bangladesh market according to the demand of the

market. Generally Italian furniture industries do not follow multi domestic strategy.

Moreover following this strategy may hamper their brand image as well as their quality.

Global Strategy

The firms that follow the global strategy sells product in many nations and they take an

integrated approach. These firms have only one strategy, structure, and product. These firms

unlike the multi-domestic strategy firms take the same strategy to every country they go and

do business in. They use the same brand name, target the same audience and if there is any

change in strategy it will be changed in all the countries. For example, Pepsi uses the same

business strategy, same formula, target audience all over the world. According to the global

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strategy the companies can modify their strategy and product if needed to meet the demand or

taste of the local market.

The firms which follow the global strategy are more successful than the ones who follow

multi-domestic approach. Italian furniture industries tent to follow the global strategy. They

use the same strategy and sell the same product all over the world.

Global Furniture production

Look at the Global trade in the furniture sector. For the year 2004, the global furniture trade

stood at 69.7 billion Euros. The European Union furniture manufacturers were able to export

34.9 billion Euros of furniture. It was around 52.1% of the world total. The Asian countries

are now the second largest furniture exporting region, with China taking the lead for the

number one spot. The countries of the NAFTA zone became the largest furniture importing

zone. Their total imports were 22.3 billion Euros with USA's share valued at 18.1 billion

Euros.

Positioning within the industry

There are competitors in every industry but firms always have to think how they are going to

differentiate themselves from their competitors and thus can gain market share. There are two

broad approaches:

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Lower cost: Producers produce similar products at lower costs compared to

competitors.

Differentiation: The firms can not produce at low cost, so gives something extra to

buyers such as high quality, more features and brand image.

The Italian furniture manufacturers use the differentiation approach in their design, style and

quality. There are a lot of furniture types in Italian industry. Even, Both the U.S. and the

European Union are reintroducing import quotas on and the Italian Furniture Manufacturers.

So, cost is not only high but also quality is also high. The perceptual map of Italian furniture

Industry is given below-

Positioning Strategy

Low Cost High Cost

Figure: Perceptual Map

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Italian Furniture Industry

Chinese furniture

15

Low quality

High quality

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Porter’s five forces

We have applied Porter’s Five Forces as the analytical tool to judge the industry. Base on the

five competitive forces as demonstrated by Professor Michael Porter, we have tried to

evaluate the Swiss chocolate industry. The main target is to come up with a conclusion

whether the industry is attractive or not. In order to reach such a conclusion we have followed

a step by step analysis.

Porter’s five forces model is comprised of following five completive forces:

Rivalry amongst the competitors

Threat of new entrants

Pressure from substitutes

Bargaining power of buyers

Bargaining power of supplier

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Rivalry Within

The Industry

Pressure from Substitute

Products

Pressure from suppliers

Bargaining Power

Pressure from Buyers Bargaining Power

Threat of entry from

new competitors

Figure: Porter’s Five Forces

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The steps are described here one after another-

Rivalry amongst the competitors:

Firms strive for a competitive advantage over their rivals. If the industry is concentrated, i.e.

only a few firms hold a large market share, then the industry structure is closer to a

monopoly. If the industry is characterized by many rivals none of which has a significant

market share, then these fragmented markets are said to be competitive. The Italian furniture

industries have a lot of competitions not only in their country but also the whole world. Brazil

and China are the threats for the furniture industry in the world because of their low cost.

There are a lot of competitors in Italian market.

A large number of firms considering the market size increase rivalry because more firms are

competing for the same customers and resources and there is also a struggle for market

leadership. Each Italian company although has to sell a large quantity of their products, they

mainly concern about the quality. But other countries like Brazil and china are cost based

Furniture Company. So, this situation leads to fight for market share and results in increased

rivalry. A moderate level of product differentiation is associated with higher levels of rivalry.

But in this case since brand identification plays a major role, it tends to constrain rivalry.

Top ten competitors in Italian furniture industry

Company name competitive advantages

kitchens, ,cucine

bedrooms, other furniture, dining-rooms,

sitting-rooms, living-rooms

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sitting-rooms, semi-finished

kitchens,cucine

components

bedrooms, other furniture, dining-rooms

Kitchens

bedrooms, components, kitchens, other

furniture, dining-rooms, sitting-rooms,

semi-finished, living-rooms

Kitchens

components, kitchens, dining-rooms,

living-rooms

Threat of new entrants:

A growing market like the Italian furniture industry and the potential for high profits induces

new firms to enter and incumbent firms to increase production. A point is reached where the

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industry becomes crowded with competitors, and demand cannot support the new entrants

and the resulting increased supply. The industry may become crowded if its growth rate

slows and the market becomes saturated, creating a situation of excess capacity with too

many goods chasing too few buyers. A shakeout ensues, with intense competition, price wars,

and company failures.

If barriers to entry are high, then there are fewer competitors in the industry and

consequently, profitability is higher. Ideas and knowledge that provide competitive

advantages are treated as private property when patented, and prevents others from using the

knowledge and thus creates a barrier to entry. There are plenty of patents in this industry and

so profitability is still high.

In furniture industry lower-cost competitors in China and Brazil are improving quality and

grabbing market share. The biggest threat to furniture designers comes from unauthorized

copies. Chinese manufacturers, and even other Italians, casually replicate the best designs.

Just mention China and any businessman in Italian design will angrily lash out about how

difficult it is to compete with manufacturers who don't follow any rules. It creates a lot of

competitions in markets.

Pressure from Substitutes:

In Porter's model, substitute products refer to products in other industries. As more substitutes

become available, the demand becomes more elastic since customers have more alternatives.

A close substitute product constrains the ability of firms in an industry to raise prices. Wood

and Wood Products, Plywood, Board, Particle Board, Bamboo, Engineered wood, Wood

plastic composite, even metal furniture are the substitutes of wooden furniture.

Plywood

In the modern civilization, the wood is playing very useful and important role. It can be seen

that wood is used at every place. In house, it is used as cots, doors, tables, almaries, racks,

roof, partition walls etc. Apart from these woods is used in making boat, ships used as sound

absorber, insulating materials etc. Plywood is a special type of board in which several

numbers of boards are joined, with glue to dissipate or compensate particular defects of each

and to offer a board of required thickness. It used for general construction purpose such as

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interior material for housing, ships, vehicles and furniture etc. Its demand is regularly

increasing. Plywood can be used at every place where the wood is used. The cost of the

product made of plywood is cheaper than the product made of wood.

Hard Board from Bagasse:

Soft and hard boards, which are the basic among the paper boards, is used for wide range of

purposes like folding boxes, backboard, for flat files, for making registers etc. These boards

can be produced from any waste material like rice straw, waste paper, jute waste, coir dust

etc. The board can also be manufactured from bagasse which is available from the sugar

industries. There is high demand for straw board, cardboard, mill board and solid fiber boards

in the country. A hard fiber board prepared from bagasse is light in weight and is not easily

breakable. Major proportion of the demand for boards is required by the packaging industry;

for flat files in government offices, for book-binding, making shoe boxes and sale of textile

goods etc. Bagasse is a waste product from the sugar industry and its conversion into paper;

fiber board etc has strengthened the economy of the country. Setting up of such a unit will

result in the profitable use of agricultural waste, giving employment to local people and

bringing in huge profits. Such units can be established on a competitive basis to large scale

units.

Particle Board

Particle boards are substitute of solid wood and plywood. Due to the growing deforestation,

the natural wood is becoming more and more scare. Particle boards are made from

agricultural wastes like jute sticks, non-commercial waste wood chips, sawdust etc. and

bonded by resins. Particle boards are used as cheaper substitute of wood in the Manufacture

of various furniture items like table tops, door/window panels, show cases, partitions fridge

taps, sewing machine cover etc. Particle boards are also used as sealing tiles. Due to this, it

has got very good scope for marketing. Most of the above items are used in bulk by the

manufacturers of fridges, sewing machine etc. There is bright future of particle board. Any

entrepreneur can well venture in this project.

Broom Stick Processing Plant

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Broom stick is well known to all. It has been largely used by domestic people, commercial

complexes, industrial people etc. It is generally prepared by using coconut leaves or special

type of bamboos. There is a good market demand of this product and it? s associated product

like handle. As a whole the project is underlying scale or small-scale agro based as well as

waste recycle based. There is a scope for new entrepreneur to enter into this field.

Ply board from bamboo

Ply Board is wooden made board or wooden like raw materials largely used for making ply

board. There is large use of ply board nowadays in making wooden base furniture. Bamboo

can be used for making ply board. There is large amount of bamboo available in our country.

Bamboo on special processing can be converted into ply board. Matured bamboos are used

for making ply board.

Bargaining power of buyers:

The power of buyers is the impact that customers have on a producing industry. In general,

when there are limited buyers but too many suppliers, then buyers have high bargaining

power. Under such market conditions, the buyer dictates the price and profitability in the

industry will be low. In reality hardly any industries face such a situation, but frequently there

is some asymmetry between a producing industry and buyers.

The quality of Italian furniture is famous through out the world. It is different for its

exclusive designs, quality, and efficient resources in Italy. Italian has international

competitiveness in manufacturing quality furniture. Hence there is plenty amount of suppliers

as well as buyers in the whole world. Market forces determine the prices. Some brands may

be expensive, while some may be reasonably priced. The buyers cannot dictate the price.

Furniture is not a daily consumed product. Many countries have a high level of per capita

consumption among which Italian furniture is in the leading position. As the market is big in

terms of buyers so buyers have very less influence over the price.

Bargaining power of the suppliers:

A producing industry requires raw materials - labor, components, and other supplies. This

requirement leads to buyer-supplier relationships between the industry and the firms that

provide it the raw materials used to create products. Suppliers, if powerful, can exert an

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influence on the producing industry, such as selling raw materials at a high price to capture

some of the industry's profits.

In the furniture industry, the major raw material is wood. In Italy, there are many related

industries of furniture. They are more co operative. Their most strength is their distributive

channel. The wood and forestry sector is also considered: production, imports, exports and

consumption data are provided for the main semi-finished wood products (sawn wood; wood-

based panels), as well as investments in the wood processing industry. So they have

bargaining power of the supplier.

Conclusion after Combining Porter’s five forces

From the preceding discussion it is found the Porter five forces suggest that the Italian

furniture industry is competitive as all the forces are in favor of the industry. The profitability

of the industry is high. So, this industry – one of the dominator in the global furniture

industry has international competitive advantage.

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Porter’s diamond model

Porter’s Diamond Model suggests that the national home base of an organization play an

important role in shaping the extent to which it is likely to achieve advantage on a global

scale. This home base provides basic factors, which support or hinder organizations from

building advantages in global competition. Porter distinguishes four determinants:

Factor Conditions:

The principal factors in the chocolate industry that may have a significant influence on its

competitiveness are labor, infrastructure. We also need to consider the influence of

government policies and agencies on the factor conditions concerned.

According to porter, under Factor condition there is some recourse. These are:

Human Resources:

It is very important for a country to have human resources. Human resources can be of two

types. Quality is when a nation has relatively small number of human resources but those

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Firm Strategy, Structure, and

Rivalry

Target customers

Intended positioning

Firm Strategy, Structure, and

Rivalry

Target customers

Intended positioning

Related & Supporting Industry

Related & Supporting Industry

Demand Condition

Demand Condition

Factor Condition

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labors or workers are very skilled and well trained. Quantity is when a national have a big

number of human resource but who are not that skilled and well trained. One nation must

have any of these to support its industry to be internationally competitive.

Literacy Rate:

Definition: Age 15 and above can read and write

Total population: 98.4%

Male: 98.8%

Female: 98%

Total area of Italy is 301,230 sq km and population is 58,147,733 (July 2007 est.) Which is

not so small and most of these population are highly or semi skilled and educated, which

make Italy a country of high quality labor not quantity. The unemployment rate in Italy is not

too high which makes these labors expensive but as they are skilled, different manufacturers

of furniture around the world are coming in Italy to manufactures the furniture.

So we can say, Human recourse of Italy is very much supportive to furniture industry and it

helped Italy to gain competitive advantage in furniture industry in the international market.

Physical Resources

These are the natural resources a nation possesses such as minerals, plenty free land, time,

oil, coal, gas, etc. These resources can play a very important role to gain international

competitive advantage. For example, Middle East has gained competitive advantage in oil

industry as all the oil mines of the world are in Middle-East mainly.

Coal, mercury, zinc, potash, marble, barite, asbestos, pumice, fluorspar, feldspar, pyrite

(sulfur), natural gas and crude oil reserves, fish, arable land are the natural resources in the

Italy which help him to gain competitive advantages. Much of Italy is covered by mountains.

The Dolomite Mountains which extend across northern Italy are part of the Alps mountain

range. It is in the Europe. So, it is easy to supply quality furniture to the other countries which

are sophisticated. It is an advantage for them.

This country is surrounded by water. So, it is easy to transport to other countries in cheaper

rate.

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Knowledge Resources

Knowledge Resources of a nation includes Educational Institutions, Universities, Research

Centers, etc. mainly places where specialized knowledge in created. For example, USA has

competitive advantage in Atomic industry as many of the world’s best universities that

research on atoms and support students in keep researching on atomic energy are in USA.

In Italy the most of the people are educated.

Education:

High school population of 2.5 million students

Almost 250,000 vocational college undergraduates

University population of 1.8 million students

A growing university student pool of 233,000 graduates since 2003

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Italy has an over 98% literacy rate and they have competitive advantages in their quality of

product. They have researched a lot to maintain the quality.

Capital Resources

Capital resources are the amount of capital available in that particular nation as industries

need capital to run business, but as now days because of globalization, fund transfer is very

easy and quick from one country to another country, so this issue is becoming less important.

Another topic under capital resource is cost of capital. If the interest rate is higher in one

country, people will invest less. As a result aggregate expenditure schedule will fall which

will result a lower demand in the market. So if the interest rate is high in a nation, that nation

never success as the industry of that nation will not flourish domestically or internationally.

From the capital market side, Italy has flexibility and this is another reason why still there is

new entrant in the industry.

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The economic condition of Italy

GDP (purchasing power parity): $1.8 trillion (2007 est.)

GDP (official exchange rate): $2.068 trillion (2007 est.)

GDP - real growth rate: 1.9% (2007 est.)

GDP - per capita (PPP): $31,000 (2007 est.)

GDP - composition by sector:

Agriculture:1.9%

industry:28.8%

services: 69.3% (2007 est.)

Labor force: 24.86 million (2007 est.)

Labor force - by occupation:

Agriculture:5%

industry:32%

services: 63% (2001)

Unemployment rate: 6.7% (2007 est.)

Infrastructure:

Infrastructure plays a very important role in nation’s success internationally. Infrastructure

includes roads, transportations, fund transfer system through bank, technology, etc. If the

infrastructure of a nation is nor supportive to industrial growth, means if infrastructure of a

nation cant help one industry to run and boost, that industry of that nation can never be

internationally competitive. For example, auto-mobile industry in Bangladesh can never

flourish until the infrastructure of Bangladesh supports.

Italy has an efficient and modern infrastructure, even though it performs poorly compared to

other Western European countries of comparable size. The whole peninsula is well connected

through an extensive system of railways, expressways, national roads, airports and seaports.

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Most of the infrastructure was rebuilt after the ravages of World War II and is subject to

constant improvement and upkeep. However, many important projects have failed to

materialize, among them the subway system in Naples, and more railways in the south and

east to facilitate the movement of goods. At the same time, funds were given to many useless

projects, built solely to line the pockets of those whose political or economic support could

thus be counted upon. Italy has a number of important international airports and the national

carrier. Since most goods in Italy are transported by road, the system is constantly upgraded

and improved. It provides a highly developed and efficient network of interconnected

highways and lesser roads, particularly in northern regions. So, the infrastructure helps to

flourish the furniture market.

Demand Condition

Demand condition is related to home demand. Demand should be there in the home market.

When a company has demand in the home market, then it will go to the international market.

If the product is sophisticated, then everyone will like it. If customers are sophisticated then

the company has to produce high quality, expensive product. Based on the home market

company has to produce its product. There is home demand for stylish furniture in Italy. In

Italy people love stylish, trendy furniture. So Italy produces quality furniture for its people.

Pressure from home buyers to innovate:

In Italy people love stylish product. They don’t like ordinary products. They are fond of

stylish, trendy furniture. There is a pressure from buyers to innovate modern stylish furniture.

They pressure companies to meet high standards; they prod them to innovate and to upgrade

into more advanced segments. So Italy produces stylish furniture for its stylish people and

always upgrades them. They also have different categories of furniture.

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Sophisticated and demanding buyers

A nation companies gains competitive advantage if domestic buyers are the worlds most

sophisticated and demanding buyer for the product or service. Sophisticated, demanding

buyers provide a window into advanced customer needs, they pressure companies to meet

high standards; they prod them to innovate and to upgrade into more advanced segments.

Such is the case with the Italian furniture industry. The customers want new furniture and

because of the growing home demand, there are always new furniture the market. The

sophisticated Italian buyers have created pressure on the Italian furniture manufacturers to

constantly innovate and upgrade their products.

Destination of Italian furniture export

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Anticipatory buyer needs

A nations company can anticipate global trends if the nation value is spreading; that is- if the

country is exporting its values and tastes as well as its products. The Swiss tradition for

chocolate has been spread to all parts of the world and the Swiss chocolate manufacturers

export their products across the continents.

Italy is the largest exporter of furniture to the United States from Europe, accounting for

$1.18 billion in 2004. Germany is second with $209 million. Denmark is third with $178

million, followed by the United Kingdom with $146 million, France with $137 million, and

Poland with $107 million. With only 0.2 hectare/per capita of forest land (one of the lowest in

Europe), Italy is forced to import 80 percent of the lumber required for furniture

manufacturing (Besozzi 2003). However, the Italian furniture industry is very productive. In

2000, output of the Italian furniture industry was $36 billion. According to Besozzi (2003),

there were more than 38,000 furniture establishments and more than 226,000 workers in the

Italian furniture industry in 2000. One of the most important success factors of this industry

has been a careful pricing policy due to relatively high raw material costs (Table 3).

Furthermore, the Italian furniture industry conducts research on new and innovative

materials, practical solutions, and improved performance of all home furnishing items. In

recent years, there has been a trend of Italian wood furniture companies becoming more like

“assemblers” and less like “producers” (Besozzi 2003)

Size of home demand

The total size of the home market is not important for it to obtain competitive advantage.

Nature of home demand is important. The nature of home demand of Italy is very stylish.

Italy produces high quality, stylish, modern, trendy furniture. The furniture industry in Italy is

dependent on the nature of population who buys the stylish, trendy furniture. They do not

want everyone to but their products. That’s why they produce small amount of furniture but

they are very stylish and sophisticated. They produce furniture only for sophisticated, rich,

stylish, modern people. That’s why they have gain competitive advantage in modern

furniture.

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Rate of growth of home demand

The furniture industry had a rapid growth during the 1970s in Italy. There was a strikingly

high rate of growth of domestic demand and exports. An interesting question is: what are the

effects of different rate of growth of domestic demand of furniture on the forest sector as a

whole? Here we carry out a shift in the demand function such that at the same price of 1900,

consumption is increased by 28% (corresponding to a shift of 5% one year for 5 years).

From Table we see that the main influences are, besides furniture itself, on the panel industry

which is closely interrelated with furniture production. Panel consumption (outside the forest

sector) obviously decreases to make up for the increased demand by the furniture industry.

Import, domestic production and prices rise as a response to the higher production level of the

furniture industry. Through panels the effect of the increased demand for furniture reaches

pulpwood. The consequences on sawn wood and logs are much less important, confirming

the relevance of the substitution of panels for sawn wood that has taken place during the

1970s.

Related and supporting industries:

Rate of Factor creation becomes higher for the related and supporting industries. It is obvious

that the person who used to work in any related and supporting industry of furniture industry

can also work efficiently in furniture industry. Italian design is a by-product of a virtuous

circle composed of quality workmanship, a winning manufacturing model (the industrial

furniture districts), constant technological innovation and a strong creative attitude to the

marketplace. This is an important success factor for the furniture related sectors (furniture

components, woodworking machinery, and household appliances) and is fundamental for the

image of Italian furniture.

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In Italy, there are many related industries of furniture, For each furniture manufacturing

district basic data are provided (furniture production, furniture manufacturers and employees,

furniture exports) as well as information on type of furniture produced, cluster history,

development bodies and policies, swot analysis (strengths, weaknesses, opportunities, threats

Italian furniture consumption is broken down by segment as well, together with an analysis of

the furniture distribution channels (small scale independent retailers, specialized large

furniture distribution, non specialized distribution). Their distribution channel is so strong.

The wood and forestry sector is also considered: production, imports, exports and

consumption data are provided for the main semi-finished wood products (sawn wood; wood-

based panels), as well as investments in the wood processing industry.

Competitive Advantage in supplier industries:

Close relationship

Italian furniture industry has close relationship with the wood processing industry and the

wood supplier. They also have relationship with the man made wood processing companies.

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In Italian furniture they also use man made wood, metal, plastic, ceramics. So they also

maintain a close relationship with these suppliers.

A definitely satisfying preliminary balance for 2006 indicates a clear recovery of Italian

woodworking machinery, with production topping 1.8 billion euro and export totaling almost

1.5 billion euro, close to 2000 record levels. These provisional results were presented by

Acimall - the Italian woodworking machinery and tools manufacturers’ Association – during

a press meeting on December 15. Italian industry of woodworking and furniture technologies

employs 12,000 people in 300 relevant companies - including 215 Acimall members -

manufacturing 90 percent of the entire Italian production.

Acimall Vice president Grazia Finocchiaro presented a handful of data and remarks on

international markets and the role Italian companies are playing.

Joint Innovation with supplier

Italian design is a by-product of a virtuous circle composed of quality workmanship, a

winning manufacturing model (the industrial furniture districts), constant technological

innovation and a strong creative attitude to the marketplace. This is an important success

factor for the furniture related sectors (furniture components, woodworking machinery, and

household appliances) and is fundamental for the image of Italian furniture.

Most of the important materials of furniture manufacture are produce in Italy. In Italy there

have great designers for furniture. They innovate new and stylish trendy furniture time to

time. Furniture manufacturer and furniture designer have a jointly innovate the furniture. And

the supplier are also supply the related material according to the new design.

Competitive Advantage in related industries:

Complimentary product

Complimentary Products are different for different type of furniture. This furniture

include different types of home furniture: kitchen furniture, upholstered furniture,

bedrooms, living rooms, beds, tables, chairs, occasional furniture, home office furniture.

Lighting fixtures are also considered. Complimentary Products of this home furniture

covered include: Fabrics, leather, lighting products, lighting appliances, lighting fittings,

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lighting fixtures, floor lamps, table lamps, wall lights and brackets, chandeliers and multi

arm fittings, flush fittings, overhead light, bathroom mirror lights, spotlights projectors,

built-in spotlights, outdoor and garden lights, ceiling lighting fixtures, ceiling lamps,

contemporary lighting fixtures, modern lighting fixtures, design lighting fixtures, classical

lighting fixtures, traditional lighting fixtures, glass lighting fixtures, crystal lighting

fixtures, steel lighting fixtures, aluminum lighting fixtures, metal lighting fixtures, bronze

lighting fixtures, brass lighting fixtures, wooden lighting fixtures, plastic lighting fixtures,

screw-type bulbs, halogen bulbs, fluorescent energy saving bulbs, fluorescent neon tubes.

bathroom accessories, toilet seats (wc seats), shower curtains, fabric shower curtains,

plastic shower curtains, bathroom accessories in wood, bathroom accessories in metal,

plastic bathroom accessories, bathroom accessories in ceramics.

Firm strategy, structure and rivalry:

Firm strategy, structure and rivalry mean those conditions in a country that govern or

influence how companies are created, organized and managed, as well as how domestic

rivalry is conducted. It is the convergence of management practices and organizational modes

favored in a country, on one hand, and the sources of competitive advantage in a given

industry, on the other hand, that result in international competitiveness in a specific industry.

Strong local rivals stimulate creation and persistence of competitive advantage

internationally.

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Firm Structure

Initially, the Italian furniture companies started, as family owned business.

The Italian industrial sector is characterized by a number of peculiarities compared to other

advanced countries. One of these is the small average size of its firms. This particular model

of organization of production, based on the small dimension and often on informal

relationships within and outside the firm, guarantees flexibility and a high degree of

specialization, two key factors of the Italian economic performance. But this model presents

some limits too, one being related to the ownership structure and governance of firms.

Another characteristic of the Italian industrial sector is its weakness in high-tech industries:

innovative activity is still far from the level reached in the major industrialized countries, and

Italian trade deficit in the technologically-advanced sectors is persisting. Ownership structure

can influence innovative activity because it implies particular forms of risk and profit sharing,

and particular financial sources. The innovative output is affected by the ownership structure,

as this variable turns out to be significant in many specifications of the model. It is also

common in Italian furniture industry. So, it is a threat to keep stable their competitive

strategy.

Goals of individuals

The people who work and manage the companies are also an influencing factor. The Italian

people like to work for well renowned furniture companies as it is considered to be

prestigious to work for them.

Rivalry among competitors

The level of competition among competitors determines industry profitability. If there are too

many competitors in the home market, then the firms will try their best to produce the best

quality chocolates. Hence, domestic rivalry leads to international competitiveness. Since the

Italian people love to have stylish furniture, there are some furniture companies in Italy.

These companies always compete among themselves in distributing and marketing their

furniture in the most innovative fashion and price. As a result of domestic rivalry, the Italian

people have obtained competitive advantage in the furniture industry internationally.

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Major furniture exporting countries

Value 1995 Value 1996 Value 1997 Value 1998 Value 1999

US$ '000 US$ '000 US$ '000 US$ '000 US$ '000

ITALY 8.203.444 8.924.152 8.593.918 8.630.577

GERMANY 4.548.889 4.569.305 4.267.070 4.780.369 4.738.641

CANADA 2.586.910 3.078.383 3.643.436 4.254.850 4.596.333

USA 3.119.386 3.323.310 3.941.737 4.408.107

CHINA 1.760.094 1.887.080 2.481.613 2.821.435

FRANCE 1.985.643 2.111.873 2.117.530 2.402.929 2.458.306

DENMARK 2.098.948 1.970.453 1.909.098 2.022.567 1.996.361

POLAND 1.330.672 1.611.279 1.774.814 1.909.699

MEXICO 882.028 1.346.008 1.755.165 1.841.054

BELGIUM-LUX 1.695.848 1.700.891 1.659.417 1.616.605

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Sources of Creating Competitive Advantage

New technologies:

New technology creates the scope of creating competitive advantage.

Sometimes new technology can help to increase the net sales of a business. By inventing new

technology companies can gain customers attention to purchase. Italian furniture industries

also implement some technical advancement in their creation.

LOOK LUXE sofas with the innovative I.B.S. BEST SLEEP mechanism

ensure especially refreshing and healthy sleep! Leading LOOK LUXE's breakthroughs and

developments is the innovative spring mattress I.B.S. BEST SLEEP (Integral Box Systems).

This unique mattress is fabricated using the latest technology to maintain the mattress's

uniform structure, prevent springs from loosening and guarantee the mattress's long-term

comfort and durability. I.B.S. BEST SLEEP - all the advantages along and across the whole

mattress:

Quilted upper comfort layer, with resilient foam cushioning for padded support;

High quality polyurethane layer;

High quality flexible insulation layer;

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1. Orthopedic support;

2. High quality Bonell spring system;

3. Bent and flexible health spine in beech wood;

4. Cast I.B.S. wall;

5. Insulating layer at the mattress's base;

6. Frame of block wood;

7. Bedding bin cover;

8. Soft, insulating polyurethane layer;

9. Spacious bedding bin;

10. Bedding crate plating;

11. Support angle for perfect strengthening of the bed frame;

12. High riser lifting device for easily opening the lower mattress;

13. Lower mattress.

LOOK LUXE's new collection invites to enjoy another innovation that improves the quality

of your sleep even more. Latex, offered as an option with most models, is a natural, anti-

bacterial product that "breathes". The latex layer adds flexibility and comfort; and allows the

mattress to take the body's shape and provide back with perfect support.

LOOK LUXE presents its Back-Up mechanism to raise and support head and back. The

mechanism is fitted to a variety of sofas in LOOK LUXE's new line and it can be operated

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electrically, pneumatically or manually and let's you read, study, watch television or just loll

in extreme comfort at any height you like.

New or Shifting Buyer Needs:

Lifestyle of a country differs from another countries lifestyle. With the

change of lifestyle competitive advantage also shift depending on buyer needs and

preferences. Now-a-days people like stylish and smart furniture to give a decent look of their

home interior rather than preserving antique or traditional furniture. Italian furniture

designers picked up the idea of changing mentality of buyers. As a result Italian furniture is

now popular whole over the world.

Emergence of New Industry Segment:

Creating a new segment for a particular market is called emergence of

new industry segment. It means creating a new demand by introducing new type of product.

In the sense of marketing it is also called “Ladder”. At present Italy is not only producing

wooden furniture but also rot-iron, plywood, stainless steel or different types of sofas. These

types of products are also popular among buyers and they would like to purchase these

furniture.

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Shifting Input Cost or Availability:

Input cost is an important factor for gaining competitive advantage. If a

company can reduce its input costs then definitely they will increase their profit. For reducing

input cost Italy order Chinese manufacturers to produce raw materials and other mechanical

support. But Italy doesn’t give their branded items to China. Because it is their prestige and

pride which can’t be copied by any other countries.

Change In Government Regulations:

Italy has been a democratic republic since June 2, 1946, when the

monarchy was abolished by popular referendum. The constitution was promulgated on

January 1, 1948. Until recently, there had been frequent government turnovers (more than 60

and counting) since 1945. The dominance of the Christian Democratic (DC) party during

much of the postwar period lent continuity and comparative stability to Italy's political

situation. The Italian economy has changed dramatically since the end of World War II. From

an agriculturally based economy, it has developed into an industrial state ranked as the

world's sixth-largest market economy. Italy belongs to the Group of Eight (G-8)

industrialized nations; it is a member of the European Union and the Organization for

Economic Cooperation and Development (OECD).

Italy has few natural resources. With much land unsuited for farming, Italy is a net food

importer. There are no substantial deposits of iron, coal, or oil. Proven natural gas reserves,

mainly in the Po Valley and offshore in the Adriatic, constitute the country's most important

mineral resource. Most raw materials needed for manufacturing and more than 80% of the

country's energy sources are imported. Italy's economic strength is in the processing and the

manufacturing of goods, primarily in small and medium-sized family-owned firms. Its major

industries are precision machinery, motor vehicles, chemicals, pharmaceuticals, electric

goods, and fashion and clothing. Italy's economic growth averaged only 0.66% for the five

years ending in 2005; 2006 GDP growth reached 1.9%, the highest since 2000, largely due to

export growth to the Euro zone area, and is expected to decelerate slightly to 1.7% in 2007.

Italy continues to grapple with budget deficits and high public debt--2.0% and 105.6% of

GDP for 2007, respectively. Italy joined the European Monetary Union in 1998 by signing

the Stability and Growth Pact, and as a condition of this Euro zone membership, Italy must

keep its budget deficit beneath a 3% ceiling. In June 2006, the European Commission warned

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Italy it had to bring the deficit down to that level by 2007. The Italian Government has found

it difficult to bring the budget deficit down to a level that would allow a rapid decrease of that

debt. The economy continues to grow less than the euro-zone average and growth is expected

to decelerate from 1.9% in 2006 and 1.7% in 2007 to under 1% in 2008 as the euro-zone and

world economies slow.

Italy's closest trade ties are with the other countries of the European Union, with whom it

conducts about 60.3% of its total trade (2006 data). Italy's largest EU trade partners, in order

of market share, are Germany (14.9 %), France (11.1 %), and the United Kingdom (5.3 %).

Italy continues to grapple with the effects of globalization, where certain countries (notably

China) have eroded the Italian lower-end industrial product sector.

The Italian economy is also affected by a large underground economy--worth some 27% of

Italy's GDP. This production is not subject, of course, to taxation and thus remains a source

of lost revenue to the local and central government.

Sustaining Competitive Advantage

There is a proverb goes that, “Sustaining is more difficult than gaining.” Sustaining

competitive advantage means that holding the advantages and related factors on a constant

way so that others can’t overtake.

INB 410- International Competitiveness

Sustaining Competitive Advantage

Nature of Competitive AdvantageNumber of Distinct Sources of Advantage Constant Improvement and Upgrading

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Nature of Source of Competitive Advantage:

Nature of source of competitive advantage depends on two factors.

One is lower order advantage which is easy to copy and other is higher order advantage

which is hard to copy. Italy can reduce their costs by producing raw materials in China. Other

countries could easily copy this strategy but the unique concepts of designing the furniture

are not available all over the world. Interior design is the process of shaping the experience of

interior space, through the manipulation of spatial volume as well as surface treatment.

Interior Design draws on aspects of environmental psychology, architecture, product design

and furniture design in addition to traditional decoration. An interior designer is a person who

is considered an expert in the field of interior design or one who designs interiors as part of

their job. Interior design is a creative practice that analyzes programmatic information,

establishes a conceptual direction, refines the design direction, and produces graphic

communication and construction documents. There are several different areas that an interior

designer may specialize in. These include residential, retail, corporate, hospitality, healthcare,

or institutional design. Essential parts of all design styles are concept, color, proportion,

balance, ergonomics, and function of design. Although all styles differentiate their usage of

each of these, they are all an integral part of the overall look and feel of a room or space.

Designers incorporate the seven elements of design and enhance style: form, mass, shape,

line, color, texture and pattern. Italy has master furniture designers who have the skills and

ability to produce world class furniture which are now dominating the world furniture market

Number of Distinct Sources of Advantage:

Italian furniture has multiple advantages. Competitors like China or Malaysia can copy some

of the features. But they can’t copy all the advantages. China can’t copy Italian brand image.

As a result Italy gets competitive advantage and sustains their furniture business.

Constant Improvement and Upgrading:

Most of the developed countries now-a-days are concentrating on “Research and

Development”. This department is used for improvement and upgrading of products where

lots of money is being invested. Like other countries Italy is using research and development

to develop their furniture industry. Italy is now investing on technology which will be

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included in furniture. Their latest inventions are producing safe, comfortable and durable

furniture. In this way Italy is gaining competitive advantage.

SOWT Analysis

Strength:

1. Environmental condition:

Italy has a favorable environmental condition for wood. In Italy the wood processing industry

is doing very well. All type of material for furniture manufacturing is produce in the Italy.

1. Technological advancement:

They use new technology and advanced machinery for processing wood and furniture. There

furniture are involve with new technology .For example, they can made bed which one can

scroll for sit and also for sleep.

3. Design:

The designs of Italian furniture are world famous. Italian furniture is trendy and smart. With

the changing fashion and demand Italian furniture is also change their design.

4. Style:

Italy are famous for producing stylish furniture .In the world wide Italian furniture are

renown for the style.

Weakness:

1. Skill labor shortage:

In Italy there is skill labor shortage. For furniture industry skill labor are needed. Without

knowing anything about the furniture manufacturing one can not involve in furniture

manufacturing process.

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2. Expensive labor:

In Italy the skill labor are very much expensive. Which increase the Italian furniture’s price?

3. High price:

Italian furniture is comparatively high price than Malaysian, Thailand and Chinese furniture.

So every one can not afford Italian furniture.

4. Company structure:

Italian companies are family oriented business. They do not involve any outsider in their

business.

5. Less capital:

Most of these companies don't have enough capital to make crucial investments in

distribution and technology. Experts say a shakeout has already begun. Some 2,000 tiny

furniture companies have gone bankrupt over the past three years.

Opportunity:

1. Niche market: the market segment of Italian furniture is so small and sophisticated. They

only focus on aristocrat design and style. They may target another segments to expend its

business.

2. Strong brand image:

Italian furniture has a strong brand image. All over the world Italian furniture are famous for

the Italian brand For example in china there have a high demand for Italian furniture, so

China manufacture the Italian furniture and sell it in there own country.

4. Lower price than Spanish furniture:

Italian furniture has a comparatively lower price than the Spanish furniture. The demand for

Italian furniture is also very high in western countries.

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Threats:

1. Business run by family:

Now most players in the industry, composed primarily of family-run operations with fewer

than 20 employees, are in a battle for survival.

2. Competitors:

Lower-cost competitors in China and Brazil are improving quality and grabbing market

share.

3. Increasing cost:

Raw material costs are rising, and distribution networks are weak. "The sector is very, very

vulnerable

4. Replication

The biggest threat to furniture designers comes from unauthorized copies. Chinese

manufacturers, and even other Italians, casually replicate the best designs.

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Comparison among Italian furniture with other

Spanish Furniture:

A new architecture reflected Spanish styles and the new culture were heavily influenced by

Spanish Catholicism. A great deal of the furniture and decorative art made in the early period

was intended for use in churches and monasteries.

Craft guilds were established to control both the styles and amounts of furnishings produced.

Furniture made for wealthy landowners and government officials was usually styled

according to what was popular in Europe at the time. The furniture commonly used in the

sixteenth century was Spanish in style, though it began to acquire individual characteristics as

native craftsmen adapted it.

Carpenters copied Spanish designs, mirroring the styles that were in vogue in the cities where

they lived, including intricately carved armoires and chests and lyre-leg refectory tables in

walnut, cedar, cypress and mesquite. The best of the trained guild craftsmen were

commissioned to produce furniture and elaborate altarpieces for churches and furniture for

government buildings.

Independence came to Mexico and Peru in the 1820's and the colonial guilds were

dismantled, creating an opportunity for more imaginative interpretations which were not only

more varied but also more affordable.

Designs from the colonial period weren't abandoned, but without ordinances regulating sizes

and designs, the furnishings became less labor intensive and, as a result, less expensive. The

lighter woods, which came into use, made the pieces easier to transport, and the less ornate

designs made them more versatile

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In rural areas, furniture makers worked with more primitive tools and, as had been the case

before independence, with greater freedom of expression since the guilds had little influence

outside the cities. They used whatever materials they had at hand and crafted pieces to suit

their needs and traditions.

Occasionally, they interpreted Spanish styles that had made their way from the cities to the

countryside, but these interpretations were modified to be more workable and durable in rural

settings.

Carved lyre-legs became sturdy A-frame legs, carved panels on armoires were streamlined

into flat panels, turned spindles on cupboards were simplified into slats, and layers of paint

covered sometimes inferior woods. For country woodworkers, ingenuity was every bit as

important as skill.

Over time, they created a simple, appealing style of furniture that remains popular and

sought-after even today. Independence brought with it the freedom to experiment and artisans

working in the decorative arts took full advantage. In Mexico and Peru, silversmiths, potters

and weavers began to develop a variety of interesting new styles and designs. In Mexico,

wrought iron work candelabras, sconces, gates, railings, etc. began to be produced in far

greater quantities.

Painters continued to emphasize religious themes in their work from canvas and wood to

metals, copper and tin, as well as paintings on objects. All of the decorative arts conveyed a

freedom of style and a more personal touch than any produced during the colonial period.

Mexican Furniture:

Mexico has been famous for its furniture since the times of the ancient Indians who produced

a type of furniture that was created from wood and leather and was known under the name of

icpalli. The tradition of making this kind of furniture survived until today and its modern

descendants are still produced, usually made with pig leather. The most important centers in

Mexico that produce this type of furniture are Michoacan, Jalisco and Colima and they are

commercializing it as Equipal Furniture. Equipal furniture is not very often found in Mercado

(shops) places. The biggest center that makes it is the state of Jalisco where more than 20

towns are making furniture usually from the traditional wood, mesquite.

Most people have the impression that the colonial style furniture is the typical Mexican

furniture, while the Spanish always refer to it as Spanish furniture. The most important

centers that produce colonial-style furniture are Mexico City, Taxco, Puebla and Jalisco. The

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most popular woods that are used in creating the beautiful peaces of furniture are the Spanish

Cedar (cedro), Mahogany (caoba), Springbells (primavera) and the Mexican White Pine

(ayacahuite).

Chinese Furniture:

Chinese furniture is the biggest threat for Italian furniture industry. As in most other Asian

cultures, the custom in ancient Chinese homes was to kneel or sit cross-legged on floor level

mats. Furnishings were restricted to low level tables, armrests and decorative screens, with

simplicity and minimalism the overriding themes. Some time during the Tang dynasty (618 -

907 AD), higher seats first started to appear amongst the Chinese elite and their usage soon

spread to all levels of society. Evidence as to why this move to higher seating took place is

scarce, although the elevated status associated with being raised off the floor is likely to have

been a major factor. With the higher level of seating came other types of furniture, including

benches, long rectangular tables and folding screens.

By the 12th century seating on the floor was rare in China; unlike in other Asian countries

where the custom continued, and the chair or more commonly the stool was used in the vast

majority of houses throughout the country. Over the next few centuries furniture design and

construction continued to be refined, leading up to the late Ming period (1368 – 1644), which

is considered by most to be the golden age of Chinese furniture. By this time China had

become extremely prosperous, particularly its coastal cities, and demand for luxury items

including fine furniture had grown.

The furniture of this time displayed simple, elegant lines, beautiful curves and superb

craftsmanship. The quality and accuracy of joinery was so precise that nails and glue were

used only as supplements. Metalwork such as handles, hinges and lock plates were designed

to complement the graceful lines of each piece. These were no longer simply functional items

of furniture but had become objects of beauty, and their timeless simplicity means that they

still grace even the most modern home.

Many of the designs that first appeared during this period remained unchanged, in some cases

for hundreds of years. Drawings on paper were rare. Instead verbal descriptions of ‘types’ of

furniture were passed down from generation to generation, along with the skills and

craftsmanship to continue the tradition. In many ways the artisans that produced the beautiful

pieces of this time were far more advanced than their European counterparts. One simple

example of their technical superiority is the appearance early on in China of the curved

backrest, designed to both please the eye and to increase a chair’s comfort. This same feature

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did not appear in European furniture making until centuries later.

The majority of Ming furniture was made of timber from indigenous trees such as pine, elm

and zelkova (known as ‘southern elm’). However, the lifting of a ban on imports in 1567 and

the subsequent increase in maritime trade also saw the use of tropical hardwoods, mostly

imported from South East Asia. These included the dense, precious hardwoods Zitan and

Huang-Huali.

Although few examples of the originals remain today, a wide range of finishes were used for

furniture of the Ming period. These included heavy carved lacquer, sometimes inlaid with

mother of pearl or agate; plainer red or black lacquer; and a more natural finish, allowing the

grain to stand out and the beauty of the wood to be the main focus of the piece. Contrary to

the image often held in Western minds of opulent painted and lacquered items, evidence

suggests that the elite scholars and officials of the time preferred a more refined and

restrained finish.

The designs that came out of China during the Ming dynasty were much admired by the

Europeans and have had a major influence on Western interior design. The timeless

simplicity and perfect proportions of Ming furniture allow these pieces to grace even the most

modern home, and we hope that you will find something to delight you amongst the Shimu

range of classical Chinese furniture.

Furniture produced for the ruling classes during the early Qing period (1644 – 1911) was

similar to Ming and continued to display classic, simple lines. However a change in style

gradually appeared, and by the end of the 18th century the purity of Ming furniture had been

replaced by angular forms and overly ornate carvings.

However, furniture produced for the general population in China’s towns and villages

remained simpler in style, often lacquered in red or black and decorated with landscape

scenes or auspicious symbols. This type of furniture continued to be made into the early 20th

century, with distinct styles visible in different regions of China. Thousands of these pieces

are still available in China today and form the rich source from which we select our antique

furniture range.

Italy Japan china

Quality of planning

Quality workmanship

A winning manufacturing model (the

Well known for its minimalist style

Extensive use of wood

High-quality

Traditionally better known for more ornate pieces

The use of uncarved wood and

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industrial furniture districts)

Constant technological innovation

A strong creative attitude to the marketplace.

craftsmanship Reliance on

wood grain instead of painting or thick lacquer.

bamboo The use of

heavy lacquers

Recommendation

1. Italian furniture is the most sophisticated manufacturer in furniture industry. So, they

must keep continuing their competitive quality in the international market. They are

stylish, modern designer in these sectors. They have to improve these segments

continuously to keep their golden history alive.

2. Italian Furniture Company is not up to the mark to use the modern technology

efficiently. The furniture company has less capital to invest on technology sector. So,

government of Italy must take necessary steps to improve the technology.

Government may allow them incentives, tax holiday to compete in the international

market. Their financial institution must provide them loan.

3. Their target market is niche according to global market. They have to go for large

target market to compete because the competitors are increasing gradually and it is a

threat for Italian market. So, they target the market like south Asia region and other

region where they are not available.

4. Wood is a scare resource in the world. But Italian furniture mainly depends on wood.

So, the investor and related persons of this sector must think about the substitute of

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wood. If furniture companies do not think about this threat now, this sector may be

fall into trouble even destroyed.

5. As their furniture is sophisticated, they need skill labor. But skill labor is always not

found. So they have to build up a training institute to train the people which also

create competitive advantages in furniture sectors.

Conclusion

Italian furniture thus became the pride for the nation. When we visit furniture shops for

modern, stylish furniture, we look for Italian furniture. From the very beginning to till date,

Italian furniture is dominating the market. They have gain competitive advantage in furniture.

And they will as they really have some serious specialized knowledge and competitive

advantage in this industry.

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BibliographyBibliography

1. Handout of INB-410

2. Class lecture of INB-410

3. Books of INB-410

4. www.niir.org/profiles/profiles/z,,1f_0_64

5. http://www.interior-tips.com/content/181

6. https://www.cia.gov/library/publications/the-world-factbook/print/it.html

7. ftp.unibocconi.it/pub/RePEc/cri/papers/wp120.pdf

8. http://ideas.repec.org/p/cri/cespri/wp120.html

9. http://www.state.gov/r/pa/ei/bgn/4033.htm

10. Gloag, John. A Short Dictionary of Furniture. New York: Holt, Rhinehart, and

Winston, 1965.

11. Hayward, Charles H., Antique or Fake?: The Making of Old Furniture. London:

Evans Brothers, 1971.

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12. Koizumi, Kazuko. Traditional Japanese Furniture. Japan: Kodansha International,

1997.

13. "http://en.wikipedia.org/wiki/List_of_furniture_types"

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