Herman Miller Case Study
Herman Miller
1. Do a 5 Forces analysis of the office furniture industry.
In Porter’s Five Forces Model, the forces are listed as Risk of Entry, Bargaining Power of Suppliers, Bargaining Power of Buyers, Threat of Substitutes, and Rivalry among Established Firms. For Herman Miller, the rivalry between the established firms is high, and the most important force in their industry. Design is the key feature in the furniture industry, so the company that can come out with new and favored designs will win out in market share and profits. The company that is able to continually win the design battle will have the opportunity to establish brand loyalty and clout, creating a buffer for future downfalls in the economy, entry of new firms, and threat of substitutes.
The furniture industry is in its mature stages, and in the current U.S. market, it is relatively low-tech and has little room for extravagant profits and returns. This allows for high barriers to entry because any prospective entrants would be coming into a well-established industry that is barely growing, and could soon to be going into decline thanks to telecommuting and the falling of the traditional office. The bargaining power of the suppliers can be low- to- moderate depending on the future of the industry. Where the firms stand now, suppliers have low bargaining power because there are many viable sources for the raw materials needed in Herman Miller’s furniture. If the industry grows into high-tech fabrics, additional technologies integration, or other sweeping advancements, then supplier bargaining power could drastically rise due to lack of suppliers capable of offering such unique products. Conversely, the bargaining power of buyers is high due to the large- volume nature of most office furnishing purchases. When the buyer of an industry is capable of huge, frequent purchases, their negotiating power is high because without those revenues the industry would be reduced immensely. And
1. Do a 5 Forces analysis of the office furniture industry.
In Porter’s Five Forces Model, the forces are listed as Risk of Entry, Bargaining Power of Suppliers, Bargaining Power of Buyers, Threat of Substitutes, and Rivalry among Established Firms. For Herman Miller, the rivalry between the established firms is high, and the most important force in their industry. Design is the key feature in the furniture industry, so the company that can come out with new and favored designs will win out in market share and profits. The company that is able to continually win the design battle will have the opportunity to establish brand loyalty and clout, creating a buffer for future downfalls in the economy, entry of new firms, and threat of substitutes.
The furniture industry is in its mature stages, and in the current U.S. market, it is relatively low-tech and has little room for extravagant profits and returns. This allows for high barriers to entry because any prospective entrants would be coming into a well-established industry that is barely growing, and could soon to be going into decline thanks to telecommuting and the falling of the traditional office. The bargaining power of the suppliers can be low- to- moderate depending on the future of the industry. Where the firms stand now, suppliers have low bargaining power because there are many viable sources for the raw materials needed in Herman Miller’s furniture. If the industry grows into high-tech fabrics, additional technologies integration, or other sweeping advancements, then supplier bargaining power could drastically rise due to lack of suppliers capable of offering such unique products. Conversely, the bargaining power of buyers is high due to the large- volume nature of most office furnishing purchases. When the buyer of an industry is capable of huge, frequent purchases, their negotiating power is high because without those revenues the industry would be reduced immensely. And
Cited: "Herman Miller Store." Herman Miller Official Store. N.p., 2013. Web. 02 Apr. 2013. Hill, Charles W. L., and Gareth R. Jones. Strategic Management: An Integrated Approach. 10th ed. Boston: Houghton Mifflin, 2008. Print. "Stock Analysis Made Simple." Vuru.com. N.p., 2013. Web. 02 Apr. 2013.