Palliser Furniture

Palliser Furniture Ltd. is the second largest furniture company in Canada and currently has production facilities in Canada, Mexico and Indonesia. However, with the development of globalization, Palliser faces increasing pressures from Asia. Palliser has to evoke a new strategy and take a more proactive approach to increase annual sales and sustain its competitive advantage. Therefore, Palliser has to choose investing into China or continue to expand into Mexico. The internal and external factors bring both positive and negative effects on Palliser Furniture, and the potential threats and opportunities both from Mexico and China. On one hand, some internal strategies made Palliser successfully. For example, Palliser created partnership with Brazilian company to keep its cost leadership in North America. Also, the company provide great customer service, delivery times and customization options. Most importantly, Palliser reached cost advantage by contracting some value chain components to Asia such as Taiwan and Indonesia. However, the company use both differentiation and cost leadership strategy, which made the products are lack of concentration. On the other hand, the external factors create both opportunities and potential threats to Palliser. Before 1998, the geographic location of Mexico provides lower distribution costs due to Mexico close to the USA market. Also, Mexico has more experienced and skilled workers in the furniture industry. However, the friction cost issue, shipment difficulties, and interpretation of the law in Mexico bring many restrictions and threats to the development of Palliser. After 1998, with the globalization, Palliser found some opportunities in China such as cheap and efficient labour, little environmental regulations, lower income taxes and social benefits, and little pressures from its Union. But, the biggest challenge in China is difficult to establish a long-term partnership with Chinese government and find a trustworthy local