A business grows by increasing and/or improving those things that help it generate future wealth, i.e. its assets both tangible and intangible. Typically this involves investing in those assets. For example, by:
- improving the quality and appeal of the existing product range plus new product development
- building up a portfolio of well-known brands (intangible)
- refitting and modernising existing premises; land, buildings, fixtures and fittings
- providing a level of service that is better than the competition; e.g. a more efficient supply chain
- acquiring associated good fit businesses (net assets)
- offering continuing professional development programmes to employees.
MFI is the UK's largest retailer of kitchens, bedrooms and integrated appliances. It is a manufacturer, a retailer and a supplier of services to customers who buy its products. The company has 195 out of town retail stores, 25 city retail stores and 300 trade depots in the UK. The company also has 133 retail outlets in France and a number of other retail and trade operations across the rest of the world. It employs 10,700 people and has a £1.3 billion turnover. MFI has a 30% share of both the kitchen and bedroom sector of the furniture market in the UK, and a 9% share of the overall UK furniture market.
Business research continues to show the importance of becoming and remaining the market leader. That involves offering popular and appealing products within a changing market place. MFI's market research has shown the importance of creating a market proposition that provides what the customers want. MFI intends to consolidate its position through continuous, carefully planned growth. It provides a convincing example of growth through well-planned investment in key assets.
UK consumers are increasingly well off and, with a growing interest in enhancing their lifestyles, they are seeking better quality affordable products coupled with great service. So MFI has strengthened its existing product line through continuous new product development and it has also acquired a leading brand in Sofa Workshop.
In the UK, MFI is able to plan, deliver, provide credit facilities and fit where appropriate, people's choice of furniture for every room in the home. By investing in building its brands in businesses overseas, and in integrating the business so as to give customers a better all round service, the company achieved 17% growth in the six months to June 2003.
This case study looks at the nature of business growth, with particular reference to MFI's acquisition of Sofa Workshop.