Page 4: SWOT analysis
The acquisition of Sofa Workshop resulted from a careful SWOT analysis involving an examination of that company's strengths and weaknesses coupled with an examination of opportunities and threats in the wider business environment.
Strengths were headed by the Sofa Workshop brand name - the established leader in design, quality and marketing. Another was Sofa's Workshop's resources, including:
- an excellent management team
- highly skilled, loyal employees, with years of experience in top quality sofa production
- distribution channels that complemented MFI's i.e. direct mail, retail outlets and sophisticated use of e-commerce.
These strengths needed to be balanced against Sofa Workshop's weaknesses, including:
- limited factory capacity
- making products that people buy mainly when their incomes are rising and which they can postpone buying when the future looks less optimistic.
At the same time there were a number of exciting market opportunities, and chiefly the British public's increased home-fashion orientation. For MFI, the acquisition offered the opportunity of broadening its category product range and build on the strategy of offering full room solutions for every room in the home.
Obvious threats included the existence of market rivals (e.g. DFS) and the possibility that more competitors might enter the market.
Sofa Workshop sofas are now available in around 200 MFI stores (a tenfold expansion of the market presence of Sofa Workshop products). Upholstery makes up 25% of the overall furniture market (a segment nearly as large as kitchens, bedrooms and bathrooms combined). Sofas are a very profitable line, typically generating significantly more per retail square foot than other product categories.
Sofa Workshop's established brand, quality products and management enterprise complement MFI's new store layout, which displays design-led products in a creative, realistic way.