Reference no: EM132648257

Roshni Pvt. Ltd. is a table and floor lamp manufacturer that is considering an entry into the. home furnishings manufacturing industry. The latter industry landscape is fragmented and consists of many players, but none with significant market share. Average net profit after tax is between 4 and 5%. While the industry is still primarily comprised of single-business family-run firms that manufacture furniture and furnishing domestically, imports are increasing at a fairly rapid rate, especially from China. Some of the European imports are leaders in contemporary design and are planning to set up factories in India to reduce costs. Furniture manufacturers in Malaysia and Korea also find the Indian market attractive for "organized" furniture and home décor. Ikea has set up its first store in the city of Hyderabad. Large Indian corporates are also planning diversifying into the home furnishings industry via acquisition. Supplier firms to the home furnishings industry are in relatively concentrated industries (like wood, steel, and textiles). Retailers, the intermediate customer of the home furnishings industry, have been traditionally very fragmented. Customers have many products to choose from, at many different price points, and few home furnishing products have strong brands. Also, customers can switch easily among high and low-priced furniture and other discretionary expenditures (spanning LED TVs to the choice of postponing any furniture purchase entirely).

Question:

Using Porter's five-force framework, summarize the opportunities and threats facing Roshni as it considers entry into the home furnishings manufacturing industry. Which threats are greatest to current incumbents?