Case Scenario 3: Barracuda Inc

question 9

Essay

Case Scenario 3: Barracuda Inc.
Barracuda Inc. is a lamp-fixture manufacturer that is considering an entry strategy into the U.S. home-furnishings manufacturing industry. The existing landscape consists of many players but none with a controlling share. There are currently 2,500 home furnishings firms, and only 600 of those have more than 15 employees. Average net profit after tax is between 4 and 5 percent. While the industry still primarily comprises single-business, family-run firms that manufacture furniture domestically, imports are increasing at a fairly rapid rate. Some of the European imports are leaders in contemporary design. Relatively large established firms are also diversifying into the home- furnishings industry via acquisition. Supplier firms to the home-furnishings industry are in relatively concentrated industries (such as lumber, 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 big-screen TVs to the choice of postponing any furniture purchase entirely).
-(Refer to Case Scenario 3). Is the furniture industry described above attractive?

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Definitions:

Economic Espionage Act

is a United States law making the theft or misappropriation of trade secrets a federal crime.

Foreign Corrupt Practices Act

A U.S. law that prohibits companies from bribing foreign government officials to maintain or obtain business.

Transparency International

A non-governmental organization that aims to combat global corruption and prevent criminal activities arising from corruption.

Consumer Bill of Rights

The Consumer Bill of Rights is a set of guidelines that aim to protect consumers in the marketplace by ensuring fair trade practices and the right to safety, to be informed, to choose, and to be heard.