Introduction
The interior designs services industry deals with planning and designing projects in interior spaces. Firms in the interior design industry focus on meeting the customers’ aesthetic and physical needs. The interior designing companies target different customer groups such as the hospitality and real estate. Moreover, the companies also target the individual customers (IBIS World 2015). The global interior designing industry is projected to undergo remarkable growth in the future.
However, the rate of growth varies across countries. The rate of growth in some countries is substantially high while other countries experience a slow growth. Nevertheless, the attractiveness of the industry has increased the rate of new entrants (Barnes Report 2014). Canada and the UAE are some of the countries that are experiencing remarkable growth in the interior designing sector. Examples of companies that operate in the two countries include Creative Closets (KSA) and Custom Cabinets (Canada).
Creative Closets was established in 1998 in the Kingdom of Saudi Arabia, and it has succeeded in setting new standards regarding customer care, innovation, and artisanship. The company has attained leadership position in offering clients storage solutions across the Gulf Cooperation Council and the Middle East and North Africa regions. On the other hand, Custom Cabinets operates in Canada, and it has managed to gain remarkable market penetration. This paper entails a comparative analysis between Creative Closets in KSA and Custom Cabinets in Canada.
Background/history
The success of an organization is influenced by the strategic management approach adopted by the respective management teams. However, most organizations adopt a narrow approach in their strategic development. Coveney, Ganster, and Hartlen (2005) emphasize that firms managers are only concerned with where they intend to be in the future regarding competition and ignore the how approach towards attaining the desired outcome. Therefore, managers should improve their efficiency in undertaking corporate performance management. Coveney, Ganster, and Hartlen (2005) are of the opinion that managers should be concerned with how to undertake their daily operations efficiently regarding production, marketing, and servicing amongst other day-to-day operations.
Coveney, Ganster, and Hartlen (2005, p. 35) posit that if ‘things go astray, the lower level managers assert that the senior managers do not understand the operational challenges and how to overcome the problem’. Despite the significance of operational activities, it is imperative for managers to ensure that the operations are aligned with the strategic objectives. This approach is essential in eliminating the strategic gap.
Successful corporate performance management requires companies to ensure that their operational activities are not limited to horizontal alignment. On the contrary, a vertical approach is fundamental. Therefore, organizational managers should ensure effective top-down, inside and bottom-up views are incorporated.
The top-down perspective enables organization managers to gain consolidated insight on the environmental opportunities and threats that the firm faces and the inherent internal strengths and weaknesses. Coveney, Ganster, and Hartlen (2005, p. 36) add that the top-down perspective improves the organizational managers’ understanding of the ‘collective expectations of the entire stakeholder’s insight and outside the organization’.
Conversely, the bottom-up perspective is a critical source of knowledge on the trends of the operational activities and the weaknesses and strengths of the specific products offered in comparison with the competing products. The integration of the top-down, inside, and bottom-up perspectives is essential in organization’s quest to formulate strategies that will culminate in the attainment of sustainable competitiveness.
Main body of argument
Organizational managers have a duty to predict the future to undertake strategic adjustments effectively (Coveney, Ganster, and Hartlen 2005). Businesses operations are influenced by the nature of the internal and external environments. The modern business environment has become very unpredictable hence presenting a challenge to organization’s managers. Therefore, businesses must formulate effective strategies that are aligned with the prevailing conditions in the macro and micro business environments. Chaola, Partoom, and Raksong (2015) emphasize that organizations are progressively experiencing strong pressure to implement change.
The force to change arises from different factors such as technological innovation, culture change, globalization, and the need for effective organizational structure. To cope with the environmental forces, organizations are increasingly adopting the concept of strategic renewal, which involves evolutions of different organizational processes. Firms are implementing new innovative approaches in the quest to develop the desired core competencies. Nevertheless, Gani and Jermias accentuate that a major misfit exists in firms’ operations regarding the business strategy, competitive environment, and governance strategy (12).
Issues/problems faced
Customs Cabinets and Creative Closets are presented with a unique opportunity to maximize their profitability arising from the market evolution. One of the factors contributing to the high market potential relates to the explosive growth in the real estate market (Olk 2015). Despite the high market potential in the interior design industry, the industry is experiencing a challenge arising from the change in customer tastes and preferences.
Companies operating in the interior design market are under intensive pressure to create persuasive interior spaces (Olk 2015). Moreover, the companies are facing intense competition from buyers. Olk (2015, par. 3) emphasizes that interior designers ‘have a duty to select and install interior furnishings and accessories that not only create a pretty space but speak directly to the target market’.
Therefore, interior designing companies such as Creative Closets and Custom Cabinets must be innovative and creative to satisfy the customers’ tastes and preferences. However, Creative Closets is characterized by a rigid management structure, which limits the efficiency with which strategies are formulated and implemented. On the other hand, Custom Cabinets is extensively concerned with maximizing profit by offering new products. However, the firm does not appreciate the importance of leveraging on market feedback.
Discussion
The comparative analysis between Creative Closets (KSA) and Custom Cabinets in Canada focuses on understanding the internal and external environments of the two firms. The findings are aimed at gaining insight on the issues facing the firm’. The analysis is based on the SWOT model.
Strengths
Creativity and innovation
Creative Closets and Custom Cabinets have developed remarkable creativity and innovation in designing closets and cabinets. The two companies have developed remarkable competitiveness regarding offering quality and unique designs. However, Creative Closets have adopted effective strategic pillars that focus on people, branding, supply chain, system, and processes. These aspects have enabled the firm to succeed in designing innovative and quality closet brands. However, Custom Cabinets does not emphasize on the importance of collaboration with the respective stakeholders (Creative Closets 2016).
Customer satisfaction
The two companies have attained a competitive edge regarding satisfying customers. Creative Closets and Custom Cabinets efficiency in satisfying customers has emanated from their focus on effective values. Custom Cabinets is committed to delivering customer satisfaction by focusing on quality, service, and design. The firm has integrated after sale customer service as a critical component in its quest to offer unique experiences.
The concept of after sale services is implemented through the integration of the concept of warranty (Custom Cabinets 2016). On the other hand, Creative Closets focuses on ensuring customer satisfaction by offering customized furniture solutions. Creative Closets has gained the reputation of offering customized products. One of the factors increasing Creative Closets efficiency in satisfying customers entails the unconditional money-back guarantee for customers purchasing its custom-made closets (Creative Closets 2016).
Weaknesses
Lack of IPR
The two companies are experiencing a challenge because of the difficulty associated with protecting their innovation and creativity.
Teamwork
Unlike Custom Cabinets, Creative Closets emphasizes on teamwork as one of its core customer focus values. This aspect has played a remarkable role in improving the company’s efficiency in promoting customer satisfaction.
Opportunities
Market growth
The two companies are experiencing a high rate of market growth arising from the increase in the consumers’ disposable income and growth in the real estate sector. However, the rate of growth in the UAE/GCC region is substantially higher as compared to the Canadian market. The Canadian interior market has experienced a slow rate of revenue growth for the past 5 years (IBIS World 2015). This aspect might present a challenge in Custom Cabinets quest to generate market from the market. On the high rate, the high rate of growth in the UAE/GCC market has been spurred by the high resilience of the UAE/GCC region to economic changes. Moreover, the cities in the UAE/GCC region are pursuing to be future cities. This aspect presents an opportunity for Creative Closets to gain a high market share by offering creative interior design solutions.
Market expansion
The two companies have an opportunity to maximize their profitability by through product diversification.
Threats
Change in customer tastes and preferences
Despite Creative Closets and Custom Cabinets efficiency in satisfying customers, the two companies are experiencing a challenge in their quest to satisfy customers. The challenge arises from the high rate at which customers are changing their tastes and preferences regarding interior design.
Competition
Despite being in operation for a substantial period, both Creative Closets and Custom Cabinets are experiencing an increase in the intensity of competition arising from the entry of local and foreign interior designing companies. This aspect has arisen from the high rate at which individual and institutional customers are appreciating the importance of effective interior designing regarding the development of closets and cabinets. The trend has not only been spurred by the need to conserve space but also for aesthetic purposes.
The comparative analysis of the internal and external environments at Creative Closets and Custom Cabinets illustrate the existence of significant strengths, weaknesses, and opportunities and threats. Despite the variation in the internal and external issues faced by Creative Closets and Custom Cabinets, the two companies can achieve sustainable competitiveness. However, this will require the two companies to focus on improving their approach to corporate performance management. To achieve this outcome effective strategy formulation is critical. The strategy formulation process should take into account the internal and external environments, which presents a complex process.
Way forward
To be effective in the strategy formulation process the firms’ management teams should take into consideration the following models.
Integrated top-down and bottom-up model
In the process of formulating their strategy, it is imperative for Creative Closets and Custom Cabinets to adopt an integrated model. The top-down perspective will enable the organizations managers to be effective in formulating business strategies. This assertion arises from the view that the perspective advocates the organizational managers to assess the external environment by scanning the business environment (Alexander 2015).
Thus, the firm will be able to determine future industry trends concerning changes in the economy, competitors, markets, technology, culture, and government. By interpreting the industry trends, the firms will be able to determine the threats and opportunities effectively. Based on this knowledge, the firms will have an opportunity to gauge how they can leverage on their internal strengths in seizing the prevailing opportunities.
The top-bottom perspective enables organizations to benchmark their products and process effectively against those of its competitors to determine the degree to which the firm has attained competitive advantage. On the other hand, the bottom-up perspective will enable the organization to examine the trend of its operational activities in the different functional units. Therefore, the integrated top-down and bottom-up model will enable the organization to engage in strategic analysis effectively.
The outcome is that the firms will gain insight on the most effective aspects to consider in the strategy formulation process. The strategy formulation process should focus on the planning scenarios and operational operationalization and re-engineering. The rationale of adopting the integrated top-down and bottom-up model is underscored by Betz (2007, p. 28), who asserts that a good ‘strategic vision is created from a top-down perspective and properly informed by a bottom-up perspective’.
Value adding open system model
To survive in an industry that is increasing being characterized by a high degree of uncertainty, it is imperative for the organizations’ management team to consider adopting the open system model. Breckenridge Institute (2015) affirms that an open system model enables an organization to adopt a holistic approach in the strategic management process. Moreover, the open system model postulates that an organization should use the inputs from the external environment and convert them into a value-added output. The input relates to the factors of productions and the feedback obtained from the customers.
The efficiency of the open system model is influenced by the internal governance structures adopted by a firm. To implement the system effectively, it is imperative for Creative Closets and Custom Cabinets to consider entrenching an effective governance structure. This goal can be achieved by eliminating bureaucracy. On the contrary, the firm’s should ensure adequate interaction between employees in the different levels of management. Incorporation of this model will enable the two firms to establish a balance between the three core components that include the firms’ strategic view, execution, and organizational climate as illustrated in Appendix 1.
Conclusion
The comparative analysis illustrates that Creative Closets and Custom Cabinets have adopted varying perspective in their strategic management process. The firms have been relatively successful in their respective markets despite the challenges encountered. To overcome these challenges, it is imperative for the organizations management team to focus on improving their competitiveness. This aspect will require the firms to implement effective strategies. Some of the models that the firms should consider adopting include the integrated top-down and bottom-up perspective and the value adding open system model. These models will enable the firms to formulate a strategy that effectively integrates the issues originating from the internal and external environments.
Reference List
Alexander, P 2015, Corporate Social Irresponsibility, Routledge, New York.
Coveney, M, Ganster, D & Hartlen, B 2005, The Strategy Gap; Leveraging Technology to Execute Winning Strategies, Wiley, Hoboken.
Barnes Report: Worldwide Interior Design Services Industry. 2014. Web.
Betz, F 2007, Executive Strategy; Strategic Management and Information Technology, Wiley, New York.
Breckenridge Institute: Centre for Management Consulting 2015. Web.
Chaola, P, Partoom, K & Raksong, S 2015, ‘A Conceptual Model Of Strategic Management Renewal Orientation and Firm Performance’, Allied Academies International Conference, vol.14, no.2, 18-30.
Creative Closets: About us 2016. Web.
Custom Cabinets: Company profile 2016. Web.
Gani, L & Jermias, J 2009, ‘Performance Implications of Environment-Strategy-Governance Misfit’, Gadjah Mada International Journal of Business, vol.11, no.1, 1-20.
IBIS World: Interior Designers in Canada; Market Research Report 2015. Web.
Olk, M 2015, New Home Model Merchandising 101; the Essential Blend of Market Research and Interior Design. Web.
Appendix
