Somerset Furniture Company Business Analysis

Founded in 1957 in Randolph County, Virginia, the Somerset Furniture Company was best known for their marketing strategy of hastily launching new product lines every couple of years. This is supported by the reading, “Essential to a successful product launch is the development of a well-planned marketing campaign” (Martin, 2014). Within the last half of the twentieth century, the company was also credited with developing high-end, inexpensive furniture for a growing number of homeowners in the Unites States. During the mid-90’s, the Somerset Furniture Company experienced declining profits as a result of increased foreign competition and inflated labor wages. As a result, the company was forced to outsource multiple product lines of furniture to Chinese manufacturers, while

As a result of significantly lower production costs in China, compared to those in the United States and the fact that Chinese manufacturers could replicate product designs by hand, forgoing costly machinery compelled Somerset to come up with a new market strategy. This is supported by the reading, “The average labor rate for furniture manufacturing in the United States is between $9 and $20 per hour, whereas the average labor rate for furniture manufacturers in China is $2 per day” (Russell, R.S., & Taylor, B.W., 2014, p. 449). All in all, Somerset was able to create a supply chain that facilitates the transport of raw materials to their Chinese manufacturers who ship the finished product by freight to the U.S, which is stored at Somerset warehouses. From the reading it was understood that Somerset was able to overcome problems by improving productivity, while simultaneously reducing inefficiency. We can conclude that Somerset’s new global supply chain was initially