Dilemma of a Manufacturer: Standardized V/S Customized Products

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Elegant Furniture Ltd is a leading designer and manufacturer of furniture. The owner of the company, Vijay, has always concentrated on manufacturing high-quality customized furniture for niche customers. His customers have a say even in selecting the type of wood to be used for making a particular part. The company was doing well with its business model of concentrating on customized products for niche customers.

However, in the last two years, the market has been flooded with standardized products and the variety and range has also increased significantly. The manufacturers of standard line furniture used the automated process and the quality of their products was good. As they produced in bulk, they were able to achieve economies of scale and could set their prices at a relatively low level.

Elegant Furniture had made a mark in the customized furniture market due to its creative designs and high quality workmanship and Vijay wanted to expand his business. As the market for standardized products was growing exponentially, he thought that the time was opportune to enter into this business segment. Vijay also felt that by manufacturing standard line furniture, he would be able to reach a wider range of customers which could help him in his customized furniture business.

Though the expansion of his business appeared an attractive proposition, conflicting thoughts were going through his mind. He thought that both types of products needed different approach in manufacturing. For his customized products, he used more skilled labor and was paying them more than the industry standard. For standardized products, manufactured mainly through automated processes, the market rates were low...

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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