Harvard Case - KITEA (A): Democratizing Furniture in Morocco
"KITEA (A): Democratizing Furniture in Morocco" Harvard business case study is written by Ramon Casadesus-Masanell, Gamze Yucaoglu. It deals with the challenges in the field of Strategy. The case study is 18 page(s) long and it was first published on : Jan 3, 2019
At Fern Fort University, we recommend KITEA pursue a growth strategy focused on disruptive innovation and digital transformation. This strategy should leverage technology and analytics to enhance its business model innovation and achieve sustainable competitive advantage in the Moroccan furniture market. The strategy should be implemented through a combination of market penetration, product development, and market development initiatives, supported by a robust digital transformation strategy and strategic alliances.
2. Background
KITEA is a Moroccan furniture company founded in 2014 by a group of entrepreneurs seeking to democratize furniture access in the country. Their vision is to provide high-quality, affordable furniture through an innovative online platform and a network of physical showrooms. KITEA faces challenges in a competitive market with established players, but also has the opportunity to leverage technology to disrupt the traditional furniture industry.
The main protagonists in the case are:
- Yassine Ouadie: The Founder and CEO of KITEA, a passionate entrepreneur with a vision to democratize furniture access in Morocco.
- The KITEA team: A group of dedicated individuals committed to KITEA's mission and eager to innovate and grow the business.
- The Moroccan furniture market: A complex landscape with established players, traditional practices, and a growing demand for affordable and modern furniture.
3. Analysis of the Case Study
Porter's Five Forces Analysis:
- Threat of New Entrants: High - The furniture industry in Morocco is relatively easy to enter, with low barriers to entry.
- Bargaining Power of Suppliers: Moderate - KITEA relies on local suppliers for raw materials and manufacturing.
- Bargaining Power of Buyers: High - Consumers have a wide range of choices in the furniture market, making them price-sensitive.
- Threat of Substitutes: Moderate - Consumers can choose alternative options like secondhand furniture or DIY projects.
- Competitive Rivalry: High - The Moroccan furniture market is highly competitive, with established players and emerging startups.
SWOT Analysis:
Strengths:
- Innovative business model: KITEA's online platform and showroom network offer a unique customer experience.
- Focus on affordability: KITEA's pricing strategy makes furniture accessible to a wider audience.
- Strong commitment to quality: KITEA prioritizes using high-quality materials and manufacturing processes.
- Tech-savvy team: KITEA possesses a team with expertise in technology and digital marketing.
Weaknesses:
- Limited brand awareness: KITEA needs to build brand recognition and trust among consumers.
- Dependence on online platform: KITEA's reliance on technology could be vulnerable to disruptions or technical issues.
- Limited financial resources: KITEA needs to secure funding to support its growth plans.
- Lack of established supply chain: KITEA needs to develop a reliable and efficient supply chain.
Opportunities:
- Growing demand for affordable furniture: The Moroccan middle class is expanding, creating a larger market for affordable furniture.
- Digitalization of the furniture industry: The rise of e-commerce and online shopping offers KITEA significant growth potential.
- Government support for entrepreneurship: The Moroccan government is encouraging entrepreneurship and innovation, which could benefit KITEA.
- Partnerships with local artisans: KITEA can collaborate with local artisans to create unique and handcrafted furniture.
Threats:
- Competition from established players: KITEA faces competition from established furniture retailers with strong brand recognition and market share.
- Economic instability: Economic downturns could impact consumer spending on furniture.
- Technological disruptions: Rapid technological advancements could make KITEA's business model obsolete.
- Fluctuations in raw material prices: KITEA's pricing strategy could be affected by fluctuations in the cost of materials.
Value Chain Analysis:
KITEA's value chain consists of:
- Inbound Logistics: Sourcing raw materials and managing inventory.
- Operations: Manufacturing furniture using efficient processes.
- Outbound Logistics: Delivering furniture to customers and managing logistics.
- Marketing and Sales: Promoting KITEA's products and services online and through showrooms.
- Customer Service: Providing excellent customer support and resolving any issues.
Key Competitive Advantages:
KITEA's key competitive advantages include:
- Affordability: KITEA offers high-quality furniture at competitive prices.
- Convenience: KITEA's online platform and showroom network provide a convenient shopping experience.
- Innovation: KITEA's business model and product offerings are innovative and disruptive.
- Customer Focus: KITEA prioritizes customer satisfaction and provides excellent customer service.
4. Recommendations
KITEA should implement the following recommendations to achieve sustainable growth and competitive advantage:
1. Enhance Digital Transformation:
- Invest in technology and analytics: KITEA should invest in advanced analytics tools to gain insights into customer behavior, optimize pricing, and improve supply chain efficiency.
- Develop a robust e-commerce platform: KITEA should enhance its online platform with features like personalized recommendations, virtual reality furniture visualization, and seamless payment options.
- Leverage social media and digital marketing: KITEA should utilize social media platforms to build brand awareness, engage with customers, and drive online sales.
2. Expand Market Reach:
- Implement a market penetration strategy: KITEA should focus on increasing market share in existing geographic areas by attracting new customers and retaining existing ones.
- Explore market development strategies: KITEA should consider expanding into new geographical markets within Morocco and potentially into other emerging markets.
- Develop new product offerings: KITEA should introduce new product lines to cater to specific customer segments and meet evolving market trends.
3. Foster Strategic Alliances:
- Collaborate with local artisans: KITEA should partner with local artisans to create unique and handcrafted furniture, enhancing its product offerings and supporting local communities.
- Form strategic alliances with furniture manufacturers: KITEA can explore partnerships with established furniture manufacturers to leverage their expertise and manufacturing capabilities.
- Collaborate with online retailers and marketplaces: KITEA can partner with online retailers and marketplaces to reach a wider audience and expand its distribution channels.
4. Enhance Operational Efficiency:
- Optimize manufacturing processes: KITEA should implement lean manufacturing principles to improve efficiency, reduce waste, and minimize production costs.
- Develop a robust supply chain: KITEA should establish a reliable and efficient supply chain to ensure timely delivery of materials and finished products.
- Implement a data-driven approach to inventory management: KITEA should leverage analytics to optimize inventory levels and minimize stockouts.
5. Build a Strong Brand:
- Develop a compelling brand story: KITEA should communicate its values, mission, and vision to build a strong brand identity.
- Invest in brand marketing: KITEA should invest in targeted marketing campaigns to build brand awareness and attract new customers.
- Focus on customer experience: KITEA should prioritize customer satisfaction by providing excellent service, resolving issues promptly, and fostering positive customer relationships.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: The recommendations align with KITEA's core competencies in technology, innovation, and customer focus, and support its mission to democratize furniture access in Morocco.
- External customers and internal clients: The recommendations address the needs of KITEA's target customers by providing affordable, high-quality furniture and a convenient shopping experience. They also empower KITEA's employees by providing them with the tools and resources to succeed.
- Competitors: The recommendations aim to differentiate KITEA from its competitors by leveraging technology, offering innovative products, and building a strong brand.
- Attractiveness ' quantitative measures if applicable: The recommendations are expected to generate positive financial returns by increasing sales, improving efficiency, and reducing costs.
Assumptions:
- The Moroccan furniture market will continue to grow in the coming years.
- KITEA will be able to secure the necessary funding to implement its growth plans.
- KITEA will be able to attract and retain skilled talent.
- Technology will continue to advance and provide new opportunities for KITEA.
6. Conclusion
By implementing these recommendations, KITEA can achieve sustainable growth and competitive advantage in the Moroccan furniture market. The company can leverage its innovative business model, technology expertise, and customer focus to disrupt the traditional furniture industry and become a leading player in the emerging digital furniture market.
7. Discussion
Alternative Options:
- Mergers and acquisitions: KITEA could consider acquiring smaller furniture retailers or manufacturers to expand its market reach and product offerings.
- Vertical integration: KITEA could vertically integrate its operations by acquiring or establishing its own manufacturing facilities.
- Outsourcing: KITEA could outsource some of its operations, such as manufacturing or logistics, to reduce costs and focus on its core competencies.
Risks and Key Assumptions:
- Competition: KITEA faces significant competition from established players in the Moroccan furniture market.
- Technological disruptions: Rapid technological advancements could make KITEA's business model obsolete.
- Economic instability: Economic downturns could impact consumer spending on furniture.
- Funding: KITEA needs to secure sufficient funding to implement its growth plans.
Options Grid:
| Option | Advantages | Disadvantages | Risks | Assumptions |
|---|---|---|---|---|
| Digital Transformation | Increased efficiency, improved customer experience, expanded market reach | High initial investment, potential for technical disruptions | Competition, technological disruptions | Continued growth of the digital furniture market, access to skilled talent |
| Market Penetration | Increased market share, higher sales volume | Potential for price wars, cannibalization of existing customers | Competition, economic instability | Continued demand for affordable furniture, effective marketing campaigns |
| Market Development | Access to new markets, diversification of revenue streams | Higher costs, potential for cultural barriers | Political instability, economic risks | Favorable market conditions in new regions, successful adaptation of business model |
| Strategic Alliances | Access to resources, expertise, and networks | Potential for conflicts of interest, dependence on partners | Partner reliability, market dynamics | Shared vision and goals with partners, successful integration of resources |
8. Next Steps
Timeline:
| Milestone | Timeline | Responsible Party |
|---|---|---|
| Develop a detailed digital transformation strategy | 3 months | Technology team |
| Implement key technology upgrades | 6 months | IT department |
| Launch new product lines | 12 months | Product development team |
| Expand into new geographic markets | 18 months | Marketing and sales team |
| Establish strategic alliances | 24 months | Business development team |
By following these recommendations and implementing them effectively, KITEA can position itself for long-term success in the dynamic Moroccan furniture market.
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Case Description
The case opens in 2013 as Amine Benkirane, founder and CEO of the leading Moroccan furniture company KITEA, contemplates the loss his company has incurred for the first time in its 20-year history. The case then describes KITEA's origins and provides a detailed overview of the business plan that enabled Benkirane to bring affordable modern furniture in flatpacks to the Moroccan market, which had previously been dominated by unorganized artisans. At the beginning of 2010, KITEA was a market leader with a robust market share of 24%. However, Benkirane read about rumors that IKEA was planning to enter the Moroccan market. The case explores in detail KITEA's efforts to prepare for the increased competition. In 2013, KITEA found itself in a difficult situation, facing a downturn in the economy, a slowdown in sales, a delayed store opening, and souring creditor sentiment following the news about IKEA's entry. Would KITEA be able to bounce back and remain competitive when IKEA entered the market?
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