La-Z-Boy Case Study Memo

La-Z-Boy Case Study Memo

Kurt Darrow’s three phase strategy to revitalize the company business remains relevant despite the 2008 downturn and he must convince the board that he has a plan to navigate the current industry headwinds in order to reaffirm his long-term vision for La-Z-Boy. The broader strategy dealt with core issues the company was facing. Creating a competitive advantage for the company is vital to its survival now more than ever. On Monday, he must convince the board to stay on the course. Darrow should recommend to his board of directors a two stage approach to navigating the next five years. The first stage focuses on surviving the short-term two-year horizon and the second stage on successfully implementing and executing the long-term vision of La-Z-Boy. The two-year theme Darrow should communicate to the board is 1) become lean (OPEX/SALES), 2) focus on the core and 3) as the furniture market rebounds, re-launch itself as the premier upholstered furniture company in the Unites States.

Reducing costs

Darrow must advocate the planned actions of his strategy that will optimize the manufacturing process, improve productivity and reduce unwanted and expensive inventory so that the company continues to reduce costs. For this they must move forward with the following actions of his strategy:

• Accelerate the plan to shift to cellular manufacturing to enable the 40% savings in labor costs for a $30M investment.
• Move Cutting & Sewing (C & S) operations to Mexico that would result in $17.1M over two years and $80M over the five year horizon.
• Shed all non-core assets including casegoods (LADD) to raise cash that will be needed over the next two years.

Focusing on the core business

        Weak consumer demand serves as an opportunity to invest in innovation within core business of upholstered furniture. The recession and low consumer confidence must be viewed as an opportunity to increase focus on the customer to regain the brand loyalty. During a recession customers are bound to change buying habits to adjust to the changes in the economy. La-Z-boy must focus on innovation in its product offerings to prepare for this change in consumer behavior. Nimble advertising and marketing must continue to remain relevant to the consumer when the market turns around in the long term. Darrow should postpone any full-fledged advertising campaigns with celebrity endorsement to the long term future when the market rebounds. In the meanwhile strategic marketing towards consumers with disposable income even during the recession will play a key role in sustaining sales in the short term. Innovation must also focus on creating more high-margin upholstered items without compromising quality.

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