Lord Digby Jones began this new 3 part series by visiting
Hereford Furniture, a medium sized family run furniture company, who have
struggled in recent times. Digby doesn’t hang around and gets straight to the
point, ‘You’re not trying to say you’re the cheapest, you’re trying to say
you’re the best.’ This is a key point where many companies have become unstuck
in the past, focusing on low prices whilst forgetting quality. The furniture
industry has followed the general trend in recent years after the economic
downturn, with 1,200+ furniture firms going bust during the recession. Having
made an £80,000 loss last year, Hereford Furniture are beginning to consider
their future.
After watching this intriguing documentary, one point
that stood out straight away was Digby’s desire to turn the company’s fortunes
around, keeping people employed and paying taxes. This is a different view to
many conventional consultants as many will look to reduce the company’s costs
and tackle the issue from a monetary point of view as opposed to a social
perspective.
Digby immediately identified some key areas which may
have caused the business to perform poorly. Hereford Furniture had a huge
product range, whilst being effectively split into 3 separate businesses; a
manufacturer, an importer and a retailer. In order to succeed, Digby advised
that they should specialise in one area which MD Mike Muxworthy struggled to
understand. This is often an issue with family run businesses; people struggle
to see the issues with their current strategy and do not see the bigger
picture. Can a business like this really operate in these 3 areas and be
successful? Based on their recent performance, I believe they cannot.
Following a trip round the shop floor, Digby and Mike
realised that employees felt one of the businesses weaknesses was the
communication between themselves and senior management as well as the workforce’s
organisation. In my eyes, it is an important managerial technique to speak to
those at the bottom of the ladder within an under-performing business, to hear
their honest opinions. These employees know the ins and outs of the daily
operations and have different perspectives to management.
It is vital that all the stakeholders, both internal and
external, work together to achieve the same goal. Good communication between
management, shareholders and employees can help to improve overall efficiency
and effectiveness which is shown towards the end of the documentary as
employee’s state that their jobs have become easier and they are able to get
more done. This has come as a result of Mike changing the company’s strategy to
focus on producing fewer products and only building for stock.
Following a visit from Digby’s friend, Stuart Towe, Mike
announced that they were planning to cut their range from 1000 products to just
20. By divesting some of their assets and cutting 49 out of every 50 product,
Mike hopes this will improve their efficiency and create value. It was also
agreed that they would brand their products under the ‘Hygge’ name, a word from
the Danish language. This was an ambitious plan which the company hoped would
turn their fortunes around.
Looking back at the documentary, Digby posed the right
questions to the company in order to suggest ways of improvement, but as is
often the case, it is hard to change the culture within a family run business.
Digby persevered and in the end Mike saw his way of thinking and made some
changes, which in my eyes should give the company a better chance of performing
well in the future.
Did these changes help turn their fortunes around?
Unfortunately not, as an article in the Hereford Times stated that the company were
to cease trading at the end of June to make way for Land Rover car showroom.
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