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Refurb-iture Ltd

Veronica is CEO of Refurb-iture Ltd, which makes and sells luxury home furniture to high income groups. Currently all of its furniture is made from reclaimed and recycled materials. The business has grown rapidly in the last two years. The number of staff in the sales department has increased from 15 to 75. As a result, many staff are inexperienced. In the sales department, there are currently 5 managers and 10 deputy managers. Each deputy manager is in charge of 6 assistants.

Some new staff have reported they do not feel very well supported. There have been some complaints from customers about slow service times as staff check information with deputy managers. The business’ staffing costs are double that of its main competitor.

Veronica recognises that good customer service and eco-friendly products are the main reasons customers buy from Refurb-iture Ltd. The shareholders of Refurb-iture Ltd have set Veronica the following objectives:

• expand the product portfolio from just home furniture to achieve rapid sales growth

• maintain its exclusive and unique brand image

• increase profitability in the long term.

Veronica is determined to meet these objectives by increasing the product portfolio with one new type of product. She has researched two options for the new type of product: garden furniture or office furniture. Her research is shown below.

	Garden furniture option	Office furniture option
Market value in UK	£12 million	£650 million
Growth in the market in last 10 years	10%	25%
Average price per unit	£1500	£150
Initial investment cost for machinery	£2.5 million	£1.2 million
Variable cost per unit	£120	£22
Discounts offered by suppliers for bulk purchases	Not offered	15%
Materials used	100% eco-friendly	40% eco-friendly
Number of competitors with similar products	1	8