Strategy for Competitive Advantage: An Overview of Otobi

1.0 INTRODUCTIONOTOBI Limited is one of the leading world class furniture manufacturers of its kind in the country. Over the two and half decades of tireless endeavor, OTOBI earned the fame and image of the unique manufacturer of world class products. OTOBI received National Business Award as “Enterprise of the Year” for year 2001. It makes all kinds of metal, laminated board and plastic furniture. The functional utility and durability with the elegance of OTOBI products earned the reliability and confidentiality of the customers. Currently OTOBI’s product range cover the office furniture, household furniture, plastic furniture, hospital furniture, computer furniture, kitchen cabinet, work station, storage rack, decorative items and interior decoration. Besides these crests, trophy, medal, gift box etc are also the products of OTOBI.

2.0 FUNCTIONAL LEVEL STRATEGY IN OTOBI

2.1 Efficiency in OTOBI A company can achieve superior efficiency through reducing its cost. There are various functions

undertaken by OTOBI which directly or indirectly contribute to achieve efficiency. To achieve economies of scale OTOBI goes for a large volume of production together. For this

purpose, they do not leave out the small orders also. What they do is compile all the small orders and then go for production.

Efficiency is also achieved through division of labor and specialization. OTOBI has divided its labor force for various segments and goes for specialization; chair, table, kitchen cabinet, hospital furniture, office furniture etc.

OTOBI gives emphasis on the experienced worker. If a little bit higher pay is also required they are ready to pay, but it always try to hold up their experienced and old employees. OTOBI shifted their plant from Mirpur to Shyampur, some of the local workers refused to go to the new location. OTOBI gave them higher payment, accommodation and other facilities to take them to Shyampur.

To make the manufacturing process flexible, recently OTOBI has imported modern machineries from Germany. Locally they are continuously trying to improve their equipment to ease the manufacturing process.

OTOBI does not leave out even single customer. Again they are also careful that in the process of customization cost does not run out of limit.

OTOBI has become so renowned in the field of furniture that they could establish brand loyalty in thousands of customer. Through customization they do not allow any individual customer to defect from their company.

Mr. Nitun Kundu, the founder of OTOBI was a very creative and innovative person. He always engaged himself in R&D. He also encouraged his employees to think to innovate. Recently OTOBI has innovated a number of small engineering tools which have made the production process easier and cost effective. The teams which innovate something new get a good amount of remuneration.

Through good leadership OTOBI could establish a well-coordinated network and cooperation among the employees. Employees are trained time to time on a new machine or technology.

2.2 Quality in OTOBI

OTOBI produces high quality world class furniture, that’s why customers have a high perceived value for OTOBI products in their mind. There by OTOBI could charge premium price for its products. And the customers are ready to pay more amounts for a quality OTOBI product.

Since OTOBI has a very efficient work force, their efficiency reduces cost of production to a greater degree.

OTOBI could establish a strong organizational commitment to achieve superior quality to beat the competitors in the quality aspects. Starting from managing director of OTOBI up to general worker everyone in OTOBI is self-motivated to produce quality products.

OTOBI gives great emphasis on the customer need. The company is always trying to eliminate the quality gap. The customers bear the feelings that they are not being cheated with a huge price that OTOBI charges.

OTOBI often offers challenging goals to its employees. Side by side adequate incentives are also arranged for meeting those goals.

OTOBI solicits the ideas taken from any level of worker. Any worker /employee of OTOBI are at a liberty to talk about any idea which may improve the quality. There is a provision of fortnightly meeting in OTOBI, chaired by MD himself. In the meeting all the production managers discuss about the ideas and information generated at worker level of their respective divisions. Afterwards, R &D section works on it if it is a viable one. This accepting attitude of management facilitates to have a unique working environment in OTOBI.

OTOBI used to follow TQM concept in identifying the defects. The defects are traced in the production process. More over OTOBI produces its products in smaller lots size, that’s why even if defective products are produced their number remains smaller, which also decreases the wastage. Again with short production lot, defects show up immediately, they are quickly traced to the source and problems are solved.

OTOBI has a manageable number of suppliers. There are three types of suppliers in OTOBI:

o Local items- procured from local suppliers

o Imported items- procured from overseas suppliers

o Stationary items- procured from local suppliers

OTOBI believes in having long term contractual relationship with the domestic and overseas suppliers. The suppliers of OTOBI also feel comfortable to work with OTOBI for such long term relationship.

OTOBI could establish a very good cross functional relationship among different divisions. Marketing department does the marketing forecast, accordingly production manager carry on acquisition of resources, and thereafter conversion of inputs into outputs is done through transformation process. If the marketing department could identify any change of customer need, immediately the idea is forwarded to R&D department. R&D department acts accordingly and improve or restructure the design.

2.3 Innovation in OTOBIAs OTOBI is a leading and pioneer furniture maker in our country, it follows the continuous improvement in case of machinery, materials, and labor utilization and production methods. There is a tool machine section which is used as part of research and development division for machines. Out of numerous innovative products, parts and process few of those are discussed below.

Drill Punch Machine: It is a riveting item which is required for connecting the sheets in the chair. Earlier they used to take 03 minutes to reduce that. With a continuous improvement it takes hardly 4 seconds which saves time. Earlier they need to do it manually, now machine can do it.

Cluster Tool: Earlier it used to take 5 minutes to make a cluster tool; now with the development by tools section it takes only 1 minute.

Bench Marking: During its initial production they bought different items from India, Singapore, Malaysia, and Sweden as model. Now they do not follow any particular company. But they try to improve their product comparing with international product. Earlier they used to produce steel Almirah which costs more than 18000 taka. Afterward observing different Almirahs of Alico Company based in Japan, Godrej from India and Oloy company jointly operating (India, Italy) they designed a new Almirah which is compatible with those but costs only 10000 taka.

2.4 Customer Responsiveness in OTOBIOTOBI attends all the trade fairs in Bangladesh to communicate their performance to the customers. It has set a rare example by winning the first prize in Dhaka International Trade Fair since 1981 – 2001 by offering quality products, service and pavilion decoration. They work with an aim to increase “SATISFIED CUSTOMER”. To respond to the need of customers OTOBI has established their presence across the country by extending dealer network in almost all district headquarters.

OTOBI manufactures different products in two ways: Normal work and Project work.o Normal Work: For normal work OTOBI forecasts their production requirement and

prepare a detail work schedule for a particular period. According to the schedule they

produce a wide variety of furniture. This variety of furniture mostly serves the customer needs.

o Project Work: OTOBI takes some project to serve individual customer to produce customized product. This includes bulk order of particular furniture, kitchen cabinets etc.

Customer can easily purchase required furniture from the show room or dealers any time which are produced through normal work. For customized product they take the order from the customer first and deliver those after production. They take around 30 days to deliver and fix a kitchen cabinet. To provide home service delivery, people from OTOBI go to the customer’s house for required measurement of kitchen cabinet and after manufacturing again they go to that particular customer’s house to fix that.

TOBI delivers it’s product by its own transport to the customer if the order is of more than taka 100000.

OTOBI also gives preference to individual customer’s taste. They deliver customized product according to customer’s choice of design, color, shape and size.

Products are prepared and delivered in parts with a manual so that customers can easily transport it to home or office and then assemble it. Besides providing warranty, OTOBI also renders after sales service through its different outlets.

3.0 BUSINESS LEVEL STRATEGY OF OTOBI

Companies pursue a business level strategy to gain a competitive advantage that allows them to outperform rivals and achieve above average returns. They can choose from three basic generic competitive approaches; cost leadership, differentiation and focus, although these can be combined. OTOBI has brought changes in production technique through development of flexible manufacturing. That is why they can follow both cost leadership and differentiation strategy.Through flexible manufacturing process OTOBI has reduced its cost. They are using various tools innovated by them for this purpose. OTOBI being a differentiator is also realizing significant economies of scale by standardizing many of the component parts used in end product.OTOBI is also reducing both of its production and marketing costs. Through attractive brochures it offers no of packages of options from which customer gets readily his/her expected one. By following both cost leadership and differentiation strategy, OTOBI is getting more profit than its competitor as it is reducing the cost and at the same time increasing the perceived value of their product.

4.0 CORPORATE LEVEL STRATEGY OF OTOBI

The principal concern of corporate strategy is identifying the business areas in which a company should participate in order to maximize its long term profitability. When choosing business areas to compete in, a company has several options. It can focus on just single business, it can diversify into a number of different business areas or it can vertically integrate, either upstream to produce its own inputs or downstream to dispose of its own outputs. The corporate level strategy of OTOBI is to concentrate on a single business. It competes successfully within the confines of a single business that is in the laminated furniture business. OTOBI focuses its total managerial, financial, technical and physical resources and capabilities on competing successfully in a single area. As it is a fast growing business, demand on its resources are very significant. Even after having the capability of diversification, OTOBI does not go for that. It sticks to its knitting that is it sticks to doing the furniture business, what it knows best. OTOBI does not want to do any mistake of diversifying into areas about which it knows little and where its existing resources and capabilities add little value.

5.0 CONCLUSIONWhy do some organizations succeed while others fail, even if those companies start their business with same resources? The only reason is that the selection or choice of strategy as well as implementation of that. A company pursues a strategy to attain superior performance, through achieving its stated goals. Being pioneer to bring revolutionary changes in the arena of laminated furniture, OTOBI has gained competitive advantages over its competitors. By implementing functional level strategy successfully, OTOBI could achieve superior efficiency, quality, and innovation and it has become customer responsive.