Company Description and Production Processes

Company Description and Production Processes

Lambeth Custom Cabinets is a small shop that manufactures and sells custom-made cabinets. The shop is owned and operated by Jack Lambeth, a master cabinet maker. Even though it is not specifically listed in the case, it does seem that Mr. Lambeth has only a few employees other than himself and his son Jack Jr. As labor is an important part of cabinet-making, Mr. Lambeth does not like the idea of laying people off even when the business is slow, so instead he assigns unoccupied workers to general clean-up and repair work and charges their wages to indirect labor.

There are three main processes involved in producing custom-made cabinets: design, fabrication, and installation. During the design phase of cabinet-making customer’s room is measured to make sure that sizes are customized to each order. Design work with computer generated design software or hand drawings for small projects is done. 3D drawings from several angles can give clients a better picture of the design and can be modified to show how changes affect the total design. This is most important in kitchens where every inch should be used for maximum efficiency and comfortable work areas. Customers are given several choices, including color, accessories (handles, legs, doors, and other hardware), and type of wood. Estimate is issued after all the details have been chosen.

Once the design and the estimate are approved, the fabrication phase of cabinet-making begins. The cabinets are cut according to the blueprint and customer’s specific requests. Cabinets are assembled, including hinges, closing mechanisms on drawers and doors, extension slides, and any other hardware specified on the drawings. Joints, parts, and subassemblies have to be fitted and trimmed to make complete units. Surfaces are sanded, and stain or polish is applied to finished products. After all the cabinets have been assembled, the customer can choose to have them installed. Cabinets are installed promptly, with a lot of attention paid to safety and precision. Lambeth’s Custom Cabinets’ employees arrive with blankets, vacuums and plastic sheeting to ensure that the worksite is kept neat and mess-free. As owner and master cabinetmaker, Jack Lambeth personally overlooks and installs the cabinets that he designed and built along with his employees to make sure that none of the details are overlooked.

PEST

One of the most important economical factors when reviewing a cabinet-making business is GDP. If people have disposable cash, they can spend it on a new kitchen, or cabinets in the living room. If the economy is in recession, it becomes more difficult to justify spending $1600 on custom-made cabinets, and if a customer really does need new ones, he will likely choose to go to IKEA instead and purchase them for much less. Unemployment rate also plays a role in determining the demand for a commodity such as custom cabinetry. It is very unlikely that a person without a job will want to order custom-made cabinets, even if quality is amazing. As the current unemployment rate is at a stable 6.1% (according to Statistics Canada), it seems that the economy in Canada is not in recession, and the percentage of the unemployed is not very high.

The demand for cabinets can also depend on the interest rates (prime rate 6% as of December 2006). As demand for housing largely depends on the borrowing interest rates, it is important to analyze the current economic situation in terms of interest rates as well. And since Lambeth can get more business by offering his services to the building companies, demand for housing becomes an important factor in analyzing Lambeth’s current situation. Current prime interest rate of 6% is actually in the high end of the range, as only a year ago interest rates were closer to 4%, which encouraged more people to buy houses.

Technology plays an important part in today’s cabinet-making. Software programs that help designing blueprints for cabinet sets faster and with more precision can be very beneficial to a business such as Lambeth’s. Having that type of software in use can bring competitive advantage to the firms that choose to use the new technology, as it can help those companies save time and money by making the blueprints more accurate in less time.

Porter’s 5 forces

Competition in cabinetry-making is high. There are hundreds of companies nationwide that specialize in custom-made furniture, cabinets being one of the most popular specialties. There are 374 establishments alone in Ontario and 748 Wood Household Furniture Manufacturers in Quebec (according to Statistics Canada), including 363 micro to small-sized establishments in Ontario like Lambeth’s. Lambeth does not only compete against the small firms however, but larger ones such