Business Plan – Competition Analysis

Analysis of existing competition is an important thing to be assessed when starting an Interior design business and is thus a vital component of the Interior design business plan.

This analysis provides several vital insights like – the size of competition, the profitability of the venture, strengths and weakness of other competitors and most importantly provides vital inputs on gaps in the market, where we could possibly position our new venture.

What Follows is a sample of Competition analysis segment of a typical Interior design business plan.

” There are 7 big Interior designing firms operating in the area as on date. As per an estimate there are around 80 small scale interior designing firms registered in the state. The top 5 Interior designing firms operating in the area are –

1) Inside out – estd.1997 – A group of 7 ASID certified members set up this organization and have become the market leaders in less than 5 years. Strengths – Technical competence, Good corporate contacts, In house products. Weakness – Mostly corporate contracts, high end pricing, high overhead costs.

2) Sofia’s Decors – estd.1991 – Started by Nulla Sofia – market leaders in the high end home decoration segment. Strengths – Strong brand name, superior designs, franchisee model of business, good product lines, tie ups with quality vendors. Weaknesses – Home segment specialization, limited number of repeat customers, single woman driving the entire business.

3) Ali Bros Interiors – estd. 2000 – The company is a market leader in ‘Do it yourself’ (DIY) segment of the Interiors Industry. Most of the sales derived from product sales to the market. Strengths – Has a large volume based market presence, Large number of Skilled craftsmen, Ability to customize as per client’s demands. Weaknesses – No corporate clientele hence payment terms are ambiguous, Have to maintain a large inventory of ready made furniture and other interior decoration items.

4) Home & Houses – est.2001 – The company targets medium sized buyers in the home decoration segment.
Strengths – Budget supplies. Weakness – Complex supply chain management

5) Reflections – estd 2006 – A new entrant that has taken the market by storm. Strengths – Technology based marketing and customer service, staff quality. Weaknesses – No specialization.

Competition Analysis
The Interior Design Industry in {Location} falls into the category of moderately competitive. There are a large number of designers of varying in expertise, experience and their hold on the market. The designers range from small home based businesses providing small services to complete solution providers. The top 5 players together accounted for 27% of the total service revenue (excluding the product sales revenue) in this year indicating that small players and new entrants are also being accommodated by the market.

Entry/ Exit Barriers: The corporate segment of the Industry has a moderate entry barrier in the form of ASID certification requirements and Requirements of previous experience. The Residential home design category has low entry barrier as any one with an aesthetic eye can easily start a Residential Interior design business of her own. Access to vendors is not an issue in the market as any one offering a competitive payment terms is generally accepted by a large number of competing vendors of furniture, fabrics and home accessories in the area.

Companies with in-house production of decoration accessories have a higher exit barrier as compared to those interior designers who rely on outside vendors.

Availability of Substitutes: The presence of ‘Do it yourself’ and the ‘buy it yourself’ segment ensures that a large section of buyers always have the choice to do the interior designing of their houses on their own. Given a large number of small self made interior designers operating in the area, the buyers have a large availability of substitutes.

Conclusion: Given the existing scenario of the Interior designing business, Pslams interiors has decided to target home designing segment for the first year. The strategy that has been decided to penetrate in the market is to minimize designing cost and to tie up with vendors to replicate trendy high end models at a budget price in the beginning. This would involve working like discounters but with a strict quality control model.

The reasons for choosing this strategy has bee elaborated later.

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The next section will deal with conducting self appraisal through SWOT analysis.