16

CHAPTER II

REVIEW OF RELATED LITERATURE AND STUDIES

This chapter presents the reviewed materials such as books, periodicals,

undergraduate researches, etc., which provided the researchers insights about

the subject matter of the proposed study. Likewise, these aided them in

identifying the research gaps that this study will attempt to bridge in. Moreover, it

helped in the formulation of the theoretical and conceptual frameworks of this

proposed study.

Related Literature

The following select and cited passages within the articles of some

published materials are deemed by the researchers to be very much relevant to

the proposed study.

The Furniture Industry in the World

Furniture is a movable accessory, fitting or a decorative art that is used for

the purpose of making a room or building suitable to live in or to work. It includes

chairs, tables, desks, beds, cupboards, etc. It can be made from a wide range of

materials including wood, plastic, metal, fiber etc. The main purpose of furniture

is to provide comfort and a suitable décor to a building or a room. Over the years

furniture industry has developed greatly and is no longer restricted to the

production of tables and chairs. It has expanded into manufacturing of an

assortment of interiors, home furnishings that exhibit elegance and class. In

addition to the production of products for living rooms, offices, kitchens, gardens
 17

etc. it has also entered manufacturing upholstery, mattresses industries. Raw

materials for production include plastic, wood, fiber, rattan etc. Skilled as well as

unskilled labor is used in addition to machine oriented mass production

techniques. Technologies like Computer Aided Design (CAD) is used for the

designing purpose.

Traditional furniture manufacturing firms account for majority of the global

market owing to their well-established market share, production capacity and

management experience. The growth of residential and commercial properties

has been the key driver for market growth. In addition, changing lifestyle,

increase in consumer purchasing power, consumer esteem needs, urbanization

has positively impacted the market growth. Increased consumer interest in home

decoration is expected to drive the market. Furthermore, environmental

awareness amongst the consumers has fuelled the demand for organic home

furnishing products. Factors including wide range of products regional market

development have further attributed to the market growth. In coming years high

demand for premium beds made using silk, hand-tufted horsehair, latex, memory

foam, cashmere and lamb wool etc. owing to their superior comfort level will spur

the market growth. Outdoor furniture demand for products such as grills,

umbrellas, covers, cushions etc. has also fuelled the market growth to some

extent.

Competition from countries such as China and rise of imports into the U.S.

has impacted the global furniture market considerably. Further, ban by

government on import and export of timber in specific countries is a restraint to

 18

the wooden furniture market. The key vendors in the furniture market include

Durham, Alfresco, Stickley, Century, Drexel Heritage, IKEA, Lifestyles among

other. Low price, easy to build and innovative furniture manufactured by IKEA

has helped propel the market growth. Furniture industry is expected to see a

growth in coming years in developed as well as developing countries.10

The preceding reviewed literature provided the researchers a fundamental

and clear understanding of the historical development, status and prospects of

the furniture-making businesses in the World. The insights further aided them in

the conceptualization of its relevance to the circumstances encountered and the

situation these identified local furniture-making businesses in Sorsogon City are

in.

The Furniture Industry in Asia

Leafing back through the data of the last ten years, it is easy to see that

since 2007 - the last year when it was recorded an increase in turnover from

twenty-three to over twenty-six billion euros - to 2014, the production of furniture

in Italy has done nothing but decline, and with it, also the number of companies

and number of employees decreased. Fortunately, export rose from 46% to 57%

now it stands at just above 50%, but this good growth was not enough to

compensate for the drastic reduction of the domestic market. The apparent

consumption of furniture in the domestic market has in fact declined by 40% -

from more than 17 billion in 2007 to about 10 billion in 2015. And defaulting

businesses have created a loss of more than 50,000 jobs, for a total of more than

5,000 companies. These numbers show us that it is reductive to speak of it only

 19

of a crisis: it is quite clear that this has been an epoch-making change. To start it

is useful to define and examine a number of key issues, in no particular order.

Since most of Asia’s furniture production is in private enterprise, capacity

is limited only by finance and that is determined by confidence of companies and

their investors or bankers. That in turn is determined by profitability. Growth in

global furniture markets over the long term should give grounds for confidence,

but in my view a lot of furniture is in danger of being offered too cheap and going

the way of the clothing industry, limiting profitability. The reduction of production

in 2015 may indicate a temporary over-capacity as well as reduced demand,

which also threatens profitability.

Material supply is crucial and complex, especially in wood. Wood is like

oil; some countries have it and some don’t, but all use it. The problem is that few

countries have all the right kind of wood they need. Most Southeast Asian

countries fall into the category of not having all the right wood for the furniture

markets they serve, which is why smooth trade in wood imports may be crucial.

But suffice it to say that the USA is probably in the best position with proven long

term sustainable supplies of hardwood for furniture, whereas China is chronically

short; and likely to be so for decades, despite huge planting programmes. 11

After reviewing the previous cited literature, the researchers were able to

comprehend better and clearer the trends and opportunities available to local

furniture-making businesses outside the Philippines. This information is very

much relevant to the proposed study for the latter is interested to present and
 20

expound local and international opportunities that may be considered by the

businesses identified in this undertaking.

The Status of Furniture Industry in the Philippines

The Philippine furniture industry is one of the most labour-intensive and

artistic industries in the country. Furniture companies tap the hardworking,

creative and enterprising qualities of Filipinos in manufacturing high-quality

furniture. Because of this, the Philippines is known as the “Milan of Asia.” The

industry, which is 98% categorized under SMEs, provides 2.1 million indirect

workers nationwide and provides business to 5.4 million in its supply chain.

Philippine furniture is made using the finest sustainably-sourced raw materials

such as hard wood, buri, rattan, bamboo, metal, and other indigenous products.

The wood, box beds and mattresses, office and store fixtures, and plastic

furniture subsectors are domestically, oriented while the rattan, and metal

subsectors are export-oriented. Ninety-five percent of furniture companies in the

country are classified as SMEs and the three major furniture production areas in

the country are in Metro Manila, Pampanga and Cebu. Metro Manila and nearby

peripheral cities in CALABARZON (Cavite, Laguna, Batangas, Rizal and

Quezon) consist of small, medium and large furniture enterprises which

specializes in wood furniture and other mixed materials. Pampanga is associated

with hand-carved wood, wicker and iron products, whereas Cebu, used to be the

heart of rattan furniture making in the country, is now known for its fine wood

furniture works. The creativity and industry of the Filipino is the cornerstone of

the longstanding success of the Philippine furniture industry. This gives agility
 21

and flexibility to produce furniture according to the needs and tastes of buyers.

While the industry is also capable of mass production, many companies

specialize in producing customer-specific furniture items, which have higher

value and durability. Specialization enables contract manufacturing, allowing the

industry to cater to the growing needs of families, hotels, restaurants, real estate

developers, and tourism-based enterprises.12

In the attempt of the researchers to present and analyse the historical

development, status and prospects of the industry in the country, they reviewed

the earlier cited literature providing them a clear picture of the furniture-making

industry in the Philippines in general.

Challenges Affecting the Furniture Industry in the Philippines

The Philippine furniture industry aims to be the global design innovator or

hub for products using sustainable materials by 2030, with thriving domestic and

international markets and a competitive and motivated labor force. To achieve

this, the industry shall focus its programs on four key development factors: (1)

product development, (2) marketing, (3) capacity building and (4) advocacy.

Under product development, the goal is to have access to markets with the

government support to institutionalize a budget for trends gathering, forecasting

and sharing; upgrade design education through early introduction of design

awareness appreciation and information and training assistance for design

students and professional designers and manufacturers; and establish

sustainable and environment-friendly raw materials and establish supply hubs for

semi process and raw materials from local and imported sources. Under
 22

advocacy, the objective is to build the group to be a strong force with a unified

voice, strongly influence all appropriate sectors, and build support infrastructure

to continue the gains. Under marketing, the targets are to make the Philippine

furniture top of mind in Asia, to sell to traditional markets, and simplify marketing

strategy to align furniture design to customer needs in local, glo-cal and global

markets. Under capacity-building, the industry seeks to have a sustainable

supply of raw materials; provide readily available skilled manpower to the

industry; and to ensure availability of advanced and cost-effective machineries /

equipment and production processes.

Towards the above goals, the industry intends to intensify promotions in

non-traditional markets; establish links with foreign posts to address immediate

buyer inquiries and seek their assistance to promote the industry abroad;

organize focused offshore business matching programs; intensify product

development programs to cover material manipulation, library of material

sources, and development of design collections; implement continuous skills

training; establish regional development programs to expand the subcontractor

base of manufacturers; establish furniture quality standards; and institutionalize

management education programs by linking design and manufacturing courses

in selected schools.13

The preceding literature cited and reviewed is so vital in gaining a vivid

picture of the factors and circumstances threatening the industry in general and

affecting the operations of the identified local businesses in particular. The

literature revealed that there are so much opportunities available for these local
 23

businesses to succeed domestically and outside the Philippine borders.

However, there are matters which are necessary to be given due consideration

by these local businesses. If unattended, these will certainly result to a negative

impact to the operations of local businesses. This proposed study attempts to

give local shop owners a working knowledge on these factors and be able to

adapt to the challenges brought by these factors.

Government Initiatives to Better the Furniture Industry in the Philippines

Through the Department of Science and Technology (DOST) Forest

Products Research and Development Institute, the government generates

information and technologies on the utilization of some industrial tree plantation

species and non-wood forest products for export quality furniture and handicrafts.

Specifically, the FPRDI conducts research and development on furniture and

furniture parts, as well as the testing of these products such as wood and non-

wood preservation, wood seasoning/kiln drying, bleaching and dyeing, finishing,

saw-milling, termite and power-post beetle treatment. There are currently two

Furniture Testing Centers: one in Los Baños, Laguna and one in Lahug, Cebu.

Corollary, there are also a number of Department of Trade and Industry

(DTI) Support Programs. The DTI Regional Operations Group provides support

to industries and companies in the regions outside of Metropolitan Manila. It has

the following support programs for furniture companies that can be accessed

through DTI regional offices: (1) product development and design through the

Design Center of the Philippines, (2) FabLab or Fabrication Laboratory, a small

scale workshop offering rapid prototyping and digital fabrication services in Bohol
 24

Island State University, (3) provision of Shared Service Facilities, (4) marketing

linkage and promotion, and (5) raw materials manipulation.

Under the Industry Development Program, the furniture industry technical

working group conducts meetings to discuss and address industry concerns and

issues. Among its activities concern the following: (a) Product Development, the

Design Center of the Philippines launched the Product Development

Sourcebook, a compilation/documentation of possible indigenous raw materials

for furniture production in March 2014. For the Sourcebook, nine designers were

contracted to produce designs for sixteen selected companies which financed

and produced prototypes of the designs. The exhibit of prototypes was done in

March 2014 during the Philippine Furniture Show, (b) Human Resource

Development, the BOI, CFIP and TESDA discussed the training programs

required by CFIP. TESDA committed to offer scholarship programs for furniture

training with CFIP’s commitment to absorb 70% of the trained students, (c) Raw

Materials Highway/Supply Chain Project, the CFIP has completed identifying

suppliers and subcontractors in Quezon. DTI-ROG signed a MOA with Gumaca

Woodcraft Association for the grant of 3 kiln dryers worth PhP 11 million under

DTI’s Shared Service Facilities Program. DTI-ROG also approved SSFs

consisting of a woodworking facility, bamboo production facility and metal

fabricating machine worth PhP9 million and CNC Multi-cam Machine and

Spindleless Veneer Lathe, (d) Revision of DENR DAO 99-46, a meeting between

CFIP and DENR’s Forest Management Bureau (FMB) was set to discuss the

industry’s concern on the revision of the DAO 99-46, particularly on the

 25

importation of wood and the required authentication by Philippine Consular

Offices since it is no longer implemented by other countries. FMB clarified that

the proposed revision is still under consultation and recommended to concerned

stakeholders to submit a position paper on the issue, (d) First Philippine

Homestyle Congress, the event funded by the DTI-IDP was conducted in

September 2014 to formulate the strategies that would address the concerns of

the Homestyle industry, particularly with the coming ASEAN integration. More

than 200 exporters and manufacturers participated in the event.14

Opportunities available for local furniture-making business may be

deemed irrelevant if there are no available programs initiated by various

government agencies aimed at assisting the operations of these local businesses

and cope with domestic and global factors. The preceding reviewed literature is

vital for these local businesses and be able to take advantage of these programs.

It is also the aim of this undertaking to investigate and discuss these programs.

Private Initiatives to Better the Furniture Industry in the Philippines

Various government and private training facilities enhance the natural

talent of Filipinos for art and design. Skilled workers and designers widely

practice apprenticeship, thereby ensuring that the business and artistic expertise

of companies are well preserved and enhanced throughout the years. Through

the efforts of the Chamber of Furniture Industries in the Philippines (CFIP) and

the Cebu Furniture Industries Foundation (CFIF), the industry is projected to

make a global mark through the sustainable production of sophisticated, sturdy

and environmentally friendly products. 15

 26

In 1983, the Center for International Trade Expositions and Missions

(CITEM) launched Manila F.A.M.E. otherwise known as the Furnishings and

Apparel Manufacturers’ Exchange) International, “the country’s premier trade

platform for exports and design, providing opportunities for small and medium

scale entrepreneurs to showcase their products in the world market.” The show is

the longest running trade event on housewares, furnishings, gift items, holiday

decorations, and fashion accessories in the Asia-Pacific Region. A biannual

event, furniture and furnishings have been the highlight of Manila FAME until

2014, when the industry chose to shift away from the government program to

establish an independent furniture only show. 16

On top of government initiatives, there are also relevant and practical

programs initiated by the private sector such as the Chamber of Commerce and

other professional organizations. They are committed to instigating various

programs aimed at aiding these local shops. The proposed study is interested at

presenting and discussing current private initiatives that they may considered.

Opportunities and Prospects of the Furniture Industry in the Philippines

There are various sources of demand for furniture items in the Philippines.

Coupled with the consistent high growth of the country’s economy and Filipinos’

purchasing power, the United Nations World Tourism Organization and

Philippines’ Department of Tourism report strong demand for tourism in the

country. Since tourism-based enterprises – such as hotels, restaurants,

museums and leisure service providers – face growing needs to update their

amenities, the demand for unique furniture items is also increasing. At the same
 27

time, the property sector’s strong growth and families’ easier access to housing

credit also increase demand for household items – most important of which is

furniture.19

It is worth to note that despite the challenges presently affecting local

furniture-making businesses there are relevant opportunities that can positively

impact and aid these local businesses. Further, new trends in the industry, most

likely will create new demands. The use of bamboo, rattan and buri as main

materials of a set of furniture is a new demand in the global furniture industry to

which domestic shops may take advantage.

Related Studies

The succeeding articles and passages from select unpublished

researches with sufficient significance to this proposed research investigation are

identified and briefly elaborated by the researchers.

Dr. Rosmaini Tasmin, [Link] in their study entitled, “Sustainable Competitive

Advantage in Furniture Industry: Comparative Studies in Finland, China and

Malaysia”, revealed that in the global scene, competitive operations and

technology strategies become more intense due to the growing trend of ‘China

Effect’. Further, the study concluded that the importance of different technology

levels affect strategy implementation by the knowledge required creating the

chance to build dynamically the future change of operational strategy according

to the technology/knowledge ranking, based on their effect to performance,

including opportunities and risks.20 This study is relevant to the proposed study

for the latter is likewise interested in understanding opportunities for the industry
 28

that may serve as competitive advantage. However, the current undertaking is

not a comparative study of furniture industry in the global perspective.

In another study entitled, “Technological Innovation in Wooden Furniture

Industry: An International and Malaysian Perspective” by Morris & Readman in

2003, it was revealed that technological innovation in the wooden furniture

industry served as the major factor that led to the boom of the industry. Corollary,

the research described the global furniture trade, value chain, sectoral patterns of

the industry, technological innovation and design economics, the spatial

agglomeration and innovation systems studies of the industry. The study likewise

delved on the classification, components and structure of the industry, and then

sketched the development of the industry in Malaysia. This is followed by a

detailed account of the industry from the perspective of knowledge-based and

technology domain, and actors and linkages development. 21 The same with the

earlier cited study, this undertaking also saw the relevance of innovation in the

production of goods and services.

Jose Ramon A. Abad in 2008 conducted a study entitled, “Philippine

Furniture Industry: Adjustments for the RP-US Trade Agreements.” This

undertaking is a descriptive study that attempted to identify the factors that

helped the furniture industry in the Philippines survive despite of pressures of

globalization. This paper also tried to determine how the industry was able to

innovate, develop skills, mix design, combine local manufacturing capability and

global and local sourcing to become competitive in the high end, low volume

markets. This paper likewise analysed if the industry has the capability to capture
 29

the mid-range, high volume furniture niches. Finally, the paper also pinpointed

adjustments the furniture industry has to perform, in the short and long run, to

address this market niche. To analyse the industry problem, the Porter’s

Diamond Model Framework was utilized to determine the country’s internal

competitive advantage.22 The current study established a direct connection with

the previous study reviewed for the former is likewise focused on understanding

the challenges faced by the local business engaged in the furniture-industry and

how these challenges may be addressed by government and private initiatives.

A similar study was conducted by Shawn T. Grushecky entitled, “Decline

in the U.S. Furniture Industry: A Case Study of the Impacts to the Hardwood

Lumber Supply Chain”, the wood household furniture industry has accounted for

a sizeable portion of total hardwood lumber use in the United States. However,

for more than a decade, imports have gained an increasing share of the

hardwood furniture market, and lumber consumption by this industry has

declined dramatically in the last five years. The research used the case study

methodology to investigate on the impacts of the decline on the hardwood lumber

supply chain. The findings revealed that furniture manufacturers appeared to be

more optimistic regarding the future of the domestic furniture industry compared

to the primary and components manufacturers. Furniture market declines have

been quickly replaced by the cabinet and solid wood flooring sectors; however,

the supply chain must continue to strategically develop new markets in the event

of a housing sector slowdown.23 This reviewed studies drew relevance to the

proposed study. The latter is likewise interested to investigate on the decline of

 30

the furniture industry, particularly in the identified locality. Moreover, the reviewed

study discussed the relevance of both domestic and foreign opportunities in the

life of furniture-making businesses.

Prof. Andrea Renda and her team studied in 2004 the European Union

Furniture Market Situation and the Possible Furniture Products Initiative.

Significant findings of the study revealed that possible initiatives on furniture

products could respond to some of the main challenges currently affecting the

sector. Further, the research results emphasized on the role played by the

European manufacturing industry as a driver of economic growth and

employment levels in Europe.24 The earlier cited study discussed the relevance

of various initiatives to respond to most challenges confronting the industry. In

the same manner that this undertaking would like to find out, the opportunities

available for the local shops in the identified locality that will aid them adapt to the

factors causing the decline of the industry.

Synthesis of the State-of-the-Art

The cited related literature helped the researchers formulate the

theoretical and conceptual frameworks of this undertaking. Several materials

discussed the status and historical development of the furniture-making business

in the world and in Asia. More importantly, sufficient literature presented the

status and prospects of the said industry in the Philippines. Corollary, the

researchers were able to present relevant articles and passages expounding the

past and current challenges affecting the operations of local furniture-making

business in the country in general and in the countryside in particular.

 31

As to the reviewed studies, one undertaking studied on the sustainable

competitive advantage in the furniture industry as experienced in Finland, China

and Malaysia. A number of studies emphasized the relevance of innovation and

technology in boosting the production capacities of various furniture-making

businesses as a way of addressing issues on production. More importantly,

several studies in their findings revealed significant arguments on the decline of

the industry.

The relevance and relation of the reviewed researches are substantial and

supplementary nature only. Such unpublished researches are not in any way

directly similar to the proposed study. However, all are with vital bearing to this

undertaking. The difference of the former to the latter which are briefly discussed

are in terms of scope, status and nature of respondents and key-informants and

the main focus of the study which is to determine the factors of the rise and of the

fall of select furniture-making business in the identified locality. Thus, all these

studies provided vital premises in the formulation of the fundamental concepts of

this proposed study.

Research Gaps

During the research work, the researchers have had not come across with

a study that attempted to understand the factors affecting the operations of

businesses in Sorsogon City engaged in furniture-making leading to an eventual

success or failure of the business. It is worth to note that no particular study

reviewed delved on understanding the situation of the furniture industry in the

identified locality. Likewise, it is interesting to note that no studies made a

 32

conclusive analysis on the success and failure of businesses engaged in the

furniture-making industry. One study delved only on the decline of the industry in

select countries in Europe. These are the gaps that this undertaking would like to

bridge. The researchers understood the significance of conducting a holistic

approach to understanding the furniture industry. This proposed study more

significantly, attempts to reveal programs and interventions available for local

shops in the industry to better their performance a business.

Theoretical Framework

Any man of experience realizes the importance of a theory in the lives of

man and nation. Man act according to a set of beliefs, “A Philosophy of Life”.

Most people unconsciously operate in a society composed of system based on a

framework of beliefs. It will be fatal and certainly impractical to ignore theory.25

The focus of this study is geared towards understanding the socio-

economic indicators as well as the factors affecting the life of a business. More

particularly, this will investigate on the success and failure of businesses

engaged in furniture-making.

Corollary, the paramount concept of this undertaking is anchored on

various relevant business development theories. The main model is the Linear

Growth Theory of Walt Rostow26 espoused in 1960. He is an American economic

historian and a vigorous advocate of free market capitalism. The theory discuss

five stages of economic phase that a business usually undergoes, to wit: (1)

situation analysis- most businesses in their start-up stages scan the environment

and understand its position in the actual business circle, (2) pre-take-off stage-
 33

with the development education or knowledge economy and understating of

science and the application of science of technology in the business operations,

(3) take-off stage- businesses this time utilizes organized system in its

operations, (4) drive to maturity- with an ongoing movement towards a diverse

economy, businesses are challenged to adapt to these changing business

environment affected by the varying demand, and (5) stage of mass

consumption- where businesses are able to sustain a considerably good

performance, they are able to take advantage of the rising consumption of the

society.

There are other four theories supporting the main theory earlier discussed.

The Structural Change Theory27 of George Lewis in 1970 is a development

theory that argues that the growth and failure of a business is affected by various

factors such as, (1) traditional barriers, labour supply, (3) industrialization, and (4)

capital accumulation. Relatively, the Business Development Intern Theory28

advances the idea that the success of the life of a business is fundamentally

affected by its new venture strategies and start-up barriers. It is assumed in the

theory that if a business is able to combat problems in the initial stage of its

operations, the business is most likely to succeed. Another supporting framework

is the Dependency Theory29 of Paul Prebisch espoused in 1967. The main idea

here is that the success of a business is directly dependent on its ability to adapt

to the challenges brought about by globalization and its ability to take advantage

of the opportunities of free market capitalism. Otherwise, will cause the failure of

the business. Finally, the New Classical Theory of Robert Keynes30 in 1980
 34

developed the argument that market liberation, free market system, public choice

and a market-friendly business environment will aid the business gain eventual

success.

The schematic illustration of the theoretical framework of the study is

shown in Fig. 1.
 35

Linear Growth Theory

1. Situation Analysis
2. Pre-Take off stage
3. Take off stage
4. Drive to Maturing
5. Stage of Mass Consumption

New Classical Structural

Theory Change Theory

1. Market 1. Traditional
GROWTH Barriers
Liberation
AND/OR 2. Labor-Intensive
2. Free-
FAILURE OF Stage
Market 3. Industrialization
BUSINESS
3. Public- 4. Capital
Choice Accumulation
4. Market-
Friendly

Dependency Theory Business Development

Intern Theory
1. Globalization
1. New Venture
2. Market
Strategies
Capitalism
2. Start-up Barriers

Paradigm of the Theoretical Framework of the Study

Fig. 1
 36

Conceptual Framework

The life of a business can be best understood by analysing its operations

and its sustainability- the willingness of the business to operate with minimal

negative impact in the environment it exists while achieving its economic goals.

Further, the life of a business is equally affected by a number of factors, both

internal and external. These internal factors including its employees,

management and partners cum suppliers directly affect the operations of the

business and may be directly controlled by the firm. On the other hand, it is worth

to note that the external factors like government regulations and competitors to

name a few pose significant issues to the life of the business and are not directly

controlled by the firm.31

Considering the foregoing, a business experiences both success and

downfall in its operations. Corollary, economists understand that a business

undergoes cycle of varied stages- growth, boom, recession, depression and

recovery. These are the very stages that define the rise and fall of a business. Of

the many industries in the Philippines, the furniture-making industry is a loud

statement of both rising and declining business. Arguably, most local shops were

not able to sustain its operations because the impact of the many factors like the

government policy on the regulation of cutting of trees and the changing demand

for cheaper sets of furniture made from bamboo and rattan. These are just some

of the concerns that caused the downfall of many businesses engaged in

furniture-making. This is also true for the situation of the said industry in

Sorsogon City.
 37

The researchers likewise believed that the socio-economic profile of these

businesses are vital to the success and is critical to the failure of its operations.

The socio-economic profile of the businesses may be characterized by the

following indicators, to wit: (a) organizational structure and design, (b) form of

business organization, (c) initial capitalization and current financial standing, (d)

manpower and salary scheme, and (e) products and services offered.

Despite these realities, it is a hopeful fact that these businesses have

great opportunities to recover. Government initiatives are slated and are being

implemented by the Department of Trade and Industry. As a consequence, the

agency has institutionalised varied programs to assist these small furniture-

making businesses. Relatively, the demand of bamboo and rattan made sets of

furniture is a new opportunity for these local shops. Moreover, financial

assistance on capitalization and purchase of equipment. A number of programs

are likewise instigated by private institutions and professional organizations.

These varied trends and opportunities are believed to catapult the industry from

decline to success again.

The schematic illustration of the conceptual framework of the study is

shown in Fig. 2.
 38

FACTORS AFFECTING THE OPERATIONS OF THE

FURNITURE-MAKING BUSINESSES

CHANGING CONSUMER BUYING

PREFERENCES

SHORTAGE OF SKILLED
GLOBAL COMPETITION
WORKERS

LACK OF RAW MATERIALS RISING LABOR COSTS

GOVERNMENT INITIATIVES
/PRIVATE INITIATIVES

OPERATION OF THE BUSINESS

FURNITURE BUSINESSES

Paradigm of the Conceptual Framework of the Study

Fig. 2
 39

Definition of Terms

The following important terminologies in this study are theoretically and

operationally defined for the readers; for the purpose of better understanding and

clarity.

Rise. This refers to the ability of a thing to move upward, to become higher

or to slope or extend upward according to Merriam-Webster Dictionary32. As

used in the study, this refers to the eventual success of the identified furniture-

making businesses in Sorsogon City.

Fall. Lexicon33 defines the word as to come or go down quickly from a high

place or position. Operationally, this refers to the decline in the operations of a

business and its failure to sustain a good financial standing caused by the

decreased in sales.

Furniture-Making Industry. This refers to a particular type of industry

categorized as a manufacturing business engaged in the conceptualization of

design and the actual production of woodworks and other materials such as buri,

rattan and/or bamboo.

Socio-Economic Profile. As used in the study, this refers to the over-all

business profile of the identified furniture-making businesses characterized by a

number of indicators such as organizational structure and design, form of

business organization, manpower and salary scheme, capitalization and financial

standing and the goods and services offered by the businesses.

Organization Structure and Design. Operationally, this denotes the

administrative framework of the businesses identified defining the duties and

 40

responsibilities of the persons involved in their operations. This is illustrated by

an organizational chart.

Form of Business Organization. As used in the study, this refers to the

design of the administrative power followed by the identified local businesses

whether sole proprietorship, partnership or corporation. This further qualifies the

scope of sharing responsibility, liability and gains of the owners of the

businesses.

Capitalization. This refers to the act or process of capitalizing or the total

liabilities of a business including both owner’s capital and borrowed capital.

Operationally, this denotes the cash and non-cash capital invested by owners of

the identified businesses in this study in starting up their furniture-making

venture.34

Current Financial Standing. As used in the study, this refers to the actual

cash position of each furniture-making business as reflected in its book of

accounts as may be validated by cash count and other accounting procedures.

This likewise may be understood as a financial indicator to qualify the capacity of

the business to sustain its operations.

Manpower. As defined by the lexicon, it is the power available from or

supplied by the physical effort of human beings. Operationally, this refers to the

actual number of persons or labourers involved in the actual production of sets of

furniture.35
 41

Salary Scheme. As used in the study, this denotes to the scale of the

amount of money that an employee is paid after the performance of task related

to the production of a piece or set of furniture or a related service.

Products Offered. Operationally, this refers to the tangible (a piece or set

of furniture and intangible products (related service) that are produced and

offered for sale by these identified furniture-making businesses.

Interventions. As defined by lexicon, it denotes the act of interfering

usually a force or threat of force. As used in the study, this refers to the programs

and/or activities initiated either by government agencies or private institutions or

professional organizations engaged in the industry. Moreover, this may also refer

to regulations instigated by the government through an authorized agency. 36

Opportunities. This refers to the amount of time or a situation in which

something can be done.37 Operationally, this refers to the new demands, trends

and updates on the furniture-making industry. This may likewise denote

circumstances and policies that may boost the operations of the identified local

furniture-making businesses.
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NOTES

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