The furniture industry is an innovative industry that produces high added value products and its turnover is several billions of Euros in Europe, and there mainly work small and medium-sized enterprises (abbreviation – SMEs). Nowadays competitiveness is an essential factor for both a country and its enterprises in the process of dealing with changing market conditions. The global market is changing and for enterprises it is too hard to position themselves and find the way how to differ from other competitors. From 2006 until 2010 a Latvian furniture market value, numbers of employees and enterprises in the sector and its share in GDP has decreased. As a result, there are the serious challenges to be met and increase their competitiveness in domestic and export markets. The author has made an in-depth research into influencing competitiveness factors of SME micro level in the furniture manufacturing industry. The study objective was to identify the key internal factors which influence the SME of Latvian furniture manufacturers. The aim was to obtain an internal factor of competitiveness assessment of the 30 respondents by random sampling method and expert method of factor assessment. The enterprises need to constantly increase their competitiveness. The internal factors influencing the competitiveness of SMEs are connected with the products, manufacturing of products, financial situation, management and marketing activities. The competitiveness level of Latvia`s SMEs in the furniture manufacturing has been evaluated as average in 70% of cases. Only 27% of the enterprises show a good level of competitiveness.

A questionnaire related to the wood drying was carried out among wood processing enterprises in Latvia to clarify the main problems and possible differences depending on production capacity and products. Deformation (twist, bow, spring, cupping etc.) during the kiln drying has been identified as the most important problem for all enterprises. Many problems are related to the product area as very often improper drying technology or incorrect drying schedule is used. Others are connected to the organization and control of drying process - optimisation of the drying schedule, energy consumption, kiln control unit, maintenance of measuring equipment, MC measurement, quality control during drying. There is a difference between softwood and hardwood drying in the product and sales area. Considerably more problems are recognized in hardwood drying (hardwood is often used in furniture production and has higher quality demands).