4 REPLIES DUE IN 24 HOURS

Classmate Replies:

For this Discussion, you will reply to your classmates in this way:  Comment specifically on letter C of your classmate's post.  Describe why you agree or disagree with your classmate's assessment, and support your response with course materials. 

How to Reply - Substantive Replies:

Substantive replies to classmates are expected for this Discussion. That means that comments like "Great Post" or "I agree" will NOT count toward a substantive reply. A substantive reply MUST use support from course materials, which means APA citations and references. For this discussion, you will reply to your classmates as indicated above in Classmate Replies. 

How Many Replies to Classmates?

Read the grading rubric carefully. The rubric points out the major criteria, including response frequency and timeliness, that will be used to grade this assignment.  Note that you cannot earn maximum grades for the frequency of posting by responding to only 2 classmates. You are required to respond substantively to 4 classmates to maximize your grade in this area. (See explanation above about what "respond substantively" means in this class.)

Other Writing Guidelines for this Discussion:

· Use the grading rubric while completing the project to ensure all requirements are met to lead to the highest possible grade.  

· Third-person writing is required. The third person means no words such as "I, me, my, we, or us" (first-person writing).

· Contractions are not often used in business writing, so do not use them here. 

· Paraphrase - do not use direct quotations. This means that you will put the ideas of an author or article into your own words rather than lift them directly from a source document. You may not use more than four consecutive words from a source document (including the case scenario) or change words in a passage as doing so would require direct quotation marks.  Use a passage from a source document by putting it into your own words (paraphrase) and attribute the passage to the source document. Changing words from a  passage does not exclude the passage from having to have quotation marks. If direct quotes are presented, they will not be included in the grading.

· Use in-text citations and provide a reference list that contains a reference associated with each in-text citation. 

· Only course materials (from this course's content) may be used. Sources other than this course's eBook or the course materials listed under content will not be considered sources of support.

· Provide the page or paragraph number in every in-text citation presented. Refer to this link for more guidance on how to do this:   In-Text Citations - Including Page or Paragraph Numbers.

DOUGLAS’S POST:

TO:  Joan Smithfield

FROM:  Doug Fleming

DATE: September 2, 2022

SUBJECT:  Future Diversification Strategy of Smithfield Custom Furniture

 

Analysis

A)        Porter’s Competitive Advantage model focuses a company’s efforts toward a competitive advantage in two specific ways with two focuses in each area. The first area is market scope, where the focus is on either a specific market segment or the broad/overall market segment. The second is cost focused, where the focus is on a higher cost niche market product or a lower cost mass marketed product (Lumen Learning, n.d., para. 9). When using this model to determine the best course of action for Smithfield Furniture, the choice is between mass produced, lowest cost furniture marketed to the general population or the targeting of a very specific market, in this case the top 7.5% of the world’s top earners, to produce a very high quality, even exotic, product.

B)        Of the two alternatives listed above, the best strategy would be to start producing a separate product line of readymade, mass produced products and furniture under a separate name brand that would still be under the Smithfield Furniture umbrella. This way, customers do not get confused about the current product line versus this new, lower cost mass produced product line that would be marketed and sold in a different way. With the company’s production capacity not a maximum, this leaves room for the manufacturing plants to produce multiple products with some increase in production costs since the factories, other fixed costs, and personnel are already being paid by the company. Other than the increased cost of raw products and those slight increases in production cost, it would be easy to pivot some other of those stagnant resources to producing these mass-produced products.  As compared to producing high-end furniture for the world’s top 7.5% of income earners, this market would focus on people that have very high expectations and, in most cases, are looking for custom made or unique pieces of furniture that, although purchased at high price, would not necessarily increase profits greatly since the quality of raw goods would be great and the market small.  

C)        For Smithfield’s product line to diversify, an examination of production capacity and distribution costs must be made, as well as a market analysis, to determine strengths and weakness of each line.  The best starting point to move forward with starting a new market line of massed produced furniture under a separate name would be to conduct an Internal Factor Evaluation (IFE) of the company’s internal strengths and weakness. (Maxi-Pedia, 2017, para. 2-4). After completing this list, input each into an IFE matrix. This is similar to a SWOT analysis but gives each component a numerical value and allows for a company to quickly evaluate if internal work needs to be done before starting on a new product line (Maxi-Pedia, 2017, para. 13,16)

In conjunction with an IFE matrix evaluation, a competitive profile matrix (CPM) needs to be completed to evaluate the competition within this new market and how Smithfield as an organization compares to them. Similar to the IFE but done with a specific set of internal and external factors for this new market, the CPM is conducted for all companies, including Smithfield Furniture, that are in this market (Jurevicius, 2022, para. 1, 2).

This will provide a realistic and numerical comparison of all companies in the marketplace today using the same scale and system, thus providing a matrix for deciding what products to produce and where best to market them as compared to what the competition is currently doing. It will identify where there are areas to explore and to be exploited (Jurevicius, 2022, para. 7).

 

References

Jurevicius, O. (2022).  Competitive profile matrix (CPM). Strategic Management Insight.  https://strategicmanagementinsight.com/tools/competitive-profile-matrix-cpm/

Lumen Learning. (n.d.). Module 4: Environments and strategic management, stages, and types of strategy.  Principles of Management.  https://courses.lumenlearning.com/wmopen-principlesofmanagement/chapter/stages-and-types-of-strategy/

Maxi-Pedia. (2017).  IFE matrix (internal factor evaluation).  http://www.maxi-pedia.com/IFE+EFE+matrix+internal+factor+evaluation

Saylor Foundation (2014). Mastering Strategic Management.  Mastering Strategy: Art and Science (pp. 1-36).  https://leocontent.umgc.edu/content/dam/equella-content/bmgt495/Chapter_1Mastering_Strategy.pdf

MARCEL’S POST:

A. Explain, using the link provided to Porter's Competitive Advantage Model, how Porter's Competitive Advantage model applies to the Smithfield's Board of Directors' issue of deciding to produce a very exclusive furniture line or a mass-produced, mass-marketed furniture product line. Use in-text citations as appropriate.   https://courses.lumenlearning.com/wmopen-principlesofmanagement/chapter/stages-and-types-of-strategy/

The scenario stated that Smithfield's custom furniture board all agreed on a new line of furniture. The company is not sure what the new line will be but is discussing whether the new line should be low cost and mass produced or high cost with expensive products and advertising to the higher upper class. In this situation it is important to know what type of competitive advantage the company is looking for. According to Porters model he states that there are two different ways of have a competitive advantage which are differentiation or by cost (Lumen Learning, n.d., para. 9). This ties very well into the situation with  Smithfield's custom furniture. The company wants to either make low cost products on a vast production scale or high end products for a small group of customers.      

B. Select the best strategy for the Smithfield company to pursue from the two strategies Porter presents in his model and explain why that particular strategy is better than the alternative. 

 After consideration of both options it would be more advantageous for the company to go with a low cost high products at mass production option. When taking a look ar Porters advantage strategies it appears that the low price leadership strategy is the most effective and appropriate in this case. Smithfield's custom furniture company is looking to gain a advantage over their competition. Going with the low cost strategy is a great way to reach and provide a larger customer base. If the company chooses to go with products sold at the lowest price in combination of mass production and mass marketing the company will experience more benefits. Porter stated that the lower cost strategy will attract the majority of customers in a market which ultimately leads profit by the volume of goods sold (Lumen Learning, n.d., para. 10). In comparison to the differentiation leadership strategy this strategy offers products with unique features such as table made of exotic wood. The problem with this strategy is that these products are only interesting for people that have a high income and can afford expensive furniture (Lumen Learning, n.d., para. 10). 

C. Using this week's course readings, assuming Joan Smithfield accepts your recommendation, what is the next action she should take to determine if your recommendation is correct? Be specific. Use in-text citations and list references from course readings as required. 

In order for Joan Smithfield to determine whether the discussion made was correct there are many things to consider. It is important for the strategy selected matches with the company ideas and goals. In order to determine whether this is the case it would be helpful for the company to a PESTEL analysis in combination with a SWOT analysis or Porters five forces. These analysis will support the company in understanding environmental factors and how these factors may positively or negatively effect the companies goals (Bruin, 2016, par.1). After these tasks have been completed it needs to be established whether the strategy chosen correlates with the company's future.

References

Bruin, L. de. (2022, April 22).  Pestel analysis (pest analysis) explained with examples: B2u. Business. Retrieved August 30, 2022, from https://www.business-to-you.com/scanning-the-environment-pestel-analysis/

Learning, L. (n.d.).  Principles of Management. Lumen. Retrieved September 2, 2022, from https://courses.lumenlearning.com/wmopen-principlesofmanagement/chapter/stages-and-types-of-strategy/

OMAR’S POST:

Memorandum

To: CEO Joan Smithfield

From: Omar Massoud

Date: September 3, 2022

Subject: Feedback on New Product Line Strategy for Smithfield Custom Furniture

A. As discussed in a previous lesson, the Porter’s Competitive Advantage model is a tool that can be used to build effective and efficient business strategies. Aside from the Five Forces Theory, the Porter’s model includes four types of competitive strategies: Overall Differentiation, Focused Differentiation, Overall Low Cost and Focused Low Cost (Lumen Learning, n.d., “Module 4: Environments and Strategic Management”, para. 10). These strategies can be accomplished in two ways: by differentiation or by cost. Additionally, there are two way to attract the consumers by either targeting a particular market or focused on broader market (Lumen Learning, n.d., “Module 4: Environments and Strategic Management”, para. 10). Moreover, Ported the integrated approach as a fifth competitive strategy which integrates all characteristics of differentiation and low cost.

Smithfield Custom Furniture has been in the business for several decades with a focused on providing furniture at a reasonable price. Since the Board of Directors identify the need to maximize its production by introducing a new product line, the Porter’s Competitive Advantage Model is applicable tool to help determine the best way forward for the business future product line. The first new line of furniture the company was considering is more focused on cost; by offering low-cost products while targeting a broader market. While the second product line is driven towards targeting a particular market segment, high income earners to be specific with products made up of expensive materials.

Low Price Leadership Strategy – this is the ability of the company to offer low-cost products against its competitors (Lumen Learning, n.d., “Module 4: Environments and Strategic Management”, para. 11). This is more appropriate for larger companies such as Costco and Walmart that have plenty of buying power; however, this strategy will be likely less effective to a smaller company.

Differentiation Leadership Strategy – this approach is focus on increasing competitive advantage by providing consumers products that are unique or one-of-a-kind (Lumen Learning, n.d., “Module 4: Environments and Strategic Management”, para. 13). Luxury product lines fall under this category.

Integrated Strategy – this approach is a combination of low-cost and unique products in the market (Lumen Learning, n.d., “Module 4: Environments and Strategic Management”, para. 16). This can be accomplished by utilizing basic materials in producing luxury brand items to drive the cost down while still marketing the product as top-of-the-line item.

B. Smithfield Custom Furniture is a well-established furniture company with stores all over the United States and stores that are located overseas. They have been known for providing reasonably priced furniture in the industry. However, redefining the current market by looking for a new fit and targeting a new market segment is vital when establishing a competitive advantage (Grand Strategy Mix, 2013, 2:16). Introducing an upscale furniture line will bring new customers to the business. A focused differentiation strategy will be acceptable for the company as they start marketing upscale furniture since the company can identify a select number of stores that will carry the upscale product line to target a particular market segment. The cost to produce these products may be high; however, this can provide the opportunity for building new relationships and maintaining loyalty as the customers believe in the uniqueness of the product and are willing to pay the premium price for it (Lumen Learning, n.d., “Module 4: Environments and Strategic Management”, para. 11).

A Low-Price Leadership Strategy will less likely be effective as a competitive advantage for Smithfield Custom Furniture because they have already been doing this strategy by producing a mass amount of furniture and using low cost as their competitive advantage. This will result in a lack of differentiation or value, especially since they have identified that more competitors are offering reasonably priced furniture in the market, which will not give them an advantage (Lumen Learning, n.d., “Module 4: Environments and Strategic Management”, para. 10). 

C. The following action to take to ensure that the recommendation is acceptable is to conduct a competitive profile matrix (CPM). The CPM is a strategic tool that can accurately compare the company to its competitors (Jurevicius, 2022, para. 1). In this way, it will help reveal some of the business's strengths and weaknesses. Moreover, this analysis tool will show the areas of the company that need attention or improvement and assist in decision-making as to what strategy would work best based on the result of the CPM (Jurevicius, 2022, para. 7).

Reference:

Grand Strategy Matrix. (2013, September 15). PEPSICO. And the Grand Strategy Matrix. Youtube. [Video]. https://www.youtube.com/watch?v=fYWHaOjWnN8

Jurevicius, O. (2022, August 16). Strategic Management Insight. Competitive Profile Matrix (CPM). https://strategicmanagementinsight.com/tools/competitive-profile-matrix-cpm/

Lumen Learnning. (n.d.). Module 4: Environments and Strategic Management. Stages and Types of Strategy. https://courses.lumenlearning.com/wmopen-principlesofmanagement/chapter/stages-and-types-of-strategy/

AMBER’S POST:

To: Ms. Joan Smithfield

From: Ms. Amber Scott

Date: Sept 3, 2022

Subject: Mass production line vs. High quality line of furniture

 

A.        Currently with the board split evenly, looking at the low-price leadership strategy will mean making a high quantity of their product at the lowest cost (Lumen Learning, n.d.). This is out of character for Smithfield as they have built the name on the quality of their product. To now switch to a more IKEA style would just make them another version in the same market. This is not going to make them stand out and will tarnish the name that has been built so far. By going the other way the board is looking at differentiation leadership strategy, which will give them a high-quality product the customers are used to, and they have the opportunity to have pieces like more elite businesses. This will give the public a sense of satisfaction as they already know the name Smithfield and trust that the product is going to last and work.

The fear for the board is the cost and the customers no longer wanting to buy the product. However, customers will pay for quality and will be willing to stay with a product line they trust. By taking that trust and go the other way, making a product that is mass produced just for cost sake will not be looked on fairly by the consumers. Besides the fact, the name of the company is Smithfield CUSTOM Furniture. How do you mass produce something that is supposed to be custom? 

B.        Smithfield needs to maintain the level of service and quality that has gotten them to this point in the business. This would mean for them to use a focused differentiation strategy (Lumen Learning, n.d.) vs. using the low-price strategy. Smithfield has a name that is built on quality and even if there is a price increase, the customer base will understand that they are getting quality because of the name Smithfield. This will help them support the price increase, and once they have switched over to the new materials, the products will speak for themselves.

With six manufacturing plants in the US., one can be allocated to a Highline of furniture and the others can produce what they have been. To maintain a competitive edge in an over-saturated market, companies need to stand out and make a difference in the landscape vs. just doing what the others are doing.

C.        The course of action for Ms. Joan Smithfield is to do a test run on the product line. By manufacturing a few pieces and getting feedback to see what the reception is with the customers. By using a promotional timeframe, Smithfield could allocate some of the resources that they currently have, promote a high-quality line for a short time, and see the revenue or feedback from the consumers. If they like it, they will buy it, and Smithfield will have an answer.

This can be accomplished by increasing awareness of the new product line with advertisements either via social media or in the stores themselves. The Smithfield brand name is more than enough to handle the word of mouth stating that the brand is quality. Along with this, Smithfield needs to do a SWOT analysis (Lumen Learning, n.d) to see where the issues are with its plan going forward. most boards are not evenly split on a decision, so there are some things that need to be brought up to see what the best course of action is going to be: continue in the market as just another low-price furniture no different than the rest or strike-out and do something better to stand out?

 

Learning, L. (n.d.). Module 4. Principles of Management. Retrieved from  https://courses.lumenlearning.com/wmopen-principlesofmanagement/chapter/the-role-of-strategy-in-management/