TO: Smithfield, Joan. CEO, Smithfield Custom Furniture
FROM: Weir, Gaeun, Senior Strategy Analyst, Smithfield Custom Furniture
DATE: 01 April 2022
SUBJECT: Analysis of Diversifying Product Line
Ms. Smithfield,
As requested, please see below to find the analysis of the two proposed product
lines. The information below is incorporating ideas from Porter's Competitive
Advantage Model
A. Porter's competitive advantage model has four, recently five forces theory which
are overall differentiation, overall low cost, focused differentiation, focused low
cost, and integrated (Lumen, n.d.). For Smithfield, the company is in a situation
whether to select focused differentiation or an overall low-cost strategy. Overall low-
cost means the company is offering lower prices compared to its competitors for
comparable value goods. (Lumen, n.d.). This is an option if Smithfield is aiming to
become a more approachable brand to its consumers. Another option for Smithfield
is focusing on a differentiation strategy. Such a strategy is to focus on a specific
group of consumers who look for uniqueness and the highest quality of products
(Lumen, n.d.) which the custom-made furniture line of Smithfield would be case.
Therefore, the question to ask is which would be more profitable in Smithfield's
current situation where the current market is saturated by competitors with
reasonably priced furniture and that Smithfield does currently have the capability to
produce more and various types of furniture.
B. Selecting focused differentiation would be the most beneficial option for
Smithfield. When the current market is being considered, there are many competitors
who have already saturated the market with their overall low-cost strategies. If
Smithfield decides to go into the low-cost competition, the company will have to sell
lots of furniture at a cheaper price in order to make a profit. Though it will be hard to
compete when the furniture industry is already led by competitors offering the same
values.
Meanwhile, with focused differentiation, Smithfield will have a better chance to
differentiate itself in the market. As the current market is filled with low-priced
products, Smithfield may bring high-quality products. Smithfield also has the ability
to make a sufficient amount of custom-design furniture as the company is not fully
utilizing its capability to produce more and various furniture. This strategy will
enable the company to increase plant productivity and be able to enter the
competition with a unique feature for consumers. One more reason to select focused
differentiation is that the company already has established its brand in the current
market globally. It will be a lot easier for Smithfield to appeal to its high-end line of
furniture to current and new consumers rather than trying to saturate the market with
cheaper prices to the general consumers.
C. With the focused differentiation strategy, Smithfield’s management should take
the following actions to execute the new strategy efficiently.
First, the new strategy should be shared among all employees. Sharing the same
vision and providing sufficient knowledge to all employees will be the milestone of
success with the new strategy. Next, it is important to figure out overall plant usage.
It is to analyze and assign which plants will be utilized for the new Smithfield
custom-made line. This way, the company will be able to maximize plant efficiency
which is lacking at the current moment. Second, management should look into
rearranging the workforce. With the new custom line, there will be a new team
created to launch and maintain the new line. Reviewing the current workforce and
realigning the workforce is also critical. Lastly, the management must engage with
the marketing team. Marketing is the connection between the company and
consumers on what values the company is offering to them to bring the right values
to the right customers (Yohn, 2019). With the new custom-made furniture line,
understanding the specific needs of consumers and reaching out to them most
effectively may determine the success or failure of this new change.
References
Lumen. (n.d.). Principles of Management. Stages and Types of Strategy.
https://courses.lumenlearning.com/wmopen-principlesofmanagement/chapter/stages-
and-types-of-strategy/
Yohn, D. (January 08, 2019). Marketing Matters Now More Than Ever.
https://www.forbes.com/sites/deniselyohn/2019/01/08/marketing-matters-now-more-
than-ever/?sh=1e44a8f117a4
