To: Joan Smithfield, CEO
From: Monique Conley, Senior Strategy Analyst
Date: 2 April 2022
Subject: Smithfield Company Strategic Recommendation
A. Porter's Competitive Advantage model focuses on two strategic
approaches to competitive advantage, a low price leadership strategy, and
a differentiation leadership strategy. The model further provides a means
to target the market through a focused or broad market (Lumen, n.d.). A
low price leadership approach focuses on mass production and cutting
costs below the industry competitors, and a differentiation leadership
strategy approach focuses on distinguishing its products and services from
competitors. A broad market focus is an approach in which the firm
appeals to the entire market, whereas a focused market approach is an
approach to appeal to a specific target market or sector (Lumen, n.d.). The
model applies to Smithfield's Board of Directors' dilemma because it can be
used as a tool to strategize the best course of action for the firm. The
analysis will aid the firm in determining the most beneficial strategic
approach to sustain its competitive advantage and market approach.
B. The most beneficial strategy for Smithfield company is to pursue a low-
price leadership strategy. Smithfield has been a global conglomerate in
operation for well over twenty years. The firm should focus on mass
marketing, mass production, and selling low-cost products. Smithfield has
an established, loyal consumer base; the company should focus on its
existing market sector and invest in advertisement efforts to expand the
current market. Increasing marketing efforts can be tactically used to
differentiate and establish a strong emotional attachment to the firm's
product line (Lumen, n.d.). The differentiation approach has some
advantages, such as reduced direct competitors and new market entrants.
The disadvantages of this approach are substantial production costs and
distinctive features that do not create value and are irreplicable. Embracing
the differentiation approach would negate the firm's existing consumer
base and focus on attaching an elite consumer sector (Lumen, n.d.). The
company would be departing from its established market to attract an elite
market. Differentiation may benefit the company, but they will be incurring
substantial up-front costs to produce a luxury furniture line. Moreover,
competitors can imitate the company's features that distinguish it within
the differentiation model. Differentiation by itself may be short-lived or
insufficient in some cases, as differentiation by itself does not necessarily
create value.
C. The next course of action for the Smithfield Company is to follow the
strategic management process. Firstly, the organization must define its
vision, mission, and values; in conjunction with a PESTEL and SWOT
analysis (Lumen, n.d.). Secondly, the findings from both analyses will be
used as the foundation of the company's strategic plan. Findings can be
used to assess the organization's external and internal environment,
vulnerabilities, and opportunities and to set strategic goals and objectives.
Thirdly, upon completion of the strategic analysis and plan, the firm begins
implementation. At this stage, the entire organization should be aware of
its strategic plan and its contribution; awareness can be achieved through
training and allocation of resources (Lumen, n.d.). The final stage of the
strategic management process is evaluation and control. The organization
should have a metric to assess the effectiveness of its strategic plan
(Lumen, n.d.). This can be done through consumer surveys, retention rates,
and revenue growth. If issues are found, the company should revisit its
strategic plan and the implantation process.
Reference
Principles of Management. Lumen. (n.d.). Retrieved April 2, 2022, from
https://courses.lumenlearning.com/wmopen-
principlesofmanagement/chapter/stages-and-types-of-strategy/
