TO: Joan Smithfield, CEO
FROM: Kendra Dial
DATE: 01 April 2022
SUBJECT: Analysis Product Line
A. Smithfield's Board of Directors is debating on whether to diversify
Smithfield’s product line. Everyone on the board agrees that both
diversification and a new line of furniture need to be added. However, the
underlying concern is choosing the right new line of furniture. The first half
of the Board of Directors eyes a Low Price Leadership Strategy, suggesting
that the board who voted for this, wants Smithfield to use overall low-cost
providers in their business without a specific market area to focus on
(Lumen Learning. n.d., Paragraph 5).This helps Smithfield to maximize
output and generate more profit as they attract the majority of the market
consumers. The second half of the Board of Directors is craving for a
Differentiation Leadership strategy, specifically a Focused Differentiation
one. The board believes that Smithfield Company should have a superior
market positioning and a lasting competitive advantage by offering items
that are distinct from its competitors and highly valued by consumers in a
certain market segment. Most established organizations like Smithfield use
a Focused Differentiation strategy since they aim to keep an outstanding
consumer base.
B. The Low Price Leadership Strategy should be the best option for
Smithfield. In this case, the new product line will be mass-produced, mass
promoted, and sold at the lowest price. Essentially, this strategy will result
in deprived negotiating power of buyers due since there exist fewer
suppliers than customers and the buyer will not readily get this product
line from other companies. Also, Smithfield faces fewer threats from new
competitors due to the current brand loyalty that it enjoys among
customers. However, Smithfield is concerned that despite its investments
in more sophisticated technology, production isn't reaching its full
potential. Smithfield should choose a range of products that can be mass-
produced to alleviate this problem. To be successful and remain
competitive in the market, it is advantageous to have a low-cost product
line with a wide target audience. As the company is not restricted to a
single market, it will increase the interest of potential customers. In the
Differentiation strategy, there would be increased prices mean higher
expenses (Liang & Xiangmin, 2020., P. 205). Moreover, there is no
guarantee that Smithfield will be their preference since there are other
established furniture brands.
C. The recommendation is for Joan Smithfield to use the Low Price
Leadership Strategy. First and foremost, Joan should verify that the
strategy being adopted is in line with the organization's objective and
vision. This is a crucial part of Smithfield's mission and aims, and all of its
activities should promote this. In the implementation stage, there is no
longer any planning to reinforce. Delegating responsibilities and educating
employees who will be involved in the new product line is an important
step that Smithfield managers and executives should do. SWOT analysis,
PESTEL analysis, and PORTER'S FIVE FORCES analysis can be performed
again to evaluate the underlying elements that are associated with the
recommendation Aityan, 2022.P. 395-411).This will help know the precise
factors that contribute to competitive advantage and positive customer
feedback on the new product strategy. It is also vital to know the
opportunities and what to improve on.
References
Aityan, S. K. (2022). Comparative Analysis. In
Business Research
Methodology
(pp. 395-411). Springer, Cham.
Liang, J., & Xiangmin, H. (2020). Optimal Pricing and Product
Differentiation Strategy under Different Price Leadership.
Management
Review
,
32
(5), 205.
Lumen Learning. (n.d.).
Stages and types of strategy | Principles of
management.
Retrieved from https://courses.lumenlearning.com/wmopen-
principlesofmanagement/chapter/stages-and-types-of-strategy/
