TO: Joan Smithfield
FROM: Joseph Sandler
DATE: 02 April 2022
SUBJECT: Diversifying Product Line
a. Porter's competitive advantage model applies to the Smithfield's board of
directors issue or deciding between an expensive furniture line or a mass-
produced mass-marketed furniture line because it helps decide what market
they should focus their production on. Currently, they have a competitive
advantage in middle-of-the-line quality furniture. They have the ability to
produce more than the current demand. Therefore it is to the benefit of
Smithfield to add a new line. Using the porter strategies of the factors of
competitive advantage to market scope, They should be able to find a
middle ground of what line makes sense to add to create an integrated
system. I believe that of the two markets that Smithfield can manufacture
for, one appears to be more profitable and reasonable.
B. The strategy that I believe that Smithfield should pursue of the two
strategies is adding a luxury brand. This is due to the ability of Smithfield's
branding as an international and substantial furniture store. On top of that,
adding a luxury brand has the potential to increase the company's value of
their other lines because it will give the company more prestige. On the
other end, the major reason that creating a cheaper more affordable line
would sell faster but have the potential to decrease the value of the brand.
On top of that, manufacturers like Ikea have essentially cornered the
market for cheap furniture, and it would be near impossible to produce the
quantity needed to gain a competitive advantage in manufacturing costs,
with just the extra manufacturing ability of Smithfield currently. For these
two reasons, it does not make sense for Smithfield to add an inexpensive
line. But using Porter's competitive advantage model, if Smithfield makes an
integrated luxury product, there is a lot of potential for profits to be made
in with the value of the brand and product, without having to increase the
means of production.
C. Assuming Smithfield takes my advice of choosing the creation of a more
luxury line, they should try and do some market research within a selection
of their stores to see potential customer interest. Since they have the ability
to produce more in their stores, they should take advantage of it. And since
they have many stores all over the country and world, it would be relatively
easy to add a few more expensive products to arias which are generally
wealthier. As discussed it could be good for the brand, and worst-case
scenario the company is left with extra high-end products, that it can move
between stores till it sells, and best-case scenario a new line can be added
that seems to be profitable. Once the decision is made, production and
marketing of the new line are the most crucial factors for getting the line
off the ground. And once it's off the ground and customer feedback is being
received, then an integrated strategy can be made to expand the luxury
products to all stores where it could be profitable. Without reaching the
limit to their manufacturing and without hurting the more affordable sales
of products in which they established themselves within the market over
the last 100 years.
Lumen Learning. (n.d.).
Stages and types of strategy | Principles of
management
. https://courses.lumenlearning.com/wmopen-
principlesofmanagement/chapter/stages-and-types-of-strategy/
