FROM: Mariam Kolawole
TO: g Joan Smithfield
SUBJECT: Smithfield Custom Furniture Business Strategic Plan
DATE: g April 2, 2022
A) Michael Porter presents two strategies organizations can use to achieve
a competitive advantage; this is either by cost or differentiation. In
addition, the model identifies two ways to target marketing approaches -
appealing to the overall (broad ) market or to a specific market (Lumen
Learning, n.d.). Using this approach, four types of competitive strategies
emerge: focused low cost, focused differentiation, overall low cost, and
overall differentiation.In addition to the four mainstream strategies, there is
an integrated strategy. In response to Smithfield's Board of Directors' issue,
Low Price Leadership is employed whenever furniture products are mass
produced, mass marketed, and sold at the lowest price. Companies adopt
this strategy by delivering comparable services or goods at a lower price
than their competitors.The low production costs attract many of the
consumers in the market,
allowing the company to profit from the volume of goods sold (Lumen
Learning, n.d).Companies that commit to the Low-Cost Strategy strive to
achieve market leadership by serving a broad market share and offering
low-cost products to their customers.In order for Smithfield Custom
Furniture to succeed with this strategy, it must establish itself as a market
leader within its industry. An upscale furniture line, produced with the most
expensive and exotic woods, is exclusively sold to the top 7.5% of income
earners worldwide, employing the Differentiation Leadership Strategy. Not
only will the furniture produced be high quality, but it will also have unique
features that will appeal to potential customers. Porter (1986) believes the
characteristics of a product should be superior to the ones of the
competitors and deserve to be pricier.
B) Smithfield's company might be better off pursuing the Differentiation
Leadership Strategy, rather than the Low Price Leadership Strategy.
Considering that the reasonably priced furniture market has become
saturated with other competing products, the company intends to devise a
strategy that differentiates its products. Based on the market analysis, the
company has discovered that a large workforce segment has experienced
financial growth, primarily due to more women securing full-time or
professional employment. Thus, the purchasing power of the market has
increased and more consumers can afford upscale furniture, which is
custom-crafted and constructed from the most exotic and expensive
woods. Effective marketing and distribution are necessary for this strategy
to succeed as well as providing quality furniture.
C) The first strategy is to conduct a comprehensive market study to
determine whether the upscale line of furniture features custom-crafted
pieces made with the most exotic and expensive woods (Porter,
1986).Smithfield managers and executives should reinforce a department
(workforce) by assigning tasks and training those who will be involved with
the new product line as well as allocating sufficient resources to make
changes successful. After reinforcing a department, a SWOT (internal),
PESTEL (external), and PORTER'S FIVE FORCES analysis can be re-done to
assess the underlying factors that relate to the recommendation(Lumen
Learning, n.d). This will determine the specific determinants of competitive
advantage and positive feedback on the new product line strategy. Lastly,
make strategic benefits more sustainable by looking for areas to improve. If
Joan notices mistakes or flaws, then corrective action needs to be taken.
Reference
Lumen Learning. (n.d). Principles of management.
https://courses.lumenlearning.com/wmopen-
\principlesofmanagement/chapter/stages-and-types-of-strategy
Porter, M. E. (1986).
California Management Review
,
28
(2), 9–40.
https://doi-org.ezproxy.umgc.edu/10.2307/41165182
