Memo
To: aa aa aa aa aa aa aa aa aa aa aa Joan Smithfield
From: aa aa aa aa aa aa aa David Tolbert
Date: aa aa aa aa aa aa aa aa March 30, 2022
RE: aa aa aa aa aa aa aa aa aa Smithfield Custom Furniture Product Expansion
A. Porter’s Five Forces theory takes two aspects, the size of the
market and competitive advantage, and breaks them down into four
distinct categories with a fifth category that can be applied across the
other four. The value can be broken down into high cost or low cost
and the market scope is either broad or focused, right now Smithfield’s
is trying to decide if their new line should be expensive and exclusive
or low cost and widely available (Lumen Learning, n.d.). Smithfield’s
current line of furniture resides in the reasonable price range so the
next logical steps would be to either offer a high-end exclusive option
or a lower-priced option that is available to a larger segment of the
population.
B. In the case of Smithfield’s desire to diversify their current line-up
they should look to expand into the upscale furniture line. Currently,
they operate in the middle reasonable price range which is a market
that is quickly becoming oversaturated with other competition. It is not
unreasonable to assume that the low-end market is also becoming
saturated since it is easier for most of the competition to also mass
produce cheap furniture vice shifting the focus to expensive/exclusive
furniture. While the high-end furniture will only be marketed to
roughly 7.5% of income earners, where Smithfield’s is currently
operating that might not be an issue. According to the Pew Research
Center’s World Population by Income report 59.5% of Germans, 55.7%
of Americans, 42% of English, and 37.9% of French are all considered
to be in the high-income range compared to only 7% of the overall
global population being considered high income (Pew Research Center,
2015). While this data is a little over six years old it is safe to assume
that these countries continue to lead the world in high-income
percentages. aa Due to the current workforce having a larger amount of
disposable income it is in Smithfield’s best interest to expand into a
focused differentiation strategy for their new line of furniture.
C. Prior to taking on this new market segment Smithfield’s should
conduct a market analysis of who its competition will be in the high-
end furniture market and how their products and processes compare to
Smithfield’s. A useful tool to perform this is the Competitive Profile
Matrix, this analysis tool compares how the competition is performing
in critical sections of the industry and allows the preparer to assign
weights to each category based on the perceived importance of that
critical success factor. Comparing the competition across the same
factors creates an accurate portrayal of their industry and also
highlights the strengths Smithfield’s currently has and weaknesses that
need to be improved (Jurevicius, 2021). This analysis will give
Smithfield’s the information it needs to determine if the company
should proceed with the new line of high-end furniture.
References
Jurevicius, O. (2021, Nov 11). Competitive Profile Matrix (CPM).
Retrieved from strategicmanagementinsight.com:
https://strategicmanagementinsight.com/tools/competitive-profile-matrix-
cpm/
Lumen Learning. (n.d.). Principles of Management: Module 4:
Environments and Strategic Management, Stages and Types of Strategy.
Retrieved March 30, 2022, from courses.lumenlearning.com:
https://courses.lumenlearning.com/wmopen-
principlesofmanagement/chapter/stages-and-types-of-strategy/
Pew Research Center. (2015, July 8). World Population by Income.
Retrieved from pewresearch.org:
https://www.pewresearch.org/global/interactives/global-population-by-
income/
