Date: April 2, 2022
To: Joan Smithfield, CEO
From: Joe Rousseau, Senior Strategy Analyst
Subject: Smithfield Strategic Plan
Please see the following answers to the questions posted regarding the
proposed new furniture line for Smithfield
A. Explain Porter’s Competitive Advantage Model
There are two competing business models being proposed, a focused
differentiation strategy with high end products and a focused low-cost
strategy with low prices (Principles of Management, n.d.). aa The low-cost
strategy will appeal to a wide range of customers with profits gained
mainly by volume whereas the differentiation strategy relies on
premium pricing to drive profits (Principles of Management, n.d.).
B. Select the best strategy
In the current situation, the best approach will be to mass produce low-
cost goods. aa Smithfield already has a strategic resource in its name
(Mastering Strategic Management, 2014, pg. 104) but that name is not
known for luxury, expensive goods. aa Shifting position can be a risky
move (Mastering Strategic Management, 2014, pg. 14) and the idea of
producing low-cost goods fits more closely with the current company
strategy of targeting a larger percentage of the population. This would
align more closely with both the company value chain (Mastering
Strategic Management, 2014, pg. 122) and supply chain (Mastering
Strategic Management, 2014, pg. 125). aa The value chain will likely have
better access to low-cost raw material rather than premium and
current retail stores are unlikely to target the top 7.5% of earners. aa
This strategy marks too large a shift from what’s worked in the past
for Smithfield.
C. The next step
The next step would be to create a competitive profile matrix to
better understand whether this approach would fit in with the
strengths of the company as well as whether that strategy is aligned
with the industry’s critical success factors (Jurevicius, 2021). aa After
determining the critical success factors for the industry, they can be
assigned a weight based on importance. aa Ratings can then be assigned
to the company as to how well they perform in each area and
compared across competitors in the industry to determine whether this
was the correct approach (Jurevicius, 2021).
Reference
Jurevicius, O. (2021, November 11). Competitive profile matrix.
Strategic management insight
. Retrieved from
https://strategicmanagementinsight.com/tools/competitive-profile-matrix-
cpm/
Mastering Strategic Management. (2014). Adapted by the Saylor
Foundation under a creative commons attribution-noncommercial-
sharealike 3.0 license.
Principles of Management (n.d.). Module 4.
Lumen Learning
. Retrieved
from https://courses.lumenlearning.com/wmopen-
principlesofmanagement/chapter/stages-and-types-of-strategy/
