To: Joan Smithfield, CEO, Smithfield Custom Furniture
From: Gregory Brownell, Senior Strategy Analyst
Date: 01 April 2022
Subject: Analysis of New Product Line
aa aa aa aa aa aa aa aa aa aa aa Smithfield Custom furniture is looking to extend its product
line. aa There are some concern of what path to take with this new
product line. This memo addresses some of the concerns related to
this decision and offers a recommendation of the best route to take.
A. Porter’s Competitive Advantage Model describes how a company
can use competitive strategy to be successful. aa According to
Porter, there are five ways to ensure success. aa The model shows
overall differentiation, overall low cost, focused differentiation,
and focused low cost as four different competitive strategies. aa
Finally there is an integrated approach that combines the previous
four. aa Smithfield Furniture has the option to start a new product
line that fall within two of the five strategies of Porter’s Model. aa
The first option of upscale furniture marketed to the top 7.5%
income-earners is considered a focused differentiation strategy. aa
This strategy depends on maintaining a loyal customer base that
are convinced on the quality or exclusivity of the product.
(Bruton, 2022 para 11) aa On the other hand, if the company were
to mass produce and mass market some furniture at a low price
point, it would be considered an overall low cost strategy. aa An
example of this type of strategy would be that of Costco and
Walmart. (Bruton, 2022 para 9)
B. The best strategy for Smithfield is to pursue is the focused
differentiation strategy. aa Since this strategy relies on a particular
customer base, the success of Smithfield can help launch this new
product line. aa Smithfield already has the equipment and furniture
building experience, they just need the raw materials and vision
to start making this product line. aa The low cost option has too
many disadvantages and can tarnish the name of Smithfield.
C. The first step to ensure Smithfield should do to ensure the
company moves in the right direction is to conduct an Industry
Analysis. aa Smithfield should start by conducting and industry
overview, reviewing industry news and innovation, review
consumer market data, conduct research on competitors,
determine the economic conditions and influences, and research
government regulations. (Purdue, 2013) aa These steps will show
the company if entering this market is feasible and profitable.
Bruton, J. (2022). Porter's Competitive Strategies. In Lumen Learning
(Ed.),
Principles of Management
(Module 4). Lumen Learning. Retrieved
from https://courses.lumenlearning.com/wmopen-
principlesofmanagement/chapter/stages-and-types-of-strategy/
Purdue Libraries. (2013).
Introduction to Industry Analysis
.
YouTube
.
Retrieved 2022, from https://www.youtube.com/watch?v=5DFd-ZNbNX4.
