TO: Smithfield, Joan. CEO, Smithfield Custom Furniture
FROM: Joseph Comer, aa Senior Strategy Analyst, Smithfield Custom Furniture
DATE: April 2, 2022
SUBJECT: Analysis of Company Manufacturing methods
Ms. Smithfield,
A) Michael Porter's competitive advantage model is based upon the concept of
providing a unique product or one with better pricing than competitors to
receive a competitve advantage. Through differentiation and low pricing a
business can expect to attract numerous customers if their product and
reputation are irreplaceable (Lumen Learning, n.d., para. 4). Smithfield's board
of directors' dilemma to choice a mass produced, cheap product or a limited
produced quality product lines up perfectly with either side of Porter's theory.
Porter's theory is further strengthened by targeting a specific consumer market
through differentiation or by appealing to the broad market by offering an
affordable product (Lumen Learning, n.d., para. 4). Smithfield either wants to
target a specific sector of consumers that desire high quality furniture or the
general market of individuals who just want affordable goods to furnish their
homes. This is an important decision for Smithfield to make as it will
develop their brand image and affect who their future customers will be.
Smithfield could utilize the low-price leadership model that focuses on
appealing to the majority of the market through mass producing lower cost
products. This would make the company money through large volumes of
goods sold and would make a brand image that appeals to the average
furniture buyer (Lumen Learning, n.d., para. 5). Through a differentiation
strategy the firm would produce less products of a much greater quality to
target a small niche of customers who can afford luxury items (Lumen
Learning, n.d., para. 6). The brand image created through this method would
attract wealthier customers and make the company money by selling products
of considerably higher value than mass produced ones.
B) As previously stated Smithfield has an important decision to make that
will affect the future profitability, image, and customer base of the
organization. The company can decide to mass produce an affordable product
and create profits from selling large quantities or target a niche of luxury
furniture buyers who want the highest in quality. Smithfield executives should
pursue the option of mass producing an affordable product but with small
targeting to specific consumers. In this focused low-cost strategy Smithfield
would mass produce products to target a specific sector of the overall market
(Lumen Learning, n.d., para. 5). Smithfield has been in the furniture market
for many years and has most likely created processes that it has become
efficient with. This would allow them to mass produce specific products at a
rapid rate while being affordable. Maybe their customers desire a more rustic
style of furniture and would be a suitable market sector to target. A well
established company like Smithfield would make it difficult for less efficient
companies to produce and from new ones from breaking into the market
(Lumen Learning, n.d., para. 5). Such a process would make it easier for
employees to be trained on the manufacture of this furniture line as it is less
diverse and specific than luxury furniture. An employee's knowledge is a
valuble commodity and the minute the employee leaves their experience and
skills go with them (Saylor, 2014, ch. 4 pg. 107). It would take a longer
period of time to train employees on making luxury furniture as opposed to a
targeted line of mass produced ones. In a focused low cost strategy furniture
can be made efficient and on a large scale while retaining some diversity
from competitors.
C) As an analyst one's job is the evaluate the environment and provide the
best recommendations possible to company executives. Ultimately, it is left to
the leaders to make the decision based upon the knowledge and tips that have
been given to them by their analysts and other consultants. For Joan to
strenghten the recommendations given to her she should perform a
Competitive Profile Matrix (CPM). This tool is utilized to compare a
company with its rivals in metrics such as brand reputation, market share,
sales, customer satisfaction and many more (Jurevicius, 2021, para. 1). This
method would allow her to compare data of Smithfield with its competitiors
and be able to visually see why the recommended method would suffice.
Upon seeing where the company is lacking Joan could perform an Internal
Factor Evaluation (IFE) to see where the company could correct shortfalls to
make it more competitive. An IFE is an audit of a business to see where the
strengths and weaknesses are within its structure (Maxi-Pedia, 2017, para. 1).
Joan may even be able to delegate the IFE to each division executive within
their respective departments to create a team effort to increase overall
effectiveness of the company. With solid recommendations from the analyst
team and proven tools to analyze the organization's internal and external
environment, Smithfield executives should have no issue making the best
decision for the company.
References
Jurevicius, O. (2021, November 11). Competitive profile matrix (CPM).
Strategic Management Insight.
https://strategicmanagementinsight.com/tools/competitive-profile-matrix-cpm/
Lumen Learning. (n.d.). Stages and types of strategy | Principles of
management. https://courses.lumenlearning.com/wmopen-
principlesofmanagement/chapter/stages-and-types-of-strategy/
Maxi-Pedia. (2017). IFE matrix (Internal factor evaluation). Maxi-Pedia |
Your trusted resource for finance and IT!. https://www.maxi-
pedia.com/IFE+EFE+matrix+internal+factor+evaluation
Saylor. (2014). Ch. 4 Managing Firm Resources. In Mastering Strategic
Management (3rd ed., pp. 101-134). The Saylor Foundation.
