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.). e 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. e 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. e 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).
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. 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). e After determining the critical
success factors for the industry, they can be assigned a weight based on
importance. 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/
