Use the lettering system indicated below to post your answers. Your answers should be listed in sections labeled “A” through “C.”
Michael Porter — An Icon of Competitive Strategy and Competitive Advantage
Every business student would be well served by becoming conversant with Porter’s models. Michael E. Porter was (and may still hold the distinction) of being the youngest professor to receive tenure in Harvard University’s history. He has been on the Harvard Business School faculty since 1973. It would not be easy to find an academic article, book, or textbook dealing with competitive strategy and competitive advantage written in the past 50 years that does not mention the impact of Porter’s theories.
In Competitive Strategy (1980), as you learned in week 2, Porter identifies five industry forces that managers must consider in developing market strategies. The five forces Porter’s model identifies are: (1) the threat of new entrants into the market, (2) the bargaining power of customers in the industry, (3) the bargaining power of suppliers in the industry, (4) the threat of substitute products or services entering the market, and (5) the price competition or other forms of rivalry among existing firms in the market. The application of the five forces model recurs throughout the course. …
Porter pursues the theme of global competition in his 1985 book, Competitive Advantage, where he notes that companies must select a strategy of cost leadership (e.g., Costco), which is contingent upon a large market share, or a strategy of differentiation (e.g., Nordstrom), which pursues a smaller market share but has an exclusivity advantage. It is this part of Porter’s work we will focus on this week. Porter’s books rank among the best-selling business books.
Porter, E. M. (1980). Competitive strategy: Techniques for analyzing industries and competitors. Free Press.
Porter, E. M. (1985). Competitive advantage: Creating and sustaining superior performance. Free Press.
Case Scenario: Smithfield Custom Furniture:
Smithfield Custom Furniture has done extremely well since its founding in 1903. Smithfield has focused on selling reasonably priced furniture since its inception. Now 2001, the company has been headed by the founder’s granddaughter, Joan Smithfield (CEO). She has run the company for the past twenty years. Today, the company has 247 retail stores. 220 stores are spread throughout the 50 states, and 27 stores are located in England, France, and Germany. Each country has 9 stores. The company employs 13,000 people.
For the past 20 years, Joan Smithfield has been aware of the financial growth in a large workforce segment, primarily due to more women in the workforce holding full-time and professional occupations. She knows, too, that the reasonably priced furniture market has become saturated with other competitors during this time.
The company does all its manufacturing in the United States at six facilities, which recently were modernized with the latest equipment. Although recently modernized, Smithfield’s production plants are not producing at maximum capacity. Joan realizes the plants could produce more and different types of furniture.
The Board of Directors is pressuring Joan to diversify Smithfield’s product line. Everyone on the board, including Joan, agrees diversification is needed. Everyone agrees, too, a new line of furniture needs to be added.
However, the 12-member Board of Directors is evenly divided on whether the new line of furniture should be 1) massed produced, mass-marketed, and sold at the lowest price point possible or 2) whether the new line of furniture should be a very upscale line of furniture, custom-crafted and produced from the most expensive and exotic woods, exclusively marketed to the top 7.5% of world-wide income earners. The Smithfield plants have the capacity and capability to develop and produce either but not both lines of new furniture.
Joan Smithfield has been a longtime admirer of Michael Porter. She met Porter a few times over the years at various seminars and business functions.
Your Task for Your Initial Post:
In your role as a senior strategy analyst at Smithfield Custom Furniture, CEO Joan Smithfield has requested you to provide to her a memorandum that addresses A-C below.
A. Explain, using the link provided to Porter’s Competitive Advantage Model, how Porter’s Competitive Advantage model applies to the Smithfield’s Board of Directors’ issue of deciding to produce a very exclusive furniture line or a mass-produced, mass-marketed furniture product line. Use in-text citations as appropriate. https://courses.lumenlearning.com/wmopen-principlesofmanagement/chapter/stages-and-types-of-strategy/
B. Select the best strategy for the Smithfield company to pursue from the two strategies Porter presents in his model and explain why that particular strategy is better than the alternative.
C. Using this week’s course readings, assuming Joan Smithfield accepts your recommendation, what is the next action she should take to determine if your recommendation is correct? Be specific. Use in-text citations and list references from course readings as required.
Your initial post is due by Saturday at 11:59 PM.
Other Writing Guidelines for this Discussion:
- Use the grading rubric while completing the project to ensure all requirements are met to lead to the highest possible grade.
- Third-person writing is required. The third person means no words such as “I, me, my, we, or us” (first-person writing).
- Contractions are not often used in business writing, so do not use them here.
- Paraphrase – do not use direct quotations. This means that you will put the ideas of an author or article into your own words rather than lift them directly from a source document. You may not use more than four consecutive words from a source document (including the case scenario) or change words in a passage as doing so would require direct quotation marks. Use a passage from a source document by putting it into your own words (paraphrase) and attribute the passage to the source document. Changing words from a passage does not exclude the passage from having to have quotation marks. If direct quotes are presented, they will not be included in the grading.
- Use in-text citations and provide a reference list that contains a reference associated with each in-text citation.
- Provide the page or paragraph number in every in-text citation presented. Refer to this link for more guidance on how to do this: In-Text Citations – Including Page or Paragraph Numbers.
Make sure that you post your substantive initial posting no later than Saturday this week, and be sure to use outside support for your posting. This should be from reliable sources (other than the text book), and you need to reference the sources using proper APA Version 7 formatting.
In addition to your initial posting, you need to respond to at least three classmates’ initial posts to provide comments, insights, or questions that further the discussion. Your responses need to be substantive, and should move the discussions forward.
Keep in mind that you cannot submit discussion posts for credit after the week ends and you will be assessed a late penalty for any initial posts that are submitted after Saturday. You will not be able to see other posts until you have posted yours, and you should not edit your initial posting after you have posted.
How to Do Well in Discussions
- Make your initial post responding to the above questions by Saturday, 11:59 p.m. EST.
- Comment on at least three of your classmates’ posts by Tuesday, 11:59 p.m. EST.
- Posting late may lose you points.
- Respond to the specific questions posed in the discussion.
- Be sure to base your initial post and responses on course materials, and other scholarly sources.
- Write clearly and proofread; errors can lose you points.
- Quality of posts, citations, frequency, and timeliness of posts all factor into your discussion grade.
- See the Discussion Grading Rubric for details.
