Case Discussion

Smithfield Custom Furniture (Part 2)

As a result of its consultants' wonderful guidance in 1901, Smithfield Custom Furniture has continued to do extremely well financially. It is now 1987, and the company has been headed by the founder's grandson, Jonas Smithfield III. He has run the company for the past twenty years.

The company now 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. In total, the company employs 13,000 people. Approximately 40% are manufacturing, distribution, quality control, design, delivery, administrative, and back-office work. Approximately 60% of the employees are in retail stores.

It has been Smithfield Custom Furniture's mission to target the wealthiest segments of the market. The company does all its manufacturing in the United States at six facilities, recently modernized with the latest equipment. They use the finest and most exotic woods to make distinctive furniture for their clientele. Much of their work is limited edition, and they try to ensure demand is slightly higher than supply for each product they make.

For the past 20 years, Jonas Smithfield III has been aware of the financial growth in a large segment of the workforce, primarily due to more women in the workforce holding full-time and professional occupations. He knows too that families are moving more often and may not need or desire the exclusivity of his furniture. His last concern is that his plants may not be working as efficiently as they could. In other words, he realizes his plants could produce less of the high-end furniture if the company developed a line of products that was still upscaleaimed at mid-career professional households.

A. Please elaborate on one of the issues raised in the discussion below. Your enhancement will provide your classmate with more depth or other related factors to consider. Please support your response with course materials, in-text citations, and references

1. Explanation of Mission Statement Requirements:

Luman Learning (n.d.) describes a mission statement by being a more actionable and strategic goal. They recommend to answer the questions where, how, and why for the organization existing and also how it will add value to the market. A mission statement needs to be informative yet simple and memorable.

2. A Mission Statement for Smithfield Custom Furniture's New Product Line

"To create furniture that is exotic in nature, but remains fiscally responsible"

3. Explanation of Vision Statement Requirements

A vision statement needs to be a broad description of where the organization wants to be in the future. It should have a visual imagery and should inspire as well as being clear and concise. (Luman Learning. N.d.)

4. Vision statement for Smithfield Custom Furniture's Product Line

"To have a piece of exotic and distinctive furniture in every house."

5. Application of either of Michael Porter's Five Force ModelThreat of new entrants/ barriers

Smithfield would need to make sure his equipment would be able to function properly on the less upscale pieces without damage, or that adjustments would be minimal to not interfere with timetables for production.

Threat of substitute products/services

In adding the new line, if the product is not up to a customer's standards, it could damage his exclusive products. A bad review on his material or completed project could turn that customer away from his exclusive line due to not being able to complete something simpler.

Competitive rivalry

In opening up the new line, his competition would be greater with the mass production. He would need to think about cost of production and how much he would be able to compete with big box companies. Everyone can make furniture, but not everyone can make exotic pieces.

Bargaining power of buyers

At the end of the day, sales are the goals. If buyers come in and say the prices are too high, then the cost of production needs to be adjusted and even lower prices if able to. Selling items over cost is still needed to keep a positive on the accounts.

Bargaining power of suppliers

By the suppliers knowing their inventory and mirroring their costs/quality to fit their own needs, Smithfield's lines would both take a hit. In either not being able to produce due to supply cost or not even having items.

6. Priority Order/Justification Smithfield's 3 Next Steps

Since Smithfield's just determined they could produce the second line, the next steps would be to define objectives, develop premises, and evaluate alternatives. In defining the objectives, they could determine how to get the production cost efficient for mid-career households. My looking into materials, labor and maintenance of machines they can determine if this is even a possibility.

Next would be to develop premises. In planning for changes the company can continue to be successful. The review of laws and regulations of imports and exports, taxes, etc. would be beneficial to make sure the new line will not have any hidden issues. Creating a budget for the new line and including employee training would need to be assessed.

Finally, they would need to evaluate alternatives. To make sure adding the new process is seamless, they would need to look into inventory/products that would be better suited for the line. Even review machines to make sure they are up to par or even find a cheaper/faster alternative to a task without sacrificing quality.

Luman Learning. (n.d.).Common Frameworks for Evaluating the Business Environment. Principles of Management. Retrieved October 26, 2022, from https://courses.lumenlearning.com/wmopen-principlesofmanagement/chapter/common-frameworks-for-evaluating-the-business-environment/

Luman Learning. (n.d.).Mission, Vision, and Values.Principles of Management. Retrieved October 26, 2022, from https://courses.lumenlearning.com/wmopen-principlesofmanagement/chapter/reading-mission-vision-and-values/

Luman Learning. (n.d.).The Planning Cycle.Principles of Management. Retrieved October 26, 2022, from https://courses.lumenlearning.com/wmopen-principlesofmanagement/chapter/the-planning-cycle/

B. Please elaborate on one of the issues raised in the discussion below. Your enhancement will provide your classmate with more depth or other related factors to consider. Please support your response with course materials, in-text citations, and references

As Smithfield Custom Furniture has continued to expand, both nationally and internationally, the company is doing extremely well financially. Furthermore, Smithfield Custom Furniture's vision is to target the wealthier segments of the market. An example of a vision statement Smithfield Custom Furniture may use could be, "To provide the most luxurious furniture in the industry." For Smithfield Custom Furniture to attain this new vision for the company, Jonas Smithfield III must begin by creating a mission statement, which describes what the company needs to do currently to achieve the vision. Additionally, the mission statement typically contains where the company will compete and how it will compete. Other important factors the mission statement contains are how the organization creates value for the market and why the organization exists. The successful creation of a company's mission statement will then lead to actionable strategic goals (Bruton J. & Bruton L., 2022c). An example of a mission statement Smithfield Custom Furniture could use to support their new vision could be, "We strive to provide the finest and most exotic furniture to customers nationally and internationally through use of the finest and most exotic materials."

In order to attain the mission statement, which ultimately contributes to the overarching vision statement of Smithfield Custom Furniture, the company must differentiate themselves through either a competitive advantage or competitive strategy. Because Smithfield Custom Furniture vision elicits exclusivity, they would be postured to apply Michael Porter's focused differentiation strategy (Bruton J. & Bruton L., 2022a). This strategy would prove to be most beneficial for many reasons. First, Smithfield Custom Furniture has established a loyal customer base (operating for nearly 90 years) and expanded internationally. Additionally, Smithfield Custom Furniture uses the finest and most exotic woods to create distinctive furniture. All in all, the loyal customer base in combination with the superior quality of furniture would allow Smithfield Custom Furniture to charge premium prices.

After establishing Smithfield Custom Furniture's vision and mission statement, as well as application of the Focused Differentiation Strategy, the next steps for the company would be to ensure the three above items align and support each other. If any one of these items deviate from the ultimate vision, the future direction and measure of success become unclear, ultimately creating chaos within the organization. Following the alignment of these items, Smithfield Custom Furniture's next priority would be to begin to analyze the business environment (both internal and external factors). In the form of Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis, Smithfield Custom Furniture can now turn the data into smaller, strategic goals. Strategic goals are able to be communicated down the lowest level (Bruton J. & Bruton L., 2022b).

Works Cited:

Bruton , J., & Bruton , L. (2022a). Mission, Vision, and Values. Principles of Management. Retrieved October 27, 2022, from https://courses.lumenlearning.com/wmopen-principlesofmanagement/chapter/stages-and-types-of-strategy/

Bruton , J., & Bruton , L. (2022b). Putting It Together: Environments and Strategic Management. Principles of Management. Retrieved October 27, 2022, from https://courses.lumenlearning.com/wmopen-principlesofmanagement/chapter/stages-and-types-of-strategy/

Bruton , J., & Bruton , L. (2022a). Stages and Types of Strategy. Principles of Management. Retrieved October 27, 2022, from https://courses.lumenlearning.com/wmopen-principlesofmanagement/chapter/stages-and-types-of-strategy/

C. Please elaborate on one of the issues raised in the discussion below. Your enhancement will provide your classmate with more depth or other related factors to consider. Please support your response with course materials, in-text citations, and references

1. Explanation of Mission Statement Requirements
   • The mission statement is described as what the organization needs to do now to achieve their vision. It is more specific and identifies how the organization will be different from other organizations in its industry. It must be in line with the vision statement, and they have to support each other (Learning, L., 2022). Some requirements would be:
     1. The contribution from the business and what they are going to provide, i.e., products and services
     2. Who they are selling to and who will be their key market
     3. What separates the company from the others in their field and what makes them unique
2. A Mission Statement for Smithfield Custom Furniture's New Product Line
   1. The contribution from the business and what they are going to provide, i.e. products and services-Upscale Furniture
   2. Who they are selling to and who will be their key market-Mid-Career professional households in all 50 states and overseas in England, Germany and France
   3. What separates the company from the others in their field and what makes them unique-Most up-to-date equipment and use of the finest and most exotic wood.
   4. Mission Statement: To modernize and provide affordable, reliable and flexible upscale furniture worldwide using the finest and most exotics woods.
3. Explanation of Vision Statement Requirements
   • A vision statement is a statement of an organization's aspirations of what it hopes to become and achieve. It is a broad description of what the organization values. It should inspire people and motivate them to want to be part of and contribute to the organization (Learning, L., 2022). Requirements for a vision statement would be:
     1. Core Values of the business
     2. Purpose of the business
     3. Vision/Goals to fulfill its mission
4. Vision statement for Smithfield Custom Furniture's Product Line
   1. Core Values of the business- Creating innovative and creative furniture worldwide
   2. Purpose of the business-Produce affordable, reliable and flexible furniture
   3. Vision/Goals to fulfill its mission-Leader in the production of top-quality wood products worldwide for mid-career professionals
   4. Visions Statement- Our Vision is to be the leader worldwide in producing innovative and top-quality upscale furniture and to inspire people to live out their dreams.
5. Application of Michael Porter's Competitive Strategy (Five Forces Model)

The company is targeting customers in most or all segments based on attributes other than price (via higher product quality) to command a higher price, it is pursuing a differentiation strategy (Learning, L., 2022). They are trying to differentiate itself by having higher quality and exotic woods. They are trying to find a way to minimize cost in areas that differentiate itself to remain competitive cost wise.

1. Priority Order/Justification Smithfield's 3 Next Steps
   1. Formulate a strategic plan, gather information, SWOT analysis
   2. Create Strategic Goals
   3. Strategically implement information gathered

References

Learning, L. (2022, October 20). Principles of Management. Lumen. https://courses.lumenlearning.com/wmopen-principlesofmanagement/chapter/reading-humanistic-management/.