Question

Strategic Positioning. Tartan Corporation has been manufacturing high-quality home lighting systems for more than 90 years. The company's first products in the 1920s- the Classic line-were high quality floor lamps and table lamps made of the highest quality materials with features that other manufacturers did not attempt: multiple switches, adjustable heights, and stained glass. In the 1950s and 1960s, the company introduced a number of new products that were in demand at the time, including track lighting and lava lamps, which became the company's Modern line. A new customer style emerged in the 1960s and 1970s, which resulted in another new line of products, Contemporary. It was followed in more recent years by two new product lines, Margaret Stewart and Western. In developing and marketing the new styles, the company took advantage of the favorable reputation of the Classic line which was the foundation of the favorable image of the company overall and which also helped in the sales of the new lines. Jess Jones, the company's chief financial officer, had become concerned about the performance of some of the product lines in recent years. Although total sales were growing at an acceptable rate, approximately 10% per year, the sales mix was changing significantly, as shown in the following product line sales report. Jess was particularly concerned about the Classic line because of its sharp drop in sales and its high costs. Because of the high level of craftsmanship required for the Classic line, it always had higher-than-average costs for labor and materials. Furthermore, attracting and retaining the highly skilled

Answer 1

Requirement 1

Tartan’s competitive strategy is high standards of quality in the industry and the product differentiation.
Tartan Corporation has been manufacturing high-quality home lighting systems for more than 90 years. The high quality products with several distinguish and practical features secured the company’s success in the initial process. Additionally, the company introduced a number of new product lines that were also popular with customers. The description of the company in the question points to differentiation based on innovation and quality. Tartan products were “..made of the highest quality materials with features that other manufacturers did not attempt..” Also: “In developing and marketing the new styles, the company took advantage of the favorable reputation of the Classic line which was the foundation of the favorable image of the company overall and which also helped in the sales of the new lines.”

Answer; Option A Differentiation because of Unique products and high quality

Requirement 2

According to Jess Jones, the company’s CFO, the company has trouble in some of the product lines in recent years, especially the Classic line. Although some plant supervisors suggested shutting down the Classic line to make capacity for other product lines, I recommend that the company keeps the Classic line. Because the Classic line tends to only have a strong support in the northeast states, and in some sales districts in these states, it represents a relatively high proportion of total sales. Furthermore, eliminating the Classic line will make obsolete about $233,000 worth of raw materials inventory that is used only in the manufacturing of Classic line products. In addition, the workers in the Classic line are likely to be old and very loyal. The loyal workers are a big assets to the company. It also concerns about the business ethics issues. If the company suddenly obsoletes the line, the employees will lose their job, which will reduce all employees’ loyal and have strongly bad impact on its image and reputation.
Finally, since its competitive strategy is high standards of quality, I suggest the firm to improve the Classic products in long term, which can remain the traditional conceptions as well as increasing sales.

When using differentiation as the Company’s strategy, it becomes clear that maintaining the Classic line is critical to the company’s success. Thus, elimination of the line could damage the firm’s quality and craftsmanship image, and thus hurt the company’s strategic competitive advantage. Even if the Classic line is losing money for the company, it is important to both retain it and to publicize it, because it is the product line which most supports the company’s quality image.

Answer: Option C:  Continue the classic line because it supports the company’s strategy