I would personally say that, of the five forces, the substitution from other industries would be the strongest. Wholesale clubs offer similar products in a sense, although it is the same product simply in larger quantities, or obviously, wholesale instead, which drives the price down. Which then could almost tie up with the buyers competitive force, which is where the wholesale clubs buy their products from, direct, which makes that middle man non-existent, and increases profit margins. 2. Do all three warehouse club rivals have highly similar strategies?
It influences the extent to which the value created by an industry will be dispersed through direct competition. There were several signs of industry growth at the time as was USA’s economy; this led to a number of newly emerging discount stores trying to exploit the potential of high profit. This led to intense competition at the time and increasing rivalry for market share. Due to this industry concentration was low at the time. There was not one dominant player within the industry; they were more equally balanced thus increasing rivalry.
Ratio Analysis From 2006 to 2007 Britvic’s net profit rose by 0.3% while gross profit fell by 1.05%, therefore production cost was reduced, which can be due to the deal with C&C (Magners cider maker) and the acquisition of Ballygowan water which brought a cost saving of €14m. Over the past 5 years, 2010 achieved one of its highest gross profit 55.3% and net profit was never so high at 7%. The deal with C&C also made Britvic’s share prices raise and it reached its highest price (399p) over 2 years period. As many companies, Britvic in 2008 was also affected by the global economic crisis and in that year gross profit fell by nearly 8% but net profit was not affected as much. Britvic’s pubs trade was also affected by the recession, company shares fell to its low in 5 years, reaching 222.25 p, a difference of 165p comparing with previous year.
Bottled water comes in second behind carbonated soft drinks in consumer spending. For the makers and suppliers of bottled water this is great because it costs about the same to bottle and distribute as soda, but the marketing cost is 15% of that for soda. The fifth force is the competitive rivalry. There were fierce competitions among the producers. Pepsi Co. and Coca Cola companies have developed the strategies which are hard for the local sellers to compete with them.
In addition to it some additional challenges faced by the Brita brand were: * Bottled water consumption was growing at a tremendous pace which was the main cause of the Brita brand’s volume decline. Bottled water was expected to surpass carbonated soft drinks as the most popular commercial beverage in the US in 2004. For bottled water (400 brands), 20% of brands were driving 80% of category volume. * The “leaky bucket” issue where customers who bought the product stopped using the brand because these consumers were finding changing filer too onerous job. * Refrigerators with built-in water filtration were going rapidly at an expected rate of at least 2 million units per year from 2005.
Peter and Donnelly (2009), state” some of the most successful business organizations are here today because many years ago they offered the right product at the right time to a rapidly growing market (p.6)”. Clearly Miller Coors is trying to do this by offering the product at the right time (lemonade) beer, in the summer when their sales are the highest. The main points of this article is to inform management and readers that the company is recognizing that the current trend in beer sales have declined and
Statistics state that the trade value of the U.S music market decreased 10.7% in 2009 due to the up rise in piracy. (IFPI Report) 1. In the 2011 IFPI report, under section 14 “Digital Piracy- Facts and Trends” it is stated, “Despite the surge by more than 1000% in the digital music market from 2004-2010, an estimated value of $4.6 billion, global recorded music revenues declined by 31% over the same period. The two figures powerfully illustrate how, in the face of piracy, even the most progressive strategy of licensing hundreds of digital music services has been unable to prevent the steady decline in the overall legitimate music market and that decline will continue unless action is taken.” B. The same database continues to give statistics about how there has been a steady decline in profits through album release and
This forced the corporation to decide whether to locate production close to their target markets, where significant labor costs are necessary during production; or in a region where production and labor costs are significantly cheaper due to unregulated labor pools in many overseas countries. Choosing to place production where there is low cost labor provides an opportunity for increased revenue, as well as profit maximization, but raises ethical concerns for the company. Despite the great financial success of Nike’s international expansionary process there were also many failures. These failures stemmed from the use of low-cost labor, a lack of competition by rival corporations, and several unsuccessful advertising techniques. Consequently, the
2010) is provided below. 1167872 4 Despite the leading position and the good business results, SWOT shows several sources of potential risks for UST. The company is losing market share against new price-value competitors because of slow innovation and late product introduction and extensions. Historically, UST relied on his leading market position boosting earnings with annual prices increases. But in the meanwhile smaller competitors started to quickly erode market share with prices cut.
Refer to situation anaylsis 2. Internal Marketing Audit Operating Results Total group sales have reduced by £225.9m to £923.2m, plus a 12.1 decline in sales. “An adverse movement in the Hong Kong dollar, offset by favourable movements in the Euro and Singapore dollar, impacted sales by £0.4m and operating profit by £nil.”(HMVgroup, 2012). Sales lessened from £1,102.2m to £873.1m and the costs afore tax and special items were £16.2m, which is down from a profit of £16.2m in the previous period. Furthermore, significant charges of withdrawn operation of £33.5m were sustained in the year.