...The RTE Cereal Industry in 1994 Case Analysis Competitive Strategy Presented by: Raghav Keshav Why has RTE cereal been such a profitable business? The RTE cereal market is a classic oligopoly with the four dominant players controlling 85% of the market. The return on sales earned by the incumbents in this market (18%) is significantly higher compared to rest of the food industry (5%). Efficient markets typically entice new entrants when the returns are attractive. These returns are gradually eroded with increased price competition as a result of the entry. The RTE market has defied this market theory. There are two main reasons for this. One, any market that yields a high rate of return but has no new entrants must have significant barriers to entry. The RTE cereal market has significant entry barriers. Two, barriers to entry does not necessarily mean high profits for all incumbents in an oligopoly. However, in the RTE cereal, it has. This is attributable to the fact that players in the oligopoly have demonstrated profit maximizing behavior and have successfully avoided market share maximization motivated price wars. Barriers to entry are discussed below. Brand Proliferation Strategy: Incumbents have successfully launched a “brand proliferation” strategy using which every foreseeable market niche is already serviced with a specific brand. Collectively, there are about 200 + brands offered by the three leading suppliers. This approach deters new entrants...
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...assignment. Viraj Perera Sara Russell Ingrid Szikla ID: 18877095 ID: 18481183 ID: 13034715 Page 2 of 89 EXECUTIVE SUMMARY This strategic marketing plan specifically addresses Uncle Tobys Ready to Eat (RTE) Breakfast Cereal products in Australia over the time period starting from the second quarter of 2004 and ending fiscal year 2007 (1/10/2004 – 30/6/2008). This plan takes into account and builds on new marketing strategies for Uncle Tobys resulting from the take-over by Burns Philp in the USA. Uncle Tobys is a leading brand of Goodman Fielder, which is a division of Burns Philp Company Ltd. Until 2002, Uncle Tobys had the second greatest share of the RTE market by value with 20.3% in 2001, but has since slipped to third place at 15.9% in 2003 and is now behind Sanitarium (17.2%) and Kellogg’s (55.4%). Contributing factors were issues such as high debt and lack of effective IMC strategy. However, it is anticipated that efficiency gains from the new organisational structure will come into fruition during 2004-05, and Burns Philp’s renewed support to build up leading brands such as Uncle Tobys will provide the frame work and support for achieving revenue growth. Uncle Tobys corporate objectives for the next three years in the RTE cereal market is to increase revenue by 2 - 5% per annum on average, and have a net profit growth of 6% per annum on average. However, these objectives cannot be met using strategies...
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...(860) 486-2461 email: fmpc@canr1.cag.uconn.edu http://vm.uconn.edu/~wwware/ fmktc.html No. 17 October 1998 Jawboning Cereal: The Campaign to Lower Cereal Prices by Ronald W. Cotterill Food Marketing Policy Center University of Connecticut Food Marketing Policy Center, Department of Agricultural and Resource Economics, University of Connecticut, 1376 Storrs Road, U-21, Storrs, CT 06269-4021 Jawboning Cereal: The Campaign to Lower Cereal Prices by Ronald W. Cotterill Abstract This article introduces the Forum by explaining the sequence of events related to the jawboning campaign and subsequent reductions in cereal prices. It also introduces the main issues on the vigor of competition and pricing that are analyzed in subsequent papers. Jawboning as a public policy strategy is assessed and found useful in certain circumstances such as those in the breakfast cereal industry in the mid 1990’s. The jawboning campaign was effective in advancing price competition in an industry that successfully resisted repeated antitrust efforts to promote competition. The RTE cereal industry is now undergoing major structural changes that are on balance pro competitive. (ECONLIT Cites: L100, L410, L660) Key words: jawboning, nonprice competition, market power, market concentration, antitrust enforcement Jawboning Cereal: The Campaign to Lower Cereal Prices by Ronald W. Cotterill∗ This Agribusiness Forum contains a...
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...Harvard Business School 9-795-191 Rev. February 14, 1997 The Ready-to-Eat Breakfast Cereal Industry in 1994 (A) All is not well in the land of Tony the Tiger.1 In early 1994, the ready-to-eat (RTE) breakfast cereal industry had reached a critical turning point in its evolution. In an industry historically characterized by stability and above average profitability, slowing demand growth and a surge in private label sales threatened to undermine the dominant positions of the Big Three: Kellogg, General Mills, and Philip Morris. The 1993 year-end statistics showed that industry sales growth had slowed to under 2%, while private labels had topped 5% market share by sales and 9% by volume for the first time. Price increases by the Big Three had widened the gap between branded and private label products. The competitors had traditionally avoided destructive head-to-head competition, but this mutual restraint appeared to be crumbling. Each of the firms faced major decisions going forward about whether to break with the industry’s lock-step moves and how to deal with the threat of private labels. History of the RTE Breakfast Cereal Industry2 The ready-to-eat breakfast cereal industry got its start in 1894, when Dr. John Kellogg and his brother W.K. Kellogg invented wheat cereal flakes in an attempt to make whole grains appealing to the vegetarian clients of the Seventh-Day Adventist sanitarium Dr. Kellogg ran in Battle Creek, Michigan. 3 W.K. went on to invent the corn flake...
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...Environmental Analysis – Microeconomics Historically, the breakfast cereals industry had become prominent and successful due to its Oligopoly structure of market where there was small number of large players in the industry. Under Oligopoly, there was difficulty for the small players to penetrate the market. This was in fact evidenced by the “antitrust” complaint filed by the FTC which argued that the incumbent firms (the Big Three) had effectively discouraged small firms to enter the industry. How was it done? It was observed that the Big Three used marketing strategies such as but not limited to 1. Trade Dealings - which offers discounts to retailers or special promotion 2. In pack Premiums –where cereal packages include toys and gifts 3. Vitamin-Fortification 4. Distribution of coupon Indirectly these giants also took advantage of the economies of scale which also enhanced their profitability. Profitability is one big factor that makes a business remain and becoming a leader in the industry. The Big Three also made use of their influence in the food stores, supermarkets, etc. by taking display slots in their stores making their product visible to the buyers/consumers. Variations in the product offerings and product innovations/differentiation also played an important role in the success of branded cereal industry as these give the consumer large scale of options of which product to grasp. Cumulatively, above business tactics/activities apparently can only...
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...popular part of a British family breakfast. Weetabix itself is the nation's favorite breakfast cereal, and the brand includes a wide range of tasty, nutritious cereals, bars and muesli. Weetabix Heapular part of a British family breakfast. Weetabix itself is the nation's favorite breakfast cereal, and the brand includes a wide range of tasty, nutritious cereals, bars and muesli. Weetabix Head Office is located at its main production site, Burton Latimer, a 75 acre site that produces circa 3 billion Weetabix every year. Weetabix is enjoyed all over the world, with further manufacturing facilities in the USA and South Africa and consumers in more than 80 countries. Structure of the industry: Breakfast cereals are an integral part of the British diet, and a key sector of the grocery market in the UK. The total industry value is about 2bn at present in the UK. Since the Second World War, consumption of breakfast cereals has shown steady growth, although in 2008 the UK economy was hit by the recession, which saw the sale of breakfast cereals - alongside other food items - slow. Between 2006 and 2010, Key Note estimates that the entire breakfast cereals market grew by 15.6% in value terms, with particular growth demonstrated in the RTE cereal sector, which accounted for 91.2% of sales by value in 2010, compared with 90.9% in 2006. In addition, the consumption of hot cereals, which had been in long-term decline, has risen over the past 5 years. Due to supermarket discounts...
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...organization. It is concerned with both the determination of the strategic direction of the firm and the management of the strategic process. The course builds on prior studies of functional areas while recognizing that most real business problems are inherently multi-functional in nature. Thus, this course employs an explicitly integrative approach in which we adopt the role of the general manager who has the responsibility for the long-term health of the entire organization. The course would be taught primarily through the case method of instruction. Course Objectives 1. Understand the nature of strategic competitiveness and develop the ability to analyze the competitive environment facing a firm, assess the attractiveness of the industry and isolate potential sources of competitive advantage and disadvantage. 2. Develop business level strategies by defining the type of advantage sought, scope of operations and activities required to deliver the chosen strategy. Assess the likely sustainability of firm strategies and competitive positions. 3. Discriminate among the types of data that general managers need to evaluate alternative scenarios....
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...organization. It is concerned with both the determination of the strategic direction of the firm and the management of the strategic process. The course builds on prior studies of functional areas while recognizing that most real business problems are inherently multi-functional in nature. Thus, this course employs an explicitly integrative approach in which we adopt the role of the general manager who has the responsibility for the long-term health of the entire organization. The course would be taught primarily through the case method of instruction. Course Objectives 1. Understand the nature of strategic competitiveness and develop the ability to analyze the competitive environment facing a firm, assess the attractiveness of the industry and isolate potential sources of competitive advantage and disadvantage. 2. Develop business level strategies by defining the type of advantage sought, scope of operations and activities required to deliver the chosen strategy. Assess the likely sustainability of firm strategies and competitive positions. 3. Discriminate among the types of data that general managers need to evaluate alternative scenarios....
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...University of Illinois at Urbana-Champaign College of Business Department of Business Administration BADM 449: STRATEGIC MANAGEMENT / BUSINESS POLICY (FALL 2015) Section J: Tuesday – Thursday 11:00 A.M. – 12:20 P.M. BIF 2041 Name: Shinjinee Chattopadhyay Visting Assistant Professor Office: 465 Wohlers Hall Office Hours: Tuesday, 2-3.20 pm (Or by appointment) Office Phone: 217-300-1033 Email: schattop@illinois.edu Website: Maintained on Illinois Compass 2g INTRODUCTION AND COURSE OBJECTIVES Strategic management deals with decisions that fundamentally influence the direction of the organization and effective implementation of the direction chosen. Strategic management addresses the organizational structure, resources & capabilities, and the strategic positioning of the organization to create, capture, and sustain competitive advantage. In addition to economic value creation, management also must make decisions concerning the distribution of this economic value across stakeholders. In BADM 449, you will develop your skills at: • Understanding how firms create, capture, and sustain competitive advantage; • Analyzing strategic business situations and formulating strategy; and • Implementing strategy and organizing the firm for strategic success. Success ultimately depends not only on the soundness of the formulated strategy, but also on effective implementation through appropriate organizational choices. This capstone business course focuses...
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...[pic] GESTÃO ESTRATÉGICA E COMERCIAL [pic] Caso 5 PepsiCo Grupo 2 Francisco Morais, 56941 Ricardo Marcão, 58593 Índice Página Respostas às perguntas 2 Índice Figuras X Índice Tabelas X Bibliografia X Respostas às perguntas 1. What is PepsiCo's corporate strategy? Briefly identify the business strategies that PepsiCo is using in each of its consumer business segments in 2008. Desde a sua criação que a PepsiCo apostou sempre numa estratégia de diferenciação, não fosse a mesma resultante da fusão de uma marca de refrigerantes (Pepsi) com uma marca de snacks (Frito-Lay). Entre o fim dos anos 70 e o princípio dos anos 90, a empresa apostou ainda mais nesta estratégia, adquirindo cadeias de alimentação como a Pizza Hut, Taco Bell ou KFC, acabando por eventualmente vendê-las ou dar-lhes autonomia [4] [13]. No virar do século XXI, a PepsiCo voltou a focar-se nos produtos alimentares, adquirindo nos E.U.A. a Tropicana e a Quaker Oats Company e noutros países as marcas de bebidas locais que eram as concorrentes principais ou secundárias. Esta operação revelou-se um sucesso, pois todas as marcas estavam a crescer, embora lentamente, em todos os mercados, excepto a gama de refrigerantes com gás (carbonatados), nos E.U.A., onde o produto Pepsi estava a perder para a sua rival de sempre, a Coca-Cola, conforme se pode na Exhibit 8 do enunciado do Caso. Era preciso fazer algo e a solução...
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...4:00 pm or by appointment e-mail: taewan.kim@scranton.edu Course description This is the capstone course. It is designed to integrate knowledge gained from other business courses and apply that knowledge to policy and strategy development in situations facing general managers and business leaders. Emphasis will be placed on situational analysis, strategy formulation, and strategy execution at all levels of the organization. Course objectives 1. Understand Strategic Management as a process and be able to apply its principles to diverse business situations. (Linked to MBA’s Learning Goal #1. B) 2. Develop skills necessary to analyze the competitive situation facing various types of economic organizations; isolate important sources of competitive advantage and disadvantage; generate and make decisions among various strategy alternatives; plan for successful execution of selected strategies; and persuasively communicate these analyses and recommendations to others within the organization. (Linked to MBA’s Learning Goal #3. A, B, and C) 3. Gain experience with the case analysis method as applied to business situations. (Linked to MBA’s Learning Goal #3. C) 4. Gain experience working in teams to solve business problems. (Linked to MBA’s Learning Goal #5. A) Class policies Attendance: You will be expected to attend all classes. If you have a good reason you must miss class, please...
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...RAND Journal of Economics Vol. 31, No. 3, Autumn 2000 pp. 395–421 Mergers with differentiated products: the case of the ready-to-eat cereal industry Aviv Nevo* Traditional merger analysis is difficult to implement when evaluating mergers in industries with differentiated products. I discuss an alternative, which consists of demand estimation and the use of a model of postmerger conduct to simulate the competitive effects of a merger. I estimate a brand-level demand system for ready-to-eat cereal using supermarket scanner data and use the estimates to (1) recover marginal costs, (2) simulate postmerger price equilibria, and (3) compute welfare effects, under a variety of assumptions. The methodology is applied to five mergers, two of which occurred and for which I compare predicted to actual outcomes. 1. Introduction Traditional analysis of horizontal mergers is based primarily on industryconcentration measures. The market is defined and pre- and postmerger market shares of the relevant firms are used to compute pre- and postmerger concentration measures, which give rise to presumptions of illegality. Using this approach to evaluate mergers in industries with differentiated, or closely related but not identical, products is problematic. In many cases the product offerings make it difficult to define the relevant product (or geographic) market. Even if the relevant market can easily be defined, the computed concentration index provides a reasonable standard by which to judge...
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...Sector Coverage A pril 15, 2008 Indian Processed Food Industry Opportunities Galore Industry Overview Global Processed Food Industry Indian Processed Food Industry Processed Food Industry - A Sunrise sector Where the opportunity lies- areas for investment Industry Analysis Driving Forces Major Challenges Indian Food Processing Industry by sectors Diary Fruits and Vegetable Grains Meat and Poultry Fish Packaged/Convenience Food Aerated Soft Drinks, Packaged drinking water Exports FDI in Food Processing Government Regulation and support Regulatory framework Outlook Initiating Coverage Lakshmi Energy & Foods Ruchi Soya Analyst - Nisha Harchekar nishaharchekar@way2wealth.com Sectors - FMCG, Pharma, Entertainment WAY2WEALTH Securities Pvt. Ltd., 15/A Chander Mukhi, Nariman Point, Mumbai - 400 021. Tel: +91 22 4019 2900 email: research@way2wealth.com website: www.way2wealth.com Indian Processed Food Industry Sector Coverage Opportunities Galore Executive Summary The size of global processed food industry is estimated to be valued around US $3.6 trillion and accounts for three-fourth of the global food sales. Despite its large size, only 6% of processed foods are traded across borders compared to 16% of major bulk agricultural commodities. Indian food-processing industry is miniscule in comparison and is estimated to be US $40 billion and is likely to grow at over 10%, on the basis of an expected GDP growth rate of...
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...Stephen J. Hoch, Xavier Dreze, & Mary E. Purk EDLP, Hi-Lo, and Margin Arithmetic The authors examine the viability of an "everyday low price" (EDLP) strategy in the supermarket grocery industry. in two series of field experiments in 26 product categories conducted in an 86-store grocery chain, they find that a 10% EDLP category price decrease led to a 3% sales volume increase, whereas a 10% Hi-Lo price increase led to a 3% sales decrease. Because consumer demand did not respond much to changes in everyday price, they found large differences in profitability. An EDLP policy reduced profits by 18%. and Hi-Lo pricing increased profits by 15%. in a third study, the authors increase the frequency of shallow price deals in the context of higher everyday prices and find a 3% increase in unit volume and a 4% increase in profit. Finally, they draw a conceptual distinction between "value pricing" at the back door and EDLP pricing at the front door. R etail formats come and go with changes in consumer tastes, lifestyles, and trends in demography and the economy. Recently it is the "everyday low price" (EDLP) format that has experienced rapid growth and media popularity. The prototypical description of an EDLP pricing policy is as follows: The retailer charges a constant, lower everyday price with no temporary price discounts. These constant everyday prices at the EDLP outlet eliminate week-toweek price uncertainty and represent a contrast to the "HiLo" pricing of promotion-oriented...
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...Faster, Sustainable and More Inclusive Growth An Approach to the Twelfth Five Year Plan (2012-17) Government of India Planning Commission Contents 1 An Overview 1-14 2 Macro-Economic Framework 15-27 3 Energy 28-38 4 Transport 39-44 5 Sustainable Management of Natural Resources 45-58 6 Rural Transformation 59-66 7 Farm Sector 67-79 8 Manufacturing Sector 80-86 9 Health 87-95 10 Education & Skill Development 11 Social and Regional Equity 104-107 12 Challenge of Urbanisation 108-114 13 Science and Technology 115-118 14 Services: Tourism, Hospitality & Construction 119-125 15 Governance 126-134 16 Innovation 135-139 96-103 Tables Table 1.1: Structure of Global GDP 13 Table 2.1: Sectoral Growth Rates - Previous Plans and Target for Twelfth Plan 18 Table 2.2: Broad Macro-Economic Parameters - Previous Plans and Target for Twelfth Plan 19 Table 2.3: Projection of Centre’s Resources for the Twelfth Five Year Plan (2012-17) (Figures in Rs Crore at Current Prices) 23 Table 2.4: Projection of Centre’s Resources for the Twelfth Five Year Plan (as per cent of GDP) 24 Table 3.1: Projected Energy Demand 29 Table 14.1: Construction Sector: Contribution to GDP 122 Table 14.2: Construction Components Involved in Creation of Physical Infrastructure 122 Table 14.3: Requirement...
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