Ice-Fili case analysis 1. Please provide an in-depth five forces analysis to illustrate the competitive environment for Russia’s ice cream industry. How is it likely to evolve?
Five forces analysis: 1) The bargaining power of suppliers * As some producers such as Ice-Fili wanted to keep their product’s quality level, they imported specific raw materials, but they didn’t have a problem in finding new suppliers. * As the technology of Russia was lagged behind Western’s, Ice cream producers needed to import most of their ice cream machines. The bargaining power of suppliers for raw materials is low, while for facilities is high. 2) The bargaining power of customers * There are various ice creams in Russia, so customers have many choices and low loyalty to a certain kind of ice cream. * Ice cream is really appreciated in Russia, customers eat it even in Winter. The bargaining power of customers is moderate. 3) Threat of potential entrants * Barriers to entry are low, profit can be easily made (as ingredient’s cost can be moderate), facilities can be use for other items, and economies of scale can be made (as the unit cost decreases when the total production rises). * Moreover, a new producer can easily find a distribution channel, because multiple companies are willing to sell ice cream, it isn’t a monopolistic market.
Threat of potential entrants is high. 4) Threat of potential substitutes * In Russia, Ice Cream is considerate as an easy and inexpensive snack. Plenty of other inexpensive “on-the-go” snacks are also available, like candies, chips or chocolates. Threat of potential substitutes is moderate. 5) Rivalry among existing competitors * Firstly, most of the products are undifferentiated products, which can be easily replaced by a substitute or another brand by the consumers. * Secondly,