Strategic management

Bottled water industry in 2006 Case

Summary• 1) Dominant Economic Features • 2) Drivers of change• 3) 5 porters analysis • 4) Key success factors • 5) Strategic group map• 6) Recommendations

1)Dominant economic features

1) Market Size and Growth Rate:

2) Scope of compétitive rivalry :

3) Number of rivals :• Nestlè • Coca-Cola• Pepsi• Groupe Danone• Suntory Water Groups

  4) Number of buyers .   No one buyer accounts

for a significant fraction of overall market demand.

5) Distribution channels :

• wholesale clubs • supermarkets • discount stores • food store• supercenters

6) Pace of technological change 

7) Degree of product différentiation 

8) Vertical integration 

 2) Drivers of

change:

• Increase in environmental concerns

• Convenience and portability

• The profit margins in the industry are very lucrative

• To facilitate entry into carious parts of the globe many companies enter into strategic alliances

3) 5 porters analysis

The threat of substitute product

• Other type of drinks : Soft drink, milk, Tea, Soda• Innovative products like vitamin water and

flavored water.

Those products are more and more popular and that’s why they can be considerate as a real threat.

HARD!

The threat of the new entrant

• Biggest competitors have the majority of the global market.

• Only competitors that are able to provide important quantities of bottles water with a cheap price will be able to enter this market.

DIFFICULT!

The bargaining power of suppliers

• Due to a large number of existing suppliers : about 50 different companies in the USA.

LOW!

The bargaining power of customers

• Many channels : Food stores, mass store.

• Consumer won’t change their consumption regarding the price because it’s a basic product.

MEDIUM!

Intensity of competitive rivalry

• Bottled water industry is a market with a limitated number of competitors as Nesle, Danone Coca Cola & Pespi

There is an intense competition due to • Price• Type of products (health and fitness)

4) Keys success factors

• Water is the world’s most attractive beverage categorie

• Demand is increasing day by day in the bottle water industry

• The impact of brand is important because of notoriety

• People are always more interessted in health and fitness

• Water Improved the appearance of skin and give more energy

• Purity of water is important for the health• Good convenience and portability of bottled water

5) Strategic Group Map :

6) Recommendations

o Dominion by the costs o Concentrate on one

market o Differenciationo The customer loyaltyo External growth 

o Strengthen its presence in the country already occupied 

o Reduce production costs 

o Innovation in local supply

o Reduce production costs 

o Market Domination :o Local Acquisitions and

consumers loyalty 

o Improve the worlwide présence 

o Reducing Production Cost : o Globalization and External

Growth

o Developing an international Customer loyalty 

Thank You