OtherPapers.com - Other Term Papers and Free Essays
Search

Analysis of the Italian Yogurt Industry in 2001: Competitive Dynamics and Entry Strategies Case Study

Essay by   •  March 27, 2012  •  Case Study  •  3,140 Words (13 Pages)  •  2,740 Views

Essay Preview: Analysis of the Italian Yogurt Industry in 2001: Competitive Dynamics and Entry Strategies Case Study

Report this essay
Page 1 of 13

CONTENTS PAGE

Introduction 3

Porter's Five Forces Analysis 3-5

Pest analysis 9-10

Positioning Maps 10

Competitor Profiles 11-12

Industry Life-circle 11-12

Key Factors for Success 12-13

Threats and Opportunities 13-14

Suggestions on Positioning Strategies and 14-15

Market Entry Methods for new entrants

References and Bibliography 16

INTRODUCTION

Porter's 5 Forces Model:

Porter's 5 Forces model is probably one of the most often used business strategy tools and has proven its usefulness on numerous occasions. Porter's model is particularly strong in thinking outside-in.

Source: http://upload.wikimedia.org/wikipedia/en/6/66/Porters_five_forces.PNG

The Porter's Five Forces tool is a simple but very powerful tool for understanding where power lies in an industry situation. It is useful, simply because it helps us to understand both the strength of the current competitive position, and strength of a position we are looking to move into.

According to that, we would try to analyse our case study: The Italian Yogurt Industry in 2001: Competitive Dynamics and Entry Strategies by doing Porter's Five Forces analysis.

Porter's Five Forces Analysis

Looking into the Bargaining Power of Suppliers of the industry:

There are a major number of different suppliers in the yogurt sector such as milk producers, packaging manufacturers who produce cartons, cups, plastic containers, also those suppliers who provide flavouring substances.

Looking into the Bargaining Power of Buyers of the industry:

Family consumption of yogurt sector in Italy has the highest slice of the market, while catering is still a relatively small channel. There are a huge number of buyers favoured by the fact that proper 'sit-down' meals became rarer, consumers spend less time having breakfast, and there for yogurt sector is very popular among younger men and women while consumption among adults is still limited. Yogurt consumer is quite young, from a middle/social class, shows little loyalty towards the single brands and a great inclination toward product innovation. The pie-chart below shows us in detail the consumption of the product:

Pie - Chart 1:

As we can see from the Pie-Chart 1, yogurt is product mostly consumed in Northern Italy with 57% of yogurt consumption, following with 21% of yogurt consumption in Central Italy and with 22% of yogurt consumption in Southern Italy and islands.

About 70% of all yogurts are purchased by women.

Competitive rivalry within the industry:

There were about 60 yogurt producers in Italy in the year 2000. The major competitors in Italian yogurt sector are the following Parmalat, Muller, Nestlé, Scaldasole, Granarolo, Yoplait, and Milkon. Some of these companies has a variety of product commodities and has a high customer loyalty. The yogurt sector is dominated by three major firms which operate nationwide (Sitia Yomo, Danone, and Parmalat) and by Muller which has recently come on the scene. The remaining quota is covered by other companies operating in the dairy industry such as Nestlé, Granarolo, Lactis, A.L.A., Milkon, Latteria Sociale Vipiteno, and by importers such as Ehrmann and Stuffer, which targeted a multi-national market. The competition is particularly intense in modern distribution channels, where the entrance of new competitors has reduced the amount of space allocated to the market leaders and local brands. Also new product development is carried out by top companies or those which are traditionally market-oriented like Muller, Nestlé, and Fatorrie Scaldasole. Also yogurt with cream added is in direct competition with deserts.

Looking into Threat of New Entry of the industry:

The price of milk in Italy has risen as a result of gradual reduction of the national supply linked to a more rigid application of milk quotas and there for looking into the yogurt industry from 1994 to 200 there was a downward trend in revenues leading companies curbed price increases and pushed the more profitable multi-pack packaging.

Table 1:

Year 1994 2000

Consumers 100% 100

Profit margin of distribution 29% 32%

Industry Revenues 71% 100% 68% 100%

Logistic-related costs 12% 16.9% 7% 10.3%

Raw materials 23% 32.4% 26% 38.2%

Packaging 6% 8.5% 8% 11.8%

Production costs 13% 18.3% 11.5% 16.9%

General & commercials expenses 12.5% 17.6% 13.5% 19.9%

Total operating costs 66.5% 93.7% 66% 97.1%

Average operating income 4.5% 6.3% 2% 2.9%

In general, the yogurt sector profitability is on the decline, it is due to greater margins of modern distribution, lower added of the product and the increase in commercial costs.

Also, many followers activated a decisive price repositioning with reduction of up to 20% on principal products.

Looking into the distribution network, even smaller-sized companies since their activity is concentrated at a local, regional, or even multi-regional level; they are able to sustain the investment of an efficient distribution network. One of the primary barriers to enter the yogurt sector is the need for a refrigerated distribution network. This barrier could be overcome by companies in the dairy sector which have an efficient distribution network for fresh food.

...

...

Download as:   txt (19.8 Kb)   pdf (215.3 Kb)   docx (18.5 Kb)  
Continue for 12 more pages »
Only available on OtherPapers.com
Citation Generator

(2012, 03). Analysis of the Italian Yogurt Industry in 2001: Competitive Dynamics and Entry Strategies Case Study. OtherPapers.com. Retrieved 03, 2012, from https://www.otherpapers.com/essay/Analysis-of-the-Italian-Yogurt-Industry-in-2001/25200.html

"Analysis of the Italian Yogurt Industry in 2001: Competitive Dynamics and Entry Strategies Case Study" OtherPapers.com. 03 2012. 2012. 03 2012 <https://www.otherpapers.com/essay/Analysis-of-the-Italian-Yogurt-Industry-in-2001/25200.html>.

"Analysis of the Italian Yogurt Industry in 2001: Competitive Dynamics and Entry Strategies Case Study." OtherPapers.com. OtherPapers.com, 03 2012. Web. 03 2012. <https://www.otherpapers.com/essay/Analysis-of-the-Italian-Yogurt-Industry-in-2001/25200.html>.

"Analysis of the Italian Yogurt Industry in 2001: Competitive Dynamics and Entry Strategies Case Study." OtherPapers.com. 03, 2012. Accessed 03, 2012. https://www.otherpapers.com/essay/Analysis-of-the-Italian-Yogurt-Industry-in-2001/25200.html.