Porters 5 Forces for Del Monte India - Free Essay Example

Company name: Field Fresh Pvt. Ltd. (Del Monte Foods) SBU: Processed foods beverages Strategic group: Nestle (Maggi), HUL (Kissan), Dabur (Real) Industry Analysis: A. Bargaining Power of Suppliers-Low * Switching costs- low * Differentiation of inputs- low * Threat of forward integration- high * Supplier concentration- low The Porter’s â€Å"Five Forces† framework for packaged food beverage industry analysis Bargaining Power of Buyers- Low * Buyer concentration: less * Buyer Volume: low * Switching cost: low * Brand identity: strong * Ability to backward integrate: less Threat of Potential Substitutes- High * Price performance differentiation: low * Switching cost: low * Buyer propensity to substitute: high Threat of New Entrants- Medium * Brand Identity: strong * Switching costs: low * Access to distribution: tough * Proprietary product differences: low * Capital requirements: High * Access to necessary inputs: Tough Industry competitors Degree of Rivalry- High * Industry is expected to grow at CAGR of 9% * Brand identity: Strong * Switching costs: low * Product differences: low * Diversity of Competitors: high B. Key Success Factors: a) Distribution-related KSFs: * A large network of distributors Efficient and responsive supply chain * Efficient usage of Retailer shelf space as Display * Trustworthy relationship with retailers b) Marketing-related KSFs: * Top of the mind brand recall * Motivated Sales team trained in having good product knowledge * Point of Sale advertising * Special offers and bulk buy deals for retailers * Attractive and strong product packaging c) Other types of KSFs: * High product quality standards in norm with food standards and guidelines * Product innovation capabilities with respect to new product launch and time to market C. Industry’s Dominant Features: * Market size and growth rate Number of rivals: In certain product categories, such as, ketchup and sauces, the industry is dominated by a few large companies with national presence but overall it is fragmented into many small and regional companies. * Number of buyers: Market demand is fragmented among several buyers across the country and hence buyers do not enjoy much of bargaining power * Degree of product differentiation: Product of other companies is less differentiated leading to heightened price competition. * Product Innovation: Development of new and differentiated products is important D. Industry Driving Forces: * Booming modern retail Increasing globalisation of industry leading to several foreign companies foraying into India * Changes in consumer behaviour ma rked by increased health consciousness and adoption of urban and outgoing lifestyle * Burgeoning middle class with increased purchasing power SWOT StrengthReputed and trusted International BrandEntry in India with Bharti, a well-known brandHuge investment potentialHigh quality of products| Weakness Presently sales volume is too low, so difficult to retain distributors, and get new ones. Products are not available in sachets and tetra packs (lower priced), hence people put off. There are packaging issues with juices (Metal Cans)High credit period handicaps distributors. | OpportunityImmense market potential in India Increasing Income level of peoplePeople are slowly developing taste of canned juices which is good for companyPeople are liking the taste of company’s ketchup with its unique flavorsVery less competition for few products like fruit cock tail, fruit slices etc| ThreatWith more and more players entering into market, the competition has made it a price war with very low margins. Distributor confidence is very low as the products do not move as fast as competitors. Due to high credit period given to retailers, Distributor money is blocked causing them to lose interest and thus motivation to promote products on their own| Building Competitive Advantage: Resource-based view The company derives its competitive advantage from the valuable resources it has. The biggest resource that the Co is leveraging is the global product range and brand identity of Del Monte and the backing of Indian partner Bharti Enterprises further add to the credibility of the Brand in India which differentiates it from its competitors. 1. Threat to Sustainability Imitation- Local importers are importing foreign products in the same space and climbing the peak that has started flattening because of heightened competition. * Substitution- Several companies which are hitherto in contract manufacturing are forward integrating and displacing the company’s business model of importing Del Monte products and marketing in India. Private labels of retailer are yet another thre at to sustainability. * Hold-up- Tremendous amount of added value created is lost to retailers and the distributors as the Brand Del Monte is newly launched in India and it doesn’t enjoy much of bargaining power. The company has to give special offers to both the distributors and the retailers to stock the company’s products which eat into the value created. * Slack- Lack of performance-based pay leaves the company’s sales men less motivated to maximize the sales. Secondly, frequent defects in the product packaging leads to sales return causing dead stock that dissipates the added value. 2. Strategic challenges facing the company * Pan India penetration- India has a huge market potential but there is cut throat competition and price war between major FMCG players. To reach across the length and breadth of country is a formidable task in front of company. * Creating Brand awareness- Top of the mind recall for Del Monte products is still low in India despite the promotions carried out by the Co. * Building long-term relationships with the distributors and retailers- As the Co. is new in India its products are not as fast moving as its competitors leading to delayed payments from retailers to distributors and at times the payments due even go bad debt leaving the distributor in the distressed state. Thus, many dealers leave the dealership causing the disruption in the supply chain.

So now we come to the end (well… sort of)

Here I was, all set for the SAT to take its final bow  when, in a remarkable twist,  it was announced that hundreds of testing centers would be closed and the January test postponed until Feb. 20th  thanks to the blizzard about to descend on the east coast. Given that it was 60 degrees on Christmas Day in New York City and that this is the first real snowfall  of the year, I cant help but find this to be an bizarrely  coincidental  turn of events. It would seem that the SAT is not about to go quietly. That notwithstanding, tomorrow is still the last official SAT test date, and thus I feel obligated to post a few words in tribute to an exam thats had a disproportionately large impact on my life over these last few years. (Full disclosure: Im also posting this  now because Ive gone through the trouble of writing this post, and if I wait another month, I might get caught up in something and forget to post it.)    Ill do my best  not to get all mushy and sentimental.   From  time to time, various students used to  ask me hedgingly  whether I loved the SAT. It was a reasonable question. After all, who would spend quite so much time tutoring and writing about a test they didnt really, really like? I cant say, however, that I ever  loved the SAT in a conventional sense.  The test  was something I happened to be good at more or less naturally (well, the verbal portion at least), and tutoring it was something I just happened to fall  into. I didnt start out with any particular agenda or viewpoint about the test; it was simply a necessary hurdle to be dealt with on the path to college, and as I saw it, my job was to make that hurdle as straightforward and painless as possible.  To be sure, there were aspects of the tests that were genuinely interesting to discuss, and dont even get me started on the lets-use-Harry-Potter-examples-to-define-vocabulary-fests, but as I always told my students, You dont have to like it you just have to take it. What I will say, though, is something Ive heard from many tutors as well as from many students (and their parents), namely that after spending a certain amount of time grappling with the SAT, picking it apart and understanding its strengths as well as its shortcomings, you develop a sort of grudging respect for the test.  For a lot of students, the SAT is the first truly  challenging academic obstacle theyve faced the first test they couldnt  ace just by reading the Sparknotes version or programming their calculator with a bunch of formulas. For the students I tutored long-term, there was almost always a moment when it finally sank in: Oh. This test is  actually difficult. Im going to have to really work if I want to improve.  And usually they rose to the challenge.   But the interesting part is that what started  out as no more than a nuisance, another hoop to jump through on the way to college, could sometimes turn into a real  educational experience one that left  them noticeably more comfortable reading college-level material, whether or not  they got all the way to where they wanted to go.  And when they did improve, sometimes  to levels beyond what their parents had thought them capable of, their  sense of accomplishment was enormous.  They had  fought for those scores. Perhaps I lack imagination, but I just dont see  students having those types of experiences quite as often with the new test.   Thats a best-case scenario, of course; I think the worst-case scenarios have been sufficiently rehashed elsewhere to make it unnecessary for me to go into all that here. But regardless of what you happen to think of the SAT, theres a lot to be said for having the experience of wrestling with something just high enough above your level to be genuinely challenging but just close enough to be within reach.   This test has also  led me down roads  I never could have foreseen. While Ive also been primarily interested in the SATs role as a cultural flashpoint, in the way it sits right at the crux  of a whole host of social and educational issues, its also taught me more than I ever could have imagined about what constitutes effective teaching, how the reading process works, and about the gap between high school and college learning.  And Ive met a lot of (mostly) great people because of it, many of whom have become not only colleagues but also friends. I never thought Id say this, but I owe the SAT a lot. It wasnt a perfect test, but considered within the   narrow confines of what it could realistically be expected to demonstrate,  it did its job pretty well.   So on that note, Im going to say something that might sound odd: to those of you taking this last test, consider yourselves lucky. Consider yourselves lucky to have been given the opportunity to take a test that holds you to an actual standard; that gives you a snapshot of the type of vocabulary and reading that genuinely reflect what youll encounter in college; that isnt designed to pander to your ego by twisting the numbers until theyre all but meaningless.   And if youve been granted a reprieve for tomorrow,  enjoy the snow day and catch up on your sleep.