PESTEL, 5-Forces, Ice-Fili
Question 1. –(refer to appendices on p.5)
Political
1) From 1991-1998 No longer anti-alcohol campaign to boost ice-cream industry. Ice cream industry had to complete with substitute products.
2) Since 1998 Financial Crisis, Russian rubles devalued by two-thirds. Russians cannot afford foreign products and companies relied more on national suppliers.
3) 1999 VAT raise. Fruit-based ice-creams and popsicles raised to 20% VAT. Consumer buy less ice-cream because of elastic demand, revenue is less.
Economical
1) Privatized companies must overcome bad infrastructure, to create value in Primary and Support activities, and to extend the maximum market share.
2) In ice-cream industry, Ice-Fili’s competitor, Nestlé, built Nestlé’s own infrastructure during the 1990’s and Russian faced an enormous challenge.
Society/ Culture
1) Lakomka. Older customers love “Lakomka”, 5 competitors compete Lakomka. However, in a long term, Lakomka needs to sustain its life if old generation dies.
2) Russian likes Condensed Milk (less sweet) ice-cream generally. But Nestlé may change consumers’ behavior.
3) Consumers took ice-cream during short summer but took beer throughout year.
Technological
1) Newly imported equipment. Ice-cream industries invested newly imported equipment to enhance infrastructure.
2) 90% of new equipment used for freezing and packaging in Russian market, but only $1.5 to $2m per complete production line. Not really improving.
Substitutes (High Threat)
Soft drinks, beers, chocolate, confectionaries were rising but ice-cream declined by 3.5% in 2002.
Rivalry (High Threat)
Nestlé established great infrastructure and wanted to be only brand in Russia in 2-3 years’ time!
Entrants (High Threat)
Regional producers took 30% of domestic market and still growing.
Supplier (High Threat)
Imported ingredients were more expensive; National suppliers had more supplier power, price of ingredient were more expensive
Buyer (High Threat)
1) Customers had 240
Political
1) From 1991-1998 No longer anti-alcohol campaign to boost ice-cream industry. Ice cream industry had to complete with substitute products.
2) Since 1998 Financial Crisis, Russian rubles devalued by two-thirds. Russians cannot afford foreign products and companies relied more on national suppliers.
3) 1999 VAT raise. Fruit-based ice-creams and popsicles raised to 20% VAT. Consumer buy less ice-cream because of elastic demand, revenue is less.
Economical
1) Privatized companies must overcome bad infrastructure, to create value in Primary and Support activities, and to extend the maximum market share.
2) In ice-cream industry, Ice-Fili’s competitor, Nestlé, built Nestlé’s own infrastructure during the 1990’s and Russian faced an enormous challenge.
Society/ Culture
1) Lakomka. Older customers love “Lakomka”, 5 competitors compete Lakomka. However, in a long term, Lakomka needs to sustain its life if old generation dies.
2) Russian likes Condensed Milk (less sweet) ice-cream generally. But Nestlé may change consumers’ behavior.
3) Consumers took ice-cream during short summer but took beer throughout year.
Technological
1) Newly imported equipment. Ice-cream industries invested newly imported equipment to enhance infrastructure.
2) 90% of new equipment used for freezing and packaging in Russian market, but only $1.5 to $2m per complete production line. Not really improving.
Substitutes (High Threat)
Soft drinks, beers, chocolate, confectionaries were rising but ice-cream declined by 3.5% in 2002.
Rivalry (High Threat)
Nestlé established great infrastructure and wanted to be only brand in Russia in 2-3 years’ time!
Entrants (High Threat)
Regional producers took 30% of domestic market and still growing.
Supplier (High Threat)
Imported ingredients were more expensive; National suppliers had more supplier power, price of ingredient were more expensive
Buyer (High Threat)
1) Customers had 240