Strategic management Case: Bitter Competition
Discussion Questions1. How should Vermijs expect NutraSweet to respond to the Holland Sweetener Company 'sentry into the European and Canadian aspartame markets?NutraSweet was able to maintain his worldwide monopoly position because it was secured by two key patents on aspartame in the Canadian and European market. But in 1987, NutraSweet 's patents were due to expire so HSC wanted to enter the market. During the secured times of NutraSweet, the company could create advantages to protect his market position.
Those advantages:-The two key patents, the 'use ' patent obtained in 1970 and the 'blend ' patent in 1973, so nobody could make the aspartame or use it.
-Economies of scale, cost advantages (ex. By 1992, NutraSweet would be proclaiming that it had cut its manufacturing costs by 70% over the previous decade) and efficiency who were created over time.
-Brand recognition by the clients who were familiar with the product, by 1986, the company was claiming that 98% of American consumers recognized its logo.
-NutraSweet knows already how the cookie crumbles on that market and could sold aspartame directly to major buyers such as Coke and Pepsi.
Vermijs knows that the patents will disappear but also that his company doesn 't have the other advantages of NutraSweet. So Vermijs expectations should be that NutraSweet is going to protect his other advantages and even try to improve them. Only by doing that, NutraSweet could protect his position on the market for the long terms.
2. Specifically, how should Vermijs assess the relative likelihood of the two scenarios-price war and normal competition-he has in mind?Vermijs should assess the likelihood for a price war bigger than for a normal competition because NutraSweet not going to give his superior market position away that easy. A normal competition will cost to many market shares for NutraSweet. NutraSweet is in a stronger position (competitive advantages) to fight a price war or in other words cutting back on
Those advantages:-The two key patents, the 'use ' patent obtained in 1970 and the 'blend ' patent in 1973, so nobody could make the aspartame or use it.
-Economies of scale, cost advantages (ex. By 1992, NutraSweet would be proclaiming that it had cut its manufacturing costs by 70% over the previous decade) and efficiency who were created over time.
-Brand recognition by the clients who were familiar with the product, by 1986, the company was claiming that 98% of American consumers recognized its logo.
-NutraSweet knows already how the cookie crumbles on that market and could sold aspartame directly to major buyers such as Coke and Pepsi.
Vermijs knows that the patents will disappear but also that his company doesn 't have the other advantages of NutraSweet. So Vermijs expectations should be that NutraSweet is going to protect his other advantages and even try to improve them. Only by doing that, NutraSweet could protect his position on the market for the long terms.
2. Specifically, how should Vermijs assess the relative likelihood of the two scenarios-price war and normal competition-he has in mind?Vermijs should assess the likelihood for a price war bigger than for a normal competition because NutraSweet not going to give his superior market position away that easy. A normal competition will cost to many market shares for NutraSweet. NutraSweet is in a stronger position (competitive advantages) to fight a price war or in other words cutting back on
Bibliography: - Harvard online, buy case bitter company- Strategic Management: Concepts, Second Edition (2008), by Mason A. Carpenter and Wm. Gerard Sanders, Pearson Prentice Hall. ISBN-10: 0132341409; ISBN-13: 9780132341400