CASE WRITE UP READY-TO-EAT BREAKFAST CEREAL INDUSTRY- GROUP B-5 RTE INDUSTRY BOUNDARIES When looking at supply side of RTE cereal industry major costs to producers constitute of initial investment in production plant. Flexible manufacturing plants resulted in a rather high supply-side substitutability between different cereals. This implies that RTE cereal producers operate in a broader cereal industry as opposed to one for only a specific type‚ such as puffed or shredded wheat cereals. However‚
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Ready To Eat Cereal 1) The Big Three firms‚ Kellogg‚ General Mills‚ and Philip Morris‚ formed practically an oligopoly in the RTE cereal market. Their price and cost levels moved in lockstep‚ following signals sent mostly by the biggest player‚ Kellogg‚ while their tactics could be used against outside competition‚ as suggested in the scenario below. Although RTE cereal is a basic food item and production technology stabilized for about half century‚ the industry had effective barriers to entry
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The Ready to Eat Breakfast Cereal Industry in 1994 Market demand for cereal was elastic 1. Why has RTE cereal been such a profitable business? What changes have led to the current industry crisis? Profitability- a. RTE has been very profitable – posting ROA’s in the 15-30% range. b. Restrained competition thru effective unwritten agreements for the big three to work together on restricting – trade dealing‚ in-pack premiums‚ and vitamin fortification‚ these were viewed as powerful tools for
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ready-to-eat Breakfast Cereal Industry in 1994 Why RTE cereal has been such a profitable business up to the 1990s? Rivalry among existing competitors: Low. Restrained competition through effective unwritten agreements for the big three to work together on restricting – trade dealing‚ in-pack premiums‚ and vitamin fortification‚ these were viewed as powerful tools for increasing a firms market share. Bargaining power of suppliers: Low. The big three were leading the suppliers. Bargaining
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R-T-E Cereal Breakfast Industry Name: Andres Gil Competitive Analysis and Strategy The ready to eat (RTE) cereal industry has grown steadily‚ with a compounded annual volume rate of three percent between 1950 and 1993. It success during the 20th century had been driven by the surge of consumer’s interest in healthy and dietary food. After World War II there was an increase demand for vitamin fortification products. During the 50’s‚ pre-sweetening gained popularity among Americans
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CORPORATE STRATEGY 3E LYNCH Pearson Education November 2002 |Case Title |Source‚ Number‚ |Geographical and Industry |Case Decision Issue | | |Length‚ Teaching Note|Setting‚ Company Size‚ | | | | |Timeframe | | |Chapter 1
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BUMO 756: Industry and Competitor Analysis Dr. Hugh Courtney Sections 0101‚ 0201 Office: VMH 4516 Room: VMH 1518 (0201)‚ TBD (0101) Office hours: T‚ W‚ 11:00-12:30 or by appointment Tuesday‚ 8:00-10:40 a.m. (0201) Telephone: 301-405-9544 Wednesday‚ 8:00-10:40 a.m. (0101) Email: hcourtney@rhsmith.umd.edu Course Overview and Objectives This industry and competitor analysis seminar provides students with the conceptual frameworks and analytical tools for understanding the dynamics
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SCP MODEL MARKET DEFINITION  Product Level The industry for these products is the Ready-to-Eat Breakfast Cereal‚ but recently some companies attend to extend the reach of its products into snack food.  Geographic Level The geographic level for the analysis of this industry is national. All the companies were focus on obtain market share from the whole industry in the United State. BASIC CONDITION Demand 1. Price Elasticity It is an elastic demand because it is influenced for
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The Ready-to-Eat Breakfast Cereal Industry in 1994 Why have private labels been able to enter this industry successfully? How do the cost structures of private label and branded cereal manufacturers differ? The private labels have been able to enter the ready-to-eat cereal industry successfully for the following reasons: High prices set by major manufacturers (incumbents) Retailers’ willingness to promote better because of better margins Coupon promotions by major manufacturers eroding
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The whole Ready-to-Eat (RTE) breakfast cereal industry is a very profitable industry in general with the Big Three: Kellogg‚ General Mills‚ and Philip Morris dominating more than seventy percent market share. By using 5-Force Analysis‚ we can have a deeper insight of this Industry: • Entry Barrier: High The Big Three has spent large amount of money on advertising to establish brand recognition and to promote sales. By paying grocers “slotting allowance”‚ the Big Three gain shelf space advantage
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