If you were the CEO of Tetra Pak China, what competitive strategies would you use to deal with Greatview’s challenge? Please explain your answer.
Tetra Pak, in the future, has to deal with Great View who has been threatening the market share of Tetra Pak within China. If I were the CEO of Tetra Pak China, the competitive strategies that I would use to deal with the challenge of Great View will be as follows:
Initially, Tetra Pak needs to apply Porter competitive strategy so that it can gain competitive advantage in the market. In this situation, Porter has portrayed certain competitive strategies, which can be used to battle the challenge presented by Great View.
Cost leadership would enable Tetra Pak to take advantage of their economies of scale and special access to raw materials, which is of utmost importance in aseptic packaging and affordable technology.
The second strategy suggested by Porter is differentiation that can synchronize with their patent and research strategy. With the element of research and developed, Tetra Pak has accumulated over 5,500 patents and their innovations make them stand against all the different entrants such as Great View who do not have the capability and the capacity to invest in a high level of innovation or research.
As the case states, China does not have patent laws that are exclusive, therefore it can be manipulated as Tetra Pak needs to protect its patents and nurture a perception as these are the providers of certain products/dimensions, which are widely valued. By uniquely positioning themselves differently, Tetra Pak would cease to fight over the same market share as of Great Views. The final strategy focuses on the two variants- cost focus in its target market or differentiation focus in its target market. Tetra Pak can narrow down its competitive scope, which would allow it to cut past the masses.
Porter Five Forces Model
Bargaining Power of Buyers:
The bargaining power of buyers is quite limited in the industry. The reason is simple, the number of companies offering Tetra Pak is quite limited, which makes the players compete at higher prices; however, the quality has been the differentiating factor in the market. The limited dependency on the distributors is also an attribute for the market.
Bargaining Power of Suppliers: Low
The bargaining power of suppliers for the industry is low. The reason why it is low is because the number of suppliers is quite high for the industry. Along with this, the large number of substitute inputs has also been a major factor for the industry. The volume is the most critical factor for the suppliers. Along with this, the low switching cost is also a major factor for the industry.
Threat of new entrants: Low
The threat of new entrants is low for the industry. The reason why it is low is because of high capital investment required for the industry. The distribution network required should also be quite strong. The government rules and regulations also make the industry highly competitive for the new player.
Threat of substitutes: Low
The threat of substitutes is low for the industry. The substitutes available in the industry are quite expensive.
Competitiverivalry: High
The competitive rivalry among the market players is quite high. All the players in the market have been competing for a market share that is widely spread.
SWOT Analysis
Strengths:
The company has invested in R&D
Highly Innovative firm
Training and development of employees
Recycling of Tetra pack ascetic cartons
Weaknesses:
High prices
No internal hiring of employees
Equipment failure
Opportunities:
Increase the product line
Consumption of the milk is set to increase
Should look to improve efficiency
Threats:
Competition
Introduction of tax by the government
Standardization of products
PEST Analysis
Political Factors
Tetra Pak has been well suited within the market because of the political support that the company and all the industry players have been getting by the government. The government has offered subsidiary to the industry players, which makes the raw material cost to reduce.
Economical Factors
The economy has been on boom and on the verge of becoming a more stable economy. Therefore, this makes it quite a positive move for Tetra Pak, where the buyers’ spending patterns have also increased. The income levels have also increased for the local population...........................
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