Submitted by: Submitted by thefifthleo
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Category: Business and Industry
Date Submitted: 02/18/2013 05:39 AM
Case #3: Competition In Energy Drinks, Sports Drinks, And Vitamin-Enhanced Beverages
1. What are the strategically relevant components of the global and U.S. beverage industry macro-environment? How do the economic characteristics of the alternative beverage segment of the industry differ from that of other beverage categories? Explain.
The strategically relevant components of the global and U.S. beverage industry macro-environment are economy, societal value, legal, and demographics. Economy is a relevant component because the economic downturn had a great impact on the sales of beverages. The economic downturn resulted to decrease the sales of sports drinks by 12.3 percent, sales of flavored and vitamin-enhanced drinks by 12.5 percent and by slowing the growth in volume sales of energy drinks by 0.2 percent. Societal value is another relevant component because some studies have shown that large intakes of some alternative beverages can have negative effects on the body. Legal is another relevant component because U.S. Food and Drug Administration regulates some of the ingredients that the companies put in their product. Demographics, because each drink caters to different buyers.
As for the differences in economic characteristics between alternative beverages and other beverages, alternative beverages compete through product differentiation from the well-known and established traditional beverages. They have the ability to introduce new lines with added benefits to the consumers, unlike other beverage categories that suffer from low profit margins because of their inability to expand and further differentiate the products. Alternative beverages though, are more likely to suffer price reductions because of new products that are continually being introduced.
2. What is the competition like in the alternative beverage industry? Which of the five competitive forces is strongest? Which is the weakest? What competitive forces seem to have the greatest...