The two companies in this study are quite similar. The family canneries were created centuries ago in the Loire Valley. They preserve the same type of vegetables, and cater to the same type of customers. Their production methods differ and are targeted towards the upstream market. The company Nivert produced nearly 2.5 times more than the company Carriere and their market share are negligible and comparable on the market (less than 1%) given the big names that monopolize the competition in the market.
The figures mentioned in this study date from 1985 and they reflect the historical facts. The market has now evolved, and the analysis and recommendations that follow take into account these developments including the growth of private label and growth in demand for frozen products at the expense of canned tinned products.
The five Forces Model of Porter is a strategic analysis tool that analyzes the influence of exogenous factors on the company and its activity in the market.
According to Michael Porter, there are 5 forces that influence how a business behaves and / or must behave in the face of competition:
- The bargaining power of customers
- The bargaining power of suppliers
- The threat of potential entrants
- Threat of substitutes
- The intensity of intra-industry competition
The weight of these 5 forces determines the ability of the enterprise to generate profit or not. If the forces are highly placed, the profit will be less important. Thanks to this analysis, we can identify the strategic elements, and the key factors for success. We must master these forces in order to compete and win the market share. The two companies studied are rather similar, and the analysis that follows therefore concerns both of them.
Tags: Loire Valley, strategic elements, Five Forces Model of Porter, potential entrants, canned tinned products, Carriere
[...] The bargaining power of suppliers Are vendors in a strong position to negotiate? The providers are not really in a strong position to negotiate because they are numerous and have few assets that balance the scales. Indeed, many suppliers are on the market because many are exploited of their farmlands. However, there are certain points where they can play, especially in the case of Carriere that sets short deadlines hours) between harvest and canning. The close proximity can then charge the canner. [...]
[...] We have seen in this study that the two companies have not diversified at all and they should undertake diversification because the market share of frozen food is growing and diversification strategies of competitors were clearly inconclusive. In addition to the segment of canned food, it is always possible to differentiate themselves with new formats for example, with organic produce. Price The pricing is always a very important part of the retail prices and is driven by the lower purchasing power who are looking for high volumes at prices that are the closest possible to the cost. [...]
[...] Several levers are available to them to redress the situation and to increase the turnover and gain market share.They may evoke successively as the elements of marketing mix, ie product, price, place and promotion. Product The first point that comes immediately to mind while working on increasing production volume is the product because it sells more volume and helps to earn more. But this solution is not simple to implement. Indeed, we do not know the full capacity of production lines for each of the two companies. [...]
[...] In terms of our two companies, Nivert and Carriere, their market share is very low with less than and volumes far below those of their competitors. Unlike market leaders, they decided to focus entirely on canned vegetables with no diversification. More than half of their volumes are from the filling and they are not directed at all communities. It appears clearly on these representations of the market that both companies are in a difficult position and do not seem to have defined strategy. [...]
[...] The two parties are bound by a contract culture which certainly forced the supplier regarding the obligations of quality and also provides the dates of sowing and harvesting. If the packers do want to spread the harvest over time to facilitate their production, it is certainly a point that may be subject to negotiation. This shows the supplier bargaining power that is still limited especially if one adds to this the fact that relations between canner and cultivator are governed by an interprofessional structure.They set the trading rules and prices for fresh vegetables and then act as an arbitrator thus limiting the power of vegetable canners. [...]
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