bisleri consolidated
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bisleri strategy analysisTRANSCRIPT
Group 6:
Lalit Singh RaoMaanasa MallelaManas MendirattaMehul Gahrana
BISLERI
Bisleri continues to innovate constantly,urged by the goals of the Aqua Green Revolution to provide every Indian easy access to purified drinking water and to support initiatives that rejuvenatethe Earth’s natural sources of pristine drinking water.
Bisleri began the Aqua Green Revolution with an ambitious dream in mind; that of an India in which every person, irrespective of geographical barriersor economic limitations, has uninterrupted access to scientifically purified and fortified drinking water
Mission Vision
PESTEL analysis of Bottled Water Industry
Political Favourable – Stable government and policies to support industrial growth Against – High Tax rates Economical Favourable – Rapid urbanization, increasing per capita income, growth of tourism, high CAGR of the industry Against – Low per capita consumption, shelf life Socio-cultural Favourable – urbanization, high spending, health awareness Technological Favourable – Improved purification and packaging techniques Environmental Favourable – PET bottles and recycling techniques Against – low water levels, plastic waste Legal Against – strict purity laws to follow
Conclusion from PESTEL analysis
There is a lot of untapped potential in the bottled water industry despite of the adversaries present due to improved standards of living, technological advancement and increased awareness in people towards health issues related to drinking water.
Porter’s Diamond Analysis Firm strategy - structure and rivalry Facing strict competition from organised big brands as well as unorganised local players. Demand conditions Increasing demand with growth around 22% CAGR Factor conditions Technological advances and resource availability makes it a strong condition Related and support industries Unorganised sector and low switching costs.
ConclusionAlthough support industry is still growing but due to increased demand and favourable factor conditions the industry is likely to grow at a faster rate.
PORTER’S FIVE FORCES ANALYSIS
Rivalry among Existing Firms (HIGH)
Concentration (High)Many firms - Perfect CompetitionCost Conditions (High)Price fluctuates between different players and offeringsProduct Differentiation (Low)Bottle Shape, LabelsMainly concentrated on PURITY
Threat of Substitutes (High)
Substitute Availability (High)Easy availability of substitutesPerfect Switching Cost (Low)High cost of purifiers for households and corporatesPerfect Replaceability (Low)Cannot be perfectly replaced by Imperfect Substitutes
Buyers switching costs (Low)No pecuniary cost; Placebo effectBuyers Price Sensitivity (High)Demands competitive prices, Ready to switch among the cluster
Bargaining power of Buyer (High)
Threat of New Entrants (Moderate)
Capital Costs and industry (Moderate)Moderate levels shall attract New entrantsEconomies of scale and distribution (Low)Existing players have achieved low cost production and distribution capabilitiesBrand Loyalty and Government regulations (Low)Entrants struggle to create brand loyalty for undifferentiated products.
Bargaining Power of Suppliers (Low)
Selected suppliers for superior intermediates (Low)Continuously increasing no. of suppliers. Significantly dependent on industryForward integration threats(Low)Suppliers cannot integrate forward to threaten industryWorkers/Contract employees (Low)Ample unskilled labor.is a significant advantage for the industry
Based on the Porter’s Five Forces Analysis, the following conclusion can be derived :
- The Entry barrier in the industry is high in the form of Moderate Capex
- To sustain the business is not easy. Taxes are high (15%) and Distribution system needs to be strong to be successful.
- Competition is cut-throat in the industry. Perfect competition exists and there is no loyalty towards a specific brand
- Perfect Substitution is unlikely in the short term. There are ample Imperfect substitutes though
- There is no exit barrier.
Key Success Factors for Bottled Water Industry
Distribution
Packaging
Key Success Factors
Strong distribution networkExploring new channelsCustomer perception
Shapes and sizeTechnological advancement
Labeling
PriceLow cost of production
Economies of scaleFirst mover advantage
Strategy
• Rural market penetration• Concentrating on volumes• Improve the visibility of Vedica and changing its target segment• Differentiation on packaging, price and distribution
Value chain
Raw Material
• Water• Plastic grain• Packaging
material
Treatment
• Water• Testing
Bottling
• Capping• Testing• Recycling
Distribution
• Route mapping
• 3 level distribution channel
Marketing and sales
• Key strength- Branding and segmentation
• Catchy advertisements
Raw Materials Treatment Bottling Distribution Marketing
and sales
Strategy– Space MatrixSpace Matrix
Internal Strategic Position External Strategic Position
Values -6 to -1 Competitive Advantage Values +1 to +6 Industry Attractiveness (Porter’s 5 Forces)
X Axis
-1Product Quality 3Barriers to Entry
-1Market Share 3
Growth Potential - Bargaining power of Buyer 3 Threat of Substitutes 1Bargaining Power of Suppliers 6
-1Brand & Image 5Aceess to Financing
-3Product Life Cycle 6Tech: Know how
Total X Axis Score 2.75
Values +6 to +1 Financial Strength Values -6 to -1 Environmental Stability
Y Axis 6
(Unlisted Company)1000cr Revenue by 2015
Therefore looking at secondary reports and market share
commanded we can make conclusion
-6Price of Competing goods
-2 Inflation Rates
-2Technology Changes
-5Competitive pressure
-6Demand Variability
Total Y Axis Score 1.8
Space Matrix