Bottled_Water_Industry

Assignment: Bottled Water Industry Analysis LaShanwda S Surles MGT 330 Instructor: Eboni Hill May 30, 2011 The industry in which I have an interest in would be the bottled water industry. In my research the bottled water industry was a great success in the beginning and still is to a certain extinct. Before the bottled water many of us were getting our water from the tap or faucet and drinking from glasses or cups, but now there is a variety of bottled water even some with a kick of flavor. According to Bottled Water Blues.com (2011), North America is growing forcefully in bottled water, and is the beverage industry’s fastest growing segment. Major companies like Coca-Cola, PepsiCo, Dr. Pepper Snapple Group, and Hansen Natural Corporation, along with the US operations of Cott and Nestle are North America’s dominant markets for bottled water today (First Research, 2011). Even though there maybe some positive of the bottled water industry there are some negative perceptions as well when it comes to the environment. In addition, this paper will discuss the impact of the General and Task environments in the bottle water industry with the use of different forces that help with keeping this industry operating, especially in areas of sales, satisfaction, threats and outside influences. It begins with the general environment which is defined as the force that can have profound effects on forces in the task environment, effects that may not be evident to managers (Jones & George, 2011). In the general environment the economic force is considered to be a big threat, and in the bottle industry there has been substantial economic growth in the United States, making it the largest market worldwide. Then there are sociocultural and demographic forces that forces managers with opportunity and threats in this industry due to the changes of the economy (Jones & George, 2011). By targeting different customer groups like those in fitness and those who drink it primarily because it is of convenience is one way this industry have been so successful. With there being so many different companies competing with one another having new entrants would be a minimal threat to the five dominates here in the North America: Coca-Cola, PepsiCo, Dr. Pepper Snapple Group and Hanson Corporation, and Nestle. According to First Research (2011), new entrants to an industry brings diversity from other markets, also a desire to gain market share with a capacity to pressure costs and prices for great profit. Just as PepsiCo did when they first entered into the distribution of soft-drinks and now into the bottled water industry with Aquafina Essentials, for Pepsi has really shaken up the competition (Jones & George, 2011). The bottled water industry has capital requirements that could reach as much as $100 million based on the sophistication of a plant, and with competition out there this could be fierce (First Research, 2011). Another force of the general and task environment would be the bargaining power of the suppliers and the buyer in the water bottle industry. With this industry being so concentrated it is highly competitive and in trivial demand for those suppliers, to where their bargaining power could be limited. Meaning, there many competitors today who have the capability to manufacture and package bottle water, while those who own springs can have a slight advantage for they can lease out the springs having full control. As for the bargaining power of the buyer this force seems to more powerful for bottled water is sold everywhere from the local supermarket to the largest retail store like Wal-Mart. Meaning that, they have room for negotiating prices so the shelves of the store could be stock and resold for business profit. Therefore, the buyers would be able to decide how many and which brands they would supply in their stores. An example of this, Coca-Cola and Pepsi they chose soft-drinks as the main selling product, but once they introduced the supply of bottled water in large quantities and discounts are given when large bulks are purchased. When it comes to the threat of substitutes in the water bottle industry this one is moderate for there are many viable alternatives today for bottle water from refilling your own bottle to water with flavor and juices or sodas. There is one fact I can say is that even though these alternates satisfy thirst the one advantage bottle water has is it conveys purity and health, and with tap water for the simple great taste. An example would be those flavored waters with enriching vitamins that is good for our health with obesity being such an issue today. I believe that many people would prefer this type of infused water rather than having just plain old tap water. In conclusion, over the next three years rivalry, bargaining power of buyers and suppliers, and threat of substitutes and entrants will definitely change as the high demand for bottle water increases. By targeting different customers in the concern of water safety imposes a great impact on the environment with new entrants being fierce competitors and having low entry barriers. Although, the overall growth rate of the water bottle industry is threatened by entry and power this makes them competitive forces for the industry. References Berger, A. (2008). Seeing is Believing: An Introduction to Visual Communication (3rd ed.). New York: McGraw-Hill Bottle Water Blues. (2011) Bottled Water facts. Retrieved May 25, 2011 from http://www.bottledwaterblues.com/bottled_water_facts.php First Research. (2011). Beverage Manufacturing and Bottling Industry Profile. Retrieved May 26, 2011 from http://www.firstresearch.com/Industry-Research/Beverage-Manufacture-and-Bottling.html