Barriers to Entry and Competitive Force Analysis

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I.INTRODUCTION

Company Vision

To have a Lamoiyan product in every home.

Company Mission

Improve the quality of life by bringing essential products within the reach of the common people.

Corporate Values

Pursuit of Excellence
Doing things better than before and better than competitors.

Respect for the Individual
Values individuality by treating each other with fairness.

Social Responsibility
Making our presence a blessing to society.

Teamwork
Reaching collectively goals that we cannot reach separately.

Integrity
Doing things right

Company Background

In late 1970’s Cecilio Kwok Pedro’s Aluminum Container Incorporated became the major supplier of alluminum collapsible toothpaste tubes to Colgate-Palmolive, Procter and Gamble, and Philippine Refining Company (Unilever). However, in 1985, these companies started using plastic laminated tubes. Dr. Pedro closed his company but was able to realize that his equipments can still be put to good use. Two years later (1988), Dr. Pedro opened the doors to Lamoiyan. That time, the toothpaste industry was dominated by multinational companies namely Colgate-Palmolive and Unilever.

Lamoiyan’s strategy was to target the weak point of these companies which is price. The company did not choose to compete head-on with Colgate-Palmolive and Unilever, hence it did a niche strategy. Dr. Pedro was able to develop multi-flavoured toothpaste for children. The company also introduced Hapee Gold for consumers in their 40s and 50s. Red and Green Sparkling Gel was developed to target the teenagers.

With perseverance and effective advertising, and by selling his product at a price 30% lower than the leading brands, Dr. Pedro succeeded in making Hapee the No. 3 toothpaste brand in the country.

The company engaged itself in community outreach sponsoring schools and sports teams as a way of giving back to the community. Dr. Pedro also employed many hearing-impaired graduates of the school founded by the Deaf Evangelistic Allience Foundation Inc. (DEAF). He know that these community efforts made it harder for the multinationals to attack his company aggressively.

With the entry of Zest-O Corporation’s BEAM toothpaste which is priced cheaper that Hapee, Lamoiyan decided to introduce Kutitap as the new, lowest priced toothpaste available. While Kutitap had achieved only 1.1% market share by 2002, the new product was growing rapidly and as a consequence, BEAM’s market share had fallen to 6.6% in 2002.

The company also diversified its product line to include Dazz Dishwashing Paste, Dazz Dishwashing Liquid, Dazz All-Purpose Kitchen Cleaner, Tenderly fabric softener, and Fresher feminine wash.

In November of 2004, Lamoiyan has earmarked P100 million to expand its business and establish presence in neighboring countries such as Vietnam, China, and Indonesia.
II.Analysis of Macroenvironment

Political

The political system contained an executive, legislative, and judicial branch and functioned as a democratic state under President Macapagal-Arroyo. Ms. Macapagal Arroyo took office in January 2011 after Former President Joseph Estrada was impeached on charges of nepotism and corruption. The transition from Estrada, who was considered “president of the poor,” to Macapagal-Arroyo, who desired to strengthen competition and liberalize trade, unleashed considerable political uncertainty and a recession threat in late 2000 but, by 2002, the instability had mostly subsided.

Economic

The 1997 Asian financial crisis, the political instability, and the 2001 global economic downswing all adversely affected the Philippine economy, however growth in recent years suggested a modest recovery. The 2002 real GDP reached US$77.1 billion, reflecting an 8% increase from 2001, and export revenues in 2000 totaled US$35 billion, more than four times the amount in 1990. In 2002, however, the Philippines fell 13 places to 61st out of 80 countries in the World...
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