Five forces framework is proposed by Michael Porter. It draws upon Industrial Organization economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. Attractiveness in this context refers to the overall industry profitability. An "unattractive" industry is one in which the combination of these five forces acts to drive down overall profitability. 1.
In current the main competitors of Tsingtao beer are Budweiser, YangJing, Blue Ribbon and China Resources Snow Breweries, etc. YanJing Beer is the biggest competitors to Tsingtao Beer, it has high brand image. After 1999, YangJing changed its strategy, annex more than 30 beer industries; it was the first chair in beer business in a period of time, it entered a period of expansion. China Resources Breweries was founded in 1994 and headquartered in Beijing. Its shareholders are China Resources Enterprise limited and SABMiller which is the world’s second largest beer business. Strong capital and specialized technical support it growing rapidly. In addition with some well-known foreign brands enter to Chinese market; the beer industry will become increasingly fierce competition. 2.
Potential entrants into the market
Potential entrants can bring new production capacity, new resource; however they also want to have a market share. This may occur that compete with the existing business and market share. Eventually it can lead to decrease the current profit in every beer industries. The threat of potential entrants into the market depends on two factors, which is an obstacle to the new entrants and the reactivity of the existing business. 3.
Threat of substitutes can affect the competition strategy of the existing business in various forms. The beer selling price and the improvement of profit potential is depending on substitutes, mainly from liquor, wine, beer tea and so on. As Chinese fondness for beer and the current price of beer in...
Please join StudyMode to read the full document