Porter's Five Forces

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Part A Task 1 1. What type of organization is Australian Beverages Limited? Family owned? Private? When it was founded? Founded by whom? Currently run by whom? 2. What industry, product segments/ markets does ABL operate in? nd 2 largest Core activities Product categories and segments Foreign or domestic ? Distribution channels Stages in the value chain 3. What is the current life-cycle position of the industry? p. 2.24 The Australian bottled water manufacturing industry is currently in a growth stage. Growth has been achieved due to the increase in per capita consumption of bottled water albeit from a relatively low base compared with other more established beverages. As consumers become more health conscious and change their drinking habits away from CSDs to healthier beverages, bottled water would increasingly become their drink of choice. The non-alcoholic beverage industry is at the growth stage of its life cycle. Consumption of nonalcoholic beverages in Australia increased from 179.7 litres per capita in 2005 to 228.5 litres per capita in 2009. Per capita consumption trends for all non-alcoholic beverages generally follows consumption patterns in the United States. On that basis, there are still significant opportunities for growth in all non-alcoholic beverages, including CSDs. Currently, Australian per capita consumption is 63 per cent of the US consumption level. 4. What have been the key issues affecting historical industry growth? What was their impact (high/medium/low)? (growth % analysis (high/medium/low) +remote environment analysis (+/-) P. 2.14

2004 Growth % of BW Revenue Growth % of NAB Revenue







13.58% 6.61%

7.61% 6.72%

8.08% 6.49%

12.15% 6.04%

11.25% 4.30%

11.09% 8.30%

10.63% 6.41%

2004 Growth % of BW Consu per capita














NAB Consu litres per capita Growth % of NAB Coms per capita




Using the data in table 3 and table 4, growth in the BW industry has been medium to high over the period from 2004 to 2009. While BW consumption per capita has grown by an average of 6.86% (medium growth), the BW revenue has grown by an average of 10.63% (high growth). This growth has been derived from increases in total consumption, helped along by strong customer acceptance of new products launched over the past five years. The increase in the total Australian population together with an increase in per capita consumption of bottled water has contributed to this historical growth.

5. What are the key issues that will affect future industry growth? What is their likely impact and the overall assessment of the industry’s future growth? 2010 P Growth % of BW Revenue Growth % of NAB Revenue 11.94% 5.50% 2011 P 13.07% 5.40% 2012 P 13.00% 5.30% 2013 P 11.98% 5.20% 2014 P 9.94% 5.00% 2015 P 7.09% 4.90% Average

11.17% 5.22%

2010 P Growth % of BW Coms per capita 5.49%

2011 P 5.21%

2012 P 5.54%

2013 P 5.63%

2014 P 5.51%

2015 P 5.05%



6. What have been the key issues affecting historical profitability? What was their impact? (Porter’s five forces) Turnover/production Gross profit %= gross profit / turnover Change in GP% EBIT % = EBIT/turnover Gross margin 2005 Gross margin % Net margin % 31.30% 16.60% 2006 31.90% 16.90% 2007 31.10% 16.50% 2008 31.50% 16.70% 2009 30.70% 16.30%

Bottled water has the highest profit margins of all non-alcoholic ready-to-drink beverages. This is due in part to the strong growth that the industry has achieved. Manufacturers are also able to sell all production in a year. Industry rivalry is relatively low, particularly as the major competitors are focused on supplying through different distribution channels.

Purchases include water supplies, labels and other packaging materials such as glass and plastic resin bottles and closures which are...
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