Topics: Marketing, Kiwifruit, Financial ratio Pages: 13 (4319 words) Published: April 16, 2014

Case Analysis-Zespri

Business Strategy
Dr. Jonathan Lee


1. Main issue
Zespri’s main issues are to maintain their leadership in the industry and to increase New Zealand kiwifruit exports to $3 billion by 2025. In order to reach the objective, in existing market, Zespri should increase per capita consumption through more focused marketing. They also need to find emerging markets, research on new varieties and improve the 12 months supply program. 2. Porter’s five forces

2.1 Degree of rivalry
The degree of rivalry is low. The four biggest kiwi fruit producing countries are China, Italy, New Zealand, and Chile. Despite of the higher production of China, it had become a net importer of fresh kiwifruit. From the exhibit 16, it demonstrates that New Zealand has the highest average net market returns and grower returns from 1999-2009, compared with Italy and Chile. According to those data, we can conclude that they cannot compete with New Zealand cause other countries do not have the management and financial support from the government as comprehensive as Zespri has. They are not able to produce the kiwi, which is high quality and high productivity like Zespri produced, even if they spend tons of years. Apart from that, Zespri spend over 6% of the revenues on promotion, not only in-store activities but also using mass media. The value of ‘brand New Zealand’ was recognized as pure and natural, and thus Zespri is a price setter rather than a price taker, therefore they can price higher than other brand and people would still like to choose Zespri. 2.2 Threat of substitutes

According to the possibility of substitute by other fruits, the rate is really high. There are multiple fruits people can easily choose from the supermarket. They have variety of nutrition people can get by digesting them. Even though we know that kiwi has more nutrition than other fruits have, we may still not choose kiwi due to its high price. Kiwi fruit is not necessary in consumers’ life. Maybe some people don't like the taste of the kiwi. The threat of substitutes is high. 2.3 Threat of new entrants

The threat of new entrants is low. It will take an amount of money to start that business. Firstly, I should emphasize Zespri has a strong brand. It is hard for new entrants to persuade customers to choose other brands. They must need much more money in advertising. Secondly, Zespri has the experience to produce high quality and high yield fruits and they got the patent protect. It is unrealistic for new entrants to achieve to that level and scale. Thirdly, Zespri has the government support by funding their research and development. Thus new entrants will not be threat for Zespri. 2.4 Supply power

The supply power is relatively high. In this case, the grower or the supplier own and control Zespri. About 82% of 2010 growers were Zespri shareholders. To avoid becoming a supply driven, Zespri helped the growers to make more profit. They answer the questions and share the information with growers, help them adopt the best technology and growing practices, and thus produce high quality and high tasting kiwi fruits, help them to acquire firsthand information from their customers by ‘grower tour’, and invite customers to visit New Zealand to deeply understand their kiwi fruits. Zespri and suppliers are highly relying on each other. 2.5 Customer power

Customer power is high. Firstly, the kiwi fruits production only occupies 1%of the total world fruit production. That means not a great number of people buying kiwi. They can buy other kinds of fruits instead of kiwi. Even though the kiwi produced by Zespri has a great deal of nutrition and great- tasting, the price is much higher than other fruits. They would have no advantages to compete in the market with other fruits. 2.6 Porter’s five forces conclusion

The new entrants and rivalry cannot compete with Zespri because Zespri is a...
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