Strategic Case - Sustainability of a Mineral Water Company's Strategic Advantage
Essay by hichamMBA • November 15, 2015 • Essay • 2,027 Words (9 Pages) • 1,478 Views
Essay Preview: Strategic Case - Sustainability of a Mineral Water Company's Strategic Advantage
INTRODUCTION
This paper is about assessing the sustainability of a mineral water company's strategic advantages against the rise of local and especially international competition.
The company analyzed, called "Les Eaux Minérales d'Oulmes" (EMO), is the biggest one in the market, with three main different products:
Product | Nature | Market share | Observations |
Sidi Ali | Mineral water (natural spring) | 50% | |
Oulmes | Natural Gazefied water (spring) | 90% | Slow market growth |
Bahia | Distilled bottled water | 40% | Lunched in 2001, fast growing market |
The company employs some 1500 persons and achieved in 2007 a 520 MDH[1] turnover.
1 - The Environment
1.1 The Macro environment
As the international and national economic conditions changed, as so as the political conditions and the customers' social positions, way of life and behaviors, the matrix below tries to summarize the influence that all this macro conditions changes can have on the EMO Company and globally on the sector, and to identify the key macro-environmental drivers.
Environmental drivers | Impact +5, -5 (A) | Probability of factor (B) | Potential as opportunity or threat (AxB) |
Economic GDP average growth of 3%; Average income is increasing | 2 | 3 | 6 |
Social Drinking networks' water image was damaged in last years by bad quality in many cities, mid class is definitively moving to distilled or mineral water[2] | 3 | 4 | 12 |
Technological Improvement in drinking network's water quality | -2 | 1 | -2 |
Ecological Plastic bottles can damage the image of bottled water | -1 | 1 | -1 |
Media Newspapers played a very important role in the events related below (2) and were frantically alongside with the population | 3 | 2 | 6 |
Political A decision to increase the prices of the water can have positive effect. But more likely a decision to increase the energy prices can have bad effects on the price of the bottled water. | 1 | 2 | 2 |
Legal The permits to sell bottled water are difficult to obtain and need long breath investors Regulations can get harder or softer | - | - | |
Ethical | - | - |
It appears at the end of this ESTEMPLE analysis that the Economic, Social and Media factors are the key macro-environmental drivers for the bottled water activity, but they appear to have a positive impact now and in a possible future.
The mid and mid low class seems to move significantly to use more the bottled water instead of the distributed water, due to the noticed and widely covered bad quality distributed water in some cities and to global growth of their income. This could be influenced by the global rise of the foods prices, but people will more likely keep their habit of drinking bottled water if they get this habit. Besides they can prefer distilled water to mineral water because of the prices gap.
1.2 The industry terrain
Historically, the bottled water market in Morocco was a flat one with unnoticeable growth and with only two mineral water products sharing the market between them :
Sidi Ali (EMO) | Sidi Harazem (SOTHERMA) | Imported products | |
Market share % | 60 | 30 | 10 |
The two companies obtained concessions from the government to exploit this two mineral water springs in the early eighties against roughly 5% of their annual turnover.
From the year 2002, regulations changed and it becomes relatively easier[3] to obtain those concessions from the Government agencies.
So, as the market was expanding too (a sustainable 6% a year), investors were more attracted by the bottled water business and in 2005 and 2006, new comers entered the mineral water market:
Product | Company | Year of entry | Observations |
Aïn Saïss | SOTHERMA | 2005 | Same owner of Sidi Harazem – a product in partnership with Danone Group |
Aïn Soltane | Ynna Holding | 2006 | Ynna (Chaâbi group) owns many investments in real estate cement, ceramique, steel industries, supermarkets (aswak essalam)… |
And as the market is still expanding, and the actual consumption of bottled water of 7liters/person/year is still very low compared to other countries (Tunisia : 11, France : 120 l/p/y), other new comers are this days trying to enter the market and one of them had already its selling permit for mineral water (Aïn Ben Smim).
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