Finally, the company should focus its marketing and advertising towards justifying its slightly higher price point. It is known that there are increasing concerns in China about food safety, therefore by marketing that it is an industry leader in safe packaging; customers may see the value in the premium pricing. By conclusion, f acing cost pressures from Greatview and the Chinese market while being expected to continuously provide high-quality and safe products poses a difficult challenge to the CEO of Tetra Pak China. Fortunately, a focused differentiation strategy that encompasses superior quality, efficiency, innovation and customer responsiveness is the best course of action. It is extremely risky and difficult for the firm to completely switch towards a low-cost strategy, therefore it should simply focus its efforts towards differentiation. Emphasizing innovation through continuous research and development, becoming a more respectful and positive contributor in the market, and creating a marketing strategy focused on a rebranded image are all ways that Tetra Pak could deal with the challenges presented and increase its market share from the current level of 70.2%. Should the China division of this company follow the recommendations above, it will be capable of reaching the value creation frontier (refer to Figure 1.a in Appendix) and strengthen the building blocks of its competitive advantage for future success.
TETRA PAK VERSUS GREATVIEW PAPER 5 Appendix Figure 1.a) Porter’s Five Forces Analysis Figure 1. b) Threat of New Entry High threat; competitors have lower cost structure and are able to penetrate the market by offering very similar products and services Bargaining Power of Suppliers Weak/Low; products offered by Tetra Pak have a number of substitutes and products are not vital to customers Bargaining Power of Customers High; buyers have many options in terms of food packaging companies and anti-trust laws and IP laws are weak in China Rivalry Among Existing Competitors - High risk; ongoing competitive struggle among companies to gain market share – evident through law suits and fluctuating market share Threat of Substitutes High; creates a threat because the variety of substitutes limits the price that Tetra Pak can charge, increasing the need for differentiation
TETRA PAK VERSUS GREATVIEW PAPER 6
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