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Chapter 15 The Global Soft Drink Industry: A Case Study in Managerial Economics

Chapter 15 The Global Soft Drink Industry: A Case Study in Managerial Economics. Outline. Case study: food and beverage Industry background Industry analysis Managerial decision making in action. Learning Objectives. Describe the market structure of the food and beverage industry

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Chapter 15 The Global Soft Drink Industry: A Case Study in Managerial Economics

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  1. Chapter 15The Global Soft Drink Industry: A Case Study in Managerial Economics

  2. Outline • Case study: food and beverage • Industry background • Industry analysis • Managerial decision making in action

  3. Learning Objectives • Describe the market structure of the food and beverage industry • Cite the main trends affecting this industry • Describe the issues facing the industry • Explain how strategy should be incorporated for Global Foods

  4. Introduction • Review (from Chapter 1) questions that managers must answer: • What are the economic conditions in our particular market? • Should our firm be in this business? • If so, at what price and output levels? • How can we maintain a competitive advantage over other firms? • What are the risks involved?

  5. Economic Overview of the Industry Factors and Trends Influencing Demand • Shift in Demographics: age by demographic group • Integration of Markets: globalization • Going Back to Basics: Health, wellness, convenience, and premium status • Demand from Emerging Markets

  6. Economic Overview of the Industry Factors and Trends Influencing Supply • Mass Customization • Private Label • Rising Cost of Raw Materials • Asset--Light Business Model--businesses must adapt faster

  7. Economic Overview of the Industry • New Products: Energy Drinks • Health concerns • Differentiation • Ingredients • Packaging

  8. Managerial Decision Making in Action • SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) • What are the strengths of Global Foods? • Market share position? • Brand awareness? • Potential profit margins? • Other?

  9. Managerial Decision Making in Action • SWOT analysis • What are the weaknesses of Global Foods? • Demographic changes? • Brand recognition? • Declining gross profit margin due to the rise in input costs. • Others?

  10. Managerial Decision Making in Action • SWOT analysis • What are the opportunities for Global Foods? • Room for new entrants in this market? • Growing consumer interest in wellness? • International demand? • Others?

  11. Managerial Decision Making in Action • SWOT analysis • What are the threats to Global Foods? • Entrenched competition? • Potential new entrants? • Higher costs? • Others?

  12. Managerial Decision Making in Action • Goal: • Profitable growth • Strategies and tactics: • Differentiation strategy? • How can Porter’s model be used?

  13. Summary • The principles of managerial economics are integral to the decision making process within business. • Managerial economics provides information on consumers, prices, costs, quantities, competition and business strategy. • A major contribution of managerial economics is the estimation of risk.

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