Ice Fili
Please provide an in depth five forces analysis to illustrate the competitive environment for Russia’s ice cream industry. How is it likely to evolve?
The competitive set of the ice cream industry is highly fragmented and very diverse. International brands such as Nestlé have through their size, position and also advertising expenses managed to capture market share. The local, much smaller producers on the other hand have the majority of the Russian population on their side. In addition their organizational structure and their modern equipment make them much more flexible and manageable at a lower cost which is an immense competitive advantage. As for the threat of new entrants, it is very high too. The barriers to entry are relatively low and the product ice cream is not difficult to produce, especially for companies which are operating in the storage and freezing segment. Therefore there is a constant threat of new players coming from other industries or suppliers which will put pressure on prices and costs. As for the suppliers, the environment is amongst them very competitive which gives is reassuring. Yet suppliers might due to the low entry barriers use their strategic advantage and enter the market themselves. Furthermore due to the constant changing of suppliers no long term relationship can be established between ice Filli and its supplier which would be preferred. As for the customers, a problem for the ice cream industry is that consumers face very low switching costs and that loyalty is almost nonexistent which makes it harder for the producers to establish themselves. Producers have to be proactive to keep their customers satisfied, also in terms of quality of the ice cream.
The treat of substitutes is very high too. Beer, soft drink and confectionary industries are highly popular. Many of them have in the meantime entered the ice cream market as well. Furthermore they have the advantage of being very well established already and of spending huge
The competitive set of the ice cream industry is highly fragmented and very diverse. International brands such as Nestlé have through their size, position and also advertising expenses managed to capture market share. The local, much smaller producers on the other hand have the majority of the Russian population on their side. In addition their organizational structure and their modern equipment make them much more flexible and manageable at a lower cost which is an immense competitive advantage. As for the threat of new entrants, it is very high too. The barriers to entry are relatively low and the product ice cream is not difficult to produce, especially for companies which are operating in the storage and freezing segment. Therefore there is a constant threat of new players coming from other industries or suppliers which will put pressure on prices and costs. As for the suppliers, the environment is amongst them very competitive which gives is reassuring. Yet suppliers might due to the low entry barriers use their strategic advantage and enter the market themselves. Furthermore due to the constant changing of suppliers no long term relationship can be established between ice Filli and its supplier which would be preferred. As for the customers, a problem for the ice cream industry is that consumers face very low switching costs and that loyalty is almost nonexistent which makes it harder for the producers to establish themselves. Producers have to be proactive to keep their customers satisfied, also in terms of quality of the ice cream.
The treat of substitutes is very high too. Beer, soft drink and confectionary industries are highly popular. Many of them have in the meantime entered the ice cream market as well. Furthermore they have the advantage of being very well established already and of spending huge