Using the case study in the Crafting and Executing Strategy

Using the case study in the Crafting and Executing Strategy: The Quest for Competitive Advantage 21st Edition book.

- What is competition like in the craft beer industry? Which of the five competitive forces is strongest? Which is weakest? What competitive forces seem to have the greatest effect on industry attractiveness and the potential profitability of new entrants? - What key factors may determine the success of a start-up craft brewery?

Solution

The Craft beer industry was one of the most growing industry in the beer market and we have observed it growing to almost 18% in 2014, the industry is still existing and growing but the pace of its growth has come down to what it was a couple of years back. Today the craft beer industry is almost 20% of the total beer industry and there is no way we can deny the existence. Initially the industry had less players therefore doing business was easy and the players who existed were all small players but gradually as it was identified as a easy way to do business many big players came forward and through mergers and acquisitions the challenge increased a lot. The situation is a bit difficult from 2015 and many organizations have experienced loss and it was understood that mere producing quality beer will not do because of the high competition, therefore organizations have to look at the marketing aspect too which will give them a proper competitive advantage over its competitors.

The five competitive forces that we observe here are Intensity of existing rivalry in the industry, Threat of substitutes, Threat of new competitors, Bargaining power of suppliers, bargaining power of customers. Out of the five the threat of new competition is the strongest because the industry is already experiencing high competition, therefore no additional competition is expected. The threat of substitutes is the weakest because in this industry there is very less chance of substituting an organization.

The industry is attractive that is very much clear from the increased number of industries in the market and as because the organizations have displayed profit to quite some extent, the big players have got interested in the industry. The New entrants initially have earned profit because consumers have tries new products but at present the situation is no more dynamic, therefore the competitive forces like intensity of existent rivalries, bargaining power of suppliers which helped the organization initially will not be effective at present.

At present, the success of a start up craft brewery will involve various factors because the industry is very competitive, therefore organization has to have competitive advantage over its competitors and also the idea has to be unique because if the organization is doing the same thing like others then there will be no success and in order to do that the marketing strategy has to be unique in terms of the business.