Week 3 Case A: Coopers Brewery

Questions

1. Analyze the Australian brewing industry. What are its key driving forces?

To analyze the Australian brewing industry, the Porter’s Five Forces could be employed in this situation.

 Rivalry among existing organizations: according to the context in the case, the competition in the Australian brewing industry is relatively low as “transportation improvement, refrigeration improvements and changes to the Trade Practices Act resulted in continue consolidation”. Although there are two powerful internationally-operated competitors, accounting for up to 94% market share, Coopers Brewery becomes “No.3 in the industry” in virtue of its differentiation strategy. Therefore, Coopers Brewery, who has long been keeping his own uniqueness, could survive fairly well in this industry.

 Threat of the new entrants: “economies of scale and scope” also caused the huge scale of consolidation between 1890 and 1990, thus large investment in capacity becomes a cost disadvantage to the new entrants. As a first mover in this industry, Coopers Brewery has its own distribution channels and marketing team KWP!, so that in a circumstances without high threat of the new entrants.

 Threat of substitute products: this aspect of worry is relatively medium for beer industry, since there are many other kinds of drinks available on the market, such as soft drinks and wine that are produced internally or imported from other parts of the world. However, beer drinkers who are loyal to their preferred taste and brands would not easily transfer to other drinks, and beer would always be essential element in the recreational places.

 Bargaining power of buyers: this could also be rated as medium. Although beer drinkers would choose their own taste and brand when facing with the diversified beers, they are also price sensitive, that is, they may transfer to other brand if they can’t accept an unreasonable price.

 Bargaining power of suppliers: this could be relatively low for the brewers, since the materials used in the brewing process are all natural agricultural products which grow and harvest in a mass so that the brewers do not have to bother the source and price of these primary products.

In conclusion, the competition in Australian brewing industry could be medium and the key driving forces should be the taste, the brand reputation, the price of the beer and economies of scale of the brewing company.

2. What is Coopers’ business strategy?

It is quite obvious to conclude from the given case information that the Coopers Brewery applied a differentiation strategy in its operating in Australian brewing industry. A differentiator is committed to “supply a unique product or service at a cost lower than the price premium customers will pay”. Coopers Brewery adds