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Managing Strategy: PIE Analysis of the Cereal Industry

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Please refer to the attached overview for the instructions and the template:

Managerial Strategy: TASK 2 PROJECT

Conduct a PIE Analysis of the Cereal Industry
Henry was pleased with your analysis of the metal container industry and assigns you to work on a similar analysis for the cereal industry. Read the e-mail below to find out more about your project.
E-mail from Henry Clark on the Cereal Industry ***

Rationale

Government can have a powerful influence on an industry's economic profitability. Understanding the role of government will help you anticipate how external forces can affect an industry's ability to create and capture value.

Your Deliverable
Prepare an analysis of the cereal industry that contains the following:
? A PIE analysis that discusses the effect of various factors (including the six forces) on the cereal industry's ability to create and capture value. Limit your analysis of each factor to three to five sentences.
? A description (250 words or less) of how the combination of these factors affects the industry as a whole and your assessment of the industry's profit potential.
? A description (250 words or less) of how governmental regulation of slotting fees may affect the cereal industry. Assume the US Government has decided to ban the use of slotting fees. How will this decision affect the cereal industry? Be sure to address all components of the vertical chain in your response.

Download the template provided:

Task Two Template (attached as separate upload, this is what needs to be filled out)

Suggested Approach
Read the project materials and learning resources associated with this task.
Project materials:
? Cereal Industry Animation
? Cereal Industry Vertical Chain
? Cereal Industry Overview prepared by the American Association of Cereal Makers
? Interview with a Cereal Manufacturer
Learning resource:
? Three Pervasive Influences
Additional readings:
? Saloner et al, Strategic Management, pp. 119-47, 238-64.
? Porter, Competitive Advantage, pp. 33-61.

***E-mail from Henry Clark on the Cereal Industry

To: You, Analyst
From: Henry Clark
Subject: Cereal Industry

Again, good work on your analysis of the metal container industry.

One of the major competitors in the ready-to-eat cereal industry has retained us to do an industry analysis. So for your next project I'd like you to prepare an analysis on the cereal industry similar to the one you just completed on metal containers. In addition, the client is interested in understanding how potential governmental regulation of slotting fees may affect this industry, so be sure to include this information in your analysis.

Again, I will send you a few documents that may help you. The first is a vertical chain one of our junior analysts has prepared for the industry. I just read an online interview with an industry expert about the explosion in the ready-to-eat cereal market; I'll send that to you also. Finally, take a look at the overview of the cereal industry that we downloaded. I think these documents will be of use to you.

The Government is considering some potential changes to slotting regulations. Make sure you factor this into your analysis.

Thanks,

Henry

Instructions:

Use this template to complete your Task Two deliverable. Delete these instructions after completing your deliverable.

Prepare an analysis of the cereal industry that includes:
? A PIE analysis that discusses the effect of various factors (including the six forces) on the cereal industry's ability to create and capture value. Limit your analysis of each factor to three to five sentences.
? A description (250 words or less) of how the combination of these factors affects the industry as a whole and your assessment of the industry's profit potential.
? A description (250 words or less) of how governmental regulation of slotting fees may affect the cereal industry.
PIE Analysis for the Cereal Industry

Factors Affecting PIE Analysis

Value Creation Factors

1. Industry Demand
2. Changes in Technology

3. Availability of Inputs
4. Availability and Price of Substitutes
5. Availability and Price of Complements

Value Capture Factors
6. Degree of Rivalry
7. Barriers to Entry
8. Strength of Buyer Power
9. Strength of Supplier Power

Memo on Industry's Profit Potential

Memo on Governmental Regulation of Slotting Fees

Attachments
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Solution Summary

This discusses the strategy: PIE Analysis of the Cereal Industry

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Factors Affecting PIE Analysis

Value Creation Factors

1. Industry Demand The turnover of breakfast cereals was more than $8 billion and annually 1 million tons of cereals are sold. But there has been decline in the demand annually by 3% over the past five years. According to Datamonitor's 2002 report on breakfast cereals in the United States, sales of RTE cereals are expected to decline from $8.2 billion in 2001 to $7.2 billion in
2006. Thus this is indicating that people are shifting to the substitutes and there is a decline in demand.

2. Changes in Technology
This has helped the industry as its adapting the latest ecommerce technologies to make the operations more efficient. Moreover they are producing more organic products and
healthful line extensions of old favorites, which should appeal to health-conscious
Consumers. They are procuring raw material through ecommerce portals making its supply chain more efficient and thereby reducing the costs. . Thus E business has removed geographical and time restrictions for the organizations. It also helps in following:
? Recording and analyzing strategic management records: processing these strategic management records into industry trends reports, market share reports, mission statements, and portfolio models
? Use of all the above to implement and control the businesses.

Thus they are more connected and knowledge seeking to improve the processes, quality, technology and overall customer delight. Due to e business there is much more agility to improve and also to ...

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