Industry and Competitive Analysis
The Seven Key Questions to ask concerning the external environment are:
I. What are the chief economic characteristics of the industry?
a. Market value: total revenues of $15.6 billion in 2006 (8.8% growth
b. Market value growth rate: CAGR (compound annual growth rate) of
8.1% for the period spanning 2002-2006
c. Market volume: 31.4 billion liters in 2006 (9.3% growth from 2005)
d. Market volume growth rate: CAGR of 8.6% for the period spanning
e. Market segmentation:
1. Still unflavored – 89.6%
2. Sparkling unflavored – 7.2%
3. Sparkling flavored – 2.7%
4. Still unflavored - .6%
f. Numbers and sizes of buyers and sellers:
g. Exit barrier:
h. Entry barrier:
i. Pace of technology:
j. Is product standard or differentiated: Bottled water is differentiated
somewhat by its composition and provenance, but also benefits from
investment in branding.
II. What is causing the industry to change? (Driving forces)
III. What competitive forces are at work and how strong are they?
a. Buyers: retailers
b. Suppliers: water utilities, landowners,
c. Substitute Products: Carbonated (sugared) Soft Drinks, Tap Water,
d. Potential New Entrants:
e. Rival Competitors: Overall rivalry is moderate, with healthy revenue
growth weakening the competitive rivalry between players; however
factors such as low switching costs and high storage costs tend to
IV. Which companies are in the strongest/weakest positions and why?
V. Who will likely make what competitive moves next?
VI. What key factors will determine competitive success or failure?
VII. How attractive is the industry and how good are the prospects for
above average profitability?
Top 10 firms:
o Nestle S.A.– 30.5% share of the US market’s volume
o PepsiCo , Inc.- 13.80% share of the US market’s volume
o The Coca-Cola Company – 11.9% share of the US market’s volume
o Perrier Group
o Suntory Water Group
o McKesson Corp
Most notable industry trends (short paragraph)