Ice-Fili (Abridged) – Case Solution

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Ice-Fili (Abridged) Case Answers

Introduction – Ice-Fili

In 2002, Ice-Fili was Russia’s biggest ice cream producer. With the emergence of the Nestle brand, the company was threatened by this strong competitor.

This case study solution analyzes the company’s position relative to its competition.

1. Discuss the structural attractiveness of the Russian ice cream market using appropriate tools and frameworks to support your answer and discussion.

To assess the structural attractiveness of the Russian ice cream market, I have conducted Porter’s Five Force analysis.

Threat of New Entrants

A large number of local brands have started the production of ice cream in Russia, and these account for 30% of the market share. The barriers to entry into this market are low.

A new entrant doesn’t require a huge level of sophisticated machinery and equipment. The refrigeration equipment has a variety of uses, as it is also used for the storage of meat, chicken, and other food items.

The ice cream market grew from 100 companies in 1996 to 300 companies in 2000. This shows that the threat of new entrants in this industry is high, and Ice-Fili would be facing the same threat.

Threat of Substitutes

Products such as beer, soda, yogurts, chocolates, and other confectionery products have gained a lot of popularity in the Russian market. Customers prefer to consume these products as compared to ice cream.

The production of confectionaries, soft drinks, and beer has grown by 8%, 25%, and 23%, respectively, while ice cream production fell by 3.5%.

These changing consumer patterns, coupled with low switching costs, show that the threat of substitutes is high.

Bargaining Power of Buyers

The buyers of ice cream are the people of Russia. The manufacturers sell their products to the general population via distributors.

There is product differentiation in the market, and the switching costs for the buyers are very low. Therefore, the bargaining power of the buyers is moderate.

Bargaining Power of Suppliers

The ice cream industry, to which Ice-Fili belongs, needs suppliers for its raw materials and manufacturing equipment.

There is an abundance of raw material suppliers in the market, as per the industry experts. Therefore, the bargaining power of the suppliers is low in the industry.

The equipment suppliers are…