Why has rte cereal been such a profitable business

Christian missionaries arrivedprobably from Gaul. Irish settlements began in the west of Britain. Colonisation and raids on Britain influenced Irish culture. Romanisation began in the fifth century, derived from the Romano-British culture of western Britain.

Why has rte cereal been such a profitable business

Why has RTE cereal been such a profitable business?

Why has rte cereal been such a profitable business

Efficient markets typically entice new entrants when the returns are attractive. These returns are gradually eroded with increased price competition as a result of the entry.

The RTE market has defied this market theory. There are two main reasons for this. One, any market that yields a high rate of return but has no new entrants must have significant barriers to entry.

The RTE cereal market has significant entry barriers.

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Two, barriers to entry does not necessarily mean high profits for all incumbents in an oligopoly. However, in the RTE cereal, it has.

This is attributable to the fact that players in the oligopoly have demonstrated profit maximizing behavior and have successfully avoided market share maximization motivated price wars. Barriers to entry are discussed below. We will write a custom essay sample on Why has RTE cereal been such a profitable business?

This approach deters new entrants because no market niches are left out for new providers to exploit. Also, the given market share of any one brand is low in a market which has such a large number of brands.

This would typically not cover the costs associated with initial capital investment required for the manufacturing facilities.

Incumbents are spending million annually on advertising and promotions. The intent is to foster brand loyalty by differentiating similar cereals supplied by competitors. Preferential Privileges in Retail Channel: Incumbents have relationships with the retailers and get the most desirable shelf space to maximize chances of high sales.

Shelf space is typically allocated based on historical sales volume. This makes it difficult for new entrants to break into the market, as it is impossible for them to get prime shelf space.

This is certainly a barrier to entry but not a very strong one as many large companies would have access to this capital private or from lending institutions and would be willing to make the investment, given the high profitability potential.

The barriers to entry helped maintain the oligopoly. However, a key factor contributing to high profitability is the implicit collusion amongst members of the oligopoly. The industry has historically demonstrated a pattern in which Kellogg raises prices and the rest of the industry follows suit.

What changes have led to the current industry crisis? Switching cost and trade promotions: Competitors have made heavy use of coupons based trade promotions. This has reduced switching cost for customers.Most Common Text: Click on the icon to return to heartoftexashop.com and to enjoy and benefit.

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Study 5 The Ready-to-Eat Breakfast Cereal Industry in flashcards from april g. on StudyBlue. Why has RTE cereal been such a profitable business? High entry barriers.

econ. of scale (min. eff.

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= 75m lbs/yr/plant) recover lost business; reduce internal cost of coupons; take share back from private labels (not big 3 competitors). News and opinion from The Times & The Sunday Times.

The RTE Cereal Industry in Case Analysis Competitive Strategy Presented by: Raghav Keshav Why has RTE cereal been such a profitable business? The RTE cereal market is a classic oligopoly with the four dominant players controlling 85% of the market.

Why has RTE cereal been such a profitable business? The RTE cereal market is a classic oligopoly with the four dominant players controlling 85% of the market. The return on sales earned by the incumbents in this market (18%) is significantly higher compared to rest of the food industry (5%)%(29).

Why has RTE cereal been such a profitable business? Essay. The RTE cereal market is a classic oligopoly with the four dominant players controlling 85% of the market - Why has RTE cereal been such a profitable business?Essay introduction.

The return on sales earned by the incumbents in this market (18%) is significantly higher compared to rest of the food industry (5%).

Ready to eat breakfast cereal industry in by on Prezi