Reasons why titanium dioxide is a commodity. There are many reasons and methods, why the titanium dioxide market is a commodity, in first place, the competitors in the market take actions to increase its share. • Economies of scale: This strategy is suitable for markets where value does not come from product differentiation, but from reduced costs, so there is a certain kind of profit. • Similar process: All competitors have a similar process, and it is easy to implement this process without delaying each other. In conclusion, It is a commodity because, first of all, it is used for paint, paper and plastic. Second, because its market value does not come from product differentiation, but from cost reduction (economies of scale), and finally because all competitors have similar processes and they are simple to produce. 

Du Pont’s competitive advantage with titanium dioxide is based on….This is based on the process they use. Instead of using sulfates to produce components, they use chlorides. These materials make the process unique and reduce environmental waste. In addition, the process allows for lower operating and manufacturing costs compared to competitors. It was a small advantage at the beginning, until they enacted a law to protect the environment, which increased this advantage. 

Which two environmental factors increased DU Pont’s competitive advantage with titanium dioxide? Two environmental factors are the less impact of the use of chloride on pollution, and the availability of ilmenite, which is the key raw material for the use of chloride. This accessibility allows companies to monopolize resources and use this process earlier than other competitors. It also proved to be the best way because it provided them with a lot of income when the law was enacted in 1970 .

The bargaining power of customers was… (high/low) …The number of customers in this market continues to increase, and there are no alternative products available to transform consumer needs into other solutions. Before 1970, they could acquire from several manufacturers and provide them with some leverage, which was described as a 3% price fluctuation. 

Explain why cola concentrate producers make a lot more money than bottlers.Cola and Pepsi where the ones expressing the cost and price. This is often much obliged to the gigantic bargaining control that the two concentrate producers had over the bottlers. Whereas the primary one had the secret formula for the drink, they were the two players with a lot of market shares and advertise offers, they stablished long term relations with their makers which they had selectiveness on their supply of bottles, but they had to acknowledge the costs stablished by the other two concentrate producers: Coca cola, in its case they stablished the cost to purchase their item fair with the shift of the cost of the sugar as a differential. On best of it, the bottlers had to overcome diverse costs which diminished their margins, like dispersion to retail dealers

Porter’s analysis (Coca Cola):Substitute Items: There are right now substitute items, within the past, these items were less prevalent, but within the real page these things are developing. Customers: There are a parcel of clients, companies can set costs, and a key calculate is that everybody needs cola products on their establishment. Competitors: There are a number of competitors within the advertise, meaning by that, that a company can develop without having to battle against other companies. Suppliers: There are a parcel, they take after enlightening of the concentrated makers, but they have more control than other parts since of the information of their mystery formula

Use the concept of gross margin to explain why concentrated producers in the cola industry and firms in the pharmaceutical industry make so much money. The gross margin is the separation of the earnings and the costs of the goods sold divided by those earnings from the goods sold. In both businesses the gross margins where higher than 70 %. Meaning that each dollar of deals they made, 0,3 was for costs related to that particular deal and the other 0,7 dollars where for the company to utilize. That cleared out the company with a part of adaptability in arrange to stablish prices, diminish indeed margins on the off chance that a war was to be taken and more advantage points. That sum of control permitted the companies to create a parcel of money.

Explain why the express mail industry was attractive with a gross margin of 5 % on sales. The mail industry was attractive because of the nature of the industry. Its nature was that they secured a need which is required until the end of time. On beat of that, the case is displayed that the request for the mailing industry was expanding, in portion much obliged to the e-commerce commerce use. The competition between competitors was low, as each one of the specialists had their reasonable share of the showcase with their claim separation characteristics that permitted for the industry to have no cost and price wars. This increment in offers, and the product of the industry which was adjust much appreciated to the exclusion of price wars between the diverse major specialists leads to an attractive industry. The inverse circumstance is what happened in reality as rivalries raised and wars drop the costs making companies like Airborne to take off the industry. 

Explain how Airborne Express survived the industry dominated by Federal Express and UPS. The key factor for Airbone Express survival was their center on morning delivery as well as their trade show of delivering for the most part low weight items with low costs and prices. This gave the company more adaptability than its competitors and more space or volume for their shipments, permitting the company to compete through volume and timeline, instead of margins. At final, the property of the air terminals by the company permitted Airborne to diminish costs as well as culminate the stack handle and capacity to stack. 

Explain why there is no rivalry in the motorcycle industry. The motorcycle industry was separated between subgroups which were ruled by diverse rules. Within the Ducati industry, as they were heading more for a subgroup of sports bikes, they were competing through advancement, not pricing. The industry wasn’t a commodity, insted a competition on the development and innovation. That makes a rivalry which lead to separation of groups within the industry as well as division of clients within the industry. The clients of Ducati were not the same ones that Harley’s had. Moreover, none of the players, were competing between them as they had their claim “niche” with loyal clients. So, in arrange for the rivalies to seem, an entrance in one of these subgroups by a part of a diverse subgroup must be made, at that point a competition in that showcase with its competition will be started. One clear case is what it might have happen in the case that Ducati entered the Harley showcase by planning a new motorbike adapted to the products of Harley. 

Use the motorcycle industry as an example of the two defining characteristics of a niche market. In first place, the niche market features a high disposition to reward as the elements adjust to its attributes, expanding the cash clients would be willing to pay in such a fit arrangement. That’s self-evident within the motorbike company as the niche market of the companies that appear in the case had the most elevated prices. In sedond place, a niche market is low-priced in numbers, something which clearly can be seen on the number of deals in those markets compared to other product industries. In third and last place, the items target a particular buyer with particular characteristics which have clearly expressed their inclinations and what they are trying to find. For example in the case of the motorbikes made by Ducati, bikes where quick  and inventive, in search of quick riders. In case we compare it with the cola industry, their focusing on was completely the inverse, opening their item to everybody, without showcasing a particular group or way of life. In conclusion, Ducati and Harley had faithful clients. A niche market is little in numbers but loyal in those who are clients. Much appreciated to that, the variance of clients from Ducati to other companies was troublesome. 

Explain why drugs pipeline development is so critical for pharmaceutical firms. Pharmaceutical firms pick up property from modern drugs which are protected and patented, there is permit for the company to stablish a price which gives them a big margin. Companies have a proportion of victory on the advancement of the drugs closer to 0% than to 10 %, as well as expanding a part of the assets that a company has (near to 800 M is expressed on the case for the improvement of a modern medicate). In case it wasn’t sufficient the huge time that it takes for the company to dispatch a product, as well as the promotion. When that medicament is launched and the patent is ended, the competitors duplicate that medicament making the costs and prices drop nearly to costs levels. In conclusion, the way for a pharmaceutical firm to outlive within the industry is by taking an colossal investment, with the chance that it takes, so that a medicine is created, and a high margin can be acquired, because it is incomprehensible for the company to get margin from a non-patented medicine

If we cannot monitor the evolution of selling prices, how can we conclude that a given industry is a cartel. We will conclude a given industry could be a cartel through the offers of the market or the activities that the company is surrounded by. A cartel is an illicit way of changing the rules of capitalism through agreements between companies. Those companies stablish approaches which are going within the same direction and advantage all the individuals of those agreementsdriving to a non competition showcase where the client is tricked and needs to pay the comes of the agreement. So, on the off chance that we cannot predict the advancement of prices, we’ll be able to see if  the case of an industry could be a cartel thanks to the approaches that the company is undertaking. For example, in case no activity is done to compete against the competitors of the industry, that will signify there’s a case of an agreement. In conclusion, the activities of the diverse competitors in other areas like amounts, commercial terms, market-sharing clients, market-sharing of geological regions, as well as the efficient elimination of competitors, can be a side effect of a cartel approach. 

Explain how Microsoft and Sony could break from the Prisoners Dilemma of 299 $.Both companies need to coordinate through believe and trust. That does not mean that they need to reach an understanding, as that would be a cartel and it is illicit. Instead, what they must do, is to believe the other competitor that it’ll not decrease the prices, as well as they will not decrease it either, always in terms of confidence and believe. It may be difficult and troublesome that happens and ordinarily the price will drop, continuously as a response over their competitors activities. It is likely that both companies will be influenced negatively with the lower of the costs and prices, as share of the sell will stay stable but margins will lower down. As only solution we have to construct a believe environment where no prices and costs are lowered and no aspiration to annihilate the other competitor is runned after. 

Porter analysis (Pharmaceutical)

Power of suppliers: The bargaining power of suppliers in this market is low. Pharmaceutical products require various types of organic chemicals “commodities” and since pharma is a well-established industry, it has led to a number of chemical suppliers, limiting their power to influence price through bargaining. Therefore, instead of buying chemicals at a high cost, pharma companies usually switch from one company to another. Since most raw materials are easily available and suppliers are numerous, where one can easily replace the other, bargaining power is low. (no loyalty neither cost when switching because are commodities).

Power of Buyers: They have restricted power because all prices are set, and the buyers need to adapt to them. Drugs are needed to survive and cure all type of illness. There is no brand identity, buyers buy what they need without thinking if it is Pfizer, Bayer, or Novartis. In the end, consumers do not have any bargaining power. Hospitals and other health facilities are examples of buyers. Public and private hospitals are both groups that have a lot of bargaining power.

Barriers to entry: There are a lot of barriers to entry that’s why we need a lot of money to develop new drugs, to create brand names, to access distribution channels, to manufacture drugs, etc. We can set up a small lab but not a company with the ability to compete in this market with such players. Patents local restrictions of the governments, the governments are supportive for entry, but they apply price regulations. The barriers to entry are high, especially because they require a big investment.

Threat of substitutes: The availability of substitute products in the pharma industry is a great advantage. When a patent expires, many substitutes appear since everyone can produce, so every big pharmaceutical company is a threat and customers can easily find a substitute medicine in terms of generic drugs.

Industry competition: big companies have already done research on existing patented drugs. The biggest enemy in the industry is time because you must try to gain back all the research expensesco so you can have the lead on the next drug.

What is the biggest problem of the Coca Cola industry in 2010?  The biggest problem was that the consumption of carbonated soft drinks was decreasing, and all the other types of drinks were growing or maintaining the same consumption. We can see that by looking at the shares of total beverage, the consumption of carbonated soft drinks decreased by 4% in 10 years, 2000 – 29%; 2009 – 25,2%, because of the concern of sugar in carbonated soft drinks, due to CSDs being the leading source of obesity-causing sugars in the American diet.

Is the Pharmaceutical an attractive industry? Yes, it is one of the most attractive and competitive industries in the country, and also in the world, especially after the covid-19 sanitary crisis. There are many players fighting for the same pie and also many trying to enter the industry. The rivalry in the industry can be measured from the fact that the top player in the country has only 6% market share, and the top five players together have about 18% market share.

Health is always going to be an issue, and with the current growth rate of the population, it is going to be even more necessary to fight diseases and protect human health, which means that the pharmaceutical industry will keep growing, and keep being attractive. Also, after the covid-19 crisis, health is now the center of attention, and many industries are adapting their activities, products, services, and internal processes to improve health. 

Key success factors (KSF) (Pharmaceutical case): Pfizer is such an example. They have a lot of drugs in the market and thus, a lot of solutions for every case. The key success factor in this industry is to have a large portfolio of drugs in the market and many of them to be under development in all phases (to replace the drugs that are up to expire), such as Pfizer has.

Was the US titanium dioxide industry in 1971 attractive? Why? The industry was attractive because players are making a lot of money but there is not much equity in the market share as there are two big players that get more than 60% of the total market (Du Pont & NL Industries).

What are the KSF in the US titanium dioxide industry in 1971? Because of taxes and distribution charges, foreign producers’ manufacturing costs remained higher than their American counterparts. The extraction of rutile from beach sand had been restricted in Australia. Rutile prices increased by more than 70% because of this. Plants using the sulfate-based process were required to make huge capital investments to meet the increased environmental protection regulations over the same time.

Is the US titanium dioxide industry in 1971 a cartel? Why? Yes, because the industry is an oligopoly, since there are few but larger players (especially Du Pont & NL Industries), the products are a commodity and prices are similar. The industry complies with every condition to be a cartel. 

The bargaining power of suppliers was… (high/low)? The bargaining power of the suppliers was very high, a great example is a rise in the price of sand in the late 70′. At that moment the titanium producers realized that they were very dependent on the prices of the raw materials.

Entry barriers were… (high/low)? Between 8 companies had more than 90% of the market share, the manufacturing costs and tariffs and distribution costs were very high to enter as a new player.

Is the ‘express mail’ a commodity or a differentiated service? It is a commodity service because all competitors have same prices, same service of ‘delivery on time’ and quality of service.

Key success factors (KSF) in this industry – Exhibit 3: What is the lesson? The first key to increase margins would be for firms to increase the sale price; however, the problem is that the prices have been declining for all the players. Therefore, we recommend firms to reduce costs. To succeed you need to minimize the cost, controlling the costs.

Which are the main strengths of each one (Mailing)?

Federal Express: Technology, quality, and personal attendance. The company held 45% of the domestic express mail market in the USA. They offered a more personal service to their customers by providing them more attention and ease).

United Parcel Service: Pick-ups and deliveries. The company was the largest package delivery company in the world.

Airborne Express: Low costs (20% lower than competitors) & flexibility (that the shippers and recipients of Airborne were concentrated in major metropolitan areas. Therefore, they focused on dominating internal big cities.)