For this analysis Porters Five Forces have been used to define the nature of a given industry. With this, TOMRA will find the appropriate position where it can defend itself against different competitive forces. By analyzing the competitive environment, we are going to have the ability to define a successful competitive strategy.
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Barriers of New Entries:
The barriers to entry into the Peruvian market are relatively low; this means that the threat of a new organization entering the industry with the same product is high. In Peru, there isn’t a Reverse Vending Machine industry, so the product (new for the market) will create this new industry. However, there are some basic legal barriers; but not hidden trade barriers. A potential competitor will look at; how loyal customers are to the existing products, how quickly they can achieve economy of scales, and if the government legislation would prevent them or encourage them to enter the industry. Some of the potential competitors would be: ENVIPCO, Americana Environmental and Reverse Vending.
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Bargaining Power of Customers:
The customer segment which we are going to focus at first are the supermarkets chains in Peru. The Reverse Vending Machines that we will offer them are not a specific need in their businesses, but a new form of attracting customers, providing a better image and contributing the environmental care. TOMRA doesn’t have any competitors in the industry, so the cost for the supermarket to change their supplier will be very high since TOMRA will be the only option they have. Given this, TOMRA and the potential customers will have the same amount of power of negotiation. Regarding the end users (people who consume beverages), they will have a very low negotiation power since their only efficient option to sell the containers is TOMRA, by the Reverse Vending Machines.
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Power of Suppliers, Threat of Substitutes and Rivalry among firms.
TOMRA will export the Reverse Vending Machines from the three countries where they are produced: Norway, Poland and Sweden. So there will not be local suppliers in Peru. Thus, the bargaining power of the suppliers can be defined where the company produces this product. Since there are no existing Reverse Vending Machines in Peru, TOMRA will be a first mover into the market. Given this, there are not substitutes of the product and it has no actual competitors, so the profitability of moving quickly and attaining market share could be huge.
And in addition to the five forces, we also consider:
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Collaborators and Partners:
Given that TOMRA will promote the care of the environment by developing the recycling culture with the government in Peru, it is essential to have good relations with these stakeholders. The Environmental Ministry, the District Municipalities of Lima (as first target city), and NGOs are the main focus and the aim is to create together (as partners) marketing campaigns and a successful B2C (Business to Consumers) strategy.
Meso Level