Reference no: EM133257266

Case 1.

Against the backdrop of changes in the fossil fuel industry, and the inevitable depletion of fossil fuel stocks, both the US and Canada have taken steps to enable alternative sources of power. The factors driving both the growth and demise of the fossil fuel industry include increasing demand, greater environmental consciousness and the increasing public pressure against greenhouse gas emissions (GHG), and instability in oil-producing countries. In North America, while the transportation sector accounts for two thirds of the fossil fuel consumption, heating and electricity generation account for about one third. As the economy grows, limited natural gas supplies are the primary form of augmenting supplies for that one-third segment of energy consumption. Wind power is another viable alternative source to complement the natural gas supplies. As such, regulations have been amended in both the US and Canada to enable greater wind power generation. In fact, the expectation was that wind energy supportive regulation implemented in 2005 would promote an expected minimum of 8000 MW of wind energy generation in Canada by 2015. That amount would equate to roughly 16% of all the electricity to be produced by new generating facilities to be constructed in Canada. The growth in wind power generation outpaced that of fossil fuel generation by a very wide margin. Wind power's popularity stems from the fact that it is clean, reduces air pollution, and the systems are easy to install. However, there are some concerns about windmills and their effect on nearby livestock and humans, prompting many of the systems to be installed offshore. This complicating factor was one aspect of wind power generation that required significant research and development. The tax incentives in both the US and Canada, serve to address both the growing popularity and need of when power, and the associated challenges in making wind power more pervasive and affordable.

1. What causal factors influence government regulatory policy?

2. How is regulation applied as an economic tool?

3. Are the agencies in charge of regulatory oversight always taking a sustainability-oriented view of their policy changes?

Case 2.

Between 2014 and 2016, the market share of Coca-Cola had declined from 35.5% to 33.5%. Concurrently, the market share of PepsiCo had dropped from 23.2% to 22.2%. These declines in market shares for the two globally dominant beverage giants partly reflected an overall downturn in the market. However, they also reflected regulatory changes, indigenous competition, and market transition to a greater global awareness. In the 2016-2017 timeframe, the overall market was estimated at about ?22,000 crore.[1] It was dominated by Coca-Cola and PepsiCo, whose sales volumes were roughly ?9500 crore and ?6500 crore, respectively. Regional brands collectively held about 15-17% of the domestic market. The Indian market still reflected a high preponderance of very small providers like Fresca juices, with annual turnovers of ?5-30 crore.[2] they numbered in the hundreds and represented a formidable force to both the global giants as well as the large Indian beverage providers. These small providers tended to have an average of 30% of their products offered for about ?10.

The Indian beverage market was described as one of persistent cutthroat competition. Regulatory influences became more prominent when the global providers, especially Coca-Cola, were deemed to be using water at a rate that depleted some regional sources to the point that farmers' capability to produce was significantly and adversely impacted. Cultural change too was affecting the beverage market. Indian consumers, in line with global trends, were showing much greater interest in healthy drinks. This was reflected a raft of new fruit drinks that were taking hold across India. That shift resulted in radically different growth trends for the traditional carbonated drinks versus the juice segment. The carbonated segment in India grew at 12.8% compounded annual growth rate (CAGR). The juice segment posted a growth rate of 27.3% over the same period. Against this backdrop of fierce and persistent competition, all beverage providers, large and small, had to wrestle with decisions like new plant construction, product line changes and refresh, packaging, and marketing directions etc.

1. Can the success of the smaller Indian beverage brands be viewed as an acceptance of global competition?

2. Is the fierce competition in the beverage sector representative of Bottom of the Pyramid (BOP) sensitivities by the participating firms?

3. Of the trends and drivers promoting new thinking in global competition, as defined in LO 15.7, which do you think are most instrumental in the patterns of changing the Indian beverage market?