Tetra Pak is the world's leading food processing and packaging solutions company. ‘There are 41 Tetra Pak market companies and 74 sales offices across the world, 43 plants for packaging material and closures and 10 packaging machine assembly factories’. (Tetra Pak) The privately held company ‘has 21,640 employees and products are sold in more than 150 markets’. (Tetra Pak) Theheadquarters is situated in Lausanne, Switzerland.
‘Tetra Pak began in the early 1950s as one of the first packaging companies for liquid milk. Since then, it has become one of the world's largest suppliers of packaging systems for milk, fruit juices and drinks, and many other products’. (Tetra Pak)
‘In 1991, Tetra Pak expanded into liquid food processing equipment, plant engineering, and cheesemanufacturing equipment. Today, it is the only international company in the world able to provide integrated processing, packaging, and distribution line and plant solutions for food manufacturing’. (Tetra Pak)
The purpose of this paper is to analyze the industry environment, the company’s strengths and threats as well as the leadership styles and strategies to define the challenges and foresee thefuture of Tetra Pak.
1. Five Forces Analysis of Aseptic Liquid Food Packaging Industry
In this section Porter’s Theory, Five Forces (Grant, 2005, p. 73) is reviewed to determine the competitive intensity of the Aseptic liquid food industry where Tetra Pak is a player among others.
1.1 Threat of Entry
• Economies of scale. In the food packaging industry, efficiency requires large-scaleoperations. ‘New entrants are faced with the choice of either entering on a small scale and accepting high unit costs, or entering on a large scale and running the risk of underutilized capacity while they build up sales volume’. (Grant, 2005, p. 76).
• Absolute cost advantages. Apart from economies of scale, established firms in this industry have a cost advantage over entrants simply because theyentered earlier. This advantage results from the low-cost sources of raw materials, huge sunk costs of machines and related facilities.
• Capital requirements. Generally, startup costs are acceptable for small or medium companies. While in the aseptic liquid food packaging industry, the huge capital costs of establishing R&D, production, and related supply chain facilities for supplyingpackaging materials and machines make new entry highly unlikely.
• Product differentiation. In this ‘industry where products are differentiated, established firms possess the advantages of brand recognition and customer loyalty’. (Grant, 2005, p. 77). There are only countable players in the aseptic liquid food packaging industry for instance, Tetra Pak, Elopak, SIG, etc., their products are highlyrecognized by customers. Thus, new entrants have to incur in massive additional costs to enter the market.
• Access to channels of distribution. The main incumbents provide comprehensive commercial solutions and own their mature distribution channels. Whereas lack of brand awareness among customers acts as a barrier for the new entrants with limited access to distribution channels.
The high entrybarriers of aseptic liquid food packaging industry can protect established companies, while in the long run, breaking these barriers is not impossible.
1.2 The Intensity of Competitive Rivalry
• Concentration. To measure the intensity of firms competing within a market, emphasis should be attached to the combined market share of the leading producers. In this industry, the market is dominatedby a small group of leading companies, especially in mature markets. While in some booming markets, such as China and India, the competition is much more intense.
• Competitors. There are few players in the aseptic liquid food packaging industry. ‘Tetra Pak is the world’s leading food processing and packaging solutions company’. (Tetra Pak) ‘Tetra Pak has an 80 percent of market share,...