Question

Video Transcript:

>> And we have the grain, and its mixing with the water.

>> As soon as Port City brews one of its four specialty beers it's out the door.

>> We are in a fortunate position in that we're selling all the beer we can brew and we struggle to keep up with demand.

>> Bill Butcher founded Port City Brewing Company two years ago, tapping into a nationwide boom in craft beers. The growing industry represents only 6 percent of the market, but as sales of large domestic beers decline, sales of craft beers are up 11 percent.

>> It's very similar to what happened in the wine business 15, 20 years ago. People stopped ordering just a generic glass of white wine and they started ordering Chardonnay. It cost a little bit more, but people found that it tastes better and they're willing to pay a little bit more.

>> There are 2,000 local breweries like Port City across the country. As they multiply, the opposite is happening with the big beer makers, which are consolidating on a march to global domination. How different would Budweiser look than this [brief laughter]; what's the difference?

>> That's a good question. You could probably fit this entire brew house into one of the tanks at Anheuser-Busch.

>> One tank? Really, they're that big? Even Budweiser is now owned by a Belgium company, Anheuser-Busch InBev. It controls nearly 50 percent of the U.S. beer market, with brands like Budweiser, Bud Light, Stella and Becks. Now Anheuser-Busch InBev is trying to get even bigger by merging with the Mexican company that brews America's most popular import- Corona - a deal worth $20 billion. But the Justice Department has sued to block the deal, arguing it would lead to higher prices and fewer products. Butcher says the deal would hurt his industry by putting the squeeze on small specialty brewers.

>> There's a limited amount of shelf space out there and the big suppliers have influence over what goes into the set. If one supplier gets too big, then they ultimately can have the opportunity to limit that choice in the market and that's bad for consumers and it's interesting that the Justice Department agrees with that view.

>> Port City is about to expand a second time. Their niche: quality over quantity.

>> This is among the highest quality strains of barley in the world.

>> They're sold in three states and the District of Columbia, including this D.C. restaurant that sells only craft beers, 555 of them. There's not a Bud or a Bud Light in sight.

This video describes the brewing industry. Large brewers and craft brewers are both a part of the industry because:

a.all beers taste the same.

b.they are operated with the same business organization and have the same ownership structure.

c.they both offer products that serve the same customer need.

d.They are implementing the same strategic plan to gain a competitive advantage.

The video describes craft brewers and large international brewers. This is an example of:

a.changing industry boundaries.

b.complementors.

c.strategic groups.

d.sectors.

Consider the competitive force of risk of entry by potential competitors. Large brewers, such as Anheuser-Busch InBev, benefit from which of the following:

a.government regulations.

b.lack of substitute products.

c.customer switching costs.

d.economies of scale.

When Bill Butcher of Port City Brews discusses shelf space and the way that a merger could increase the leverage potential of large brewers, he is discussing which competitive force?

a.Bargaining Power of Buyers

b.Complementors

c.Substitute Products

d.Rivalry Among Established Companies

Consider the life-cycle of an industry. Which stage would you consider brewing to be in:

a.Declining

b.Mature

c.Growth

d.Embryonic

Macroenvironment forces can have an impact on an industry's performance. Which of these forces might be an explanation for the growth of the craft beer strategic group?

a.Aging population of baby boomers who are loyal to their beer brand

b.Political and legal forces limiting access to alcohol

c.The social forces of millenials as they seek to express individuality through their beer choice

d.Technological forces making it more expensive for companies to get into the beer industry

Answer 1

Ans 1: option c. "they both offer products that serve the same customer need."

Explanation: Craft breweries and large brewers serve the beer of different quality to the beer drinkers. The key difference is that craft brewers make a small quantity of good quality with great flavor. Both offer beer to the customers but different quality and flavors.

Ans 2:Option c.strategic groups.

Explanation: The strategy on pricing, target segment and quality offered is different for both the craft brewers and the large international brewer. Both craft brewers and large international brewers are part of the same industry but follow a different market and positioning strategy. Craft brewers target niche high-end customers. Large International brewers make many different options to target different customer segments.

Ans 3: Option d.economies of scale.

Explanation: The large brewers derive economies of scale by manufacturing large volumes as their fixed costs are spread over a larger volume of production. They reduce overall cost manufacturing and maximize their profits. The new entrants have to face competition as they have larger overheads and lower volumes. They are unable to compete with large manufacturers like Anheuser-Busch InBev who can minimize their costs because of having larger productions and sales.

Ans 4: Option a.Bargaining Power of Buyers

Explaining: The bargaining power of buyers is one of five forces in porters five force analysis. Bargaining power of buyers refers to the pressure customers can put on business to give higher quality products, better customer service, and lower prices. So when bug supplier negotiates for shelf space he is in dominating position and can pressurize the outlets to give more shelf space.

* "answering first 4 questions"