Sample Management Essay Paper on Business strategy and policy of the bottled water industry

In business, the main objective that overlooks all other aspects is making a profit. Every
undertaking however small it is aimed at contributing to the ultimate price, the profit. This is
why the business has to develop sound strategies that govern how operations are being run, how
resources are judiciously applied, and creating a framework on policies that guide relations
between workers and customers. The paper study business strategies and policies applied in the
operation of the bottled water industry.

Industry analysis, market size, and structure.

Market size
For the last decade, there has been a rising growth in demand for bottled water, a reason
owed to the improving health and wellness concerns of the citizens. Due to continued agitation
for safe and healthy environment concerns the majority of the beverage companies are
improvising their packaging to fit in the demands and regulations, for instance, Coca-Cola
Company is doing away with those small plastic bottles less than 24 ounces. the water industry
as of 2015 was valued at USD 185 billion and the size is expected to register a compound annual
growth rate of 8.5% reaching USD 334 billion as per the forecast period of 2018-2023.
Industry analysis and structure
In the early 90s, the majority of people had started consuming bottled water in the United
States, half of this bottled water was delivered to houses or offices in bulk, by the use of reusable
five gallons containers that was dispensed through coolers. The other half was sold in small
packages of one liter or smaller PET bottles.

The changing lifestyles, the advantage of added minerals, the portability, and health
concerns are the major aspects of the bottled water industry currently and serves as the market
driving factors. The growing numbers of Polyethylene terephthalate (PET) bottle sector are
contributing greatly to the growth of the industry as well as organized networks of market stores
and groceries across the globe. The bottled water industry is receiving a lot of players that serve
the special interests and preferences of their customers through customizing flavors and nutrient
The market structure and segmentation in the industry are classified based on the nature
of flavors, distribution channels, and the region of packaging. Based on these classifications,
still, water retails the most under sub-segment of bottled water and accounted for 65% of the
total demand. Carbonated water follows in second place (Geissler, 2002). The flavored water
demand is growing, and by 2022 it is expected to have reached 78% total share of the bottled
water revenue. The growth thanks to the product innovation in packaging and flavor additions.
People enjoy and work for good health, drinking a lot of bottled water as one of the leading
contributions to good health has driven and necessitated the majority of individuals to at least
have a bottled of water at all times, the same also applies to those health-conscious consumers.

Industry key success factors.

Before 1993 in the United States majority of people used to drink tapped water and
without no reported cases of ill health, the bottled water industry was growing slowly. An
incident that happens in 1993, where more than 100 people died from waterborne diseases and
400,000 others developed flulike symptoms. The municipal water system had all along been
regulated by the Environmental protection Agency, and thus went ahead to create a water act
amendments of 2001 that rolled out consumer concerns on the quality of drinking water. Bottled

water producers became the only entities that could meet up with the EPA and US Food and
Drug Administration standards.

Critical external factors.

Distribution and sale of bottled waters.
Market conditions
It became evident that to grow a bottled water business in the United States meant a toll
order for those producers which deals with water production entirely. The reason being, the
majority of the distributors make their deliveries to superstore, supermarkets, and groceries along
with their other products. And thus companies like Coca-Cola and PepsiCo had the advantage
because they had other foods and beverages to deliver along.
Stiff competition
The other factor impeding the growth of bottled water industries that giant companies
like Coca-Cola and PepsiCo had, is that they always had a way of negotiating contracts with
stadiums and universities making them exclusive suppliers.
Customer demand
At the supermarkets and food stores, the majority of them have up to like five brands of
bottled water brands, the other water producers had to compete aggressively on the prices to have
access of their products to the shelves. In some supermarkets aside from bottled water suppliers
offering to pay the least amount, they are also required to pay the slotting fees for the shelf space.
Societal changes

As time advances so do people's way of life, in the past people just used to consider any
water as long as it is clear clean. But the impacts of the societal habitations bring about sewages
and dumping areas that have the potential of contaminating groundwater. It is this fact that
people began to appreciate the use of treated and ionized water, the bottled water. The changes in
societal structure in a way has contributed to the growth of bottled water in society.
Changing customers.
People taste and preferences changes as their status and style of life changes. As people
advance and get classes, they tend to associate themselves with brands, and in the case of water
consumption, they began only taking a specific brand of water. As a distributor, being aware of
this aspect gives an upper hand in developing a brand that is niche-specific.

The pertinent driving force.

Bottled water industries, had recognized the aspect of brand loyalty, with some of the
consumers looking only for a particular brand and others believing that only a few brands are
safe and acceptable. Such kind of perception from the customers is making it hard out there for
the upcoming water bottling industries. It means as an entrepreneur one has to possess brand-
building skills.
Industry consolidation is another factor which has made the bottling water industry more
competitive, for instance, the group Danone one of the greatest giants in the world as a bottled
water seller bought Naya T $34 million and Mc Kesson at $1.1 billion in the year 2000, a move
that hints on the positioning of the industry maturity.


Industry key success factors

The bottled water industry came into being for the fact that it considers purification of
water before they are bottled and that people can drink it without the fear of getting health issues
such as influenza or amoeba. The producers make sure water is purified.
The nature of the world at the moment is that it is very fluid, and people travel a lot from
one place to another. And since water is a basic need one cannot get water from her own home
walking around places with it. Bottling water guarantees the safety that people always prefer, and
aspects which it has brought credit in terms of increased sales to the industry.
The water bottling industry not long ago used to deliver water on big Reusable buckets.
But with the introduction of PET bottles, packaging has been done to suit the demand of
individual customers becoming easy and efficient.
Brand marketing
Customers have varied preferences as per their taste, the innovation in the bottling
industries to include minerals and nutrients in their brands have become, one of the reasons why
water sells even better than the beverages. Companies have developed a strategy of selling
flavored and mineral water a brand that many customers would go for, every time they feel
thirsty. Brand marketing has become a successful impact on the bottled water business.


High advertising
The majority of people who end up being loyal to a brand of bottled water are because
they have in one way or another met with an advert of that bottled water.
Porters five forces of competition analysis

Buyer power
In the United States, at the moment there are so many bottled water manufacturers and
bottles water lines that it has made buyer bargaining power significant. The same competitions
have rendered the option of switching costs insignificant as well. For instance, the retail price of
Dasani and Aquafina is almost similar that customers can switch the products at no cost at all.
The value of brand loyalty is also reducing and this gives consumers the window to highly
bargain. The idea that bottled water represents purity and a choice of good health influences to a
larger extend the decision to buy. Worldwide the growing perception that bottled water is
becoming the fastest-growing category of beverages has increased the volume of sales made
globally, this has translated to high bargaining power in the case of the United States. This
implies that the United States bottled water industry has a high customer buying power.
Threats of new entrants
In the United States, the bottling water industry is filled with many competitors with the
majority of them being established companies that own a large portion of the market share, this
fact has caused minimal, close to no registration of new entry threats. The giant companies like
Coca-Cola and PepsiCo have mounted a stiff defense to the state's market share. Incase new
entrants make way, their business takes a lot of time and resources to break even. In the united
states, these big companies that have huge investments in the food and beverage industries, have

the benefit of well-established brand loyalty and recognition and enjoys the benefits of large
scale producers such as the low-cost distribution and production capabilities that new entrants
cannot match. Developing infrastructure for a new industry is very expensive, given these
reasons, the United States water bottled industry concerning porter five forces can be said to
have a low threat of new entrants.
The threat of alternative products.
The market today globally and in the United States is saturated with alternatives product
of beverages that either exists as bottled or non-bottled products that easily can act as substitutes
for the bottled water product. Such products that consumers seek as an alternative to water are
the Coca-Cola based products of coke zero which has no sugar and calories, diet soda is another
alternative. Without leaving the alternative of tap water that quite a lot of people still trust leaves
this industry with a high threat of alternative products.
Industry rivalry
The business stage is characterized by a free model where there is a willing buyer willing
seller. But deep down these are the strategies by different companies to remain most preferred by
the customers. And this has enhanced the fight for the existing market share, reduction of the
alternative products, and the significant switching costs. In the fight for these, the companies
develop rivalry against each other. And since there is plenty of room for growth in the bottled
water industry the competition has gone high.
Supplier power
The bottled water industry is faced up with low supply power levels as a result of the
many alternatives that exist in the markets and the high levels of discounting due to high

competition. The other factor contributing to the low supply power is the basic nature of water, it
is readily available and thus increasing the bargaining power. The supply power in the United
States is low because the switching costs from suppliers are minimal and the presents of multiple
sources of supplies.
In the United States, the bottled water industry like any other sector of business fights a
tough rivalry fight for market share and control. The power of purchases and potential growth in
the industry lies majorly in the purity, safety, and health reasons. On the part of influence, the
threat by the alternative products and the choice and preferences by the consumers plays a
critical role. While the part with no threats is the entrants of the new players, this is so because
the already established business has set up very high precedence that is impossible to be matched
by the new entrants. In general, the five forces of porters analysis hints at a robust and a high
level of completion and rivalry among bottled water producers.
Latest updates of the industry market
As of 2017, the estimated value of the United States bottled water industry was nearly at
the US $17 billion, and projections hint at a reach of about US $22.5 billion by the end of 2024.
The growth in the industry revenue has been fueled by the health concerns and awareness on
neurological disorders, reproductive and gastrointestinal diseases attributed to taking of
contaminated water. These have registered a market shift by consumers to looking for safe and
clean water that is properly packaged.

The growth of the industry is receiving a lot of restraints from environmental agitators that they
are consuming a lot of energy in water extraction and processing. Another factor is the improper
disposal of packaging bottles that litter and pollute the environment.



Geissler, G. L., & Gamble, J. E. (2002). Straight from the tap? Consumer evaluation of a bottled
water product concept. Journal of Food Products Marketing, 8(2), 19-32.