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Bitter Competition: the Holland Sweetener Co. vs. Nutrasweet (a)

Decent Essays

Bitter Competition: The Holland Sweetener Co. vs. NutraSweet (A)

1. How should Vermijs expect NutraSweet to respond in the Holland Sweetener Company’s entry into the European and Canadian aspartame markets?

Vermijs could expect two responses from NutraSweet: try to “save” its monopoly by fighting and low the price and start a price-war with HSC; or accept the entrant and its pricing and finally share the market.

With the acquisition of Searle in the summer 1985 by the giant Monsanto, NutraSweet became a stronger brand. In 1986, the net income of Monsanto Corporation was $433M, and NutraSweet net sales rose to $711M.

With Monsanto support, NutraSweet was strong enough to conduct a price war, but the HSC had strong resources …show more content…

The two manufacturers Ajinomoto (NutraSweet) and Tosoh Corporation (HSC) could compete, with quite same net income in 1985, but with two advantages for Tosoh: around $150 000M more assets value than its competitor and an important decrease in Ajinomoto’s net sales (thus in net income) in 1985.

Moreover, another advantage for NutraSweet was the leadership of Monsanto in several U.S. markets, and its partnerships with Coke and Pepsi, allowing the brand to expand easier in the rest America, especially in Canada.

In conclusion, NutraSweet could launch a price-war in Canadian market, because of its size and presence in America, but should compete in Europe with its less comfortable position there than NutraSweet beneficiating from the DSM strong presence in Netherlands, Germany and others European Countries.

2. Specifically, how should Vermijs assess the relative likelihood of the two scenarios – price war and normal competition – he has in the market?

In order to evaluate the relative likelihood of the two scenarios – price war and normal competition let us list the factors that would lead to one of the two scenarios.

Price war

1. Previous experience

- When the NutraSweet entered the market they followed the strategy of Price War. In order to get the significant market share of sweeteners the company offered up to

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