Competitive advantage, bargaining power, and organizational performance: The case of finnish food manufacturing firms

Abstract

The strategic behavior of manufacturing fim in the context of the Finnish food industry is examined. Based on business-level strategy theories, the objective is to examine the interrelationships between particular types of competitive advantages, a food manufacturer's bargaining power in input and output markets, and organizational pe~ormance. Strategic advantages of the food industry are defined through the development of a taxonomy based on survey data from 65 firms. 01995

Market strategies used by processed food manufacturers to increase and consolidate their power: a systematic review and document analysis

“…promotion of snacking over regular meals, that favour the consumption of branded processed foods Group I: [ 85 ] Keep price of branded products low in value-based food markets by taking advantage of economies of scale and cheap commodity inputs Group I: [ 2 , 3 , 129 ] Group II: [ 91 ] Increase firm buyer power via exercising power over upstream food supply chain actors Vertical integration (backwards) Acquisition of upstream firms and related assets Group I: [ 58 , 63 , 107 , 194 , 195 , 215 , 216 ] Group II: [ 132 , 217 ] Vertical control (backwards) Control access to and use of inputs, e.g. land, production-related plant and equipment, crop varieties, water Group I: [ 29 , 33 , 58 , 64 , 141 , 195 , 218 ] Group II: [ 102 , 201 , 217 , 219 , 220 ] Use private standards to control upstream firms Group I: [ 29 , 190 , 221 , 222 ] Group II: [ 132 ] Exert power over suppliers through the use of unfair contract agreements Group I: [ 29 , 58 , 189 , 223 , 224 ] Group II: [ 225 , 226 ] Vertical coordination (backwards) Coo...…”

“…Dominant food companies often invest substantial amounts of capital in increasing and protecting the value of their brands, often referred to as brand equity [ 29 , 58 , 63 , 81 , 82 , 118 , 132 , 141 – 143 , 146 , 148 – 152 ]. For some perspective, The Coca-Cola Company’s (TCCC) brand portfolio was valued at US$63.4 billion in 2019 [ 241 ].…”

“…Building a brand is costly and time consuming, giving incumbent firms with existing brand loyalty an enormous advantage over new market entrants [ 33 , 82 , 132 ]. Brand equity is also crucial for dominant food companies to maintain bargaining power over large supermarkets, given that ‘must stock’ brands are much less likely to displaced by supermarket own brands compared with the lesser known brands of smaller food manufacturers [ 64 , 141 , 143 – 145 ].…”

“…Given that private label products in the same market are technically rival products (that typically compete on price), rather than substitute products per se, we did not include strategies deployed by dominant food companies to counter the threat of private label companies under this strategy as they are addressed as part of other strategies. For example, several studies discussed that dominant food companies with strong brands are likely to be at a lower risk of losing market share to private labels compared with small food companies with lesser known brands [ 64 , 141 , 143 – 145 ]. Furthermore, in certain contexts, dominant food companies may choose to become a third-party manufacturer for a retailer as part of risk-spreading arrangement (a practice that falls under the horizontal collaboration strategy) [ 243 ].…”

Competitiveness in the European dairy industries

“…The completion of the European Common Market and the ongoing political and economic changes in Eastern European countries have initiated specific discussion of production structures and of the competitiveness of national industries (Bellendorf, 1993). This discussion is also prevalent in the European food sectors, since changes in the political and economic framework are affecting this sector to a large extent (Appel, 1990;Hartmann, 1993;Hyvönen, 1995;Jensen, Voigt, & Hayes, 1995;Schmitz, 1992;Tefertiller & Ward, 1995;Traill & Da Silva, 1994). Within the food industry, the dairy sector comprises an interesting case for economic evaluation, since it is subject to specific and dynamic developments (Gloy, 1995).…”