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Bitter Competition

In: Business and Management

Submitted By td9212102023
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- 1. How should Vermijs expect NutraSweet to respond to the Holland Sweetener Company’s entry into the European and Canadian aspartame markets?
(1) Baseline: Product: aspartame was a strong substitute of saccharin with better flavor and low calories, especially for diet soft drink. There was no other competitive product at that time. Market: Aspartame had a great potential market.
|Mkt scale/Ton |US |EU |Canada |Japan |Total |
|1982 |220 |30 |100 |5 |370 |
|1986 |5100 |430 |120 |40 |5730 |

* NutraSweet had a capability of 5,000 tons. (Not including capability from Japanese JV)
Competition: NutraSweet (NS) was patent owner of aspartame and market leader of aspartame in US since 1970. NutraSweet monopolized aspartame market in US, European and Canadian in 1986 before HSC entered aspartame market in Europe. NS’s patent protection in Europe would expire in 1987 and 1992 in U.S.
(2) Strategy of Holland Sweetener Company (HSC)
Vermijs had his expectation based on its own strategy and situation NS faced.
HSC had an improve aspartame products with lower produce cost and better performance of stability (supposed it was true.) HSC established Japanese JV to provide cost advantage. HSC started at Europe and Canada, which were not totally monopolized by NS. Also these markets had rigid competitive control to avoid monopoly under competition law.
Therefore, Vermijs expected NS would compete price with HSC.

-2. Specifically, how should Vermijs assess the relative likelihood of the two scenarios— price war and normal competition—he has in mind?
(1) Advantage of NutraSweet from value chain
| |NS |HSC |
|R&D |Hold the patents |Follower |
| |Keep innovation and R&D |Less innovation power |
|Sourcing |Strong facility investment in US |JV in Japan |
| |Enter global market | |
| |Outsource in Japan and enter Japan market | |
| |M&A by Monsanto…...

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