week 4 case study.edited

Questions : 1. Who are the competitors in the jarred baby food market ? What market share do they have ? Is this industry concentrated ? The three major competitors in the Jarred food market are Gerber Products Company (Gerber), Beech-Nut, and Heinz. Gerber holds 65% of the market share, Beech-Nut holds 15.4% and Heinz 17.4%. Based on the pre-merger HHI score for the baby food industry, the industry is highly concentrated, with a score of 4775. 2. How do Heinz and Beech - Nut compete with one another ? Heinz and Beech-Nut compete in terms of prices when their products are available in the same areas. For example, in metropolitan areas where both companies have more than 10% of market shares, they try to outcompete each other by depressing one another's prices. Additionally, these companies offer different products that do not substitute for one another; thus, only one of the products is more likely to be available on supermarket shelves. 3. Are the barriers to entry high or low for this market ? What are they ? There are high barriers to entry for this market. The barrier that has made it difficult for new firms to enter the baby food industry is the pricing strategy. The existing firms have avoided charging supra-competitive prices for their products to prevent new firms. 4. What efficiencies are likely to be gained by Heinz and Beech - Nut through the merger ? Is a merger necessary to develop these efficiencies ? Heinz and Beech's merger is likely to result in many efficiencies. These efficiencies will result in fair competition with Gerber. These efficiencies include improved products, lower prices, and the production of new products. A merger is not necessary to develop these