What are some distinctive characteristics of the aquaculture industry?
How is the aquaculture industry changing?
The unique characteristics of the aquaculture industry have a very
real impact on the performance for Marine Harvest. The industry
structure such as the size and number of competitors, the product
offerings, government regulation, and environmental concerns are all
relevant and must be monitored closely in order to be both proactive as
well as reactive.
The industry is made up of only a few competitors due to a recent
consolidation. China has 62% of global production. This is an important
fact to consider when looking expanding into new markets as barriers to
entry into new markets could be difficult.
The environmental challenges such as the occurrences of crossbreeding
with wild species, the use of antibiotics created regulations that were
considered by Marine Harvest as “over regulation”. Such over regulation
creates tougher standards and oversights that hinder production and most
importantly, reputation. If the public deems the products to be unsafe,
despite being potentially misinformed, demand for those products will
surely fall.
Strategy starts with an understanding of how the environment is
changing and the opportunities and threats this presents for the firm.
Perhaps the biggest opportunity is the fact that production would have to
expand rapidly to help feed the world’s growing population. Given the
threat of overfishing in of wild fish stocks, Aquaculture production
would certainly be a viable solution to help fill the gap. One of the
strengths of Marine Harvest is that they were the current market leader
in farmed Salmon. Salmon had increased in popularity due to its health
benefits as well as its high yield of protein per kilogram.
Additionally, market conditions in countries such as the US indicated a
potentially untapped market that could be exploited. However, despite
the popularity and potential for new markets, consumers are price
sensitive. This could cause price elasticity which could drive margins
down if price is increased as a response to increased demand.
nHow is Marine Harvest performing within the industry?
In order to determine how Marine Harvest is performing within an
industry, we can apply the structure–conduct-performance (SCP) model.
The structure–conduct-performance model is a framework that explains
differences in industry performance by identifying if the firm competes
in perfect competition, monopolistic competition, oligopoly, or a
monopoly.
As mentioned in the case, global salmon farming at one time had been
