Case Study Analysis: Cost Of Production Essay

Question:

Discuss about the Case Study Analysis for Cost of Production.

Answer:

As per the case study, the industry of bottled water occupies 19% of the total share of nonalcoholic water based products excluding milk. after analyzing the case study it will be right to state that the case study contains all the sufficient information in order to determine whether importing water from Iceland is a profitable business or not. The essential criterion such as details regarding location, cost of production and transportation, duties and taxes, trade, and statistics were provided in the case study called ‘Water from Iceland’. Thus it will be very apt to state that importing water from Iceland would be a successful business for United States. The major factor is that Icelandic Glacial bottled water has the potential to penetrate in the market of the United States. According to case study a business initiative the giant beverage company Anheuser-Busch successfully developed a plan in order to disperse the glacial bottled water of Iceland over the market of United States. However, effective business plan is required in order to assure success since some adverse forces is present affecting the importation of Icelandic glacial water. For example, the increased demand of American bottled water and the international trade strain are the major threats for Icelandic water importation business.

In respect to the discussion, it needs to be elaborate whether the market of United States is helpful for the business of water importation from Iceland or not. Since Iceland is the member of three most important economic organizations namely, World Trade Organization, United Nation and the European Free Trade Association, Iceland is considered as ‘the most favored nation’ by the United States. Due to this status of Iceland, the natural water from Iceland is tariff free while the non-carbonated water and the mineral water from Iceland with a tariff of only 0.33%. Thus it can be said that the climate of the market of United States is conducive for water imports from Iceland.

Over the past ten years, fluctuation has been observed in the industry share which is held by imports share. There are several reasons behind the fluctuation; however the causes that had major impacts are the financial crisis and the constant demand American bottled water. Due to financial crisis international trade strain had been posed on Ireland which in turn affected the water imports of Iceland. On the other hand, the trend of hygiee in the United States increased the demand of American bottled water. These two factors adversely affected on the water imports from Iceland over the past ten years.

The government of the United States regulates the industry of bottled water in the country. Different levels of government separately regulate and impose rules and regulations on the bottled water industry. According to the case study, it must be mentioned that around 75% of the bottled water is sourced from artisan wells, wells that are drilled and springs, whereas 25% of the bottled water is sourced from the municipal system. Hence the government intervention is required in terms of regulation so that the business of water imports can be promoted.

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