Contending forces are of great importance in strategy formulation, as they determine the profitability of the industry. In this case, it is the globalization which took the prominence in shaping the industry. Both Brahma and Antarctica were rivals from hundreds of years, both wanted to become industry leaders in Brazil and wanted to gain competitive advantage over each other. In 1990's after the opening of Brazilian market country went through a process of liberalization, import barriers were lifted, world's largest privatization process started. U.S & European companies have descended upon the country acquiring local companies. Earlier beer companies were focusing on their domestic markets but now they want to expand their international process and become multinational corporations. So this is when Brahma & Antarctica merged together to dwarf off their competitors. It took them around ten months and the whole process was under the scrutiny of CADE (the Brazilian anti-trust authority); together they claimed 70% of the Brazilian beer market & 40% if nations beverage market. .
Threats of Entry.
Competition: New entrants in order to gain a market share bring new capacity to the industry & substantial resources. This is what happened when companies from all over the world started diversifying their operations into the Brazilian market after opening up of barriers; they leveraged their resources to cause a shakeup in the industry. Many companies were unable to cope up, were either shut down or got acquired by other big companies. Merger between Brahma & Antarctica was obvious to increase economies of scale and to fight global competition which eventually leads to the formation of AmBev. This merger was opposed by many competing firms as they had the fear of losing market share, one of them was Kaiser which teamed up with Heineken and had the most famous product in the history of Brazil's low alcoholic beverage industry.
