Compare and contrast the cost structures between the branded cereal manufacturers and the private label cereal makers. You can by using the cost structure information provided in Exhibit 2 and in the case text compare the industry value chains of both types of cereal makers. [Assume that marketing costs are zero or close to it for the private label cereal makers.] Pay special attention to determining how the industry value chains are different for each type of breakfast cereal manufacturer.

Explain how the private label cereal manufacturers have been able to lower their cost structure relative to the branded cereal manufacturers. Will the private label cereal makers be able to withstand a price war with the branded cereal manufacturers?