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Innocent Drinks - Case Study Example

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Innocent Drinks has succeeded mainly as a result of the approach it has taken to business. It mainly focused on producing smoothies and juice that were mainly made from fruits and were favourable to the customers as a result of the small size of the packaging. …
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Innocent Drinks
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a. Innocent Drinks has succeeded mainly as a result of the approach it has taken to business. It mainly focused on producing smoothies and juice that were mainly made from fruits and were favourable to the customers as a result of the small size of the packaging. The 250 ML smoothie packages were very popular with the customers since they could consume these while in store or on their way home. Therefore, the packaging strategy greatly contributed to the success of Innocent Drinks. The success of Innocent Drinks can be attributed to the approach it took in on writing messages about the products on its packages. These were often fun and they became an instant favourite with the customers which led to the creation of customer loyalty. The guerrilla tactics of marketing the products through different labels greatly contributed to the success of the organisation since the customers often associated it with fun and interesting things. Product positioning also contributed to the success of Innocent Drinks. The products were distributed through grocery stores, cafes and impulse retail stores and all these channels were convenient to the customers. The other factor that contributed to the success of Innocent Drinks is that the organisation later incorporated traditional marketing to its guerrilla marketing through the use of advertising on subways as well as bus stations to attract more customers. b. Innocent Drinks should rather expand its geographical territory in Europe rather that USA. They should expand their geographic territory to Europe while extending their product line as well given that European market was strong. In this particular case, the notion of expansion in Europe will be based on the need to solicit for more customers for the same products while keeping the supply chain intact. The company is established in Europe and this is a competitive advantage than penetrating a new market in another country. The costs of expanding in Europe are relatively low than moving to other geographical countries which may not portray the anticipated growth margins by the company. In Europe the company can use the existing infrastructure which may not be a very big challenge. The problem in penetrating USA can also be related to intense competition as well as building a new supply chain. Penetrating a new market which is mature is not often an easy task and this can result in many challenges that can affect the viability of the organisation as a whole. Competition in the juice and smoothie market in USA is stiff compared to UK and there may be need to establish a new supply chain. The other problem that may be encountered with regards to expansion to Europe is that management will be dislocated which may affect the core operations of the company as it may not be very easy to coordinate the activities of companies located in different geographical areas. c. During the time of the case, the value of the company is expected to be ?15 million and it may be noble for the company to consider a purchase offer at this time since it will be better positioned to generate more cash through the merger and acquisition (M &A) while retaining a majority shareholding in the company. The company can dispose about half of the shareholding through M & A then retain the rest of the ownership and this can enable it to operate viably while focusing on the core business as the costs likely to be encountered can be split among the shareholders. In some instances, acquisitions through M & A are advantageous as they can give the company a competitive advantage hence the minimum terms in this particular case can be pegged at about 20 per cent given that the owners of the company have a controlling stake of 80 percent shares. This will be roughly around ?3 million. d. The three founders of Innocent Drinks Company should not alter the management structure of this company as this may create unnecessary complications. This company has operated viably since its inception under the management of the three and they share the same vision for the company hence it may be dangerous for them to change the structure of the management at this particular moment. Usually, there is consensus in the decisions made which is very important especially in the survival of the organisation in the long run. When there is consensus in the decisions made, there are likely chances of mutual understanding among the management involved and there will be few chances of conflicts or misunderstandings. Given that the three founders of the organisation have the same control of the organisation, they should wield the same power for the betterment of the organisation as a whole. If this management structure is changed, there are likely chances that the performance of the organisation can be negatively impacted given that there is need to treat these partners as equals. Read More
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