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Coca-Cola India Strategy Management

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STRATAGIC MANAGEMENT

MID TERM EXAM

Question 1. You are a CEO of Coca-Cola Inc. in India. Recent data shows that the growth of aerated drinks in India is going down. While the growth of aerated drinks is going down, recent consumer studies from India show that Indian consumer prefer traditional drinks such as niibu-pani, roohafza, lazzi over aerated drinks. The overall market for non-alcoholic drinks in India is growing 3 percent more than the growth rate of India. You want to launch a new product within the traditional drink market in India.

Please define the new product. Use Swot Analysis to identify logic and positioning in the market.

Answer: Coca-Cola India can launch Bottled Coconut Water as new substitute drink in the Indian Market. In Q3 of 2016 coca cola reported of 4% [1] decline in sales volume. This is because of factors like health concerns as carbonates has received a lot of negative publicity due to high sugar content and its lack of nutritional value and increases taxes on sugary drinks by government which led to increase in price. In GST taxation law aerated drinks can be taxed up to 40 % which will again led to increase in price of aerated drinks [2]. Bottled Coconut Water will be a great product for coca cola to launch in Indian market. Coconut water is the perfect natural energy drink, as it has numerous health benefits. It is rich in electrolytes essential for the human body. It is a great source of nutrients, contains calcium and magnesium, and the same amount of heart healthy potassium as a banana or a glass of orange juice with less calories. It is suitable for health conscious and people suffering with heart disease, hypertension and diabetes.

SWOT analysis of Coconut water is given below

INTERNAL FACTORS

STRENGTHS (+)

WEAKNESSES (-)

  • Low Production Cost
  • Natural Product
  • Adequate Availability of Raw Material (Coconuts) in India.
  • Coconut water is Low calorie and healthier alternative to Aerated drinks
  • Traditional and Familiar Product to Indian Consumers
  • Coca Cola brand and distribution channels

 

  • Coconut water is difficult to preserve and its shelf life is very less.
  • Easy to copy by rivals

EXTERNAL FACTORS

OPPORTUNITIES (+)

THREATS (-)

  • Competitive advantage over Aerated drinks because of low calories and health benefits.
  • Agricultural product and will result in low taxation
  • Increasing Health Consciousness among Indian consumers
  • Faced Pace lifestyle
  • Aligned with Govt. initiatives like make in India.

  • Rising sea level and climate change
  • Coconut crops are susceptible to various diseases and pest attack which can cause rise in raw material prices.
  • Substitute product like Fruit juices and lassi.

Target market for coconut water in product of Brand positioning is following

Primary Market:

  1. People in Twenty’s,  Middle Age and health conscious peoples
  2. Old age persons and working class

Secondary Market:

  1. Hotels & Quick eat restaurants
  2. Airlines and Trains (Travel Industry)

Question 2. You are a CEO of Pantaloon. You are facing heat from Zara retail in entry-level fashion. You decide to replicate the design to market strategy of Zara. Please develop a business strategy to compete with Zara. Develop a value chain analysis of Pantaloon that replicates the core business strength of Zara.

Hint: Zara: Cost leader in entry level business/casual fashion. It captures the latest fashion trends at the top fashion houses in the world and manufactures the exact same replicas at a very low price and quality. Later it sells its products in the best of location around the world, capturing both the retail using high end fashion at affordable cost and ensuring the brand sustenance by being at the most exclusive retail outlets of the world.

Answer: -  Core business strength of ZARA are agile and tightly control supply chain by vertical Integration, quickly picking up on new fashion trends, accurate forecasting of stock requirements which reduces markdowns, quick turn of stock which keeps customers coming back for new product, good responsiveness to external factors like the weather, and margin maximization. My business strategy to compete with Zara will be to compete directly in fast fashion retail segment.

  • To compete in fast fashion lead time in determining new fashion trends, designing, Inbound logistics and Outbound logistics of product cycle should be within a month, Short lead time= More fashionable clothes. This leads to lower inventory cost, products which are currently in fashion, for this vertical integration of manufacturing, designing and logistics can be done. Manufacturing should be done near major markets to reduce logistics time. A robust IT Infrastructure is required for the system to work.
  • Pantaloons approach to design may attempts to predict customer needs and follow current fashion trends. A team of designers and fashion experts will be created to determine customer need and current fashion trends prevailing. This will also result in more styles produced in a year.
  • Quantity manufactured for a particular style will be kept low, to create a scare for its product and in fashion the less availability, the more desirable. Also lower quantities create less risk if a style does not work well because less will be exposed to its purchasers.
  • Pantaloons can also offer customers featured products that have been marketed as designer collaborations with well-known names such as Manish Malhotra which are well known in Indian Market. By offering these products pantaloons can boost its reputation
  • A robust IT system is required for this system to work, Designers can be able to design and send the requirement of fabric to procurement department and manufacturing department without any delay. Also fabric will reach the manufacturing facility on time. JIT strategy can be followed during manufacturing. Also stores where clothes are being sold can be also connected to business center to analyse customer trends. Also stores will be able to send requirements to the business centre for manufacturing
  • Logistics is also very important. Hub and spoke model can be used in which manufacturing facility can act as a hub and stores as spoke. Clothes will directly send to the stores from manufacturing facility as per requirement. It will keep the cost of operations lower and will result in higher margins
  • Also Zara is low quality brand, pantaloons can give high quality in the same segment to compete with Zara.
  • Value chain analysis of Pantaloons to replicate core business strength of ZARA:

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Primary activity

Inbound logistics (Raw Materials)-

  • Sourcing from long term suppliers in India to increase the quality of fabric while forcing the price to stay down
  • Through vertical integration, receive dyed, patterned, and finished fabrics in less time (just-in-time manufacturing system)

Operation (Intermediate goods/components)-

  • Employ advanced IT system to connect business Centre and supply, production, and sales locations.
  • Use highly automated Factories sewing workshops that are specialized by product type
  • Manufacture low quantity of each style
  • Manufacturing facilities should be located in India and near big markets such as Delhi & Mumbai

Out Bound Logistics-

  • Use Hub and spoke model for distribution of garments all over India.
  • Manufacturing facilities to be used as hub instead of a warehouse to reduce time and cost of logistics.

Marketing & Sales:

  • Open stores in the best locations throughout India.
  • Invest in Online advertisement to promote brand.
  • Use Online sales as well as Brick and Mortar stores.
  • POS locations should be connected with business centre for new requirement, Monitor Inventory and sales trends.
  • featured products that have been marketed as designer collaborations with well-known names such as Manish Malhotra

Services

  • Have a robust Return Handling, customer management and Customer Feedback system

Support Activities:

 

Firm Infrastructure: More stores are required to open at good locations of India. Also for hub and spoke model to operate investment should be made in logistics. Stores design should be very appealing and modern.

Human Resource Management: Pantaloons should hire more young designers to realize the current fashion requirements and develop new design.

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