I. Point of View
This case study examines the critical decisions to be made by Arnold Greenberg, Chief Operating Officer (COO) of Snapple. The point of view of the latter was chosen since his role is increasingly important to the company’s ability to execute its strategy. The chief operating officer’s main concern is to come up with strategies that will drive operational excellence and high performance in the operation of the business. His decisions are very critical to the success or failure of the business. He is also responsible for turning such decisions into actions.
II. Analysis of the Case Situation
When a single firm became successful in a market wherein there is no competition, the positive profits enjoyed solely by the latter will induce other firms to finally enter on that same industry. Hence, the then dominant firm will have to face competition among the new entrants/firms. In the case of Snapple, after its five-year supremacy on the ready-to-drink iced tea market, it has to face its new giant competitors namely: Coca-cola/Nestea and Pepsi/Lipton
Snapple has captured a large share of the market by attracting health-conscious individuals on 1990s with its preservative-free ecological image and its new twist which offers iced tea on 11 different flavors.
Snapple offers ready-to-drink preservative-free iced tea in 11 different flavors which attracted the health-conscious market. In promoting its product, Snapple does not spend much on expensive advertisements but rather ride on with its competitors’ promotional ads which lead to Snapple’s dilemma, its lack of national recognition. Market distribution of Snapple is in only 51 out of 278 major supermarket chains in the United States. In addition, the ready-to-drink iced tea of Snapple is relatively expensive as compared to its competitors. Another problem is the company’s inability to enter into the vending machine market.
Snapple does not have enough funds to finance such expensive advertisements unlike their giant competitors, Coca-cola and Pepsi. In addition, the company has no production facilities of its own.
Snapple is a relatively small entrepreneurial company with only 87 employees. They do not have their own production facilities. Hence, it impedes the company’s production.
Discussion of the Case Issue:
Snapple has to struggle with its giant competitors, Coca-cola/Nestea and Pepsi/Lipton which spend on promotional and expensive advertisements to promote their product, which Snapple lacks. Given the fact that Snapple is in only 51 of the 278 major supermarket chains in the United States, it has to face problems in expanding its market distribution and be able to cope up with its issue of lack of national recognition. The Chief Operating Officer of Snapple has to devise efficient and effective strategies and techniques that will help them achieve its goals and help them to be competitive enough to stay on the industry.
III. Problem Statement
What strategy should Snapple need to do to remain competitive in the ready-to-drink iced tea market?
IV. SWOT Analysis
Snapple has a preservative-free, ecological image. It has given a new twist in the ready-to-drink iced tea, providing 11 different flavors.
Snapple has no production facilities of its own and has a small number of employees. They lack national recognition, and are only in 51 of the 278 major supermarket chains in the country. In addition, they are unable to produce packages for vending machines, and have a relatively expensive price.
There is a growing number of markets by 50% versus the cola industry. There is also a growing number of consumers- 75% of all households in US....