Case Analysis: United Beverages, Inc.
United Beverages’ CEO is debating with his department heads on the course of action the company is going to take in the future. Their flagship product, GangBuster, has been highly successful for the past 5 years. However, they have been thinking of entering the market for Energy Drinks for kids. Paul Diaz also comes up with a revolutionary idea of the dual-drink, having two separate flavored drinks in a bottle and being able to mix both flavors. Due to the limited resources of United Beverages, they have two weeks to decide whether to expand their portfolio or not?
What United Beverages should look take into account when deciding which product(s) to develop? Potential Costs:
How much does it cost to develop?
How long does it take to develop?
How much resource do we need to allocate for the development? 4.
Do we have enough resources to develop it? How will this development affect the development other products? 5.
Can we create a contingency in developing more than one of these products?
How large is the (existing/potential) market for this product? 2.
How much revenue is expected from it?
How long is the potential life of this product?
What are the growth potentials of this product?
How long will take for competitors to imitate/ pioneer a similar product?
GangBuster Expansion Program
Maintains revenue stream
Limits Budget of R&D for other projects ($300,000 needed to maintain current sales)
There is still potential growth for GangBusters
Expansion is mandatory to not lose market share
Strengthen barriers of entry to the Interactive Beverage Industry
It has been 5 years since the development of GangBusters, growth will eventually plateau
Open to selling foreign markets and development of new flavors
Kid-Energy Drink Project
Potential revenues range from $500,000 to $1,000,000
Cannibalization of the GangBusters Market...
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