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For many years the Coca-Cola company was very focused on making Coke the largest selling cola, first in America and then around the world. At a certain point, Coke widened its interests to include...

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For many years the Coca-Cola company was very focused on making Coke the largest selling cola, first in America and then around the world. At a certain point, Coke widened its interests to include other carbonated soft drinks - Sprite, for example, went from being an afterthought brand to being a critical part of the business. Eventually, Coke widened its range of interests beyond carbonated soft drinks to include water, juices, cold coffee and tea and other "alternative" beverages. The Coke portfolio now includes brands including Minute Maid juices, Dasani water, Honest Tea, Georgia Coffee (the largest selling iced coffee in Japan), Vitamin Water enhanced water, Power Ade energy drinks and Fuze tea.

Over the past few years, the company has become very frustrated with its internal product development efforts and the market research which helps drive these efforts. With the exception of Dasani (which is just plain water) all of the growth Coke has created has come from acquisitions - Honest Tea and Vitamin Water, among others - and these acquisitions have been very costly, because Coke ends up paying not what the company is inherently worth but what they had to pay in order to top Pepsi, which always seemed to be interested.

Coke's CEO has reached a breaking point. He feels like they are spending hundreds of millions of dollars a year on new product development and getting nothing for it. Then he needs to rely on acquisitions to meet his growth targets, but those acquisitions are costing the company billions of dollars, and his board is getting impatient. He is on the verge of just shuttering the new products effort and focusing on acquisitions.

But he is having second thoughts and has asked you to try to talk him out of it. How would you structure the new product development efforts at Coke? What would you focus on, how would you structure the department? Where would you want to spend time and money against these efforts?


Answered Same Day Oct 18, 2024

Solution

Shubham answered on Oct 18 2024
3 Votes
Cu
ent Challenges in Coca-Cola’s NPD
The cu
ent internal product development efforts of Coca-Cola have faced multiple inefficiencies that has resulted in stagnation in innovation. The primary challenges are inability of company for successfully launch in-house products that can relate with modern consumers. The struggle is because of outdated market research practices and lack of agility in NPD process. Coca-Cola has been slow in adapting changing consumer preferences. The company cannot understand the growing demand for healthier, environmentally friendly and personalized beverages. As the result, the internal efforts have failed to produce impactful products that creates a gap in the portfolio of company [2]. Coca-Cola has become heavily rely on acquisition of fuel growth especially in the non-ca
onated beverage sector. Major
ands like Honest Tea, Vitamin Water and Powerade were all acquired rather than developed internally. These acquisitions have distu
ed the portfolio of the company that have come at significant financial cost. The need to outbid competitors like Pepsi has driven up acquisition prices. This can leave Coca-Cola to pay premium far beyond inherent value of the
ands. The heavy relying on acquisitions has caused frustration among board of directors. This has resulted in little return on substantial investments that is made in NPD. The financial burden of acquiring
ands to meet growth targets along with the underperformance of internal development has left company in the precarious position. The growing impatience of board is clear indicator that Coca-Cola must restructure the approach to product development to regain competitive advantage.
Importance of New Product Development
This includes focusing on new product development that is important for long-term growth and sustainability of Coca-Cola. The increase in competitive and changing marketplace, this includes relying on existing products that can lead to stagnation. It can affect consumer preferences shift towards healthier and more different beverage options. This requires investing in NPD and Coca-Cola can tap in emerging trends. This requires innovation and build products that can resonate with consumers. This ensure that company remains relevant. This requires creating new products internally that allows Coca-Cola to maintain control over
and identity. This ensures creativity and extensive distribution networks. This requires focusing on acquisitions that can create risks for the company [4]. Acquisitions are costly and Coca-Cola must compete with other market leaders. It includes competition with Pepsi that can lead to inflated purchase prices. The financial burden can affect potential profits and this can create dependency on external innovation. The internal creative processes of company can leave Coca-Cola vulnerable to market shifts. It may happen if acquisition targets dry up and become less innovative. In depending on acquisitions can hinders development of robust internal innovation culture [3]. This could lead to long-term decline in ability of company to generate ideas organically that can put sustainability at risk. This requires focusing on NPD along with promoting financial prudence by reducing acquisition-related costs. This could enable Coca-Cola to renew and introduce new products that will ensure resilience and adaptability in dynamic industry. It includes developing strong internal NPD strategy that is key to...
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