Expansion of Coca-Cola to the Wine Business
Expansion of Coca-Cola to the Wine Business
READ THE ATTACHED CASE “COKE’S EXPANSION INTO THE WINE MARKET”
. ANSWER THE FOLLOWING QUESTIONS IN A SINGLE WORD DOCUMENT.
- Why do you think the Coca-Cola Company bought the wine business? Why did they sell it later on? (5 points)
- Besides the differences mentioned in the case, can you think of other differences between soft drinks and wines? (5 points)
- Why does PepsiCo have a much more diverse product portfolio than the Coca-Cola Company does? What benefits does the diversification strategy have for the company? (5 points)
- Was it a mistake for the Coca-Cola Company to buy the wine business? Was there anything they could have done to make the wine business a success for their firm? (5 points)
Answer preview……….
Why do you think the Coca-Cola Company bought the wine business? Why did they sell it later on?
Coca-Cola bought the wine business in order to diversify their product portfolio like PepsiCo, their main competitors. Diversifying into the wine market would allow the company to acquire competitive advantage from the synergy that would result from the wine business. The addition of the wine segment would increase the value of Coca-Cola in several ways. First, it would ensure that the future of the company was not solely dependent on soft drinks (Hitt, Ireland & Hoskisson, 2012). Depending on the same market segment increases the risk of the company falling in case there are changes in the particular segment. Also, the company planned to benefit from the marketing as well as a superior distribution network. The ability of the company to leverage the knowledge and skills that it already had through its long experience in the soft drink industry would make it very successful if the diversification went well. However, the value addition diversification was miscalculated. The Coca-Cola company was used to a different model of business from which the wine business required (Liu). The company sold the wine business because the executives realized that it was not as profitable as they thought and that the company model was different and therefore it would probably result to loss of value rather than the addition of value to the company……….
APA 755 words