Strategy Memo
To: CEO, Enhanced Analytics, Inc. Austin, Texas
From: Senior Vice President for Marketing, Enhanced Analytics, Inc. Austin, Texas
Date: 4th April 2021
Subject: Premier Drinks of Sofia, Bulgaria
1. Situation analysis
Soft drinks in Bulgaria are the biggest pillar on which the non-alcoholic drinks industry rests. The most notable players are Coca-Cola and PepsiCo which are top soft drink manufacturers of the globe as well. The sector in the Eastern European country is characterized by multinational brands which are committed to product development and marketing; moreover, they use regional bottlers that license their brands for distribution in specific regions (Soft Drinks – Bulgaria – Statista Market Forecast, 2021). The management of the client organization, Premier Drinks of Sofia, Bulgaria has informed that two new players in the country have arrived from Germany and Poland. It seems that the competition situation is becoming challenging for our client. The company believes that some competitors have an undue advantage due to their unlawful access to government departments and sports events. Apart from this, COVID-19 is also posing serious challenges in the form of lockdowns, reduced business activities, low incomes, and curtailed consumption in some segments (Donthu & Gustafsson, 2020). According to experts and the German media, the pandemic will stay attest for a year (Deutsche Welle, 2021). The implications for these facts might be serious for the entity.
2. Problem Identification
External problems
Premier Drinks of Sofia, Bulgaria is facing multiple issues on the external front. The competition in the industry is rising with the entry of two EU players which might give a challenging time to the company along with Coca Cola and PepsiCo. Apart from enhanced rivalry in the industry, the pandemic is adding salt to the injury. The management of the client organization also believes that the executives of some competitors gain an unauthorized and undue advantage by bribing the government officials in the form of supply of their drinks in government institutions.
Internal problems
Similarly, on the internal front, the product development of Premier Drinks of Sofia, Bulgaria seems ineffective in the fast-changing dynamics of the industry in the country. The company seems to rely on conventional products which have not changed with changing trends. The entity might be lacking resources to expand and improve its production and marketing.
3. Decision Options
- The company should develop new products to compete better with competitors in the changing business conditions which are even complicated in the presence of a pandemic.
- The company should collaborate with a reputed foreign or local player so that it receives the required financial and technical resources to overcome its problem.
- The entity should expand its supply chain to tap the market in the country which is not previously covered.
- The company should try to purchase a few successful brands from competitors who might divest from the country due to pandemics or any other reason.
4. Decision
Given the history, resources, and position of the entity, the top leadership of the company should select the first option covered in the previous section. It is a better course of action to develop new products to compete better with industry players in the dynamic operating environment marred with the presence of the coronavirus.
5. Justification
In the third section of this report, there are four options listed for the management of Premier Drinks of Sofia. All solutions presented have their own merits and demerits; moreover, each might produce a result with a different time frame. However, the first option of innovative product development seems most appropriate. In this way, the entity might better compete with new entrants from Poland and Germany. According to research reports, the market is anticipated to grow annually by 7.80% by 2025 (Soft Drinks – Bulgaria – Statista Market Forecast, 2021). It means that if the company selects the first option, it might gain more than general growth in the Bulgarian market because the innovative products might give the company an edge over the existing and new entrants. A detailed survey of 400 purchasers of soft drinks proved that new market segments for stimulant beverages offer ample chances for the success of companies (Sorenson & Bogue, 2006). The company might also launch innovative stimulant beverages after a detailed feasibility study. It will also another brand in the already existing portfolio of the organization. The company might offer a bulk discount to attract large customers including the government departments which seems securing products from the competitors of the entity.
References
Deutsche Welle. (2021). Is the end of the corona virus pandemic in sight? DW https://www.dw.com/en/is-the-end-of-the-coronavirus-pandemic-in-sight/a-56740737
Donthu, N., & Gustafsson, A. (2020). Effects of COVID-19 on business and research. Journal of Business Research, 117(1), 284–289. https://doi.org/10.1016/j.jbusres.2020.06.008
Soft Drinks – Bulgaria | Statista Market Forecast. (2021). Statista. https://www.statista.com/outlook/cmo/non-alcoholic-drinks/soft-drinks/bulgaria
Sorenson, D., & Bogue, J. (2006). Modelling soft drink purchasers’ preferences for stimulant beverages. International Journal of Food Science and Technology, 41(6), 704–711. https://doi.org/10.1111/j.1365-2621.2005.01139.x
