Industrias Añaños is a family business founded in 1988 in the department of Ayacucho, Peru, with the aim of dedicating itself to the elaboration and distribution of soft drinks and table waters. After successfully expanding throughout the interior of the country, in 1997 the company decided to enter the Lima market by employing a successful quality strategy at low prices.
The company has plants strategically located in Lima, Huaura, Sullana, Trujillo and Arequipa (7 plants in total) to supply the Peruvian market and three abroad in the city of Valencia (Venezuela), Puebla (Mexico) and Machala in Ecuador. The brands that the company manages are Kola Real, Sabor de Oro, Plus Cola for soft drinks and the Cielo brand for table water. Kola Real sodas are fancy type; Sabor de Oro is a yellow drink and Plus Cola is a caramel colored soda.
In 1999, the company achieved sales of US $ 31 million, growing 24% over the previous year, this as a result of the greater penetration in the Lima and Venezuelan market. Profits for that period achieved a growth of 92%, reaching US $ 3.4 million. For the year 2001, the company's income reached US $ 38.5 as a result of the incursion into other international markets. The achievements made nationally and internationally have earned them various distinctions such as the 2001 Excellence Award from the América Economía Magazine, the 2001 ConfeCamaras award and the 1999 Top Marketing, among others.
Current competitive strategies
The right price drink
For the launch of Kola Real to the Limeño market, the company used an ingenious positioning strategy "The Fair Price Drink" with which the market grew due to the incorporation of consumers from sectors C, D and E.
The ingenious strategy of placing Kola Real as the drink at the right price and not as the cheapest, hinted that the other cola drinks were expensive and did not question the quality of the product, showing in its commercials the facilities of its plants projecting a cleaning image.
Concentration in a sector with broad growth potential
Industrias Añaños decided not to compete head-on with the large bottlers, inducing consumption to sectors that did not previously do so, by concentrating markets with broad growth potential such as socioeconomic extracts C, D and E, the company's target audience, which represents 85 % of the total urban population.
Offer quality at low prices
The company does not pay royalties for the use of brands like many of the larger companies with which it competes, which allows them to offer higher-priced presentations at a lower price than the competition. Additionally, the intensive use of PET containers made it possible to transport soft drinks over long distances, covering markets that were not very accessible for soft drinks with a glass container.
Internationalization
In 1999, Industrias Añaños decided to internationalize its brand in search of not depending exclusively on the Peruvian market, foreseeing the harsh response of the other bottlers to defend their participation in the local market. Thus, the company enters the Venezuelan soft drink market based on the climatic factor (high temperatures during most of the year) and on the fact that the Venezuelan market is twice as large as the Peruvian one. It is worth mentioning that before the introduction of Kola Real in non-returnable plastic packaging in Venezuela, soft drinks in that country were distributed only in glass containers. The strategy allowed Industrias Añaños to capture 12% of the market, equivalent to 30% of the Peruvian market.
In 2001, Industrias Añaños decided to enter the Ecuadorian market, in a first phase by exporting the Kola Real and Sabor de Oro brands through its Sullana bottler (located in northern Peru), and then strengthen its presence with the installation of a plant in the city of Machala.
In 2002, the company embarked on what could be its biggest challenge: entering the Mexican market, which registers the highest consumption of soft drinks in the world after the North American, for which it installed a plant in Puebla, investing about US $ 7. millions of dollars. This plant is supplying the cities of Puebla, Veracruz and Acapulco, hoping to obtain 5% of the market in two years, which is equivalent to 69% of the Peruvian market.
With this internationalization, the company reduces its exposure in the Peruvian market and breaks the seasonality of sales considering that the summer in Mexico occurs between July and August while in Peru it occurs in the months of December to March.
Micro-entrepreneur distribution systems
Industrias Añaños incorporated into its distribution network microentrepreneurs who, with their own means of transportation, are in charge of distributing the product in the different assigned areas, which contributed to the rapid growth of sales since the need to invest in its own distribution network. Currently the company reaches 180 thousand points of sale in Peru.
Offer of different flavors and presentations in their disposable PET containers
Industria Añaños produces fantasy type drinks (Kola Real) to compete with brands like Fanta and Crush; caramel-colored drinks (Plus Cola) to compete with Coca Cola and Pepsi and yellow drink (Sabor de Oro) to compete with the traditional Inca Kola. Through this strategy, the company is able to cope with the various brands on the market for flavor and / or litigation at lower prices by using disposable PET containers.
Key Capabilities of Industrias Añaños
The key capabilities of Industria Añaños are those related to its strategy of focusing on the least purchasing power market segments through low-price, good-quality products. Two key capabilities have been distinguished, each described as they are evaluated on the characteristics of a key capability.
Penetration into new markets and rapid growth
| Criterion | Application |
| It's hard to imitate | The evidence that this capacity is difficult to imitate is in the existence of several regional brands that have not been able to exploit the sales potential that exists in the Lima market. |
| Requires communication, involvement and commitment across the "barriers" within the organization | The development of this capacity has come as a result of sacrifice on the part of the owners, since there has been limited access to external financing. There is clarity throughout the organization that achieving goals within a market is a process that requires the coordinated contribution of all functions. |
| Offers potential in a wide variety of markets | The company has successfully taken the business model to other countries, rapidly gaining market share. The application of this capacity to other businesses will be one of the purposes of the proposed strategy. |
| It is part of the intellectual capital of the organization, it has to do with its behavior | The know-how of penetration and growth with a particular focus on segments C, D and E is typical of Industrias Añaños to such a degree that it has been able to challenge powerful brands such as Pepsi in Venezuela and Coca Cola in Mexico like no other. |
| Offers a significant contribution to the value of the product perceived by the customer | The value for the client is in having satisfied a latent demand in segments whose economic capacity does not allow the purchase of higher priced soft drinks. |
Approach your product to target segments
| Criterion | Application |
| It's hard to imitate | Again, despite the fact that there are other b-brands in all the countries in which Industrias Añaños participates, the evidence that it is a capacity that others have not been able to imitate is that the market share of their beverages is only surpassed by Coca Cola and the traditional Inca Kola in Peru. |
| Offers potential in a wide variety of markets | The company has successfully taken the business model to other countries, rapidly gaining market share. The application of this capacity to other businesses will be one of the purposes of the proposed strategy. |
| It is part of the intellectual capital of the organization, it has to do with its behavior | The philosophy of a no-frills product exists throughout the organization. So product designers don't spend time and money maximizing the product's appearance, marketing doesn't spend on a sumptuous advertising and promotional campaign, and operations don't pretend to have a delivery fleet with fresh, uniform trucks. |
| Offers a significant contribution to the value of the product perceived by the customer | Under the Industrias Añaños business model, consumers in segments C, D and E have access to a drink of good quality and price according to their capacity, ignoring aspects that make other brands more expensive and do not add value to the consumer. |
Value chain
Primary activities
Internal logistics:
- The company maintains adequate inventory control, does not maintain high levels of finished products due to its network of distributors. By working with these microentrepreneurs, the company minimizes inventory maintenance costs, since they are transferred to their distributors, and they provide adequate management of raw materials. By maintaining several product bottling plants, the company has managed to centralize the purchases of essential raw materials for the production of its soft drinks such as sugar, flavor essences, pet packaging, achieving significant discounts due to the volumes purchased. It keeps costs low, explained mainly because Industrias Añaños does not need to import the concentrate that bottlers by franchise must import, not royalty payment,adequate management of inventories and raw materials, low distribution costs because it is transferred to microentrepreneurs.
Operations:
- Within the company's operations, it should be noted that they maintain a national and international presence, thereby breaking seasonality factors.Nationally, it maintains bottling plants in strategic cities such as Lima, Huaura, Sullana, Trujillo, Arequipa and also in other small bottlers in the interior of the country. Keeping its production diversified by geographic regions, allow them to be close to customers and carry out their dispatches on time. Internationally, it maintains plants located in Venezuela (Valencia City), Mexico (Puebla City) and Ecuador (Ciudad de Machala), located in key cities, with the aim of guaranteeing dispatches on time.In recent years, Industrias Añaños has made significant investments in the purchase of fixed assets,acquiring and implementing new machinery in its bottling plants in order to maintain adequate technology in its production processes and guarantee the quality of its products.
External logistics:
- The distribution system through micro-entrepreneurs has allowed a horizontal distribution of their products. It should be noted that each microentrepreneur is assigned a certain geographical area, guaranteeing the exclusive distribution of Kola Real soft drinks in that geographic area. With the implementation of the microentrepreneur distribution system, Industrias Añaños dispensed with investing in its own distribution network at the same time It promotes the opportunity for independent work for many people, positioning the company as a generator of social well-being in various communities. Offering different presentations and flavors with its own PET packaging supported by direct promotions. Intensive use of PET packaging that enables the transport over long distances.The distribution system through microentrepreneurs has allowed it to register around 180 thousand points of sale in Peru.
Marketing and sales:
- Offering quality at a low price. Successful pricing strategy.
Services:
- Increased performance in high-litigation presentations. The development of this type of presentation has allowed it to reduce production costs, since by not maintaining low-volume presentations they use fewer labels and caps.
Support Activities
Catering:
- Industrias Añaños, like the rest of the soft drink bottlers, are characterized by the use of a high percentage of imported inputs, as well as the entire industry. Sugar, packaging and essence represent 60% of total costs. The packaging and the essence do not have major supply problems. However, in the case of sugar, the sector has had supply problems since the quality that was produced locally was not suitable for the production of beverages, so it has to resort to imports.The company has developed a close relationship strategic with its main suppliers of raw materials, allowing it to permanently supply production inputs.
Technological development:
- The company has recently acquired modern technology to improve its processes and production lines, thereby seeking to improve the quality of its products. The new acquisition of new machinery has been implemented mainly in its bottling plants located abroad, as well A policy of redesign and renewal of machinery has been carried out in some bottling plants located in Peru There is a commitment by the directors of the group to develop a culture of continuous improvement in production processes, which guarantees an adequate support system in the production.
Human Resources:
- Training and constant training of company employees. It is the company's policy to keep its workers updated, for which they have designed a continuous training plan. It seeks to keep specialized employees in different areas of the organization. Good relationship with employees, being a family business, the meaning is transmitted familiar in the company.
Firm Infrastructure:
- Family business Grupo Añaños. Organizational culture and family business. It is company policy to maintain a family member strategically at each bottling plant or by geographic region.
Competitive structure of the industry
The beverage industry and in particular the soft drink industry is characterized by being very dynamic. On the one hand, there are different brands, flavors and presentations, and on the other, a continuous price and advertising war.
Porter's five competitive forces model is developed to set limits and evaluate the attractiveness of the competitive arena in which Industria Añaños participates. This model is complemented by the study of macro-forces: government intervention and regulations, technological changes, and market growth.
Five competitive forces model
Internal rivalry between competitors
The main competitors in the carbonated drinks market in the Andean Region are Panamco and Embonor - Chile (Coca-Cola), Polar - Venezuela (Pepsi) and Postobón - Colombia. Coca-Cola, despite being a leader in all the countries of the Region, does not have the same participation gap with respect to Pepsi as in the rest of Latin America. A characteristic phenomenon of the Region is the existence of strong regional brands such as Inca Kola in Peru and Guaraná in Brazil. Additionally, Coca-Cola faces strong competition from low-priced brands, such as Kola Real in Peru.
The US $ 350 million soft drink market in Peru is led by ELSA with a 31% market share, followed by JR Lindley (29%), Embotelladora Rivera (19%), Industrias Añaños (13%) and other companies (8%). The main bottlers and their brands are shown in the box below.
| Bottler | Brand | Bottler | Brand |
| ELSA | Coca Cola
Diet Coke Fanta Fanta Pineapple Sprite |
Rivera bottling company | Concord
Triple Kola Saint Charles Pepsi Evervess |
| English Kola
saint Louis Saint Anthony Schweppes |
Industrias Añaños | Kola Real
Taste of Gold Plus Cola Heaven |
|
| JR Lindley Corporation | Inca Kola
Inka Kola Diet Crush Bimbo Break |
Latin bottling company | Don isaac
Cola party Moon Water Peru Cola |
Main soda bottlers and brands in Peru
In terms of brands, Inca Kola leads the market with a 26% share, followed by Coca Cola (25%), Kola Real (8%), Pepsi (7%) and other brands (34%).
Peruvian market share by bottling company
Peruvian market share by soft drink brand
The last consumption declaration studies place Inca Kola in first place with 37% followed by Coca-Cola with 25%. Kola Real is in third place, with 16%, which has been displacing Pepsi despite its limited advertising and distribution.
The drop in domestic demand between 1998 and 2002 and the large-scale introduction of so-called “b-brands”, such as Kola Real, exacerbated competition within the soft drink sector, which encouraged a price war and seriously affected profit margins, which eventually caused some companies to exit the market.
60% of the soft drink market is made up of black and yellow colas. The remaining 40% is made up of white and “fantasy” tails, the latter's market share is constantly growing to the detriment of black tails.
Embotelladora Latinoamericana SA (ELSA) is a subsidiary of Coca-Cola Embonor SA de Chile, through its subsidiary in Peru: Sociedad de Cartera del Pacífico SA (SOCAP). It is organized into four divisions that together supply more than 90% of Peru. In 1999 Coca Cola Company entered into a commercial alliance with Corporación JR Lindley through which it became the owner of 50% of the Inca Kola brand and 20% of Corporación JR Lindley. As a result of the agreement, ELSA bottles and distributes Inca Kola in some territories of the country and Inca Cola uses the multinational's international channels to boost its exports.
Beverages under the Kola Real brand of Industria Añaños almost doubled their sales in Peru during 1998, while Coca-Cola and Inca Kola showed no growth in that period.
Soft drink brands seek to position themselves through advertising campaigns. See the positioning map for the Peruvian market.
Positioning map of soft drinks in the Peruvian market (team building)
Market research company Datum International has drawn a positioning map based on the attributes of the beverages. This is shown below.
Positioning map of soft drinks in the Peruvian market (Datum Internacional, SA)
From the map it is evident that the brands Triple Cola, Concordia and Don Isaac compete more closely with Kola Real.
This competitive force is of very high intensity.
Threat of potential competitors
Offeror access to the Peruvian market has various barriers such as brand positioning, economies of scale, low prices and market size.
Companies with their own brands and outsourcing distribution strategies, such as Industrias Añaños, have managed to overcome the barrier of economies of scale and quickly gain good market share.
The low prices that companies maintain for their products also limit the entry of imported soft drinks or foreign companies. The brands that have entered the market in recent years have low profit margins, which endangers their subsistence in the market. The graph shows the trend of the average prices of soft drinks.
(Wiese Sudameris Bank)
Regarding the threat of imported products, between January and September 2002, imports from Chile grew more than 800% due to the acquisition of drinks from the Carnaval brand and fantasy drinks of different flavors. However, the influence of imported volumes on production is minimal due to the preference for national products, which are lower in price and good quality compared to imported ones.
The same size of the Peruvian market makes it unattractive to the competition. Furthermore, it is estimated that national producers have 35% of idle capacity.
This threat, in the short term, is considered to be low.
Customer Power
Due to the diversity of clients and the increasing size of the market, it is unlikely that they will be able to exercise great bargaining power over the industry. However, since customers do not show loyalty to a brand, the standardization of the offer, the importance of the price factor when defining the purchase and the fact that the transfer cost is zero, this competitive force is seen as medium intensity.
Provider Power
As previously mentioned, approximately 60% of production costs are concentrated in three inputs: sugar, raw material and essence.
In the case of packaging, there are various suppliers, which makes it difficult for them to have negotiating power over the industry.
In the case of sugar, the supply is mixed, some companies buy it locally while others import it. In the case of companies that import sugar, the bargaining power they possess is null because sugar is a commodity whose price is determined in international markets. On the other hand, companies that buy sugar locally have greater bargaining power, due to the large volumes they demand, however, with the increase in the import tariff, local sugar producers are in a better position to negotiate favorable conditions.. The local supply of sugar by some bottlers has allowed their acquisition costs to be reduced by approximately 15%.
This force is considered to be of medium intensity.
Threat of substitutes
There is a trend in the demand to move towards soft drinks (“light”) and a strong penetration of substitutes such as nectars and fruit juices, mineral water, water, isotonic drinks and energy drinks.
The increase in the demand for diet drinks would have a moderate effect on low-price soft drinks, since the former are aimed at certain market segments with higher purchasing power.
In recent years, there has been a rebound in the purchase of "San Benedetto Tonic Water" (Italy) and energy soft drinks such as "Extasis Energy Drink" (Spain), "Blue Jeans Energy" and "FBI Energy Drink".
This force is of high intensity.
Macro forces
Government intervention and regulations
In September 2002, there was an increase in the tariff on imported sugar that is not expected to affect local producers to a great extent since they could source locally this input, although the presentation of colored or fancy sodas would be slightly altered given the composition of the Peruvian production sugar.
The tax burden is heavy for the soft drinks sector since they are recorded with a Selective Consumption Tax (ISC) of 17%, which constitutes a limitation to transfer the tax to the consumer due to the price elasticity of demand for soft drinks.
The current economic and political situation in Venezuela limits the growth of the soft drink market in that country. However, the impact is less on lower priced brands like Kola Real.
Technological changes
Technological advances in equipment for the preparation and bottling of carbonated beverages are such that investment costs are decreasing.
The popularization of disposable PET containers reduces the initial investment in a park of returnable glass or plastic containers. It is estimated that the installation cost of a returnable packaging production line is between 4 and 5 times higher than that of a non-returnable packaging line. However, even though the initial investment is higher, depending on the rotation that returnable containers have, they could be more profitable in the medium term.
Market growth
The beverage market in Latin America should show accelerated growth in the next ten years as free market economies are consolidating in increasingly stable democratic political environments and with growing per capita incomes.
Latin America is home to two of the largest beverage markets in the world: Mexico and Brazil. After the United States, Mexico is the country with the highest per capita consumption per year, with 122 liters. It is estimated that within 10 years the Latin American market will be more than 500 million people with an age distribution in which 50% will be between 18 and 30 years of age.
This means that beverage sales should be 150 billion liters with a value of US $ 120 billion in 2010, a 50% growth in both items compared to 2000.
There is a change in lifestyle in Latin America that presents a potential for beverage producers. On the one hand, the time pressure in the region, especially in large metropolitan areas, is resembling that of other countries such as the United States, with it, shorter meal times and the need for practical products to acquire, carry, consume and discard. In addition, there is a notable change in cultural influence from the traditional European influence, predominantly Spanish, towards the North American one that stimulates practicality and consumerism.
Between 1997 and 2002, the Peruvian soft drink market doubled to its current size of US $ 500 million. The growth was due to the incursion into the Limeño market, which represents 70% of the total, of regional brands aimed at the population sectors with less purchasing power in a recessive context where the price factor was more important. These brands launched presentations of higher litigation (3.1 liters) that have better performance than traditional presentations. Kola Real caused a major change between 1997, when its market share was 2%, and 2001, with a market share of 17%, mainly to the detriment of Pepsi.
The consumer markets for soft drinks in Peru show growth expectations due to the fact that it is a market with low consumption per capita, only 42 liters compared to the average of 69 liters in the region.
The El Niño Phenomenon has favored consumption growth, particularly in the north of the country, due to the rise in temperature and the shortening of the winter season.
Assessment of the attractiveness of the industry
The information in this section is graphically summarized in the following images.
(See PDF)
The graphs reaffirm what can be intuited from the previous section: the Peruvian soft drink industry is not very attractive for the entry of new companies and for those who are already in it.
SWOT Analysis
Strengths
- Competitive prices. Situation that has been achieved mainly by not incurring the high costs of paying a Royalty to the owner of a brand.The distribution system in alliance with small regional marketers and the use of disposable containers allows the drinks of Industrias It wants to be at points where its main competitors are not. Products well positioned in segments C, D and E that represent 85% of the Peruvian market. The cost structure of the company allows it to have margins above the average of the industry despite selling its products at below-average prices. Internationalization, which has reduced its dependence on a single market and will also reduce its seasonality problems in the future.
Opportunities
- Acceptance of high-volume presentations that have higher performance for the consumer and lower production and distribution costs. Low per capita consumption of soft drinks in Peru. Development of the El Niño phenomenon, a situation that will shorten the winter season in Peru, with what period of higher sales lengthens. Expansion to external markets. Kola Real's acceptance in markets such as Venezuela, Ecuador and recently Mexico are indications of the company's success in international ventures through the export of the product or the installation of plants. Growth opportunities abroad would place Industrias Añaños as a serious competitor for the large soft drink companies in Latin America.Among the countries that Kola Real has been observing are Colombia, Bolivia and the main countries of Central America. Increased margins after the soda prices were settled. The company could increase the added value of its product with new presentations or with other types of drinks that are not currently produced, such as "light" drinks.
Weaknesses
- The level of consumer preference for Kola Real is less than its market share, this being its main problem in terms of brand perception within its target audience. It closely correlates the brand with family income level, which would make it difficult its intentions to expand into markets of levels A and B. It currently has a certain seasonality in its income, a situation that is expected to be reduced once it reaches maturity in the Mexican market, which has peaks in sales in the months traditionally reduce sales of soft drinks in South America. Ease of imitating flavors.
Threats
The high competition within the industry and the low added value of the products mean that the profit margins of the companies in the sector are very low. The main threat to companies is that the price war continues.
New economical soft drinks enter the Peruvian market. Given the success of the Kola Real brand, its strategy has been imitated. There are various regional bottlers throughout the country that are beginning to bottle soft drinks under their own brand and distribute it in retail markets.
Increased informality in the soft drink manufacturing market. Given the great acceptance that Kola Real had, there are informal companies that manufacture soft drinks that seek to emulate its success by presenting itself as a latent threat in the market.
Increase in production and marketing costs due to import duties on inputs or the imposition of taxes on the product.
Proposed strategy
For the development of the strategy proposal, the advantage layer model is first followed to ensure that the proposal is dynamic, that is, it is capable of responding to the erosion of competitive advantage over time. Then, the proposal is formalized by grouping the ideas resulting from the Advantage Layers exercise into two basic strategies and describing the components in greater detail.
Advantage Layers
Layer 1.- Current Situation
The company has an important strategy of good quality at low prices with a focus on segments C, D and E of the market. This is achieved based on a series of factors, including the non-payment of royalties to brand owners, the absence of operating and production standards imposed by the latter, less investment in assets due to their concentration in non-returnable packaging and a leaner administrative and commercial structure through outsourcing of distribution. Large litigation presentations have a better economic performance for the consumer than the smaller competitor presentations. Industrias Añaños has extensive expertise in the development of the market segments to which it has focused.
Layer 2.- Competition launches large litigation presentations
Industrias Añaños responds to the launch of large-capacity presentations by the competition by introducing small presentations aimed at children and post-mix systems to the market. This last channel is not served by direct competitors since they do not have the economic capacity to provide their clients with such a mechanism for selling soft drinks.
Layer 3.- Competing companies equate the price offered by Industrias Añaños
Once the competing companies achieve a cost structure similar to that of Industrias Añaños, they are able to match the price of the drinks. The company finds it necessary to make some adjustments to its cost structure, seeking to sign exclusive contracts with its distributors so as not to allow competing companies to benefit from the same distribution mechanism.
Layer 4.- Competition manages to develop a wide variety of flavors
Seeing Industrias Añaños equal in the amount of flavors it offers to the public, the company launches a new line of products comprised of alcoholic beverages prepared to enter a market of great potential, considering the high per capita consumption of spirits that exists in Latin America.
Layer 5.- Competition equates national coverage
In order to add value to its offer in the thousands of points of sale it covers in Peru, the company invests in the creation of a chain of convenience stores to increase control over distribution channels, expand coverage and create a new source of income.
Layer 6.- Limited growth in the beverage industry
The level of competition in the beverage industry and the company's policy of not growing to a size where it becomes a risk to large bottlers limit the potential for growth. Industrias Añaños exploits the capacity it has developed by venturing into the service sector to offer advice to family businesses and small companies seeking growth and internationalization.
Concrete strategies
The common denominator of the proposed strategy for Industrias Añaños is the focus on the market segments with less purchasing power. In these segments, the purchase choice is based on price, so it is essential that the low-price image of its products and the business structure that makes it possible to offer low prices are preserved. Thus, the components of the strategy are the reduction of the risk of dependency i) of few markets through internationalization and ii) of a type of product (soft drinks) that is easily imitated and poorly differentiated from other b-brands by through the diversification of the company's offer to the segments in which it enjoys a strong position.
Internationalization
By exploiting the ability of Industrias Añaños to penetrate international markets and quickly gain participation, one component of the strategy should be to diversify the risk posed by the Peruvian market through internationalization.
The markets in which it enters must have a high composition of segments C, D and E and be markets in which the consumption of soft drinks is low with respect to the consumption of countries such as the United States and Mexico for there to be considerable growth potential. Most Latin American countries meet these characteristics.
It is important to note that a characteristic of this strategy is to avoid a head-on collision with large bottlers (Coca-Cola and Pepsi), which is achieved by choosing segments C, D and E as the target market, which are not Coca's target market. Cola and Pepsi and achieve a market share such that it does not represent a sufficient threat to the large bottlers so that they are interested in buying the Añaños operations in each country. Through smaller participations in various countries, many different sources of income would be created.
Penetration into different countries can be done through strategic alliances with local investors or through the purchase of bottling operations that are already operating in the country. It is important to find a local partner who knows the popular products business in the country where the operation is started.
Diversification of the offer of products and services
1. Convenience stores
As mentioned before, one of Industrias Añaños' key capabilities is to deliver its products to segments C, D and E of the Peruvian market without incurring costs that prevent it from offering low-priced beverages. By definition, this capacity is transferable to other activities.
The company is, therefore, capable of taking the distribution model it manages and using it for the distribution of consumer products aimed at the same market segments to which it directs its beverages. The proposal is for it to integrate forward and establish numerous convenience stores in which, in addition to its carbonated, non-carbonated and alcoholic beverages, other consumer products are offered. It would be a chain of retail stores characterized by offering low-price products.
Industrias Añaños would be gaining greater control over its distribution channels and penetration in the brand by handling only its beverages. It would have a competitive advantage over “corner stores” by offering consumer products at lower prices (which would be achieved through economies of scale in the purchase of products) in an environment of cleanliness, controlled conservation, safety and convenience for the buyer. The mix of products in each store would be in accordance with the requirements of consumers in the area. The stores would follow an austere design so as not to burden the operation with costs that do not add value to the consumer.
2. Flavors and presentations
Regarding the flavors, the proposal is that the company integrates “diet” or “light” products into its offer in response to the growing interest and competition in this type of beverage. On the other hand, it is advisable that internationalization include an aspect of local focus in terms of the flavors offered in each country. In other words, the variety of flavors on offer must respond to local tastes.
In the medium term, Sabor Oro and Kola Real should seek to occupy the position of “the national flavor drink” that Inca Kola has gradually left behind. Due to the preference of the market towards the national one, this strategy would assure the company long-term sustainability. The key to achieving this positioning is through effective communication of the national aspect of the company and the quality of its products.
It is also proposed that Industrias Añaños expand the number of presentations in two ways. On the one hand, including small disposable presentations for the school segment and, on the other, “post-mix” drinks. The post-mix beverage market would be generated in convenience stores and through agreements with school institutions, companies, cinemas, bars and restaurant chains.
3. Alcoholic beverages
In the same sense in which the offer of low-price soft drinks is expanded and to exploit the channel of convenience stores, Industrias Añaños should penetrate the market for low-priced prepared alcoholic beverages aimed at segments C, D and E.
4. Advisory services
Industria Añaños is a success story of growth and internationalization. The knowledge gained in this trajectory is valuable for the company because it has allowed it to gradually gain ground in highly competitive international markets. In addition, it is easily marketable in economic environments characterized by numerous business startups that start familiarly thanks to the initiative of an entrepreneurial member. Latin America is an economic environment that meets this characteristic. In this sense, Añaños must create a branch of advisory and consulting services for small and medium-sized companies with growth and internationalization initiatives.
Reinventing the company
Environmental trends
The soft drink market in both Peru and Latin America presents itself as a fairly competitive market where local brands seek to compete with large multinationals in different ways, achieving in some cases a certain level of success, as has been the case with Industrias Years.
However, the success achieved in terms of growth in market share may be affected by the various trends and threats facing the soft drink market both in Peru and at the Latin American level, considering this geographic space as relevant for the analysis. of the company Industrias Añaños.
Thus, the main trends that can be identified within the soft drink market facing the company are detailed below.
- There is a general tendency in all markets for only the largest and strongest competitors to remain, forming a kind of oligopoly where you can find large companies that compete with each other for the entire market. If this trend applies to the soft drink market, it could be expected that if Industrias Añaños' growth in market share continues, this would be an interesting investment alternative for larger companies. Owners should consider as a possible scenario one in which they are presented with the alternative of selling the company to a major Latin American bottling company or forming a strategic alliance with it in which the new ally benefits from Añaños' ability to manage supply to its customers. target segments.As a variant to the scenario in the previous point, as Industria Añaños' market share represents a threat to large bottlers on a Latin American scale, it could face legitimate and illegitimate retaliation to counter that growth. Competition in the soft drink business will grow on two levels. On the one hand, multinational companies will gain participation through acquisitions and strategic alliances. On the other hand, local bottlers will continue their development in smaller markets but faithful to the local product. In view of this, Industrias Añaños will have to face two fronts of competition: one, that of the competition of small local companies and another, that of the large multinationals.it is observed that the price is becoming the main decision factor to choose one or the other brand. The company must retain the ability to achieve a cost structure that allows it to offer the product at the lowest prices on the market and with the best quality. Within the market segment in which Industrias Añaños participates, it is observed that prices will remain relatively stable, which would attract local bottlers to seek market share. The image of soft drinks has been damaged by studies that name them as a Important cause of obesity and associated diseases (United States Department of Agriculture: Food, Nutrition and Consumer Services).The company must take this aspect into account and develop products with specifications that are more in line with the growing awareness of health care that exists in these times. This refers to light products or with more natural ingredients. As a complement, Industrias Añaños must approach bottling associations to have access and benefit from information campaigns that seek to deny the aforementioned studies, since it is easy for bottlers to develop products similar to those of their competition, increasingly difficult to differentiate products so companies must seek a competitive advantage through differentiation in other ways. Likewise, the best practices in the industry are imitated by competitors through strategic benchmarking.Both aspects can work in favor or to the detriment of Industrias Añaños. In fact, the company has taken advantage of its ability to imitate flavors and compete with higher priced cola, yellow and fancy sodas. There is a potential for increased consumption of soft drinks per capita in Latin America (“Beverage Markets in Latin America to 2010 ”). Except for Mexico, the levels of per capita consumption within the countries in which Industrias Añaños operates and plans to operate in the near future are all low. A strong trend in the markets for various products is that of harmonious production. with the environment. Companies should seek to carve out their image of protecting the environment by seeking certifications such as ISO 14000.There is a tendency to consider carbonated beverages as luxury goods and for this reason you affect selective consumption taxes. This situation has been occurring in countries such as the United States, Mexico and El Salvador, a situation that could be increased at the Latin American level by the need for funds from the various governments, limiting the ability of companies to offer drinks at low prices.
Value innovation
By using the Value Innovation approach, it is sought to have a graphic visualization of the business paradigms of the competitor groups of Industrias Añaños and the same company. The visualization allows finding the spaces of the product offer that are not being properly served, either because they do not meet the expectations of the clients or because they offer characteristics that make the product more expensive but do not add value to the client.
First, the current paradigms of the industry and the company are presented, and then, the new paradigm of the company for the beverage business. This scheme is repeated for convenience stores.
Carbonated drinks
This industry can be divided into two groups: one, that of soft drinks of international prestige and higher prices, which are aimed at segments A and B, and the other, of less prestigious drinks and prices aimed at the lower-income segments, such as the C, D and E, that is to say the b-brands. Coca Cola, Fanta, Sprite, Inca Kola, Crush and Pepsi are located in the first group, while the second group includes Kola Inglesa, Bimbo, Concordia, Triple Kola, Don Isaac, Fiesta Cola, Perú Cola, Kola Real, Sabor Gold and Plus Cola.
Classification by type of beverage and target segment is preferable to classification by companies, as some bottlers participate in the market with both types of beverage.
Current paradigm: prestigious drinks and high prices
The business paradigm that applies to these drinks is described by a set of product elements.
| Element | Current logic |
| Price | High prices for the payment of royalties for the use of the brand and adherence to the operational standards of the brand owner. Aimed at segments with higher purchasing power. |
| Quality | Very high quality standards. ISO 9000 certifications or in our own quality programs. Globally standardized operating standards. |
| Variety of presentations | Wide range of presentations in returnable glass and PET containers and disposable aluminum and PET |
| Large Litigation Presentations | In presentations up to 3 liters. Emphasis on lower-volume presentations (personal drinks up to 2 liters). |
| Light or diet drinks | Wide range of drinks with low calorie sweeteners in response to the requirements of its target segment. |
| Element | Current logic |
| Drinks without caffeine | In response to the myth that caffeine causes addition, they offer caffeine-free drinks in some of the flavors. |
| Regional presence | Distribution network focused on the regions with the highest consumption per capita. |
| Availability | Special emphasis is placed on always having a product at all points of sale since the cost of missing items is high. |
| PET containers | Increasing use of plastic packaging in search of cost reduction. |
| Appearance | Very good physical appearance. Special emphasis on packaging design, even suitable for different dates of the year. |
| Brand prestige | Great international prestige since they are marketed around the world and are backed by intense marketing programs. |
| Promotions | Promotions used to reinforce brand presence and prestige. |
| National identity | With the exception of Inca Kola, these brands are not consumed by a consumer identification with their origin, but rather for their prestige and internationally recognized quality. |
| Combination with liquor | A large percentage of these brands are used in the production of drinks and alcoholic beverages, this being one of their main uses. |
Current paradigm: b-brands
Current paradigm: Industrias Añaños
The current paradigm of the Industrias Añaños business is summarized in the following aspects.
| Element | Current logic |
| Price | Focus on the low price market. |
| Quality | Seeks differentiation through quality. |
| Variety of Presentations | Almost exclusively family-size presentations in disposable containers. |
| Large Litigation Presentations | Segment prefers large-size beverages because they are more “productive” than other sizes. |
| Light or diet drinks | Sweet drink does not add value. Consumers in the target segments have no preference for diet drinks. No drinks of this type are offered. |
| Drinks without caffeine | Drinking without caffeine does not add value. Consumers in the target segments have no preference for caffeine-free beverages. No drinks of this type are offered. |
| Regional presence | Focused on areas with little presence of the brands of large bottlers. Together, these areas represent a good portion of the territory but not consumption. |
| Availability | Limited. Marketed by retailers without the resources necessary to maintain an inventory that eliminates lost sales due to shortages. |
| PET containers | Exclusive use of these packages. Means to reduce costs and facilitate the transport of the product. |
| Appearance | Appearance does not add value to the consumer. Little importance is given to the appearance of the product. |
| Brand prestige | Limited despite the fact that Kola Real is the third best-selling brand. Target market does not value prestige, only price. |
| Promotions | Promotions play an important role in attracting consumers. |
| National identity | There is an identity in the regions where the brands have originated or where they are more common. Low national identity due to limited presence at the national level. |
| Combination with liquor | Cola and Lemon flavors are combinable with liquor, but not so the Fantasy flavors and the Yellow soda. |
In conclusion, the company is aware of the importance of price at the time of the decision to purchase the product, so it seeks to differentiate itself through the quality of its product.
The graph value curves show what has been presented so far.
New paradigm: Industrias Añaños
| Element | New logic |
| Price | Low price reinforced by other elements that give value to the client. |
| Quality | Differentiate in terms of quality to influence the purchase decision |
| Variety of Presentations | Within this segment, another type of market can be attacked, such as children and / or schools, which is intensive in small packages. |
| Large Litigation Presentations | Family sizes and small size (200ml) for the children's and school segments. |
| Light or diet drinks | Availability of drinks with sweetener other than sucrose and high-fructose corn syrup to add value to the product |
| Drinks without caffeine | Availability of caffeine-free drinks to add value to the product |
| Regional presence | Expansion to regions of unmet demand due to price or availability |
| Availability | Consignment agreements with retailers to increase beverage availability |
| PET containers | PET is suitable material for large litigation presentations |
| Appearance | Appearance is an effective sales attraction tool, an attractive product design generates an increase in sales. |
| Brand prestige | It seeks to increase brand prestige through advertising with an emphasis on quality differentiation and promotions. |
| Promotions | Promotions are an important factor in sales promotion. Useful to "tie" the customer with the product. |
| National identity | Initially recognized as the national brand in segments C, D and E |
| Combination with liquor | Launch of prepared alcoholic beverages |
The value curve corresponding to the new paradigm is presented below along with the curves shown above.
Industrias Añaños breaks creates a new market space by occupying an intermediate space between expensive and prestigious brands and b-brands. It differs from b-brands in product quality, brand prestige, and positioning as a national brand, and differs from expensive drinks with a lower price and limited number of presentations with an emphasis on family sizes.
Convenience stores
The convenience stores of Industrias Añaños enter into direct competition with “corner” stores, grocery stores or warehouses. The competition strategy is based on breaking with the existing business paradigm for these stores.
Current paradigm
New paradigm: convenience stores of Industrias Añaños
Industrias Añaños convenience stores integrate the concept of fair prices and quality assurance of a supermarket or market with the convenience of many facilities with extended extended hours.
Idealized Design
The idealized design model proposed by Russell L. Ackoff in Creating the Corporate Future is followed to create an idealized vision of Industrias Añaños. In the first instance, an unrestricted model is developed and then delimited with the three properties required to achieve, not an ideal system, but a system that pursues the intended ideals: a system with which the current system would be replaced if this could be done.
Mission selection
The mission presented has the objective of making explicit the ideals to which Industria Añaños will dedicate itself.
"To be the most successful provider of products and services related to the consumer products sector in Latin America with an outstanding position in massive sectors through a low-cost and excellent quality product."
Idealized Design Properties
The properties listed are the result of a brainstorming and consensus session regarding the characteristics that the ideal company must have in order to be competitive and respond to the strategies proposed in Section VIII. They are listed organized under several different headings to make sure they cover all aspects of the business.
- The business. What types of products or services must the company provide? What special characteristics should they have?
The range of products produced by Industrias Añaños includes the soft drinks they currently produce in the Cola, Yellow and Fantasy categories. The brands with the highest volume exist in a light version and there is a strong regionalism component of the flavors according to the locality. Existing presentations range from small sizes for the school audience to family sizes. Prepared alcoholic beverages are also produced, for example, rum with cola and brandy with cola. All products are aimed at segments with limited purchasing capacity.
Regarding services, the company provides consulting services for small companies in growth and internationalization.
The company has a chain of convenience stores aimed at the same market segments to which it directs its products. Stores not only sell their products but also a wide range of basic necessities.
- Markets and marketing. Where, how, who and on what terms should the products or services be sold? What pricing policies should apply?
The market in which the company develops is the Latin American market. Currently it already participates in Peru (place of origin), Mexico, Ecuador and Venezuela and expands to Colombia, Chile and Brazil in the first instance and gradually to the rest of Latin America.
Industrias Añaños will continue its position in low-income sectors, a sector where it has a strong position.
Industrias Añaños products will be marketed through regular and / or traditional sales channels, where they will arrive through private distributors with whom they are strategically related. Likewise, Industrias Añaños will reach its customers through its chain of convenience stores, which will allow it to generate a greater network of points of sale nationwide.
The pricing policy used by Industrias Añaños will continue to be to provide its customers with good quality products at low prices, prices that are achieved by factors such as its low cost of distribution, its non-dependence on royals or franchises by owning its own brand, among other factors explained above.
- Distribution. How should the company's products be distributed from the place of production to the intermediary and the final customers?
The company must distribute its products through outsourcing. This organization of the distribution networks allows reaching multiple points of sale in the target market (segments C, D and E) without an investment in assets, thereby achieving a cost structure that allows profit even when selling the product at a low price.
An important factor is that the company must be constantly monitoring the growth of its market in order to make changes in the zoning of its distribution network and thus make the distribution of its products more efficient. This zoning must be carried out taking care that the areas covered by the distributors do not overlap to avoid conflicts that harm the stability of this distribution channel.
The distribution network is made up of small micro-entrepreneurs who, with their own vehicles, are in charge of removing the product from the company's warehouses and taking them to the different points of sale according to the stipulated zoning. Although, the company's strategy is not to be in charge of the distribution of its product, but it must ensure that the members of its distribution network provide a quality and efficient service so as not to create discontent and discomfort at its points of sale..
This same distribution network is responsible for supplying products to convenience stores, thus avoiding incurring higher distribution and transportation costs. The company concentrates all its merchandise purchases in its warehouses from where, like its soft drinks, they are distributed to its chain of convenience stores.
- Product services. How, who and where should the products be serviced? What arrangements must be made for returns, exchanges, recovery or disposal?
In order to maintain adequate levels of customer service, the company implements electronic mailboxes as well as call centers where both the retailer and the end customer can place orders and send suggestions and / or complaints about both the product and the service provided. This allows the company to be aware of the efficiency of its distribution chain as well as the quality and how its product is being perceived. With this information, the company can make the necessary modifications at the appropriate time in those points that are damaging the development of its product.
Additionally, in convenience stores you can receive and process payments for various services such as electricity, water, telephone, among others. This helps to attract more clients due to the additional services that give greater added value to final consumers. On the other hand, this chain of convenience stores offers refrigerated products unlike most of its competitors that do not have access to this service, or failing that they charge an additional surcharge for these.
- Production. How and where should the products be produced? How should production plants be designed? How big should they be? What type of energy should be used? How much vertical integration must exist?
The products must be produced by personnel from the company itself, who have a high level of preparation specialized in the elaboration and development of all kinds of carbonated beverages, as well as technical personnel specialized in the handling and maintenance of machinery and equipment. It must be ensured that the plants are strategically located in order to achieve efficiencies both in the distribution of their products and in the management of inputs in order to maintain a lean cost structure.
Additionally, machinery must be continually renewed, in order to stay ahead of the latest technological developments in the production of soft drinks. It is important to mention, especially at this point, that production must comply with quality and environmental protection standards such as ISO 9000 and 14000.
As for convenience stores, the company makes purchases from its suppliers in large volumes in order to obtain discounts so that it can reach its target market with cheaper products than those offered by the rest of the small independent stores that do not they have access to these benefits.
- Support services. What support services should be provided internally and externally? Do units using internal services have to pay for them?
Given that it seeks to keep costs low in the company in order to compete for cost, the organization must have a small staff, who must be specialists, the ideal people to generate value for the company.
Support functions such as human resources, accounting, cleaning, and security should be outsourced so as not to be burdened with unnecessary fixed costs. Likewise, the distribution function is considered as a support service. Through outsourcing, you can enter new markets in a shorter period of time without incurring heavy investment.
In order to subcontract the support services, an in-depth evaluation of the alternatives existing in the markets must be carried out, so that suitable and efficient options can be chosen for the development of the company.
- Organization and administration. How should the company be organized? How is the performance of the units measured? What authority and responsibility should be given to each managerial level? What type of resources does the manager control at each level?
The organization must be as flat as possible, as explained in the previous point, support activities must be subcontracted to reduce fixed costs. However, the members of the organization must be selected in such a way that they are suitable for the functions they perform, they must generate value for the company. A market-oriented approach should be chosen, providing target consumers (segments C, D and E) with products suited to their payment capacities, needs, tastes and preferences. The products offered must be constantly measured to match those expected by the market.
Being a family business, the directors of each region can be a member of the family, however experts in key functions such as production and marketing must be hired as mentioned above. Structurally, the organization must follow a hybrid strategic grouping model. At a level, it is organized by geographic area, either by country or by region of the country, according to the size and variability within the market that it serves in order to adapt the offer of services and products to the particularities of the client. Within each geographic area there is a grouping by product, specifically, carbonated drinks, alcoholic beverages and service stores. At the corporate level, there are also specialized groups by activity that serve all operations, for example,during startup, product launch, recruitment, implementation of information systems, etc. One of the specialized groups is responsible for the knowledge management of the corporation.
The company must have a culture oriented to the evaluation of the personnel according to the fulfillment of objectives, the personnel must perform in such a way that the established goals are achieved or exceeded and they must be aware from their incorporation to the company that not to comply with the objectives a certain number of times, must withdraw from the company, it seeks to form leading, agile and efficient work teams to compete with existing local companies.
Each working group must have the ability to make its own decisions, thus having full responsibility for the results obtained.
- Personal. What policies and practices should apply to recruitment, hiring, counseling, compensation and incentives, benefits, promotions, career development, staff retirement?
The personnel hired by Industrias Añaños must be the most capable possible with a clear vision of the future of the sector and with a clear understanding of the company's policies and objectives.
The recruitment process should be divided into three classes: 1) recruitment of personnel to develop it in the company, 2) executives with knowledge of the market and with a mindset of leaders, and 3) successful managers in low-income and mass consumption sectors. that they can provide the company with a revolutionary vision regarding the direction that the business should take.
The company offers its young executives interesting development possibilities in the internationalization issue, giving them the opportunity to develop in different markets that cover a number of countries such as Mexico, Venezuela, Ecuador and Peru, hoping in the medium term to increase this supply of international labor development.
- Finance. How should corporate investments and activities be financed? What policies should be applied to the granting of debt and credit? What measures of financial performance should be used?
To finance growth and internationalization, Industrias Añaños can go public, that is, sell shares in the market or grant shares to its executives as an incentive and / or make strategic alliances with local investors in the countries where they plan to venture.
In the financial system, the company must manage to restructure its short-term and long-term debt in order to improve the interest rate and maintain self-liquidating lines of credit.
Maintain healthy finances by carefully evaluating credit applications from distributors and customers. A characteristic feature of the target segments of Añaños' products is that they handle mainly cash.
- Owners. Who should own the company? What type of board of directors should the company have? What responsibilities should you have? How should it operate?
Maintain family control of the company to ensure that the founders' goals are pursued. Internationalization forces the participation of other investors, but the founding family maintains the majority participation of the businesses.
From the corporate center, managed by the Añaños family, strategic lines are dictated for all operations. The boards of directors of each country decide on tactical and operational aspects.
- Environment. What responsibilities should the company assume regarding its social and physical environment? How should the company relate to the different levels of government and relevant stakeholders?
It is certified in environmental terms, such as ISO 14000. It is responsible for the complete life cycle of the product, promoting and participating as a concentrator in programs for the collection of PET containers to seek an adequate disposal of waste.
In agreements with schools, sports, family and recreational activities and facilities are sponsored in exchange for exclusivity in the sale of beverages on campus.
They have favorable relations with the authorities. In particular, with the tax authority you have a good image.
Detailed design
This section addresses what the organization must do to have the properties of the design just described. The subtitle scheme and order of the previous section is followed to ensure consistency and facilitate reading.
- The business.
- Establish and consolidate relations with suppliers of sweeteners for light drinks. Establish and consolidate relations with suppliers of liquor for the production of prepared alcoholic beverages. Develop the business unit that will provide the consulting service for growth and internationalization by hiring for the main administrative position a person with experience in consulting services and establishing a mechanism for the management of the knowledge gained in Añaños.Develop the convenience store business unit by hiring in the senior executive position a person with experience in supermarket and / or self-service store business. It is essential that the suppliers of the products that are supplied in the store are developed.
- Markets and marketing.
- Make an in-depth evaluation of the Latin American markets to determine the potential of each one and establish a prioritization.
- Distribution.
- Consolidate the relationship with the subcontracted distributors by creating loyalty and incentives. Develop information systems for the coordination of dispatching and routing for a more efficient administration of the distribution and the control and supervision of the activities of the contractors.
- Product services.
- Develop information systems for customer experience management (CRM): placing and tracking orders for end customers and managers of convenience stores and capturing feedback. Establishing relationships with companies or organizations whose payments can be made in stores of convenience.
- Production.
- Affiliation to industry associations to access industry-specific information: equipment, supply chain, distribution, trends. Development of a quality program with a view to ISO certification.
- Support services.
- Develop information systems for the assortment of stores based on data originating at the point of sale. Consolidate relationships with providers of support services: human resources, accounting, cleaning and security.
- Organization and administration.
- Clearly define key non-delegable functions to be performed by company employees.Develop a culture of working in self-directed teams to stop quality development, environmental, internationalization, flavor development, market research, etc. projects.
- Personal.
- Formalize the system of promotion of positions for service time within the company and compensation for achievements.
- Finance.
- Formalize the stock option system for executives.
- Owners.
- Find strategic allies in the countries where you intend to enter.
- Environment.
- Develop the ISO 14000 implementation team following the achievement of ISO 9000 certification. Establish relationships with PET buyers for use as alternative fuel or for recycling. Formalize exclusive relationships with schools and educational institutions. Develop a lobying program with government authorities, particularly prosecutors.
Design restriction
By restricting the idealized design on three levels, the aim is to adjust it in such a way as to ensure that it does not escape the reality of the environment that surrounds it and over which it has influence. This exercise, on the one hand, confirms what the organization must do to achieve an ideal state in terms of key competencies and strategies, and on the other, "protects" the strategist from making an unrealistic proposal and therefore difficult to disseminate and accept.
- Technological feasibility.
This requirement refers to the fact that the design does not incorporate any technology that is currently impossible to use, as is the case with the design that has been proposed. In fact, the technological aspects of idealized design only include existing information technology for routing and dispatch control, customer relationship management, and knowledge management (KM).
- Operational feasibility.
The proposed system would be able to survive if it were brought into existence because care has been taken to consider uncertainties in the environment and actions by the competition that could threaten the proposal, and actions have been included that respond to the risk that changing conditions impose. The crux of the proposed design is to diversify the risk associated with remaining in the soft drink industry solely for what is considered to be economically sustainable.
- Capable of rapid learning and adaptation
One of the aspects that aims to improve the idealized design with respect to the current management of Industrias Añaños is to achieve greater control over the distribution functions of the product, this in order to evaluate the decisions made. On the other hand, the development of self-directed work teams for special projects, including the project to implement the new business model, gives the organization a resolution mechanism for issues that arise during daily operations.
Key capabilities of the idealized company
As a result of the list included in the Detailed Design, it is evident that Industrias Añaños must develop certain key competences in addition to the current ones to be the ideal company. These powers are described below.
- Working in self-directed teams
The teams will be assigned to special projects and will be made up of employees from various functions. They will be in charge of the formulation and launch of internationalization projects, quality certifications, environmental certification, information technology, among others.
- Knowledge management
It refers to the ability to store, structure and disseminate the knowledge acquired by entering international markets and the daily activities of distribution, sales, and relations with stakeholders.
Scenario analysis
Defining the scenarios
The scenarios of the future, which are conceived conceptually with the purpose of externalizing and structuring a vision of the competitive arena in which the company will be located, are limited first in terms of time, geography and business.
Scopes
The time frame in which the presented scenarios are located is in the medium term (5 years to 8 years from the date). Geographically they are limited to Latin America. They refer in particular to the beverage business.
Driving forces
The observable trends and uncertainties that would shape the competitive arena are identified as driving forces. In summary, the trends and uncertainties discovered in the development of this work are listed in no particular order.
- Consolidation of the beverage industry in a few large companies Collusion between large companies to protect themselves from small companies Strong positioning in niche markets Product standardization with price as the only factor in purchasing decisions Damage to the image of soft drinks Increase in per capita consumption of beverages in Latin America Protectionist legislation of the national industry that prohibits or makes the participation of foreign companies more expensive Unfavorable legislation in terms of tariffs on raw materials, sugar in particular and selective taxes on consumption
The main uncertainties, those that would lead Industrias Añaños to make markedly different strategic decisions, are identified from the list above, the following:
- level of per capita consumption of bottled beverages commercial opening of Latin American markets
Scenario description
Having chosen the main uncertainties, the scenarios are graphically located in a quadrant system.
In the construction of the scenarios, conceptually, it is assumed that both the level of consumption and the commercial opening would occur simultaneously in all markets. However, in its application for decision-making, it is clear that the model must consider the specific market on which it is intended to decide.
| High consume | |||
| 4. Cola World | 3. Home insurance | ||
| Market
international open |
- Intense competition
- No protectionism - Strategic Alliances - High purchasing power - Favorable prices - Good image |
- Little competition
- Exploitation of niches - High purchasing power - Favorable prices - Good image |
Market
international closed |
| 2. The challenge | 1. Going back to the past | ||
| - Medium competence
- No protectionism - Low purchasing power - Unfavorable prices - Bad image |
- Little competition
- Collusion - Low purchasing power - Unfavorable prices - Bad image |
||
| Low consumption |
Going back to the past
It is the characteristic scenario of the Latin American countries between the 50s and 80s of the 20th century where there is a prohibition on imports in order to protect the local industry but without a national development program that enables the population to be technically able to substitute imports. The result: repressed economies with per capita incomes that do not allow the consumption of goods that are not essential. The few companies that continue to have an interest in participating in the market “share it” to survive.
The challenge
Companies with the financial capacity to do so operate on a small scale in various parts of the world, a strategy with questionable sustainability given the low price of beverages or have consolidated as regional companies. The challenge is precisely to encourage consumption in a world market that is thought to have potential.
Home insurance
The commercial closure of the countries would limit companies to the Peruvian market. Although high consumption would be an attraction for new entrants, competition would be low because there would be a focus from each company towards certain segments and geographic areas. This scenario is what existed in Peru until the internationalization of Añaños and Lindley.
Cola World
The "cola world" is the paradise of soft drink companies. The high consumption, favorable price and global scale of the business provides space for all participants to participate in favorable economic conditions. Competition would intensify as the world market becomes saturated.
Idealized design location on stage
Having described the most feasible scenarios to occur, the company abstracts in its idealized design from its current environment and is located in three of the scenarios to propose the strategies that would be taken to occur these scenarios.
The challenge
This is another negative scenario for Industrias Añaños. As a strategy to gain participation in the low consumption of beverages, you should seek to encourage consumption by offering a product that is more functional than emotional, enriching it with vitamins, minerals and natural energy, for example, at a low price.
Home insurance
If this scenario occurs, the company will have to expand its offer in Peru in two ways to meet growth objectives: diversifying the portfolio of products it offers (for which the existence of the chain of convenience stores provides an exceptional test vehicle) and penetrating segments A and B of beverage consumers. This second point would come more as a need than as a desire because it breaks the strategy that has been in the short term for the company.
Cola World
The Cola World is the ad hoc scenario to the idealized design, consequently the strategy in this case would be to follow the internationalization push with an exclusive focus on the market niche for whose attention Industrias Añaños has developed a key competence.
References
- Day, GS; DJ Reibstein and RE Gunther "Wharton on Dynamic Competitive Strategy - Assesing Competitive Arenas". John Wiley & Sons, Inc., USA 1997. "Beverage Markets in Latin America to 2010". Promar International, USA 2000.Fowks, Carlos “The Personality of a Soft Drink”. Datum Internacional SA, Peru. "Corporate Profile - Industrias Añaños, SA". Maximixe, Peru. April 2002. "Sector Report - Soft Drinks". Banco Wiese Sudameris, Peru. July 2002. “Market risks - Soft Drinks”. Maximixe, Peru. September 2002. "Embotelladora Latinoamericana, SA". Apoyo & Asociados, Peru. October 2002.Ackoff, RL "Creating the Corporate Future". The Wharton School, University of Pennsylvania.N / E "The design of the organization as a competitive weapon." October 1996.United States Department of Agriculture: Food,Nutrition and Consumer Services http://www.fns.usda.gov/fncs/National Soft Drink Association http://www.nsda.org/The Coca-Cola Company http://www2.coca-cola.com/index.htmlCoca-Cola Perú http: //www.coca-cola.com.pePepsiCo http://www.pepsico.com/AROQ: just-drinks.com http://www.just-drinks.com/index.asp ? c = 1Refreshments Canada
