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Andina Bottling Company Case Study

Essay by   •  November 19, 2010  •  Case Study  •  2,123 Words (9 Pages)  •  2,145 Views

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Andina Bottling Company Case

Andina is a major distributor of Coca-Cola products in Latin America. The market for soft drinks is very competitive in Latin America. The dominate brands are not necessarily Coca-Cola or Pepsi brands. For a company to succeed in the distribution and manufacturing of soft drinks in Latin America, they need to be efficient. The plants need to work at capacity or close to it. The distribution also has to be logical. It is not worth it for them to sell to less populated mountain areas. The point of the new system that Andina is introducing is going to make sales, distribution, and manufacturing easier. The three countries are going to share their information with each other. Control panel and the rest of the system will be successful if Andina can convince each country that they can trust it. Andina is doing a good job of trying to unite the three subsidiaries through Control Panel.

For Andina to succeed in the bottled drinks manufacturing and distribution business, they need to be the most efficient that they can be. There are many bottled drinks in Latin America. There are many knock-offs of Coca-Cola as well. Andina is facing a lot of competition. They need to make sure that they are selling to a larger audience and not to a smaller one. There is no point in concentrating a large amount of your sales force on a mountain area or one that is spread out over some distance unless there is a large population that the drink is marketed to. If the mountain region makes up less than 5% of the company's sales, they should try to focus on a more populated area with more of a target market. In the case, it talks about how this happened in Argentina. They had 25,000 clients that accounted for only 3% of their sales, (10). The distribution costs were incredibly high on these customers. The smaller clients were raising their distribution costs because delivering a case here and a case there adds up.

When it comes to manufacturing, the company needs to make sure that they have enough outputs for the demand. Also the sales force needs to target the correct market. If the sales force focuses on a market with low consumption, their sales are not going to be as good as a market with high consumption.

With the implementation of the new system and control panel, Andina is trying to bring their company together. They want the process to be more uniform. In the beginning of the case the company is operating like three separate companies with no connection to each other. The point of the new system and control panel is to make these three countries processes easier. The main system was there to help simplify the financials of each of the subsidiaries. It also helped in making sure that all the information reached the headquarters and not just the positive. Also the same process would used at every subsidiary. The manager of the plant in Chile could be interchanged with the plant manager in Brazil.

Control panel is supposed to be a place where central management in the main office can see what is going on at each subsidiary. Control panel is there to find any discrepancies or issues in the operations at the subsidiaries. It assesses how each division in the subsidiary is performing. An example of what control panel can find is the 25,000 smaller clients in Argentina as one reason for high distribution costs. Control panel showed the management that distribution costs were high in Argentina. They investigated this and decided that they needed to start focusing on their larger clients.

The system and control panel will be successful if they can open all their subsidiaries to it. The case talks about how resistant Brazil is to this. They do not like the idea of someone watching what they are doing. They seem very independent and not very fond of suggestions. Argentina, on the other hand, embraced the technology. Chile is below Argentina when it comes to embracing the technology, but they are still above Brazil. The managers of each of these subsidiaries needs to trust the system or else their employees will not. If the manager does not believe in or follow the new system, there is no point in implementing it. The success of the new system and control panel are contingent on how well the managers of the subsidiaries embrace it. Eventually though, the managers who do not embrace it will come around or leave and new people will be brought in. The system will succeed especially if it does make life easier.

The main problem in Chile is the insurgence of B-Brands or cheaper substitutes for Coca-Cola. These knock-offs were invading Coca-Cola's market share in Chile. They were also causing the market price for a Coca-Cola to drop. To counter the B-Brands, Chile introduced a low cost line of non-soda to the public. This new line was failing. Andina has the leading market share in this country though. Andina wants to stop these B-brands from gaining any more of their market share so they cam up with three strategic plans. One is to continue their search for a low price Coca-cola substitute. This could definitely hurt their market share. Andina would be competing against themselves in the same market. So the first strategy is not necessarily a good decision because it could in the long run affect their future distribution and manufacturing deals with Coca-Cola. The lower cost substitute could take a substantial chunk of the Coca-Cola market in Chile away. Alternative number one has serious flaws.

Alternative number two deals with having Coca-Cola launch a B-brand soft drink in Chile that would help stop the competition. Coca-Cola probably will not be too happy with this. Why would they want to introduce a lower price soft drink comparable to the current market leading soda which happens to be Coca-Cola? Unless Andina can show Coca-Cola that they are going to lose the market lead, Coca-Cola probably will not want to launch a B-brand. If Coca-Cola does launch a B-brand, is it really cost effective to only launch it in Chile? It would be cheaper to launch it in other countries as well which could definitely affect their market share in those countries.

The last or third alternative is the positioning of Coca-Cola as a premium soda and only marketing to people who are willing to pay the premium price. This is a fair idea. There will always be people willing to pay premium prices for their favorite products or something they view as being special. The really question with this alternative is how many people are willing to purchase Coca-Cola over the b-brands for a higher price? Also are these people going to purchase it regularly or are they only purchasing it sporadically? If the target market is upper class, this would definitely work because they would be more willing to pay



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