The paper “ Why Have Innocent Drinks Succeeded? " is a meaty example of a case study on business. There are many reasons why Innocent Drinks have succeeded. The company has what it takes to make it. Each one of the founders is honest, a good friend and easy to work with. The founders are well educated and that is important to have a good education in a business type field. The founders have been friends for a long time and that is important for a business. From the beginning, the founders wanted to create a business that would be successful.
They went over different types of products that they thought would be the best business venture. After going over different products, the founders agreed upon a juice/smoothie market. They did the necessary research that was important to decide how much the juice/smoothie market could grow and how much it currently puts out. They knew that if they could grow their product and become a leader in the market then this would enable their success. Choosing the right product in the healthy drinks industry has contributed to Innocent Drinks' success.
The founders sought out the correct industry and excelled by becoming leaders and focusing on what people want. Choosing a packaging technique that would be a good marketing technique at the same time was proven to aid in success. Consumers wanted to receive a smoothie that had a new message on it. These clever and new messages helped keep consumers buying products. Other techniques like testing out the product, hosting fairs and creating charity events from knit hats were also a big contributor to Innocent’ s success. 2) Should Innocent expand its geographic territory to Europe or the U. S., or should they extend their current product line or some combination of those?
Why? Expansion is important for any company if the time is right. Innocent is where it needs to be in the UK market. The customers are satisfied with the product and how the product has come along. The employees are satisfied with the idea that the company will be expanding. As stated in the case, the employees were promised the ability to be able to move up in the company and it is important for Innocent’ s founders to hold up to their promise. Since promises were made and the company has what it takes to succeed, it is important for Innocent Drink to expand and extend the product line at the same time.
Extending the product line does not have to be dramatic, products should be slowly introduced and brought about in a technique similar to a technique that the smoothies were introduced. The new products should be tested in the UK market where the business is already well known.
If the new product appears to be successful then the new product can go to the new place of expansion. When deciding which location to expand either the US or Europe, the founders need to decide which is going to be the most beneficial to the company. The expansion is likely to be more successful at first if they remain in the same area when expanding. If the company can make it in Europe and Europe turns out to be a success, then further expansion to the US can happen.
The company needs to be careful not to lose what they worked so hard to accomplish. 3) How would you value Innocent Drinks at the time of the case (specific numbers)? Should the company consider a purchase offer at this time? If so, what would the minimum terms be? Innocent Drinks can be very valuable to the right market. As the company stands, with no expansion and no new products, the company is worth a good amount of money. The founders have done all the necessary work to get the company where it is.
The annual revenue for the company in 2005 was 24 million. The company has shown an increase steadily over the years. The value of Innocent Drinks is around 48 million. The numbers factor in average annual revenue for one year plus the next. The company should not consider a purchase offer at this time. The company has the ability to grow and the benefits should be earned by the founders. Accepting a purchase offer would give the founders a nice amount of money to walk away with, but they would lose what they have worked so hard to get. 4) Should Richard Reed, Jon Wright, and Adam Balon consider altering their management structure?
Why or why not? The three should only consider altering their management structure if they choose to expand. The way the company is managed currently is successful and the company should not attempt to fix something that is not broke. Expanding would require further management and maybe too much for the three to handle on their own. If they do decide to expand and seek to hire a new management structure, it is important to hire individuals with the same values of the founders so the company can stay in the same direction.