Page 13 - CIMA MCS Workbook November 2018 - Day 1 Suggested Solutions

SUGGESTED SOLUTIONS

Key risks associated with each of these options are:

 Market penetration – industry statistics indicate a sharp decline in the intake of sugar from
soft drinks being down by 18.7% since 2013 in the UK (British Soft Drink Association (BSDA).
GRAPPLE must continue to innovate and develop new products to meet the threat from
social change, pressure groups and the relentless marketing of the major players such as
Party Pops and Carnival. As such more detailed information on consumer preference and
future trends is required to facilitate these decisions. This could be obtained by harnessing
the benefits of “big data” and the skills of existing senior management. To be complacent in
this industry is not an option.
 Product development – in a similar vein to the above, soft drinks manufacturers like
GRAPPLE need to enhance and embrace new technology to develop new flavours and
minimise the risk of trends or technological, economic and social changes. Failure to do so
could dramatically affect the long term future of industry players such as GRAPPLE. The key
risk in this context is having the competences in place to do so. Targeted new product
innovation is critical in the battle against the slowing growth environment of soft drinks.
Producers must focus on fast‐growing emerging categories and create value‐added
products that meet consumer desires for flavourful, functional and healthy products.
 Market development – this would be a risk for GRAPPLE without a detailed understanding

of new markets or segments targeted. They are not a global company (despite the vision
statement) with all sales coming from Zedland customers. The risk may be greater given the
lack of experience on the board to manage such development as well as the lack of
production capacity that such growth would demand.
 Diversification – the risk here lies with the lack of relevant skills, resources and
competences which is typical of diversification. GRAPPLE may need to consider different
expansion options to secure these skills such as acquisition or joint ventures e.g. to feed the
changing technological and social needs. Despite a positive cash position, these options will
be expensive and the availability and, given its unlisted status, the choice of funding will
need more investigation.

It will be vital therefore that each option be thoroughly evaluated before any action is taken to
develop and implement the strategy.

This will need both financial and non‐financial analysis and by the end of this process, the Board
will need to decide on a shortlist of options that will be carried forward to the strategic
implementation stage.

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