Answer to Question #120989 in Management for kajol

Question #120989
ABC Ltd is a leading corporate in India in FMCG. After an extensive research by their Marketing department they found out they should diversify into Foods & Beverages. The top management decided to get in the manufacturing of a coconut flavoured soft drink and a coconut flavoured milk based drink. Pumping capital in the venture into the business is not a major concern for the company as they have many regular investors on hand. The company would like to have a major presence with a pan India distribution network

a. Do you think the idea of getting into the business of a coconut flavoured drinks a feasible business/ product on for a FMCG company? Give your views with reasons.

b. Assuming that the business idea would have a very encouraging response, suggest a suitable plant location to set up the beverage manufacturing. Give reasons for the same.
Expert's answer

Question (a)

Coconuts have a special place in Hindu culture in India, both ritually and in their delicacies. It can't be unavoidable that such a move will generate lots of profit to the company. For instance, majority of South Indians put coconut in every single meal they have. It is considered a natural source of oil for which is highly regarded. Nevertheless, it is nutritious and high in potassium and sodium. For this reason, it would be a great way to elevate consumer's taste buds and will garner a great dime in the market for its health benefits, thus it is a good investment for the company.

Question (b)

The location should address the following major aspects; market demand, potential competitors, production capacity and transportation. The location should be well situated so as to easily get hold of raw materials before competitors and cut off their supply. Since coconut milk is highly perishable, the transport networks should be nearer the plat and should be well constructed. With regards to production capacity, the location should be accessible to water, power and labor for smooth running. Moreover, the location should adhere to set guidelines and in accordance with the authorities.

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