Case Analysis: United Beverages Inc.

1798 Words Aug 19th, 2010 8 Pages
Case Analysis: United Beverages, Inc.
United Beverages’ CEO is debating with his department heads on the course of action the company is going to take in the future. Their flagship product, GangBuster, has been highly successful for the past 5 years. However, they have been thinking of entering the market for Energy Drinks for kids. Paul Diaz also comes up with a revolutionary idea of the dual-drink, having two separate flavored drinks in a bottle and being able to mix both flavors. Due to the limited resources of United Beverages, they have two weeks to decide whether to expand their portfolio or not?

1. What United Beverages should look take into account when deciding which product(s) to develop?
Potential Costs:
1. How much does it
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7. In the Kid-Energy Drink Project, we are assured of at least $500,000 incremental revenue after development. In the Dual-Drink Project, incremental revenue could be negligible.

Worst-Case
***Yellow – Development of Dual-Drink. Blue – Development of Kid-Energy Drink
***Corresponding monthly costs of developments in the graphs above 1 2 3 4 5 6 7 8 9 10 11 12
Net Revenue 4,114 4,104 4,110 4,101 4,102 4,102 4,114 4,105 4,108 4,110 4,114 4,109
Additional Revenue -247 -246 -247 -246 -246 -246 -247 -246 -246 -247 -247 -247
Total 3,867 3,858 3,863 3,855 3,856 3,856 3,867 3,859 3,862 3,863 3,867 3,862
Cost of Revenue 2,591 2,585 2,588 2,583 2,583 2,583 2,591 2,585 2,587 2,588 2,591 2,588
Gross Margin 1,276 1,273 1,275 1,272 1,272 1,272 1,276 1,273 1,274 1,275 1,276 1,275
Operex
S G A 464 463 464 463 463 463 464 463 463 464 464 463
RND/NPD 309 309 309 308 308 308 309 309 309 309 309 309
Total Operex 773 772 773 771 771 771 773 772 772 773 773 772
Operating Income 503 502 502 501 501 501 503 502 502 502 503 502

13 14 15 16 17 18 19 20 21 22 23 24
Net Revenue 4,114 4,104 4,110 4,101 4,102 4,102 4,114 4,105 4,108 4,110 4,114 4,109
Additional Revenue -247 -246 -247 -246 -246 -246 -247 -246 -246 -247 -247 -247
Total 3,867 3,858 3,863 3,855 3,856 3,856 3,867 3,859 3,862 3,863 3,867 3,862
Cost of Revenue 2,591 2,585 2,588 2,583 2,583 2,583 2,591 2,585 2,587 2,588 2,591 2,588
Gross Margin 1,276 1,273 1,275 1,272 1,272 1,272

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