MGMT 102 Strategy Section G12 [Tues] Submitted to Professor Adel F Dimian April 14, 2012
Team members: Danny Khoo, Benjamin Lee, Lee Meng Yong, Tressilla Peh, Poh Keng Boon
Jia Duo Bao Group (JDB) - a Hong Kong-based enterprise established in 1995 focuses its business in the production and sales of specialized beverages. Currently, it is the largest nutraceutical drink manufacturer in China attributing its success to their main beverage product, a red-canned herbal drink called “Wong Lo Kat” (WLK). In efforts tie in with the nationwide market development strategy, the group set up 4 production plants in the different regions of China namely Beijing,…show more content… Having a collaboration with these three firms will allow WLK to gain access to their well-established distribution channels, build up their brand name as they are seen associated with well-known brands and finally, reduces their risk of entering the fountain market. On the flip side, WLK is desirable as a collaboration partner since they are currently China 's market leader in canned drinks. Besides, China consumers favour local products over imported/westernised products.
The entrance to the fountain market will be broken down into two stages. For the first three years, WLK will provide its product through the use of metal kegs. Concurrently, research and development will be in placed to produce a concentrate syrup that WLK is missing. This will eventually replace these metal kegs from the fourth year onwards. The additional labour and cost is justified as time is essential and WLK has to move into the fountain market while the other competing brands are not currently in. This will allow them to have the first mover advantage and ensure that these popular food-chains will not hold other brands with similar properties in the future.
Entering the fountain market will give WLK an increase in 8% of its revenue. Besides the boost in revenue, WLK also enjoys benefits such as increase in revenue streams, brand recognition and brand loyalty.