MGT 101 Saudi Electronic University Management Worksheet

‫المملكة العربية السعودية‬
‫وزارة التعليم‬
‫الجامعة السعودية اإللكترونية‬
Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University
College of Administrative and Financial Sciences
Assignment 2 MGT101 (2nd Term 2021-2022)
Deadline: 09/04/2022 @ 23:59
(To be posted/released to students on BB anytime in Week 7)
Course Name: Principles of
Management
Course Code: MGT101
Student’s Name:
Semester: 2nd
CRN:
Student’s ID Number:
Academic Year: 1442/1443 H, 2nd Term
For Instructor’s Use only
Instructor’s Name:
Students’ Grade: /10
Level of Marks: High/Middle/Low
Instructions – PLEASE READ THEM CAREFULLY
•
•
This assignment is an individual assignment.
Due date for Assignment 2 is 09/04/2022
• The Assignment must be submitted only in WORD format via allocated folder.
• Assignments submitted through email will not be accepted.
• Students are advised to make their work clear and well presented, marks may be reduced
for poor presentation. This includes filling your information on the cover page.
• Students must mention question number clearly in their answer.
• Late submission will NOT be accepted.
• Avoid plagiarism, the work should be in your own words, copying from students or other
resources without proper referencing will result in ZERO marks. No exceptions.
• All answered must be typed using Times New Roman (size 12, double-spaced) font. No
pictures containing text will be accepted and will be considered plagiarism).
Submissions without this cover page will NOT be accepted.
Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University
‫المملكة العربية السعودية‬
‫وزارة التعليم‬
‫الجامعة السعودية اإللكترونية‬
College of Administrative and Financial Sciences
Assignment Purposes/Learning Outcomes:
After completion of Assignment-2 students will be able to understand the
LO 2.2: Employ knowledge and techniques of strategic planning, problem solving, decision making
and change management.
Assignment-2
Please read the case “La Croix Is Losing the Sparkling Water Wars” given on Page number
241, Chapter 6 – “Strategic Management” available in your textbook/e-textbook “Management:
A Practical Introduction” 10th edition by Angelo Kinicki, & Denise B. Soignet and answer the
following questions (Each of your answer should be 100-150 words):
QUESTIONS
Q1. What is the underlying problem in this case from CEO Nick Caporella’s perspective? (2 .5Marks)
Q2. Develop a SWOT analysis for LaCroix. (2.5 Marks)
Q3. Do a VRIO assessment of LaCroix’s Sparkling water and recommend a solution based on this
assessment? (2.5 Marks)
Q4. Which of Michael Porter’s four competitive strategies is LaCroix trying to follow? Explain. (2.5
Marks)
ANSWERS:
1.
2.
3.
4.
European brands San Pellegrino and Perrier dominated the U.S. sparkling water market for decades
until a little-known brewing company decided to venture outside beer-making. Heileman, a Wisconsin
brewery, introduced LaCroix (pronounced “La-Croy”) as a sparkling water addition to their beer
lineup in 1981. LaCroix was a Midwest favorite until the National Beverage Corporation purchased the
brand and distributed it nationwide in the 1990s.129
The U.S. sparkling water industry exploded in 2015. The industry grew 16.2% between 2015 and 2016,
with LaCroix alone growing almost 73%.130 As a result, the National Beverage Company’s value went
from $2 billion in 2016 to $4.1 billion in 2017.131 It had the right product, at the right time, and there
were talks of a lucrative acquisition by a big name brand.132
Then the bubble burst. After five years of steady growth, National Beverage’s sales declined 14%
between 2018 and 2019, with profits dipping 10%.133 The beverage maker’s stock also dropped
55%.134 “The LaCroix brand has gone from bad, to worse, to disastrous in a relatively short period of
time,” says Laurent Grandet, a lead beverage analyst at Guggenheim Securities.135
Let’s take a closer look at what’s been plaguing LaCroix.
In order to better understand LaCroix’s strategic decision making (or lack thereof), it’s important to
know how the brand became so popular in the first place.
The average person drank less than four gallons of bottled water a year in 1988.136 Soda was king,
with per capita consumption peaking at nearly 53 gallons in the 1990s. Then came the obesity crisis in
the early 2000s, leading to increased skepticism of sugary, soft drinks. Consumers changed their
behaviors and soda consumption plummeted.137 Americans’ craving for bottled water surged by 2015,
with per capita consumption of 37 gallons per year.138
As consumers drank more water, they also looked for more variety to keep their increased H2O habit
from becoming dull. This is where LaCroix, with its 20 flavors, tried to create competitive advantage.
The noncorporate, “underground” feel spoke to those who valued an authentic Midwestern beverage,
instead of snobby European seltzer. These individuals are the types that are more prone to use social
media and spread the word, meaning LaCroix had instant brand recognition through word-ofmouth.139
While LaCroix was able to become popular relatively fast, making carbonated water isn’t a particularly
difficult endeavor. It did not take much time for the world’s largest carbonated beverage makers, CocaCola and PepsiCo, to come out with their own carbonated waters, challenging LaCroix for market
control. Both organizations had the advantage of large distribution channels and marketing budgets,
giving them an advantage over much smaller LaCroix.140 PepsiCo launched its own line of flavored
carbonated water, Bubly, in 2018. “So we see this brand as a brand of the future . . . you’re going to see
mini cans, you’re going to see larger cans,” says PepsiCo chairman and CEO Ramon Laguarta.141
What should be alarming for LaCroix is that Bubly now owns over 6% of the U.S. sparkling water
market.142
Coca-Cola also has developed AHA, its own sparkling water brand. The company is looking to utilize
bold flavor infusions, such as Apple and Ginger, Strawberry and Cucumber, and Lime and
Watermelon, as well as two caffeinated flavors.143 Coca-Cola also acquired Topo Chico, a Mexican
sparkling water brand, in 2017 for $220 million. Topo Chico is quite popular in the U.S. as well,
specifically in Texas, where it dominates market share for imported sparkling water.144 “Unsweetened
flavored sparkling water is a dynamic and exciting category as we look at our long-term growth plans,”
says Brad Spickert, Coca-Cola North America’s SVP of hydration.145
Analysts believe PepsiCo and Coca-Cola, as well as other competitors such as Nestlé and Polar, are
strategically outperforming a stagnant LaCroix. The company still sells in multipacks of six or 12
instead of varying their sizes as competitors have. They also don’t have single-serve cans for easy
placement in convenience stores. “If you look at the range of LaCroix four years ago, about 90% of it is
exactly the same as what you can see in stores today. . . . They’re not overly creative or aggressive in
terms of trying new ways of growth in the segment,” says Grandet. Customers have “discovered that
other brands offer acceptable substitutes.”146
LaCroix’s distribution network also pales in comparison to competitors. It does not utilize a Page 241
direct store delivery network for a majority of its retail channels, instead relying on warehouse
distribution. PepsiCo, Nestle, and Polar all operate direct store delivery networks, which allow them to
have dedicated display space in top retailers. PepsiCo, in particular, has used its established control
over checkout line coolers to place Bubly alongside its popular core soft drinks brands. “[Pepsi has]
added [Bubly] to all of those secondary locations, and they can do that because they’re so powerful,”
according to Tom Dowdy, chief revenue officer for Hudson News Distributors, one of La Croix’s
distribution partners.147 This may be one of the reasons analysts expect Bubly sales to surpass
LaCroix by 2021.148
Industry experts don’t have confidence that National Beverage CEO Nick Caporella has what it takes
to bring back LaCroix’s luster. Caporella does not believe LaCroix’s woes are due to mismanagement.
He actually blames “injustice” for the company’s decline in sales and profits, rather than poor strategy.
“Managing a brand is not so different from caring for someone who becomes handicapped,” Caporella
said in 2019. Analysts aren’t pleased with Caporella’s refusal to make strategic change. Along these
lines, CNBC declared, “LaCroix would be better served in the hands of an owner with strong brandbuilding capabilities, the financial resources to invest appropriately, and the willingness to do so.”149
Will LaCroix be able to rebound?
Problem-Solving Perspective
1. What is the underlying problem in this case from CEO Nick Caporella’s perspective?
2. What are some of the causes of this problem?
3. What will it take for LaCroix to regain its momentum? Explain.
Application of Chapter Content
1. How can LaCroix create a “fit” among its activities?
2. Using the steps in
business.
Figure 6.2, describe how LaCroix should be transforming the way it does
3. Develop a SWOT analysis for LaCroix.
4. Do a VRIO assessment of LaCroix’s sparkling water and recommend a solution based on this
assessment.
5. Is La Croix employing a growth, stability, or defensive strategy? Explain.
6. Which of Michael Porter’s four competitive strategies is LaCroix trying to follow? Explain.
7. What can LaCroix do to properly execute across the three core processes of business?

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