Sodacious Goes International

Case study
Reference no 510-063-1

This case was written by Gerhard Apfelthaler, California Lutheran University. It is

intended to be used as the basis for class discussion rather than to illustrate
either effective or ineffective handling of a management situation. The case was
compiled from generalised experience.
2010, California Lutheran University.
No part of this publication may be copied, stored, transmitted, reproduced
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510-063-1

School of Business
California Lutheran University

Gerhard Apfelthaler

SODACIOUS GOES INTERNATIONAL

2010, Gerhard Apfelthaler, California Lutheran University. All rights reserved. This case has been written by Professor
Gerhard Apfelthaler (California Lutheran University) and Illustrated by Jana Grabner, BA. It has been solely written for the
purpose of class discussion. The author does not intend to illustrate either effective or ineffective handling of a managerial
situation. This case is accompanied by a teaching note.

510-063-1
Actually he`s only hoping that one day he`ll be in this position. Neither does Sodacious have a unit for Global Business
Development nor has Michael been with the company long
enough to be a VP.

Sodacious is a medium-sized producer of healthy life-style beverages. It was founded by its current president and
majority shareholder, Warren Goodyear who single-handedly built it into a respectable player in its industry, helped
by his long-time employee, Kelly Headrick. The starting point of the company was a personal dilemma Warren had.

When his children were still

young and started to drink regular sodas, they developed allergies against some of the ingredients. Together with a partner
he started to experiment with
natural, allergy-free ingredients.
Looking for healthy but yet cool
alternatives that measured up
to the regular sodas on the market, Warren discovered a market
niche. The first product, an allnatural, caffeine-free Cola-drink
for children was rapidly followed
by other healthy drinks for adults.
Nowadays, Sodaco produces a
whole range of lifestyle beverages catering to different needs
and target groups.

510-063-1
Sodacious knows what consumers currently prefer, but they also believe to know what trends the future will bring.
In fact, Sodacious strongly believes that they can influence consumer preferences to an extent to which they can
manufacture success. Naturally, this has made them a bit insensitive to early and weak signals, too.

A while ago when Sodacious`

drinks started to take off, a
number of copycat products
appeared on the market. For
a number of years Sodacious
was able to defend its position as the market leader.
Lately, however, large beverage producers broke into
Sodacious` market segment,
causing them a loss of market share.

To Sodacious, all of this came at the worst possible moment.

It has built a state of the art production facility near its corporate headquarters. As new entrants were eating at Sodacious` profitability in the home market, Sodacious started to look at new opportunities outside their home market.

510-063-1
For a while, Sodacious has worked at defining a strategy to bridge
what they believed to be only a short spell of bad luck. Their operations were neatly designed along the whole value chain. Their procurement was still in alignment with their mission of providing only
the best ingredients of all (which of course came at higher cost);
their production lately had some quirks as Sodaco relies on highly
skilled workers which are increasingly hard to get.

Sodacious` sales department had undergone some changes. They had to let
go some of their sales reps and replace them with fewer key account managers in order to fit Sodacious`s customer profile of large chain retailers much
better - they had trimmed the organization of all the excess fat as their COO
used to put it. Sodacious was like a well-oiled machine.

510-063-1
Michael has just returned from a vacation trip to India he took with his wife. It had always been his dream to go
there. Besides, India had been on the news as the new economic super-power for quite a while. This got him thinking about the markets tremendous potential.

The moment the airplane

touched ground at home,
Michael found an email
on his Blackberry. It originated from a company in
Germany inquiring about
the possibility of acting
as an exclusive distributor for Sodaco. At first, he
barely paid attention to it.

But then, when Michael returned to work he was called to a meeting with this boss, Kelly Headrick, the VP of marketing. In addition to Michael, a number of people from different departments were called to the same meeting.
The news they got was rather unpleasant.

Michael was put in charge of a task force exploring internationalization at Sodacious and asked to deliver a presentation one week from the meeting.

510-063-1
When Michael returned to his desk, he pulled out his Blackberry
in order to look at the email from Germany again. His mind kept
leaping back and forth between Germany and India.

After a few clicks on the internet, Michael has verified that the
German company not only existed, but also seemed to be well
established. Their experience mostly stemmed from acting as
an importer for different brands of beer from all over the world
which it sold mainly to restaurants and independent retailers.

510-063-1

Right from the outset, Michael couldnt see any fault with the German market. From all that Michael knew, consumer tastes must be very similar and purchasing power high. After yet more quick research on the internet, he found
himself confirmed. Only the regulatory environment seemed to be a bit different from what he was used to. After
a while, however, another thought grew in Michael. With all the similarity shouldnt there be a lot of beverages in
the market which directly competed with Sodacious` products?

510-063-1

His thoughts sent him off to India again. He was still intrigued by the fact that such a huge market with an affluent
middle class which is growing at an incredible pace didnt have more innovative products. Of course, there were
some of the multinational brands. Some in its global version, some in a localized version different brand names,
different tastes, different sizes. The most popular drinks were carried by supermarkets, small retailers, even by tiny
hole in the wall-places in remote villages. Other products seemed to be Indian products with exotic flavours Michael knew would never work in Sodacious` home market. And there were of course all the fresh juices which you
could get at small stalls at every corner in India for next too nothing.

510-063-1
Michael immediately started to prepare for his presentation. He frequently consulted his wife who by
now was expecting their first child.

Until their trip to India she had never been abroad,

but he trusted her expertise as a former marketing
executive in the consumer goods business.

Michael also collected all data which was freely available from various sources especially macro-economic data,
and he even collected some information on prices which was difficult to get from his office at Sodacious`s headquarters.

Sodacious desperately needed success. On the one hand, the home market was getting more and more difficult
to deal with while international markets showed promise. On the other hand, they have known the home market
for many years and could take some specific action while foreign markets were largely unknown. But then again,
growth opportunities were outside of their home markets.

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510-063-1
Michael thought he did well in his presentation.

Right after, there was silence; but then, a very lively discussion broke out.

In the evening after the presentation, Kelly Headrick, stood in her corner office.
Should we go international, she thought.

Too many questions, not enough answers. The only

person she could think of to call at this moment was
... Michael

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