Graded Unit

1 2 – Answer Discussion
Tutorial
Tutorial 02 – Section
01
 This Week’s Question (30
minutes)
Question

Part a
Highland Spring has chosen to focus exclusively on bottled water rather than
providing other soft drinks. Analyse the advantages and disadvantages of
Highland Spring’s focus. (10 marks)

Part b
Assess the strengths and weaknesses of Highland Spring as of 2010. (10 marks)
Question
1. Part a
Highland Spring has chosen to focus exclusively on bottled water rather than
providing other soft drinks. Analyse the advantages and disadvantages of
Highland Spring’s focus ( 10 marks)

2. Part b
Assess the strengths and weaknesses of Highland Spring as of 2010. (10
marks)
Possible
Advantages

Reasoned reference to relevant concept/ brief

Illustrative examples from the case study

What the company may achieve – Justify

Possible
Advantages
1. Enables the company, and its management, to build up expertise

Reasoned reference to relevant – Work Specialization

Justified illustrative examples from the case study – Production volume (240
ml ltrs)/ amount of Investment/ Awards receive

What the company may achieve – Can focus on R & , can be more
efficient, high quality products
Possible
Advantages
2. Can lead to economies of scale
What is economies of scale, how a company can achieve economies of scale

Justified illustrative examples from the case study - Volume of

business(240 ml ltrs)

Increase scale of production, can become more efficient, resulting in a

decreased cost –per –unit, competitively ahead
Possible
Advantages
3.Helps to give the company a clear identity
The company has a clear focus in a market that they understand,

illustrative examples from the case study - explain about

the water
product, Marketing Strategy, Mission, Coca cola takeover

Easy to position, communicate, coordinate marketing programs, efficient,

High R & D, loyal customer base
Possible
Advantages
4. Reduces the chance of moving into unknown areas which may be risky
Product mix, Related and Unrelated diversification, possible disadvantages of
unrelated diversity

Examples from the case study - Company production capacity, catchments area, the
sport stars they use, ethical certifications received

Can continue the business align with the ethical code of practice, can avoid the
major competitors in the soft drinks market, assertive in marketing campaigns,
loyal customer base will be protected
Possible
Advantages
5. The consumption of bottled water may get a boost from the growing
promotion of health awareness
opportunity in the market/society – peoples attitudes, medical conditions

Examples from the case study - Health awareness/health concern

by govt.

supportive to marketing campaigns, hire sports stars who usually does not
attached with unhealthy products, difficult for the competitors to

counter-attack their product

Possible
Advantages
1. Enables the company, and its management, to build up expertise

2. Can lead to economies of scale

3. Helps to give the company a clear identity

4. Reduces the chance of moving into unknown areas which may be risky

5. The consumption of bottled water may get a boost from the growing
promotion of health awareness
Possible
Disadvantages
1. May limit diversification into new more profitable areas

What “diversification” is, related diversification and unrelated diversification,

examples to the company
Evidence from case - water only, name their current product mix

If they do not diversify what the company may loss – customers may shift into
other competitors who provide all of their beverage requirements, reduced profits
in the long run, less opportunities to expand…
Possible
Disadvantages
2. May make the company vulnerable to changes in the market
where there are signs of limited growth

Explain what “Growth is”, signs of growth and maturity

Evidence from case – UK mature market , Home consumption market

Possible dangers in a mature market with only one product.

Possible
Disadvantages
3. Danger of being a ‘one-product’ company

Product mix, Product lines and single product

Evidence from the case – explain about the “one-product”

“All eggs in one basket” and the danger of it.

In case if the customer rejects the product/ due a negative
environment
trend/product defect/shortage of supplies, vulnerable to
larger competitors, etc…
Possible
Disadvantages
4. May limit product development

• Product development – New products to the current market

• Examples – Tea/Juices/soft drinks

• Evidence from case – Show the limited “water” products

• Possible dangers – Loyal customers may shift to competitors, limited product

range, less innovation, less profits, cannot capture market opportunities
Possible
Disadvantages
1. May limit diversification into new more profitable areas

2. May make the company vulnerable to changes in the market where

there are signs of limited growth

3. Danger of being a ‘one-product’ company

4. May limit product development