CORPORATION JOSEPH R.

LINDLEY SA INCA KOLA

1. INTRODUCTION a. Sales Corporation Joseph R. Lindley SA offers its products: soft drinks, fruit nectars and mineral water, be a leader in all its products. According to recent studies of leadership in food products by 2010 IPSOS Support, in the consumption of soft drinks, position Inca Kola in the first place (54%), then Coca Cola (23%) and thirdly to Pepsi (9%). It is worth mentioning that the place that positions based on national pride is also the first, taking a 65% versus Sapolio and Gloria. Constantly modernize and expand its production capacity to meet all categories of products in different markets where they operate: Lima, Trujillo, Sullana, Arequipa, among others. Between 1998-2002 there was a fall in domestic demand for gas due to increased competition. There was a price war and thus lower earnings, which caused many companies, went out of business. In 1999 Coca Cola Company signed a business alliance with JR Corporation Lindley was done by the owner of 50% of the Inca Kola brand and 20% of JR Corporation Lindley. As a result of the agreement, ELSA bottles and distributes soft drink Inca Kola in some areas of the country and it uses the multinational's international channels to enhance their exports. The soft drink brands seek to position themselves through advertising campaigns. Despite all the ups and downs of the market, Inca Kola as a brand is the market leader through its advertising under the name "Peru." At the end of 2010, the Corporation Lindley billed a net profit of about S /. 37,543,000.00.

MACROECONOMICS AND BUSINESS Case N02

b. Market demand Peru has a per capita consumption of soft drinks quite small in comparison to the countries of the region. In 2010 the consumption was 56 liters, compared to 2009 which was 54.3 liters. The average consumption of soft drinks at the regional level is about 70 liters. Based on a study by consultancy Maximize, in 2009 gas production was 1, 590, 000 liters, growing 4.9% compared to 2008. As for the participation of Inca Kola soft drink market, has a 65.35% in the Peruvian market in 2010, being the leader in gas. Many attribute that preference is given by the unique flavor of Peruvian consumers are accustomed to, and considering that the brand has a presence in the country over 75 years. However, this gas has different competitors within them are the soft yellow (Kola Real, Triple Tail, Gold, Big Cola), black (Coca Cola, Pepsi), white (Sprite, 7Up) and those of other colors (Fanta, Kola Inglesa, Guarana).

2. COMPETITIVE ANALYSIS a. Porter's Competitive Forces y Risk of entry of potential competitors To analyze the risk of entry of new competitors, this force is divided into several factors that will make a better study. It begins with economies of scale, whereby Inca Kola, generating large volumes of production difficulties, the entry of new competitors, and that the fence is very high and causes the costs of potential competitors are high and not attractive. Another factor is the high capital, to compete with top companies in the ranking of consumption of soft drinks, it is essential to have a great position to produce large volumes required, which requires expensive capital. Low prices to keep the consolidated companies in the sector, limiting the entry of gas imported or foreign companies. Inca Kola soda currently has more than 50% of consumer preference, allowing you to create a barrier to new entrants, since brand loyalty is very high for consumers, allowing you be the N 1 in the Peruvian market. In terms of distribution, there are companies outside the business that offer this service, why not be a high barrier.

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Threat of substitute products The soft drinks market is now threatened as is being done, the tendency of displacement of these drinks nectar, fruit juices and bottled water. This is apparent in the report conducted by the National Society of Industries, which reported higher growth rates in production of bottled water in the soda and other beverages during the years 2005-2010. The results conclude that the volume of production of soft drinks grew at an average annual rate of 4.5%, while bottled water grew by 18%. It also indicates that the sector of production of bottled water is a business with high growth potential and profitability, and this is due to changes in consumer habits, looking for healthier drinks. As indicated, currently direct substitute products and be hazardous Inca Kola bottled waters, juices and nectars, which satisfy the same need and are less harmful to health. Therefore Inca Kola is threatened by these products and must continue to exercise power in their promotional campaigns in order to maintain its position.

Bargaining power with buyers Due to the diversity of clients and the moderate growth of market size, it is unlikely that they can exercise strong bargaining power on Inca Kola, unless they are related and are a significant number. It is important to note that retails, retailers, distributors and others. are intermediaries who offer the product to the final consumer and they, Inka Cola be the No 1 in market share, are contingent on having it in its portfolio of supply, because customers demand it. This force is of medium intensity, and that brand loyalty is high but there is standardization in the tender, the cost of the transfer or rebranding is zero, there is the possibility that they themselves can produce the product by high costs, the products they buy are not differentiated, that is, they all have the same properties.

Bargaining power with suppliers Approximately 60% of the cost of production is concentrated in 3 inputs: sugar, raw material and essence. In the case of packaging, there are several suppliers, making it difficult these may influence the soft drinks industry. Another raw material that is more prevalent is sugar, as in the case of Inca Kola, who cares about this product, the bargaining power they have is void because sugar is a commodity whose price is determined in international markets. The local sugar supplies, by some bottlers, have allowed their acquisition costs are reduced by 15%.

MACROECONOMICS AND BUSINESS Case N02

Rivalry among competing firms This is a fairly strong competitive force to Inca Kola, and in industry there are several competitors who are struggling to have greater market share. Currently the sector is growing slowly due to the seasonality involved and the emergence of substitute products has been overshadowed the development of soft drinks. Established companies in the sector, have high fixed costs due to the pressure of operating in full capacity. Furthermore, the existence of substitutes is high and the change of soda is easy for the consumer. Exit barriers in this sector are high, because they are required to operate specialized equipment, skilled labor, which makes it extremely difficult to get rid of it, is why to Inca Kola is competitive force is extremely high.

b. Generic Competitive Strategies The strategy used by Inca Kola is the differentiation. This strategy is developed by the company through various courses of action and development as the association of "creativity" which is a symbol of Peruvians in different industries and fields. Furthermore, this feature is associated with entrepreneurs, and these in turn are seen as humble people out of poverty thanks to their good ideas. Thanks to the communication strategy, has developed a consumer incentive Inca Kola in people through the new value proposition. People should appreciate the mark and consumed by the concept that sells, which is in the moment, is enjoying life to the fullest. The outstanding strength of Inca Kola is its positioning in the market as being a product of tradition and wide experience, has been in the minds of consumers as the product that can not fail to accompany meals and cool. It has a high brand recall, and this should be maintained or increased, demonstrating to consumers that Inca Kola is a drink that brings joy to people and improve their day to day in all situations of life.

MACROECONOMICS AND BUSINESS Case N02