The essence of the firm
The Dr. Pepper Snapple Group is one of the most successful beverage companies in North America. The company’s success has been attributed to the over 30 products it offers in various countries in North American and an elaborate acquisition strategy. The acquisition strategy has enabled the Dr. Pepper Snapple Group to expand their operations, which has given the company a significant share of the soft drink market. Since it was founded in 1998, the company has been under the leadership of Larry Young who, has been able to transform the group of companies the parent company has acquired over time, into a successful business, this success would not have been possible without the help of other managers. These two elements make part of the overall strategic plan of the company. Strategic plans are important in the success of any company . Thus, strategic management becomes an important part of ensuring this plan works. The process of strategic management can be an uphill task because it requires the management of an organization to be able to identify resources, acquire them and establish the right way of using the to achieve their goals and objectives with the long term view of achieving competitive advantage over their competitors in the market (Hill et al, 2014). Larry Young and the team were able to implement the chosen strategies well, which made the Dr. Pepper Snapple Group as competitive and profitable as it is right now. The company has used acquisitions and mergers as the main strategy. This strategy has seen the company acquire various companies that have smaller operations in the soft drink and beverage industry. These companies are mostly in soft drink production and into bottling. It has enabled the organization to expand the distribution channels exponentially making them readily available to the customers, making the company profitable and more visible.
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The management of the Dr. Pepper Snapple Group made some strategic decisions on the way the company will compete in the tough North American non-alcoholic drinks market. A company engaged in the acquisition strategy, which enabled the organization to gain significant competitive advantage. Competitive advantage is important in the sense that it is the only sure way of an organization of remaining profitable in an extensively competitive market (Harrison et al. 2013).
One of the main advantages that the Dr. Pepper Snapple Group obtained from taking over other companies and entering into mergers with other companies has been the obtaining of a more elaborate distribution channel, meaning that the organization has been able to make their products assessable to as many customers as possible through stores and supermarket chains. Mergers and acquisitions have also given Dr. Pepper Snapple Group competitive edge as it has enduced the number of competitors that would have otherwise given the company a run for the money. The final advantage that the company accrues from the strategy is diversity in the product mix. This product mixing has helped the company to differentiate their product in various markets effectively, thus selling what the customers need in that market and not forcing a product on them. Mergers and takeovers are a prudent business strategy. However, they have some disadvantages. The fact that when a company takes over another company, it also takes over the negative aspects of the company they acquire like losses and bad reputations. It takes time for a company to restructure all its operations, especially when the company has many acquisitions in a short period. Acquisitions may drain an existing company and thus may be a risky move for any company to make. Having such a wide range of products and companies to run at the same time, can pose a danger of employee turnover and more cost in marketing and branding or rebranding. Duplication of job functions is another danger a company will face in an acquisition or a merger. The company will have the employees to deals with plus the others from the acquired company. It will mean that a lot of the functions will have an issue of people many people doing the same job, which could have otherwise been done by a few individuals. In such cases the management is always faced numerous ethical dilemmas in trying to deal with these kind of cases, what to do with the extra employees, whether to fire them or employee them on contract basis yet some of them may have worked for the other company for a long time thus are key employees in the company.
Charles H, Gareth J & Melissa S. (2014). Strategic Management: Theory: An Integrated Approach. Stamford: Cengage Learning.
Jeffrey H & Caron J (2013). Foundations in Strategic Management. Stamford: Cengage Learning.