Profitability And Risk

Profitability and Risk

Qualitative Criteria and Evaluations

Profitability and Risk Alternative one offers the highest profitability. The net income after taxes for alternative two is $104,996,299 compared to $160,658,065 for alternative one. Alternative two also offers a high profitability, but not as much as the first alternative. The risk for alternative one is very high. The risk for the second alternative two is average. Purchasing Nestea is risky because the alternative beverage industry is declining. Coca-Cola’s dissolution of their alliance with Nestea also raises some concerns of risk and profitability. The additional profits received from alternative one are not a large enough amount to consider taking this high of a risk.

Competitor’s Reaction Competitor’s reactions were thought to be more prevalent in alternative two. The repackaging and offering the non-tea products in cans would cause an immediate reaction. The expected increase in sales would cut into the competitor’s share of the market. When Snapple refocuses itself in the international market, the other alternative beverage companies will also enter the market. Competitor’s reactions for alternative one are expected to be low. The main competitor left after the purchase of the alternative beverage division of Nestea from Nestle would be Pepsi’s Lipton product. There are no clear strategic actions to counteract this movement from Pepsi Lipton.

Society’s Reaction Society’s reactions...

Profitability And Risk

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