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Fiji Water Report Case Study

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Updated: Jun 9th, 2019

Introduction

Fiji water is a company that was introduced by David Gilmour, who was a Canadian hotel and gold mining tycoon. The company began its’ activities in the Fiji Island. Through a lease from the government, the company obtained a piece of land located in Fiji’s main island that has numerous artesian aquifer found in the Yaqara valley. The slogans used by the company were significant in attracting a competitive advantage.

For instance, the company used slogans like “untouched” and “unpolluted” to show the desire to conserve the environment. This created a competitive advantage, which made the company gain a new brand image, an indicator of good health, new trends, and a high-end.

Currently, the company has been encountering criticism on its’ business model, which it uses in shipping products and the carbon print. For carbon print criticism, it emerged from the areas where there was high quality water, which is readily available. The aim of this report is to analyze the future options of Fiji waters company growing up as a company that will be conscious to the environment and ensure its’ sustainability.

Situational Assessment

Analysis of the competitive landscape

Generally, the company’s rate of competition globally ranges between moderate and high. This conclusion is derived from the use of the Porters Five Forces, which is an analytical tool. Fiji Water competition emerges from the suppliers, who distribute substitute products. These suppliers are also found in the global beverages market. They include suppliers of carbonated drinks sparkling water and alcoholic beverages. The main competitors are from the suppliers and producers of bottled water.

The US has several local bottled water brands. They include arrowhead, Zephyrhills, Deer park, Poland spring among others. Australia also has companies that compete with Fiji waters.

They include Spring Valley twist, which is under the management of Cadbury Schweppes, Cool Ridge, Mount Franklin (which is a leader in Australia and receives its sources from the selected springs in Australia and is owned by Coca cola), Island Chill (A Fiji company, which is appreciated in Melbourne and is increasingly expanding to different regions of Australia).

There are competitors like Island of Chill and Evian, who aim at making the market of water tap and other related bottled water superior. Island Chill tends to market silicone particles. The particles are perceived to be of high quality and luxurious, a strategy also used by Fiji water. This strategy is applied in the market of high premium image.

Fiji water and Island Chill apply differentiation generic strategy to pursue this high premium image market. There are competitors who use mid prices to sale their water. An example of such companies is the Coca-cola and Nestle companies. This generic strategy concentrates on cost leadership. Unlike Evian water, these companies have employed the use of filtered water rather than the use of the streams from far-off and well known reserves.

SWOT Analysis

Strength

Fiji Company has a number of opportunities that make it strong in the market. First, the company’s water is healthy, luxurious and trendy. The strategies used for branding are successful. In addition, the consumers consider the product to be of high quality. The water contains minerals and healthy contents which are not in the products of competitors

Weaknesses

The company has faced controversies regarding bottled water and the environment it operates in. For instance, the company has received pressure from activists who accuses the company of green washing. Last, the company lacks facts as to why it employs carbon negative campaigns.

Problem Statement

From the case, the primary problem of Fiji is with it model used in selling bottled water for free. This strategy or model will not and cannot be appreciated as being environmentally sustainable. In the marketing of bottled water, using this model is considered to be ‘green washing’ of the consumers.

In addition, environmental activists are never comfortable with the idea of businesses using resource intensive business models in marketing water. This is wrong especially when the model is used to achieve sustainability. However, Fiji is using this model, which is known as “every drop is green”.

This problem emerges from a variety of factors and activities. First, the key markets used by Fiji Company provide readily available water for free. Second, all the main markets, except Australia, exist over longer distances and they require the company to have large amounts of fuel to be able transport heavy bottled water all over the world.

Third, plastic bottles are known to damage the environment. Last, the profits or wealth benefited by the shareholders of Fiji is not equally distributed in the nation that it operates in. This is interesting because the company is known to contribute about $3 million weekly from exports to the economy. The companies’ production process in the factories is known to be highly mechanized, a characteristic that is linked with transfer of pricing.

In addition, the company encounters a problem of not paying extraction tax to the Fiji government for a period of ten years. Statistics indicates that the Fiji government has lost millions of dollars from this company. This is an exhibit that the company has resisted or ignored the taxes put in place by the government from 2008.

Alternatives

The alternatives explained below are vital for Fiji waters to overcome the challenge of being environmental friendly and achieving sustainability.

Maintenance of the Business Model (Alternative one)

Using this alternative, the company has to maintain its’ initial model and insist that it is not green washing and has to continue investing in corporate social responsibilities (CSR) strategies. In addition, the company is to reduce the carbon footprint. This alternative comes in as a result of the accusations of ‘green washing’ from the universal community.

This way, the company will function freely in the society as a whole and reduce the concentration on making profits for its stakeholders. Applying this method will help the company strengthen its image and reduce the negative impacts. Unfortunately, the company will not consider itself to be fully sustainable considering the inherent nature of transporting bottling water across the world.

Furthermore, the company has to work on reducing the environment impact by working with the carbon disclosure project supply chain leadership collaboration. The company goal will be to use renewable materials for packaging and understand whether they can integrate with agricultural sector in Fiji to help control the consumption of synthetic resources. The company should make clean water a top priority to enable it build a good image.

Alternative of changing the Business model (Alternative two)

The company’s model is full of flaws as long as the company continues to have a negative carbon print. Alternatively, the company has to change its’ model and come up with a new product. It is suggested that the business has to create a water purifier that the water has to go through before it is distributed in the market.

The filters have to be replaced at selected times in a year to ensure that the company has a continuous business with the customers. Using a purifier will enable the company enter other markets, avoiding shipping bottled water to areas in which water is readily available. This will help the company reduce the release of the carbon emissions and also reduce the amount used to ship their products around the world.

Integration of the new products and a sustainable behavior (Alternative three)

This is a third option that Fiji can employ. This is where the company can integrates the first option and the second one. For instance, the company can increase its’ investment in the Corporate Social responsibility by working together with the community by providing donations to different programs in the community. In addition, combining the two options will help the company be associated with the products that are environmental friendly. The integration will also ensure that if one option fails, the company will take advantage of the other option and increase its operation in Australia. For instance, the combination of the two options will help the company to compete effectively by the Refresh Group Company Limited, which uses these options in Australia. This will be a better strategy to use in competition, as Fiji diversifies.

Analysis of the alternatives

This section is an analysis of the suggested alternatives for Fiji water

Alternative one

This alternative when compared with the other two will require a smaller initial investment. Its’ payback period will also be shorter because the alternative requires the reworking of the initial business model or integrating new products in the company’s market. Competitively, the company will maintain its’ distribution chain, which is currently efficient. Unfortunately, using this alternative, the company will lose its position with the consumers.

This is the case especially when the company does not respond to the concerns of the consumers. In addition, using this option, the company is required to maintain and improve government relations, make social donations, and aim at reducing environmental effects. When this is ignored, the business brand image is weakened.

Alternative two

In the alternatives, the second alternative has the greatest risks. The alternative requires high initial investment. Comparing it to alternative one, its’ payback is long because it depends on the period the company will have to make profits again, which is uncertain. Using this alternative it becomes hard to understand how the company’s strength will be achieved and how the competition advantage will be maintained.

Despite these challenges, the alternative offers the greatest impact on reducing the environmental damages. However, this has to be accompanied with research to understand the alternative’s feasibility. This is because the alternative will keep the company’s production, but it may not be feasible. Fortunately, when the company creates a good image by satisfying the society and preserving the environment, it will become a business of praise, indicating sustainability in a bottled water company.

Alternative three

This is an option that integrates both option one and two. Combining these options indicates that the company has diversified the risk because both the options have their flaws. However, the business will have increased the potential to improve the brand and increase its’ profits internationally. By this alternative, the company has the ability to invest in the society as outlined by the first option. In addition, a less harmful business model will be put in place and hence reduce environmental effects.

Recommendations

To this end, it is recommended that Fiji water has to aim at achieving sustainable growth by increasing the investments in corporate social responsibility initiatives. The company has to work with the Carbon Disclosure Project Supply Chain Leadership and Carbon Disclosure Project.

This will help the company to reduce the effects of carbon release. The company should also conduct investigation and researches on the suitable business model. I recommend the use of high quality filters by the company. The filters should be in line with the natural processes. This recommendation is made because it agrees with the current FIJI Water strategy of brand image for high quality water.

The company’s image will improve because as a high quality water provider, the company would have employed a new way for sustainability. This way provides the company with an opportunity to win back hotels and restaurants that had dropped its water products as a result of the ‘green washing’ strategy, which encountered a lot of criticism.

Adopting the use of purifiers will relieve the company from the cost of shipping water to other countries. In addition, when the company begins to use environmentally friendly materials, it would have taken a step further by offering biodegradable water bottles.

By adopting this option, it is believed that the company will successfully build a good relationship with the society and hence have the ability to effectively attend to CSR initiatives.

Action Plan

To effectively implement the option, this section covers a 5 year implementation plan

Year 1

  • At this time, the main activity will be improvement and increase benchmarking and material use. This will be accompanied by setting of realistic goals for emission and reduction of plastic materials.
  • Second, it would be necessary to communicate the goals of the project, which will indicate the phasing-out of bottled water. This will be done by the public relations and the marketing team.
  • Conducting the feasibility of the new business models to be adopted, such as the purification systems
  • Make donations to the society through the adopted CSR initiatives and has to enhance community involvement

Year 2

  • Development of a purification system (which had to be assessed during the first year).
  • Marketing of the purification systems in the European markets and the US, beginning with the restaurants. When it succeeds at this level, the marketing has to proceed to the inclusion of potential partners.
  • Adoption of biodegradable materials for packaging

Year 3

  • Try to break in new markets especially in the United Kingdom and Australia
  • Continue to support manufacture of purifiers, create new environment for CSR –initiatives.

Year 4

  • Continue with the production of purifiers and its marketing
  • Continue with the eradication of bottled water and support of CSR

Year 5

  • Completely eradicate bottled water, investing the new products, and continued support to CSR strategies.

Contingency Plan

As the company ventures in the new market, it is likely to clash with powerful competitors. To overcome this scenario, the company should focus on moving its resources to the initial product of bottled water.

FIJI water’s should ensure that the new purifiers are fully accepted in the market before they start eradicating the bottled water.

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"Fiji Water Report." IvyPanda, 9 June 2019, ivypanda.com/essays/fiji-water-report/.

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IvyPanda. "Fiji Water Report." June 9, 2019. https://ivypanda.com/essays/fiji-water-report/.

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IvyPanda. 2019. "Fiji Water Report." June 9, 2019. https://ivypanda.com/essays/fiji-water-report/.

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IvyPanda. (2019) 'Fiji Water Report'. 9 June.

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