Case study:

Innocent Drinks was set up in 1998 by three best friends of Richard Reed, Adam Balon and Jon Wright. The company is known for their fruit smoothies and a brand image of being natural. Innocent Drinks has a reputation for doing things “a little bit differently”. For example, the three friends’ original market research of whether they should go to a smoothie business or not, was based on bins; when people purchased
smoothies at a music festival in London, they were asked to put the empty container in a bin saying “yes” or “no” regarding whether they should get into business selling smoothies. At the end of the festival, the “yes” bin was full and the “no” bin was not.

In order to showcase your understanding of economic theories and concepts within a business context, you are required to write a 2500-word essay following the instructions below:

Task 1 (LO1)

Critically evaluate Innocent Drinks’ non-traditional business ways. This could relate to how demand is created and how they carry out their operations. Assess the benefits and drawbacks of using non-traditional decision-making methods, such as how Innocents Drinks sets its product pricing policy. You are required to use examples of such policies and behavioural economic theories adopted and implemented by Innocent Drinks.

Task 2 (LO2)

Innocent Drinks sold an estimated 10-20% of the business to Coca-Cola for £30 million in 2009. By 2013 Coca-Cola owned over 90% of the Innocent Drinks. Using one of the behavioural economic theories, critically assess whether Innocent Drink made the right decision to sell part of its business to Coca-Cola. Justify your viewpoint using relevant frameworks and discuss the implications of their decision
using empirical data.

Task 3 (LO3)

Apply PESTLE analysis and business SWOT analysis of Innocent Drinks for the year 2024. Identify key risks and opportunities for them and justify your rationale as to why these are the key issues. Add conclusions to your analysis and recommend the next steps, Innocent Drinks should take for future success.

Module Learning Outcomes:

LO1: Critically evaluate the alternative theories of economics and their implications for business, including traditional economic approaches and also more contemporary approaches relating to behavioural economics

LO2: Critically assess concepts and principles underlining business activity. 

LO3: Apply the appropriate models and techniques for analysing the environment within which business organisations operate