Myt PLC Resource (23pages)
Myt PLC Resource (23pages)
An analysis of the IB Business management paper 1 case study for May 2025
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–2– 2225 – 5001
This statement, released three months prior to the examination, notifies candidates of topics and
terminology not in the Business management guide that will be in the case study in the final examination.
Candidates are to spend a maximum of five hours researching these topics and learning the terminology.
Topics in this statement build on those contained in the syllabus. The primary aim is to assess
candidates’ knowledge of important contemporary business topics that could not have been anticipated
when the guide was written.
Candidates are expected to have some basic familiarity with these topics, rather than comprehensive or
exhaustive knowledge.
The following page contains the first five paragraphs of the case study. Candidates should familiarize
themselves with the context of the case study before the examination. Candidates will be given the full
version of the case study in the examination, including these first five paragraphs.
–3– 2225 – 5001
Myt has grown in size through internal and external growth. Initially, Myt manufactured just one
5 drink: a root beer that was non-alcoholic, sweet, and carbonated. By 2020, Myt had developed its
own large portfolio of over 30 different drinks, which it sells in bottles and cans. Myt uses social
media influencers as part of its promotional strategy.
Obesity and diabetes are two health issues that have been linked to drinks, many of which provide
the entire recommended daily sugar intake for an adult in a single can. However, sugar substitutes
10 used in diet drinks have also been linked to various health problems. Many of Myt’s drinks are high
in caffeine and sugar.
Companies, products, or individuals named in this case study are fictitious and any similarities with
actual entities are purely coincidental.
The case study is related to:
a multinational non-alcoholic drinks manufacturer
• A multinational non-alcoholic drinks manufacturer is a company that produces soft drinks, bottled
water, energy drinks, juices, teas, or other non-alcoholic beverages and operates in multiple countries.
These companies typically have global supply chains, distribution networks, and brand recognition,
making them highly competitive players in the beverage industry.
• Global Supply Chain & Logistics: MNCs source raw materials from multiple countries, manufacture in
different locations, and distribute globally, requiring advanced supply chain management.
• Foreign Direct Investment (FDI): Many MNCs expand through joint ventures, acquisitions, or opening
subsidiaries in different countries to access new markets and benefit from local tax incentives.
• Economies of Scale: Operating on a large scale allows MNCs to lower production costs, negotiate
better supplier deals, and optimize distribution networks.
• Cultural & Regulatory Adaptation: MNCs must navigate different languages, consumer behaviors,
legal frameworks, and ethical standards when expanding into international markets.
avatar
• An avatar is a digital representation of a person, brand, or character that can be used in marketing,
customer service, and virtual environments. Avatars can be static images, animated figures, or AI-
generated influencers.
• Myt is utilizing computer-generated avatars for advertisements, indicating a shift towards digital
marketing and artificial intelligence (AI).
• Digital avatars can be used as brand mascots, AI-driven chatbots, or even as virtual influencers that
promote products across social media and digital platforms.
biodegradable
• Biodegradable materials decompose naturally, reducing environmental impact. This is critical in
industries like packaging, food & beverage, and fashion, where companies face pressure to reduce
waste and adopt eco-friendly materials.
• Myt is modernizing and making its factories green, which may include switching to biodegradable
packaging for its bottled beverages.
• This move aligns with Corporate Social Responsibility (CSR) efforts, regulatory compliance, and
changing consumer preferences.
pressure group
• Pressure groups are organizations that influence businesses and governments to change policies on
social, ethical, environmental, or economic issues.
• Pressure groups target the soft drinks industry due to high sugar content, plastic waste, and unethical
sourcing.
• Myt’s plan to reduce caffeine and sugar levels could be a response to activist pressure.
recycling
• Recycling involves reusing materials to reduce waste and environmental impact.
• Myt’s commitment to green factories suggests an increased focus on recycling within production and
packaging.
• Governments worldwide are enforcing stricter recycling laws, making sustainability a competitive
necessity.
• Myt is a publicly held company, meaning that its shares are traded on a stock exchange and owned
by public shareholders. This gives Myt access to substantial capital for expansion, acquisitions, and
product development. However, being publicly traded means the company is under pressure to deliver
short-term profits and maintain shareholder value, potentially influencing decision-making towards
maximizing financial performance over long-term sustainability.
• Myt is a multinational corporation (MNC), meaning it operates in multiple countries beyond its home
country. This status allows Myt to benefit from economies of scale, spreading risks across multiple
markets, and tapping into new customer bases. However, MNCs face challenges related to differing
consumer preferences, legal regulations, taxation laws, and labor conditions across the regions where
they operate.
• By manufacturing non-alcoholic drinks, Myt competes in a highly saturated industry dominated by
companies like Coca-Cola and PepsiCo. The global shift towards health-conscious consumption is
shaping the industry, with increasing demand for low-sugar and functional beverages like vitamin-
enhanced waters and plant-based drinks. Regulatory pressures such as sugar taxes in some countries
pose a challenge for the traditional soft drink segment.
• Myt's head office is in the United States (USA), which impacts corporate governance and regulatory
compliance. The U.S. has strict SEC (Securities and Exchange Commission) regulations, requiring
transparency in financial reporting. Moreover, the company's leadership decisions will be heavily
influenced by trends in the U.S. beverage market, which may not always align with global consumer
preferences.
• Myt owns manufacturing factories on six continents, highlighting the complexity of its global supply
chain. This setup allows the company to reduce transportation costs and minimize tariffs by producing
in different regions, but it also presents challenges such as currency fluctuations, regional economic
downturns, supply chain disruptions, and compliance with various labor and environmental laws.
1. Analyse the advantages and disadvantages of Myt being a publicly held company.
2. Evaluate the significance of economies of scale for Myt’s competitive advantage in the beverage
industry.
3. Discuss the benefits and challenges of Myt owning manufacturing factories on six continents.
Myt has grown in size through internal and external growth. Initially, Myt manufactured just one drink: a root
beer that was non-alcoholic, sweet, and carbonated. By 2020, Myt had developed its own large portfolio of
over 30 different drinks, which it sells in bottles and cans. Myt uses social media influencers as part of its
promotional strategy.
• Obesity and diabetes concerns pose a significant threat to Myt’s business, as consumers are shifting
towards health-conscious consumption. Governments are imposing sugar taxes, and pressure groups
are actively campaigning against high-sugar products, which could hurt sales and damage Myt’s brand
image.
• Sugar taxes and increased regulatory scrutiny could force Myt to reformulate its products by reducing
sugar content or using alternative sweeteners. However, sugar substitutes have also been
controversial, with some studies linking them to health risks such as metabolic disorders and cancer
concerns. If Myt reformulates its products, it must balance health concerns with maintaining flavor and
consumer satisfaction.
• Myt’s high caffeine and sugar content in its beverages could lead to negative press, especially as
more parents become concerned about children's sugar intake. There is also a growing demand for
low-caffeine and natural-energy beverages. Myt may need to expand into healthier alternatives such as
plant-based energy drinks, herbal teas, or vitamin-enhanced beverages.
• Diversification is a growth strategy where a business expands into new markets or industries to
reduce dependence on a single product or market. It is one of the four strategies outlined in Ansoff’s
Matrix, which categorizes business growth approaches as market penetration, market development,
product development, and diversification.
• Diversification can be related (expanding into industries connected to the company’s core business) or
unrelated (entering completely different markets). Myt’s acquisitions fall under related diversification
because they remain within the broader beverage and food service industries.
• Lotssa Coffee is a chain of coffee shops with over 4000 outlets in 35 countries, making it a large-scale
international acquisition. This acquisition places Myt in direct competition with major coffee shop chains
like Starbucks, Dunkin’, and Costa Coffee.
Potential benefits:
• Synergies with Myt’s existing business: Myt can use its existing distribution and supply chain to
lower Lotssa Coffee’s costs.
• Cross-promotion opportunities: Myt can use Lotssa Coffee outlets to promote its bottled beverages
and new drink innovations.
• Strong consumer engagement: The coffee shop model creates a direct-to-consumer experience,
allowing Myt to gather valuable consumer data and improve customer relationships.
Financial considerations:
• High investment required: Acquiring and integrating 4000+ stores into Myt’s business will require
significant capital.
• Profitability of individual stores varies: Some locations may be underperforming, requiring store
closures or operational restructuring.
• Franchise vs. company-owned model: If Lotssa Coffee operates on a franchise system, Myt will
need to manage relationships with franchisees, ensuring consistency in brand image and customer
experience.
1. State one advantage and one disadvantage of using the franchise model.
2. Apply the concept of economies of scale to explain how Myt can reduce costs after acquiring Lotssa
Coffee.
3. Evaluate the financial implications of acquiring and integrating 4000+ coffee shops into Myt’s
existing operations.
Honest Water (HW), a manufacturer of bottled drinking water.
• Honest Water is a manufacturer of bottled drinking water, a fast-growing segment of the beverage
industry. This acquisition represents a strategic shift towards health-conscious and sustainable
products.
Potential benefits:
• Portfolio diversification: Adding bottled water gives Myt a product that appeals to consumers looking
for a healthier alternative to sodas.
• Synergies with Myt’s global operations: Myt already has an extensive bottling and distribution
network, making it easier to scale Honest Water internationally.
• Competitive positioning: Competes directly with Nestlé Pure Life, Evian, and Coca-Cola’s
Smartwater, giving Myt an edge in the growing premium water market.
Financial considerations:
• Profit margins vary: Premium water brands have higher margins, but mass-market bottled water is
often sold at thin margins due to intense price competition.
• High initial investment: Expanding the Honest Water brand will require marketing spend, distribution
investments, and sustainability innovations.
1. Outline one advantage and one disadvantage of Myt positioning Honest Water as a premium
product.
2. Analyse how market segmentation can help Myt successfully position Honest Water in the
competitive bottled water market.
3. Explain how acquiring Honest Water relates to Myt’s corporate social responsibility initiatives.
Myt announced plans to:
modernize and make its factories green
Potential benefits:
• Cost Reduction in the Long Run: Energy-efficient factories reduce operational costs by lowering
electricity, water, and material waste expenses.
• Regulatory Compliance: Many governments are introducing environmental regulations on carbon
emissions and industrial waste. Green factories help Myt stay ahead of compliance requirements and
avoid fines.
• Enhanced Brand Reputation: Companies that implement sustainable production practices gain favor
with consumers, investors, and regulators, strengthening their CSR image.
• Attracting Investment: ESG (Environmental, Social, Governance) investments are increasing, and
sustainability-focused businesses are more likely to attract investors.
Potential benefits:
• Revenue Diversification: Soft drink sales are declining due to sugar taxes and shifting consumer
preferences. Entering snacks allows Myt to compensate for potential beverage revenue losses.
• Cross-Promotion Opportunities: Myt could bundle healthy snacks with its beverages or introduce
them in Lotssa Coffee outlets, enhancing its sales strategy.
• Capitalizing on Health Trends: The functional food and wellness industry is experiencing rapid
growth, and Myt can tap into this emerging market early.
1. State one reason why Myt is expanding into the healthy snacks industry.
2. Outline one challenge Myt might face when entering the healthy snacks market.
3. Apply the concept of supply chain management to explain how Myt’s snack production might differ
from its existing business operations.
4. Evaluate whether Myt’s existing brand image as a beverage company will help or hinder its success
in the healthy snacks market.
utilize computer-generated avatars when creating advertisements
Potential benefits:
• Cost Efficiency: Unlike traditional influencers who require contracts and sponsorship deals, digital
avatars are a one-time investment that can be used indefinitely.
• Customizable Branding: Avatars can be tailored to fit various target demographics, languages, and
cultural preferences, making global marketing campaigns more flexible.
• Avoiding Influencer Scandals: Real-world influencers are prone to controversies, PR issues, and
unpredictability, whereas AI-generated avatars are fully controlled by the company.
1. Outline one potential benefit of using computer-generated avatars for global branding.
2. Describe how Myt’s use of computer-generated avatars could impact its brand reputation and
consumer engagement.
reduce caffeine and sugar levels in its products
Potential benefits:
• Regulatory Compliance: Many countries have implemented sugar taxes, and reducing sugar levels
allows Myt to avoid financial penalties and stay compliant.
• Expanding Customer Base: Health-conscious consumers, parents, and fitness enthusiasts may be
more willing to purchase low-sugar and low-caffeine options.
• Long-Term Brand Sustainability: Brands that proactively adapt to health trends maintain long-term
customer loyalty.
1. State one reason why reducing sugar content in beverages could improve Myt’ s brand reputation.
2. Analyse the potential financial implications of Myt’s reduction in caffeine and sugar levels in its
products.
3. To what extent should Myt focus on preserving its original taste vs health benefits when
reformulating its products.
improve its corporate social responsibility (CSR).
Potential benefits:
• Enhanced Brand Loyalty: Consumers prefer brands that prioritize sustainability, fair labor practices,
and community involvement.
• Regulatory and Ethical Compliance: Many regions require CSR reporting and accountability, and
failing to meet standards can lead to legal challenges.
• Attracting Talent: Millennials and Gen Z employees prefer working for companies with strong CSR
commitments, improving Myt’s ability to attract and retain skilled workers.
Modernization
• Myt’s plan to modernize its factories means that automation and AI-driven systems will likely replace
certain manual jobs.
• Upskilling existing employees in robotics, AI, and automated production systems will be critical to
avoiding mass layoffs.
• Job displacement risks: Some production-line employees may lose their jobs unless retrained.
• Training investment: Myt needs in-house retraining programs or partnerships with tech institutions to
develop a skilled workforce.
• Union & employee resistance: Labor unions may oppose layoffs or demand better severance and
reskilling programs.
• Talent acquisition for AI roles: Myt must compete with tech firms to hire AI engineers and automation
specialists.
Lottssa Coffee
• Myt now manages over 4,000+ Lotssa Coffee outlets worldwide, requiring an efficient HR strategy for
retail workers.
• Lotssa Coffee employs baristas, store managers, and customer service representatives, which is a
different HR challenge than managing factory workers.
• Implementing global HR policies while complying with local labor laws and wage standards.
• Training employees in service quality, brand consistency, and sustainability initiatives (if coffee beans
are ethically sourced).
• Managing franchise relationships, if applicable, and ensuring HR compliance across different ownership
models.
Honest Water
• Honest Water operates in the premium bottled water segment, which involves supply chain personnel,
water sourcing experts, and sustainability managers.
• Recruiting specialists in environmental sustainability and ethical sourcing of water.
• Ensuring Myt’s CSR commitments align with its workforce policies in water-sourcing regions.
Modernization
• Upgrading factories to be energy-efficient requires heavy capital investment in automation, robotics,
and renewable energy solutions.
• High upfront costs for machinery, AI software, and energy-efficient production lines.
• Expected long-term savings in lower energy bills, reduced waste, and operational efficiencies.
• Potential investor appeal due to Myt’s ESG (Environmental, Social, Governance) commitments.
Diversification
• Myt’s acquisitions require significant financial resources to integrate operations, rebrand products, and
optimize supply chains.
• Debt financing vs. equity financing: Will Myt issue bonds, take out loans, or sell shares to fund its
expansion?
• Cost of integrating HR systems: Managing Lotssa Coffee’s 4,000+ stores requires a unified payroll,
benefits, and HR system.
• Profitability risks: Some Lotssa Coffee stores may be underperforming, requiring Myt to assess
closures or restructuring.
• Bottled water pricing challenges: Honest Water competes in a low-margin market, requiring volume-
based profitability.
Repositioning
• Myt is shifting from a traditional soft drink brand to a health-conscious, diversified food and beverage
brand. This repositioning affects brand messaging and identity, consumer perceptions, and competitive
positioning against established health-focused brands.
• Growing consumer demand for functional beverages, low-sugar drinks, and organic snacks.
o Adjusting branding to emphasize natural ingredients, sustainability, and wellness benefits.
o Packaging redesign with minimalist, eco-friendly labeling to align with health-conscious
aesthetics.
o Educational campaigns to help consumers understand the benefits of lower sugar & caffeine
content.
• If Myt moves too aggressively toward a health-focused brand, it risks alienating its loyal customer base
that enjoys its traditional soft drinks.
Lotssa Coffee
• Myt can increase brand exposure and product trial by integrating its beverages and snacks into Lotssa
Coffee outlets and pairing them with Honest Water.
• Myt can introduce co-branded drinks in Lotssa Coffee locations, such as:
o Exclusive low-sugar lattes and cold brews.
o Bundled snack & drink deals featuring Myt’s new healthy snack line.
o Loyalty program integration: Discounts on Myt bottled drinks with Lotssa Coffee purchases.
Honest Water
• Myt should position Honest Water as a premium brand, similar to Evian, Fiji, and Smartwater.
• Partnerships with fitness influencers & wellness brands.
• Sponsorship of sporting events, marathons, and gyms.
• Eco-friendly messaging, promoting biodegradable bottles and carbon-neutral production.
• The bottled water market is highly competitive, with major brands (Nestlé, Danone, PepsiCo’s Aquafina)
already dominating. Myt must differentiate Honest Water through:
o Sustainability claims (e.g., plant-based bottles, water conservation efforts).
o Unique filtration processes (e.g., alkaline water, electrolyte-infused options).
o Direct-to-consumer e-commerce models for subscription-based water delivery.
Avatars
• Myt’s decision to use AI-generated avatars in advertising represents a cost-effective, data-driven
marketing shift.
• Strategic advantages of AI-generated influencers:
o Avoid scandals that human influencers might bring.
o Offer full control over messaging and branding.
o Can be adapted for different regions & languages, providing global customization.
o Personalize ads based on consumer behavior.
o Create interactive, immersive ad experiences (e.g., virtual brand ambassadors in e-commerce
platforms).
o Automate social media interactions, reducing customer service costs.
• Consumers may perceive AI influencers as "fake" or "manipulative", reducing trust.
• Some brands, like Dove and Patagonia, actively reject AI-generated content in favor of authentic
human stories.
CSR
• Myt’s CSR expansion provides a strong marketing opportunity.
• Highlight Myt’s biodegradable bottles & recycled packaging.
• If Myt exaggerates or fails to follow through on sustainability claims, it risks consumer backlash.
Operations Management
Modernization
• Myt’s decision to modernize factories has major implications for production efficiency, sustainability, and
workforce management.
• Automated bottling & packaging lines reduce labor costs and improve precision.
• AI-driven quality control ensures consistent product standards.
• Operational risks:
o Short-term production downtime during factory upgrades.
o Employee layoffs & union disputes over automation.
o Heavy upfront investment in new machinery.
Supply Chains
• Myt now operates in three distinct product categories, each with unique supply chain challenges:
• Beverage supply chain
o Bottling operations require large-scale logistics management.
o Honest Water’s premium positioning demands high-quality water sourcing & distribution.
o Regulatory restrictions on water sourcing in certain regions.
o Global transportation logistics impact bottled water cost-efficiency.
• Snack production supply chain
o New ingredient sourcing requirements (nuts, grains, plant-based ingredients).
o Food safety & compliance requirements.
o Myt must ensure supplier quality control.
o Different temperature storage & transport needs for beverages vs. snacks.
• Coffee retail supply chain
o Myt must manage coffee sourcing, franchise operations, and retail distribution.
o Sourcing sustainable coffee beans while maintaining profitability.
o Managing perishable goods logistics (e.g., fresh milk, baked goods for coffee shops).
Lean production
• Myt should apply lean production principles to improve efficiency & waste reduction.
• Minimizing waste through better forecasting & automation.
• AI-powered inventory tracking to reduce overproduction.
• High costs of transitioning to fully biodegradable packaging.
• Supplier limitations in providing eco-friendly materials.
SWOT Analysis
STRENGTHS WEAKNESSES
• As an MNC, Myt has geographic • Many of Myt’s drinks contain high caffeine
diversification and access to the revenue and sugar levels, making them vulnerable to
streams of multiple countries. shifting consumer health trends.
• Economies of scale allow Myt to reduce • Reformulating drinks may affect taste,
production and distribution costs across its leading to consumer dissatisfaction.
markets. • Artificial sweeteners are controversial, and
• Myt has reduced their reliance on carbonated reformulations could lead to negative
beverages by expanding into bottled water consumer perception.
and coffee, increasing growth and resilience. • Integrating Lotssa Coffee’s franchise and
• Lotssa Coffee’s 4000+ outlets give Myt direct retail model presents HR, supply chain, and
consumer engagement. operations challenges.
• Myt uses social media influencers, enabling • The financial burden of acquisitions may lead
direct engagement with younger consumers to short-term cash flow challenges.
and boosting brand awareness. • AI-generated avatars may not resonate
• Myt is modernizing its factories to be emotionally with consumers, leading to lower
environmentally friendly, improving their engagement.
sustainability. • Modernizing factories to be environmentally
• Planned biodegradable packaging and sustainable requires significant upfront
recycling programs align with CSR trends. investment.
• Exploring entry to the healthy snacks market • Shifting to biodegradable packaging will
aligns with changing consumer preferences. increase production costs.
OPPORTUNITIES
THREATS
• Growing consumer demand for low-calorie,
• Myt faces competition from other players in
functional, organic beverages presents
the beverage industry that may have stronger
opportunities for Myt to expand their product
brand equity and larger marketing budgets.
portfolio.
• Lotssa Coffee and Honest Water also face
• Lotssa Coffee provides a platform for Myt to
intense market competition.
promote their beverages, with cross-
• Environmental regulations on single-use
promotion opportunities.
plastics could force Myt to accelerate
• CSR initiatives could position Myt as a
packaging innovation at a high cost.
socially responsible brand, appealing to eco-
• Varying labour laws across countries could
conscious consumers.
create HR challenges, with multinational
• Supply chain automation could reduce costs
factories and Lotssa’s retail operations.
and increase efficiency in manufacturing and
• Taxation and import/export tariffs (barriers to
logistics.
international trade) may impact profitability.
• Lotssa Coffee can expand into new markets,
• If health-conscious customers reject Myt’s
particularly emerging economies with growing
reformulated beverages, sales may decline
coffee demand.
instead of improve.
• Honest Water can introduce premium, value-
• If CSR initiatives are perceived as
added products to differentiate from
greenwashing, Myt’s reputation could suffer.
competitors.
STEEPLE analysis
SOCIAL
• The global shift towards health-conscious TECHNOLOGICAL
consumption is reshaping the beverage • Myt’s use of computer-generated avatars
industry. allows for consistent, controlled brand
• Myt’s reformulation of its beverages aligns messaging and reduced dependency on
with these trends but risks consumer human influencers.
backlash. • Investment in automation and robotics to
• Aging populations in developed markets may automate production can reduce operational
drive demand for more health-focused drinks. costs and increase efficiency.
• Cultural preferences may impact beverage • E-commerce creates an opportunity for Myt
choices, and Myt may have to regionalize to sell online.
flavours and offerings.
ENVIRONMENTAL
ECONOMIC
• Myt’s modernization plans include energy-
• Rising raw material costs may increase Myt’s
efficient manufacturing and eco-friendly
production expenses.
production, reducing its carbon footprint.
• Inflation could reduce disposable income,
• Initial costs for sustainability efforts are high,
potentially lowering demand for premium
but long-term savings on energy and
beverages.
resource efficiency could balance expenses.
• Myt operates in multiple countries, so it is
• Consumer and regulatory demand for eco-
exposed to currency fluctuations that will
friendly packaging makes biodegradable
affect profitability.
bottle innovation essential.
• Consumers continue to spend on premium,
• Honest Water’s bottled water production must
health-focused beverages which will benefit
comply with water conservation regulations,
premium product positioning.
especially in drought-prone regions.
LEGAL
• Factory modernization may require workforce
restructuring, increasing risks of legal
POLITICAL
disputes over job displacement and union
• Myt’s international operations expose it to
pushback.
shifting trade agreements and tariffs, which
• Strict beverage labeling laws (e.g., ingredient
could impact import/export costs.
transparency, health warnings) affect
• Government policies on foreign direct
marketing strategies.
investment (FDI) may influence Myt’s
• If Lotssa Coffee operates under a franchise
expansion into new markets.
model, Myt must manage franchisee
relationships, contract agreements, and
brand standardization compliance.
ETHICAL
• Myt’s investment in green factories and biodegradable packaging enhances its ethical brand image.
• Ethical concerns over AI-generated marketing could arise if consumers feel misled or manipulated.
• Lotssa Coffee’s coffee bean supply chain must maintain fair trade and ethical sourcing commitments
to avoid reputational damage.
• Honest Water’s environmental impact must be minimized to avoid criticism from environmental
pressure groups.