Case Write Up on Keurig Essay

1124 Words Apr 2nd, 2013 5 Pages
Case Write up Keurig

It is essential that Green Mountain’s negotiation succeed because the value proposition that comes along a new product like the portion pack system. Keurig is a start up coming looking to expand its business venture and GMCR central location is in the Northeast and they were also looking to expand the company’s geographic existence. With expansion ideas in mind as a common ground for both companies, it would be smart and beneficial for the companies to work towards this specific goal. Keurig would make it feasible for GMCR to sell the K-cups it will eventually produce in parts of the country they are not already connected to once the Keurig goes national. There is major room for them to grow and to be
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This would allow rival roasters to obtain market share of the K-Cup from GMCR. The second issue is related to both GMCR and Keruig. Capital is going to be a big component of the structure of this deal because it is a concern of GMCR and Keruig. We know that Keurig need to be able to spread out its production costs which is starting to be a burden for them. GMCR on the other hand has been expanding so capital is quickly becoming scare but they still have a pretty credit line with their bank and cash on hand. They do not want to tap into the rest of their credit line until 1998, which is when Keurig wants to launch the product. They must be able to work something out where GMRC can stay within its 4.5 million range and where Keurig can outsource it production line, which is roughly about $700,000. I think the position that both parties will allow them create a deal where they both benefit in positive ways and if the product is successful capital and other sources of funding will not become a problem for either group anymore.

GMCR must realize whom they conducting this negotiation with. Is it the CEO who makes the final decision or the Venture Capitalist that are funding Keurig because this will be essential for them when structuring the deal. GMRC also does not know if Keurig is having conversations with any other roaster so they should keep this mind

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