Practise MNC questions by defining FDI, identifying overseas investment and weighing jobs, skills, tax revenue or environmental costs.
Introduced in 1935, Inca Kola is a yellow-gold coloured, fizzy, soft drink that is popular all over Peru. By 1995, Inca Kola had grown to become a strong competitor
of Coca-Cola. Inca Kola had a 32.9\% market share compared to Coca-Cola's 32.0\% in Peru.
By 2014, Coca-Cola owned 48.5\% of Inca Kola shares.
With reference to the data above and your knowledge of economics, analyse the possible reasons for Coca-Cola purchasing shares in Inca Kola.
AO2 (3 marks)/AO3 (3 marks)
AO2 and AO3
- Inca Kola was a major competitor of Coca-Cola and the market leader
- Coca-Cola had a slightly lower share of the market than Inca Kola, with 32.0\% compared to 32.9\%
- Inca Kola was well established in Peru (since 1935)
- Buying a share of the company was a way to benefit from the success rather than struggle to compete
- The purchase meant Coca-Cola no longer needed to compete with Inca Kola for market share
- Coca-Cola's purchase means they have much more control over the Peruvian fizzy soft drinks market
- Coca-Cola also gets a share of Inca Kola's profits
Level
Mark
Descriptor
0
No rewardable material.
Level 1
1-2
- Demonstrates basic knowledge and understanding by developing relevant points. Limited application of economic terms, concepts, theories and calculations (AO2).
- Information presented will lack selectivity and organisation. Interpretation of economic information will be limited, with a lack of analysis of issues (AO3).
Level 2
3-4
- Demonstrates partial knowledge and understanding by developing relevant points. Partial application of economic terms, concepts, theories and calculations (AO2).
- Information presented will demonstrate some selectivity and organisation. Interpretation of economic information will be good, with some analysis of issues (AO3).
Level 3
5-6
- Demonstrates clear knowledge and understanding by developing relevant points. Appropriate application of economic terms, concepts, theories and calculations (AO2).
- Information presented will demonstrate excellent selectivity and organisation. Interpretation of economic information will be excellent, with a thorough analysis of issues (AO3).