Role for activity-based cost systems in implementing strategy Consider the case of the Cott…

Role for activity-based cost systems in implementing strategy Consider the case of the Cott Corporation, a Canadian private-label producer of high-quality cola beverages. Cott is attempting to get grocery retailers to stock its cola beverages as a lower price alternative to the more well-known brands of Coca-Cola and Pepsi-Cola. The international brands deliver directly to the retailer’s store and stock their products on the retailer’s shelves. Cott, in contrast, delivers to the retailer’s warehouse or distribution center, leaving the retailer to move the product to the shelves of its various retail outlets. Cott offers substantially lower prices to the retailers and, in addition, is willing to work with the grocery retailer to customize the cola beverage to the retailer’s specification; develop special packaging for the retailer, including labeling the beverage with the retailer’s name (a practice known as retailer branding, such as Safeway Select Cola); offer a full variety of carbonated beverages (diet, caffeine free, multiple flavors, multiple sizes, and packaging options); and develop a marketing and merchandising strategy for the retailer for the private-label beverage.

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Consider how Cott might measure and manage activities and processes and relationships with suppliers and customers. How can Cott build cost systems to help it implement its strategy successfully?

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