PESTEL analysis, Porters Five Forces, Drinks Company
Companies utilizing proactive approach cannot distance from conducting regular environment scanning to avoid hurried reactionary response to emerging trends. Performing a PESTEL analysis facilitates knowledge finer details of the external environment. In that view, the PESTEL analysis of Innocent Drinks Company below involves the examination of the trends in various environmental factors comprising political, economic, social, technological, environmental and legal issues. With companies facing pervasive change emerging from the dynamic environment, analysis of the trends in the external environment highlights the context within which Innocent should operate to avoid conflicting strategies. Initially, examination of the legal-political factors demonstrate the climate set by the UK government on issues such as packaging, advertising, environmental taxation, nutritional profiling, and eco-labelling. Although the political trends seem to influence the company from the environmental and legal platforms, Innocent must pay attention to the economic recovery, people-power, technology foodies and social networks to support their loyal customers.
Application of the Porter's framework facilitates the knowledge of the industrial environment and identification of threats based on the strength or weakness of each force, relative to the company position. Examination of the five forces, including entry of competitors, bargaining power of suppliers, threat of buyers, rivalry and threat of substitutes, outline the competitiveness of Innocent relative to its industry position.
[...] However, with consumers becoming more demanding of nutritional content and pricing, the company should revise its premium pricing to avoid losing its loyal customers to rivals including Tropicana, Rubicon and Copella. Bargaining Power of Suppliers This emerges when the entire industry relies on the supply of inputs by fewer operators. The ability of suppliers to raise input prices force down the profits sparks a threat, conversely to when the industry has the opportunity to force down the price of raw materials (Hill & Jones p. 54). The company faces no threat given the expansive supply base, from which it draws its input. [...]
[...] Legal Allowing for the restrictions erected by the Food Standards Agency, Innocent products must meet the nutrient profile, already sustained through absence of artificial ingredients in their product. Further, the introduction of healthy-lifestyle education in the curriculum generates a positive effect to the consumption of fruit smoothies (Bainbridge p. 33). Thirdly, the UK legislation on safety of beverages mandates the manufactures to include distinguished labelling, whether they offer concentrated or pure fruit product. Similarly, the company should honour the agricultural treaty amongst European countries requiring manufacturers to utilize raw materials in their products from the region. [...]
[...] Nevertheless, Innocent manages to weather down the rivalries demonstrated by its annual growth averaging at 20% and 75% command of the smoothies market 9 (Graham, 2011). Lastly, though the industry faces the threat of imperfect substitution from beverages including milk, juicy drinks and fruit drops, smoothies lack perfect substitutes owing to their nutritional content and absence of artificial ingredients Bibliography Bainbridge, J. (2007). Fruit's rise breaks with tradition. Marketing , 32-33. BBC. (2010, October 15). Richard Reed, Innocent Drinks. Retrieved January from http://www.bbc.co.uk/news/business-11551271 Bennett, A. [...]
[...] R. (2007). Strategic Management: An Integrated Approach ed.). Houghton Mifflin: Enfield Publishers Group. Hills, S. (2012, May 28). Functionality Tops Food and Drink Mega Trends List. Retrieved January from http://www.foodmanufacture.co.uk/NPD/Functionality-topsfood-and-drink-mega-trends-list Parliament House of Lords. (2010). Nanotechnologies and Food : 1st Report of Session 2009-10. Vol. II. [...]
[...] (2013, July 26). Innocent Drinks' Richard Reed Talks Entrepreneurship, Dragons Den And Hollywood. Retrieved January from http://www.huffingtonpost.co.uk/2013/07/25/richard-reed-innocentinterview_n_3653121.html Frith, K. T., & Mueller, B. (2010). Advertising and Societies: Global Issues ed.). New York: Peter Lang. Graham, N. (2011, July 2011). My First Million: Richard Reed of Innocent Drinks. Retrieved January from http://www.ft.com/intl/cms/s/0/e13793d4-a0ba-11e0-b14e00144feabdc0.html#axzz2q4jkLvE1 Hill, C. W., & Jones, G. [...]
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