The soft drinks production industry is ranked as a large company with a massive market share of over 5 billion in the United Kingdom. Based on the case study, the company desired to make changes that will correspond to the changes taking place in the macro-environment and the impact of regulation and social issues. The company also realizes that to remain competitive and relevant to its customer, it must steer needs to improve the nation’s dietary health as a shared responsibility. This paper presents an analysis of how the soft drink company will achieve these changes. This will be done by presenting PESTLE analysis, Porter’s five forces analysis, and evaluating the importance of Corporate Social Responsibility to organizations in the industry.

Introduction

The soft drinks production industry is ranked as a large company with a massive market share of over 5 billion in the United Kingdom. Based on the case study, the company desired to make changes that will correspond to the changes taking place in the macro-environment and the impact of regulation and social issues. The soft drinks industry is not very much saturated in the united kingdom. Who are in the market are able to keep up with the competition? The market size of these drinks ware large become according to this company; it has a market share of over 5 billion. This means that the soft drink industry still has growth potential. Below are the parameters that will be used to analyze this industry.

PESTLE ANALYSIS

Pestle analysis is defined as a framework that monitors the micro-environment factors that may affect how the company does its business. In relation to this, a PESTLE analysis is a very important tool that should be used to analyze the changing nature of the U.K based Soft Drink Company (Bidault, 2019). PESTLE analysis stands for Political, environmental, technological, legal, and economic factors.

Political factors:

These are factors that define the degree of influence that the government has in the business. Political factors are very important to consider the growth of the Soft drink Company because all the regulations and tariffs enacted by the government will affect the company’s functionality in one way or another. When making changes, the Soft drink Company should consider the current and future government regulations that may affect its operation. Soft Drink Company must ensure that it has adhered to all the government regulations. To be on the safe side, the company must also hire an internal legal expert who will advise the government and legal issues.

Economic factors:

Economic factors are factors that determine how the economy is functioning. Such factors include growth, exchange inflation, and disposal of income. Based on the case study, the company has a huge market share. Keeping this in mind, the company must make changes only after it has studied the economic factors that may affect its operation. Factors such as inflation and economic growth rates are significant for this company’s future because they may affect the company’s operation both internally and externally. This is because these factors affect the performing power of the consumer. Since the company depends on the consumers, then they must be sure that the economic factors are well understood.

Social Factors:

The other direction of the analysis is the social factor. The social factor is defined as the general environmental issues representing the demographic characteristics, norms, cultures, and values of the populations that form the target audience. This factor is significant to consider when making changes because it will affect the consumers’ buying and selling nature. In making the desired changes, the company must ensure that they understand the demographic of their customers. This will help the company maintain the taste and preferences of their customers. In cases where the target customers are affected, there is a higher chance that the company may lose so much revenue due to low customer turnout. As it stands, the company commands a larger share of the market, which means that they have a huge talk of maintaining this reputation.

Technological Factors:

These are factors that relate to innovation and technological understanding. When making strategic changes, the fruit company must understand the technological knowledge that affects the industry. The company must study the current technology that will enable it to work as expected.

Environmental Factors:

Since the macro environment is one key factor that affects the company’s operations, the company must study the nature of the environment that is set to operate in. Environmental factors are important simply because of the increasing nature of raw material, the population targeted. In their operation, the company will ensure that they positively impact the environment. They should also take care of the people around them and ensure that all the required environmental laws are adhered to.

Legal Factors:

This factor may overlap with politics, but it’s more specific laws required for the company to operate across the industry. When making changes, the company will ensure that there is no form of discrimination. It must ensure consumer protection adheres to the health standards of the UK.

Porter’s five forces analysis

The five forces model of analysis is a useful business model in explaining the various industries and sustaining profitability. The five forces model include competition in the industry, the potential of new entries into the industry, power of the customers, power of the suppliers, and the threat of substitute products

Competition in the Industry

There are so many companies in the UK that deal with soft drinks. In making changes, the company should understand that the larger number of competitors and the number of equivalent products and services, the lesser the company’s power. This means that the company must work extra hard to keep its reputation and command in the market. To make changes and remain relevant, the company must take a keen study on which competitors are in the market and their power. The company must be able to offer a better deal at a lower price. This will help to have a clear and graters command of the market.

Potential of New Entrants into an Industry

The power of the soft drink company may also be affected by the new entry in the industry. When making strategic changes, the company must keep in mind that they need to have full command and be loyal to their customer. When another company offering the same drink comes into the market, it will not find it easy to remove them from the market. The company must create strong barriers to entry. Through this, the company will manage to charge higher prices and negotiate better terms.

Power of Suppliers

Suppliers have the power to drive the cost of goods. When making strategic changes, the company must create higher switching costs such that many suppliers would find it hard to get into the market. This means that the company will depend only on one supplier.

Power of Customers

In most cases, the customers have the power to drive the prices lower. This is affected by the number of customers and buyers a company has. It also dictates how significant the customers are. When the customers are few, these customers will dictate the prices of the company’s product. To counter this, the company should strive to create a wide customer base. Currently, the company has created a huge client base. The changes to be made must aim at rating the existing customers and expanding the territory such that the target cultures should grow significantly.

Threat of Substitutes

Threats of the substitutes are the last of the five forces model. Substitute goods or services can be used by a rival company to pose a threat. A substitute will have more power to increase the prices and lock to favor certain items. In the growth, the soft drink company should conduct a market study to find a possible substitute for the soft drink they produce. Without doing this, there is a high possibility that one day a company will come up with a similar but better quality of the drink, which will pose a threat to the entire company. Additionally, to prevent substitute from replacing the smooth customer command that exists, the soft drink company must develop a lock strategy that will give other substitutes a hard time penetrating the market.

Corporate social responsibility

The cooperated social responsibility is a situation where the company operates ethically and sustainably to deal with the impacts of social and environmental factors. Cooperate social responsibility is an important factor in dealing with human rights, the community, and the society the company operates. In making changes, the company must operate in a manner that demonstrates social responsibility. While it is noted that social responsibility is not a legal requirement, it is perceived as a good practice that will make this soft drink company take into consideration social and environmental issues. For the success of the soft drink company, they must take into consideration vital social responsibility issues.

Research has shown that consumers in the United Kingdom have understood the importance of cooperate social responsibility. From this understanding, they are actively seeking products from a business that operates ethically. Cooperate social responsibility shows that the business takes an interest in the wider social issues rather than concentrating on profit-making. The company must keep in mind the customer perception is essential for its future growth; hence they must ensure that the customer understands their social responsibility policies (Srdjevic, 2012). It makes a good business sense to operate within certain policies that extent the need and the use of social responsibility.

Some of the importance and the benefit of social responsibility in the soft drink industry include:

Improved company image: it is clear that the company needs to improve the way it operates in its environment. Social responsibility will change the company’s image, which is crucial as the customer will access the company’s public image and decide whether to buy the product. Some very simple aspects that the customer may take a look at are the staff numbers, volunteering hours, and the company’s role in the community service programs. The second importance of increased brand awareness. In case the company is committed to ethical practices, the news will spread and increase their brand awareness.

The next factor is cost-saving. Many simple changes will favor sustainability. Such changes will use less packaging and help decrease product costs. The final importance and benefit that is clearly cited are the benefit to employees. The internal employees will get a range of benefits when the company adopts social and cooperate responsibility (Perera, 2017). The workplace will be more positive and productive to work. You will promote things like volunteering and encourage personal and professional growth. It is also important to note that strategic changes that are yet to be achieved are changes that should also affect the internal employees. The employee is the first person who should promote the idea of social responsibility.

Conclusion

Several key theories guide international business strategic management. The first theory discussed in detail is the PESTLE analysis theory, which controls how business is done within and outside the region. For the soft drink company to achieve absolute strategic management, pestle analysis must well be analyzed. The second theory is the five force model. This theory cuts across the region. The policies applied in this model will help the business thrive in any region. Due to this, the company must look at the factors presented in the five forces model theory. Social responsibility is a key factor to success in any business. Since the business wants to change its dimension, it is important to put cooperate social responsibility that will ensure that all the customers are well cared for. The environment in which the company is operating is clean and best for operation. The company must also offer equal standards to enable it to work best with its competitors.

References

Bidault, F. (2019). Technology pricing: From principles to strategy. Springer.

Perera, R. (2017). The PESTLE analysis. Nerdynaut.

Srdjevic, Z., Bajcetic, R., & Srdjevic, B. (2012). Identifying the criteria set for multicriteria decision making based on SWOT/PESTLE analysis: a case study of reconstructing a water intake structure. Water resources management, 26(12), 3379-3393.

Whitehouse, L. (2013). Corporate social responsibility, corporate citizenship, and the global compact: a new approach to regulating corporate social power?. Global social policy, 3(3), 299-318.

Valor, C. (2015). Corporate social responsibility and corporate citizenship: Towards corporate accountability. Business and society review, 110(2), 191-212.

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