Analysing the Business Environment: A Case Study of Red Bull

Verified

Added on  2024/06/28

|14
|2825
|148
AI Summary
This report examines the business environment, focusing on the various forces that influence organizations. It explores the nature of public, private, and social enterprises, using Red Bull as a case study. The report analyzes the impact of environmental forces at both micro and macro levels using PESTLE analysis and Porter's Five Forces model. It also identifies key stakeholders and their requirements, assessing the effectiveness of Red Bull's responses to policy actions taken by these stakeholders.

Contribute Materials

Your contribution can guide someone’s learning journey. Share your documents today.
Document Page
ANALYSING THE BUSINESS ENVIRONMENT
To: Directors

Date: 14/06/2019

From:

1

Secure Best Marks with AI Grader

Need help grading? Try our AI Grader for instant feedback on your assignments.
Document Page
Executive summary
The research question associated with this report includes the identification of the environments

that that organizations generally operate in. The entire report has been segmented into five

domains. The first domain has been associated with the discussion regarding public, private and

social enterprises using multiple examples. From the second domain onwards, Redbull has been

chosen as the organization for relative analysis. The last segment is characterized by the

identification of the stakeholders coupled with stakeholder map associated with the organization.

2
Document Page
Table of contents
LO2 Demonstrate an understanding of the nature of the environment that organisations operate

in
...................................................................................................................................................... 4
LO3 Illustrate and explain the impact of environmental forces on organisations at a micro and

macro level.
......................................................................................................................................6
LO4 Access the significance of the impact of environmental forces at an organisation, market,

sector or industry level
.....................................................................................................................8
LO5 Demonstrate an understanding of the requirements of a variety of stakeholders to a chosen

organisation.
...................................................................................................................................10
LO6 Measure and appraise the effectiveness of the responses of organisations to policy actions

taken by key stakeholders
.............................................................................................................. 13
Reference List
................................................................................................................................ 14
3
Document Page
LO2 Demonstrate an understanding of the nature of the environment that organisations
operate in

Introduction

Three different types of business sectors operate in the market with different profit-making

objectives. Descriptions of the sectors with appropriate examples are given below.

Public Sector Organisations
: These organisations are operated and owned by the government
bodies of the country. These types of organisations do not function with the organisational goal

of generating profits and generally provide services such as education, health care, social

welfare, broadcasting to the public (Denhardt and Denhardt, 2015). British Broadcasting

Company (BBC) is a popular public sector organisation, which is funded by the UK government,

and the government owns the profit earned as well.

Private Sector Organisations:
Private sector companies functions in the marketplace to earn
profits from the market (Graetz and Franks, 2016). These organisations project complete control

over the business activities and are operated by members of the board. The government cannot

interfere in any action of the company. They mostly offer Fast Moving Consumer Goods

(FMCG) such as groceries as well as Fast Moving Durable Goods (FMDG) such as clothes to the

consumers. They plan their product after surveying the market trends and requirements in order

to sell the products first and earn the highest amount of revenue possible. Red bull is one of the

most popular retail chains of UK that offers groceries to its customers. Private Sectors can

operate in different structure as:

ï‚·
Pure (Perfect) Competition: In a market where the sellers and customers are, the same in
number, there can be a competition between them. Price is decided according to demand

and supply. In addition, no organisation can influence the price of the products.

ï‚·
Monopolistic (imperfect) Competition: The market where all the firms produce
substitute products is known as monopolistic competition. A single organisation cannot

influence the price due to the presence of substitute products (Parenti
et al., 2017).
ï‚·
Oligopoly: A market where only a little number of firms sells substitute and products is
known as an oligopoly. Due to a very little number of companies, an organisation can

influence the price of the product (Waldman and Jensen, 2016).

4

Secure Best Marks with AI Grader

Need help grading? Try our AI Grader for instant feedback on your assignments.
Document Page
ï‚· Monopoly: This market situation means only one organisation is ruling in the market and
has restricted the entry of competitions. Due to no competition, it can influence the price.

ï‚·
Laws of Supply and Demand: The supply and demand law can influence the price of
money. If a product has demand in the market, but not enough supply, the cost of the

product will increase. On the other hand, if the products fulfil the demand, yet there are

excessive supplies of the product in the market, the price of the product will decrease

(Callon, 2016).

Voluntary Organisations:
a community or a group of individuals primarily owns the voluntary
organisations. Voluntary organisation's functions to provide social and welfare services to

underprivileged people (Hustinx
et al., 2015). As per their names, these organisations do not
work with the organisation goal of generating revenue from the market place but to provide their

services to people in need and their objective is to reach as many people as possible.

5
Document Page
LO3 Illustrate and explain the impact of environmental forces on organisations at a micro
and macro level.

To understand the impact of environmental forces on organisations at a micro and macro level

PESTLE analysis has been done in this section of the report and with the example of Red bull,

UK.

Application of the PESTLE framework and how organisations can forecast and monitor

external influences

For a company to compete in the marketplace, the management of the company must keep track

of the transitions, which is taking place in the external environment. The PESTLE Analysis

method is a very helpful and useful way of keeping a record of the changes. A PESTLE analysis

has six elements that help to examine the external factors of the particular area, also if these six

elements are able to affect the company’s business in a positively or negatively. The

organisation’s management after analysing and evaluating all the aspects of PESTLE develops

the business strategy.

PESTLE analysis of Redpoll, UK

PESTLE

Factors

Analysis

Political Factor
ï‚· The free trade agreement of the European Commission has a positive
effect on the companies as this agreement has helped to reduce the

price of importing products.

ï‚·
The Brexit in 2016 has caused a drop in the company’s product sales
and decreased revenue in the local and global market.

Economical

Factor

Following the financial crisis that the UK faced in 2008, many companies

introduced a coupon system to the customers to keep a hold on them. Red

bull that usually offers high-quality products had to adopt the same method,

which caused them to earn very little profit. However, it served Red bull’s

impression positively for offering high-quality products at a cheap rate.

Social Factor
The constant change in the management process of Red bull has made the
market people believe the competing companies are offering better products

6
Document Page
than Red bull. Due to the rise in the number of health-conscious people, Red
bull can introduce healthy food products to earn more revenue.

Technological

Factor

The changes in the demand of the public affect business planning, as if

several people prefer to shop online from their own home. Thus, Red bull has

started promoting on social the networking sites and sells their goods on

online platforms. It has helped Red bull to reach a large number of people

and increase the number of their consumers.

Legal Factor
For customers’ safety and rights, the government has introduced many
regulations all the organisations must follow. To sustain a positive brand

reputation, Red bull must follow all the rules set up by the government.

Environmental

Factor

To protect the environment from being polluted, the government has

introduced a set of strict rules. Red bull needs to keep its process of

production transparent so the government can evaluate if the company’s

wastage is affecting the environment negatively.

Table 1: PESTLE analysis of Red bull, UK

(Source: Created by the learner)

7

Paraphrase This Document

Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
Document Page
LO4 Access the significance of the impact of environmental forces at an organisation,
market, sector or industry level

To access the significance of the impact of environmental forces, this report has taken the help of

Porters 5 force model. Porters 5 force model is a popular method that the organisations use to

analyse five competitive forces that help to shape the industry. In addition to this, it helps to

navigate the industry’s strength, weakness, competition in the market and the advantages it can

have in the market. The descriptions of the forces are down below:

1. Competition in the industry
: This refers the numbers of competitive companies Red bull has
in the market and how much threat they are posing for the organization. If the competitors offer

the same range of products, the uniqueness and value of Red bull’s products will reduce in the

eyes of consumers. Red bull can lose customers to its rival companies.

2. Potential of new entrants into the industry:
New companies are always searching for a way
to make an entry in a profitable market. If the new organizations in the market offer the same

products at a lower price, Red bull’s market competition will increase.

3. Power of suppliers:
This force is to assess how powerful the raw material suppliers are and
how easily they can increase the price of the raw materials. This depends on the number of

suppliers present in the market and how much a company will revenue if it switches its source to

a supplier who is offering the same materials to the company in a lower amount of price. A

limited number of supplier means the company has less option of the suppliers and must buy raw

materials from the limited option. On the contrary, if there are many suppliers offering things at

the same rate, the company can buy raw materials at a low price and reduce the production cost.

4. Power of customers:
This force refers to customers’ ability to manipulate the price of the
products. It depends on the numbers of customers the company has and if the company can find

new customers. A limited number of the customer means the customers have influence over the

price and can negotiate to buy products at lower price, while if there is a large number of

independent customers, the company can decide the price of the product and earn more revenue.

8
Document Page
5. The threat of substitute products: Substitute refers to the products that are offered by rival
companies, which can be used in the place of products that Red bull offers. If the organizations

start producing products, which have no substitutes in the market, it will help the organizations

to increase their profits from the market. As an example, there is very little to no fast food

products for health-conscious people. Red bull can take advantage of this situation to generate

more revenue.

9
Document Page
LO5 Demonstrate an understanding of the requirements of a variety of stakeholders to a
chosen organisation.

For demonstrating of the requirement associated with the organization Red bull, multiple

segments would be taken into consideration.

The stakeholder analysis process is defined as the process of the identification and the

assessment of potential changes that might affect the stakeholders associated with the

organization. For an organization like Red bull, stakeholder analysis could be conducted based

on the four steps. These four steps include defining the shared goal for all the stakeholders

associated with the organization (
Brunton et al., 2017). Additionally the steps include defining of
the stakeholder group such internal stakeholders, external stakeholders and government officials.

The stakeholders of the company could be segmented into four parts. This would include the

following:

1-Internal stakeholders: This includes the line workers, the employees of the organization along

with the management associated with the organization in internal capacity as well as external

capacity.

2-External stakeholder: This includes the customers, the retail and wholesale sellers of the

organization. Additionally, the external stakeholders include the investors and the promoters of

the organization along with those individuals that have provided land or office space for the

organization.

3-Governmental stakeholders: This includes the UK government as well as the banks that have

provided loans to the organization. Additionally, those banks in which the organization has a

current and demat account forms governmental stakeholders of the organization.

10

Secure Best Marks with AI Grader

Need help grading? Try our AI Grader for instant feedback on your assignments.
Document Page
11
Internal stakeholders: Management and employees
External stakeholders: Customers and investors
Internal Stakeholders: Line workers
External stakeholders and government
stakeholders: All
Document Page
Figure 1: Stakeholder Map
X-axis: Influence of stakeholder

Y-axis: Interest of customers

In the energy drink business, the most important stakeholders would be the customers. Hence,

the requirements of the same would include the following:

ï‚·
Regular availability of the drink
ï‚·
Drinks in regulation with the food and drug safety acts including foods safety acts
ï‚·
Regular promotional offers for the maintaining market image and market share in the
energy drink segment

12
Document Page
LO6 Measure and appraise the effectiveness of the responses of organisations to policy
actions taken by key stakeholders

For meeting the mentioned needs of the customers, the organization has taken the following

actions.

First, the organization has undertaken in push sales policy including in its supply chain. As a

result, the organization has been able to provide regular flow of its product in the market. This

process has been extremely effective in two segments. The push flow has enables regular flow of

product to the market (
Energydrink-lb.redbull.com, 2019). Additionally, the push flow has
resulted in the availability of multiple varieties of the energy drink like caffeine and others

varieties.

Second, the organization has adhered to extensive regulations associated with the food safety act

of 1990 as well food labelling and packaging regulations provided by the government (
GOV.UK,
2019
). Small number of consumer cases as well as food litigations could identify the
effectiveness of the actions so mentioned.

Third in the domain of promotional offers, the organization has essentially been conducting

integrated data analysis. The GDPR framework has been taken into consideration by the

organization. The effectiveness of the same could be identified by regular increase in sales

volume of the organization, which was 6.28 billion Euros in 2017 (
Statista. 2019).
13

Paraphrase This Document

Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
Document Page
Reference List
Brunton, M., Eweje, G. and Taskin, N., 2017. Communicating corporate social responsibility to

internal stakeholders: walking the walk or just talking the talk?.
Business Strategy and the
Environment
, 26(1), pp.31-48.
Callon, M., 2016. Revisiting marketization: from interface-markets to market-

agencements.
Consumption Markets & Culture, 19(1), pp.17-37.
Denhardt, J.V. and Denhardt, R.B., 2015.
The new public service: Serving, not steering.
Routledge.

Energydrink-lb.redbull.com. 2019.
Red Bull company and owner - Info about Red Bull firm,
origin & founder :: Energy Drink :: Red Bull Lebanon
. [online] Available at:
https://energydrink-lb.redbull.com/en/red-bull-company [Accessed 5 Jun. 2019].

GOV.UK. 2019
. Food labelling and packaging. [online] Available at: https://www.gov.uk/food-
labelling-and-packaging [Accessed 5 Jun. 2019].

Graetz, G. and Franks, D.M., 2016. Conceptualising social risk and business risk associated with

private sector development projects.
Journal of Risk Research, 19(5), pp.581-601.
Hustinx, L., Van Rossem, R., Handy, F. and Cnaan, R.A., 2015. A cross-national examination of

the motivation to volunteer. In
Religion and volunteering (pp. 97-120). Springer, Cham.
Parenti, M., Ushchev, P. and Thisse, J.F., 2017. Toward a theory of monopolistic

competition.
Journal of Economic Theory, 167, pp.86-115.
Statista. 2019
. Red Bull - sales 2017 | Statista. [online] Available at:
https://www.statista.com/statistics/275169/red-bulls-company-sales-worldwide/ [Accessed 5 Jun.

2019].

Waldman, D. and Jensen, E., 2016.
Industrial organization: theory and practice. Routledge.
14
1 out of 14
circle_padding
hide_on_mobile
zoom_out_icon
[object Object]

Your All-in-One AI-Powered Toolkit for Academic Success.

Available 24*7 on WhatsApp / Email

[object Object]