PESTLE Analysis of the Philippine Juice Market

This assignment delves into a PESTLE analysis of the Philippine juice market. It requires students to examine various internal and external factors influencing the industry, categorized under Political, Economic, Social, Technological, Legal, and Environmental aspects. The analysis should encompass current trends within the market, alongside a comprehensive evaluation of each PESTLE factor's impact on the juice industry in the Philippines.

Running head: BEAST JUICE
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‘Beast Juice’
Student’s Name
Institution Affiliation

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Contents
1.0.Introduction…………………………………………………………………………………………………………………………………..4
Chosen entry mode…………………………………………………………………………………………………………………………....4
1.1 Direct exporting…………………………………………………………………………………………………………………………5
2.0 Operational strategy……………………………………………………………………………………………………………………….7
3.0 Organizational design………………………………………………………………………………………………………………….....8
3.1 Global product……………………………………………………………………………………………………………………………8
4.0 Key internal weakness……………………………………………………………………………………………………………………10
5.0 Staffing policy………………………………………………………………………………………………………………………….........10
6.0 Recommendations and conclusions…………………………………………………………………………………………………11
References.................................................................................................................................................13

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Executive summary
Firms venture into new markets with the aim of expanding their markets due to available
opportunities in other countries. In this case, Beast Juice Company has decided to enter
Philippines and has to choose the mode of entry. In Philippines, the government mainly supports
the use of local agents and distributors in the case of foreign firms seeking to enter into their
market. In such a case, direct exporting seems perfect since it uses agents and distributors. The
company also needs to develop the design it will use in entering such a market and the global
product design since the firm has diversified juice products that it can offer the Filipino market.
The report also analyses the staffing policies that are appropriate for the firm in various
scenarios.

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Introduction
It is a business as established itself in the home country that it often seeks opportunities to
expand into a new market in a foreign country. It is very true that the company understands its
market in a better way, its pool of customers and their needs in terms of preferences. If a
company as a sales force that is robust and active then it will enjoy having strong brand
awareness and the business becomes stable over a short duration of time. A company may decide
to operate globally due to a number of factors.
One of the most fundamental is the market-driven motive where the desire to serve a wider
market becomes the primary objective of the enterprise. In this scenario, Beast juice decides to
venture the Philippines market so as to explore the new market and also to increase the market
size for its juice which means more revenue in terms of sales. The existence of a large pool of
labor in the Philippines is ideal for Beast juice company that relies heavily on labor-intensive
methods and also cuts the costs of production in terms of cheap labor. The large population also
offers a wide market for the juice thus creating more revenues for the company.
Entry strategy
A number of strategies exist that a firm can utilize in entering an international market.
However, no single strategy can be said to work for all foreign markets. The most appropriate
strategy is direct exporting in a particular market, and in another market, a joint venture may be
used, and in another market, a manufacturer may be forced to license the production facilities.
Some factors influence the strategy to be employed and entail details such as the transportation
costs involved, the extent to which the product may be adapted and also the rates of a tariff.

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Though the above sectors may lead to an increase in the production costs, an increase in the sales
revenues may offset the costs (Daneils, Radebaugh, & Sullivan). Below is a discussion of the
strategies used in entering a foreign market and in this case a recommendation of the best entry
strategy will be made concerning Beast Juice.
Direct exporting
With direct exporting, it involves selling into the market directly using the company
resources. For many companies, it is after the establishment of a program involved with the sales
that they turn to the agents and distributors that act as representatives in the foreign market. The
agents and the distributors are used in propelling the interests of the company and thus become
the face of the company (Tradestart). It is thus critical for a company to be keen in selecting and
choosing the agents and distributors in the same manner that it would do in hiring great
employees in an organization.
The law in the Philippines requires and supports most of the business enterprises to use
the agents and distributors more so the ones that are seeking foreign markets. Arrangements that
involve agents and distributors are more common in the Philippines. The local companies always
wait for the opportunity to progress discussions after examining a foreign enterprise in terms of
the product and also after analyzing the viability of the market. As demonstrated in the first
project, Philippines has a good tropical climate that is warm and hot triggering the demand for
juice and other beverages more so during the hot climate.
In the event of a Beast juice and the Filipino agents and distributors contracts will be
entered to safeguard the interests of the parties involved (Hill & Hult, International business).
Some of the key elements in such contracts include the general provisions of the contract that

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revolves around the profiling the parties of the contract and in this case, it is the Filipino agents
and the Beast juice company. The terms and the conditions of the contract have also to be
defined in such an agreement and also the nature of the goods involved in the transaction have to
be identified and in this case, it will be the Beast juice. The rights and the obligations of the beast
juice company are also an important aspect of the contract. For instance, the Beast juice in the
Philippines is entitled to sole rights that protect the product from being patented by another
company. The patent rights of Beast juice are protected in the Philippines and as such protect the
juice from being copied by a competitor. The last component of the contract is the distributor’s
rights and obligations; this involves making arrangements for payments and also disseminating
information to the juice manufacturer on the Philippine market and any trends in the market.
The Philippines legal framework does not support the laws that impede the termination of a
distributor contract and either party may terminate the contract. According to the contracts, it is
specified that a one month notice be issued in the event of cancellation (CIPD). The Philippines
market allows for standard commissions for their agents and ranges from six to ten percent but
also depend on the industry. For the case of Beast juice, the percentage should be slightly lower
and thus a range of two percent to three percent should be fine for the agents given that the
industry is growing and small.
The Philippine industry does not have a specific profile for an agent. Firms in the
Philippines accommodate less than 25 employees in the case of small-scale firms. However, in
the case of a large-scale firm that has a variety of products and a large number of suppliers, it can
afford to employ many agents (Dlabay & Scott, 2011). Some of the firms concentrate their focus
in the Metro Manila region and others extend their services to other provincial centers such as

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Bacolod, Iloilo, and Baguio with the help of dealers that have an extended network and also
agents.
The local agents and distributors in the Philippines working with foreign enterprises often
use the forward sales arrangements. In this arrangement, the distributor normally places an order
and then sells the product to the customer on the end (Euromonitor). The corporate agents, on the
other hand, are required to register with the Securities Exchange Commission in the Philippines
and the sole proprietorship agents, on the other hand, must register with the Trade department.
2.0. Operational strategy
Organization design also known as the structure of the organization refers to the whole structural
components and systems employed in managing the whole organization (Tradestart). The design
of the firm enables it to allocate resources efficiently, facilitate assignment of various duties to
employees and also enables employees to receive instructions and follow orders as per the
company policies, rules and regulations (C, C, & Udayasankar, 2016). The firm’s design is also
instrumental in ensuring that employees understand their expectations in a workplace as per their
performance and lastly the design can be used as a tool for formulating the problem-solving
framework (Tradestart).
It is important to understand that no specific design is designed for all organizations and
thus the organization must have its design to suit its requirements. However, some factors
determine the design of a particular organization and entail: size, the technology used by the firm
and also the culture of the country where the firm operates. However, in this work Beast juice
will determine the organization design in the Philippines. An organization design is dynamic and
as such keeps changing as firms expand internationally (Dlabay & Scott, 2011). For most firms,

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the strategies they develop do not encompass international markets, and in their involvement in
foreign markets, they adopt indirect export as an entry strategy. However, as the sales expand
through the indirect export, they adopt other means of operating in international markets since
there are opportunities in such markets.
The following approaches are employed by firms in venturing foreign markets. The corollary
approach is used by firms that are new in foreign markets, and a firm here delegates tasks and
responsibilities to an existing department in the foreign markets such as processing orders. The
department's assigned such duties include the marketing and finance department (Thompson,
Peteraf, Gamble, & Strickland, 2014). As a result of the expansions of the sales in a foreign
market, a firm may develop a sales department that foresees all the operations in a foreign
market (Focus).As such as taking the lead in marketing the products, sourcing and working
closely with the distributors in the foreign nation and making the appropriate arrangements as far
as the finances are involved. However, at a certain level, the export department may not be in a
position to handle all the firm's operations as a result of the robust sales and as such new
methods and strategies may be required to assist the export department (Bush, 2017).
The international division, on the other hand, is formed by assisting the firms to familiarize
with the international operations of the firm (Warner, 2010). It is through this department that a
firm can create and develop programs that facilitate smooth and efficient allocation of resources
in foreign markets while at the same time ensuring that the activities of the firm in the domestic
market are ongoing (Posner & Applegarth, 2014).
3.0. Organization design
3.1. Global product design

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The global product design has been identified as the most common and thus describes
responsibilities for particular products or a group of products to different divisions in a firm. The
design is suitable for firms that have a variety of product lines being sold in markets that are
diversified. The Beast juice would be favored by this design as there are different juices sold and
they would all suit different markets. Firms will choose M-form design in the case the products
are related, in this case, the different juice blends are related in the case of Beast juice would be
more convenient (Thompson, Peteraf, Gamble, & Strickland, 2014).
The global product design has various advantages. One of the benefits that Beast Juice
Company may derive is that the managers will be in a position to gain significant hands-on
expertise in all angles of the product as more focus is directed on a single product and in this
case all focus will be on developing the Beast juice (Euromonitor). Secondly is that there is
efficiency in production that ensures that products are manufactured at the lowest costs. In this
scenario, Beast juice will be manufactured at the lowest costs possible thus minimizing
operational costs thus raising revenues.
Philippines have a large population and thus diversified needs in terms of consumption of
various products. The beast juice comes in various dimensions as per the market demand just like
the competitors such as Delmonte have various blends to suit various clients. Philippines have a
variety of fruits and thus make it even better in terms of producing different blends for the Beast
juice. For instance, Beast juice can have blends such as the carrot, mango, and pineapple that can
compete favorably in the market with other brands from other companies. It is for this case that a
global product design would be suitable for Beast juice since it engages in a variety of juice
blends.

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4.0. Key internal weakness
One of the main weaknesses is the issue of skilled labor. Despite the Philippines having a
large population, most of the people lack the skills needed in the market. The juice industry
requires a particular set of skills in processing and manufacturing and this may cause problems
for the Beast juice in case such skills lack among the Filipinos. The company may not compete
favorably amidst competition from other global players in the industry. The company can
overcome this weakness by using the services of foreign workers who have the required skills
though it may be more expensive in the long-run.
Financial capital requirements
A beverage enterprise normally requires proper packaging and also the availability of
infrastructure such refrigeration for purposes of cooling and preserving the juice. Machines
required in branding and labeling the product is also needed. In such an enterprise a range of
about $ 20000 would be good for the business.
5.0 Staffing policies
For businesses with offices in foreign countries have to choose the strategy to be used in
hiring management to run the affairs of the company. Ethnocentric entails hiring nationals of the
parent company an international market. The ethnocentric approach has some advantages such as
ensuring that the company policies are followed by having nationals who understand and have
the knowledge of the firm (Johnston). However, the problem with such an approach is that it may
be expensive bringing the nationals in a foreign country as there are costs associated with
moving the staff to another country and also settling them (Johnston).

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The polycentric approach, on the other hand, involves hiring the citizens of the host
country. Such nationals are hired to fill the managerial positions. The motive behind this
approach is that the locals understand the culture of their country better and thus may be in a
position to customize the products according to the needs of the customers in such a country as
compared to foreign employees. The polycentric approach, in this case, would be superior to
other approaches for the Beast juice since the hiring of the nationals of the foreign country is
cheap in a country such as the Philippines. Also, there will be increased productivity as the
nationals have an advantage of possessing better knowledge on the market. Lastly, there is
government support as a result of hiring the nationals which may be beneficial to the Beast juice
regarding operating in a favorable environment characterized by government subsidies that lower
cost of production. However, the approach has some disadvantages such as conflict may arise in
the case of a subsidiary where the managers of the host country and the managers of the foreign
country may have conflicting interests (Mosler, 2003).
The geocentric approach, on the other hand, refers to employing the best employees
irrespective of their nationality. This approach has some benefits such as enabling a global firm
tap the best pool of managers to run the firm as such managers have international exposure and
experience that is needed in international operations (Lander). However, the geocentric approach
has some limitations as it is expensive for a small business or firm (Lander).It is costly to hire the
best managers for a small firm and thus inappropriate for Beast juice which is operating on a
small scale basis.
6.0. Recommendation and conclusions

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The report reveals that indeed the Philippines is an ideal country for the Beast juice based
on a number of factors such as the large size of the population. However, a number of strategies
are important if the company is to achieve optimum success (Dlabay & Scott, 2011). One it is
fundamental for the company to increase capital and expand the venture so as to enjoy
economies of scale associated with large-scale operations. It is also important for the venture to
seek licenses from the Filipino government so that it can run and set up its premises in the
Philippines so as to reduce costs associated with agents and distributors.

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