Europe Drink's Business Expansion Analysis

This report provides an analysis of Europe Drink's market situation, focusing on their expanding business from Romania to Greece. The company's working culture is highlighted as a key factor attracting foreign investors. The political, economic, social (macro) environment in Greece is also discussed as a strong pull for business expansion. However, high competition in the market reduces prices and decreases profit chances.

Report
(Europe Drinks S.A.
Expansion in Greece)

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
1) Background of European Drinks S.A.-...................................................................................1
2) Background information on the business environment-.........................................................2
3) Analysis of business scenario-................................................................................................4
CONCLUSION ...............................................................................................................................5
REFERENCES................................................................................................................................7

INTRODUCTION
A business or economic system where products and services are exchanged for making
money. Every organization needs some form of investment and enough numbers of buyers to
whom its output can be sold out in market to earn profit. It is a legal body which follow pre-
defined governments rules and regulations. European Drink S.A. is a food or beverage industry
of Romania, which has good market share in own country. It produces famous soft or hard drinks
like wine, beer etc.
Report will describe background of Europe Drinks S.A. It has a good market value and
famous among consumers. After this report will include explanation about background
information of Greece business environment or impact of macro factors on it. Report will explain
in the last analysis business scenario with the use of Porter's five forces model and their impact
on buyer or supplier behaviour.
MAIN BODY
1) Background of European Drinks S.A.-
European drink is one of the greatest food company of Romania which is located in Bihor
county. Organization produces large variety of products like mineral water, carbonated water,
energy drink, beer or soft drinks in its European drinks division (Bordo and Haubrich, 2017).
Adria and fruity fresh are two main soft drink components or competitors for Coco-cola & Pepsi
in Romania market. Izvorul mineral water and Burger beer are other successful brands of it. In
1993, it was founded. It is a worldwide business organization having 5000 numbers of
employees. The main products are crop and livestock, food & beverages. European drinks and
foods also has own an agribusiness nearly 8,700 ha in Bihor county, Romania. Throughout its
history has focused on making the necessary investments to navigate successfully. Company has
11% share of the carbonated drink market worldwide. Its top three drinks such as mineral water,
wine, Burger beer are among the top ten drinks in United State market. It also faced many ups
and down in initial stage ((Bone, 2017)). To increase financial performance, it introduced
different varieties of products and started sell out wine and beer according to area. Like if beer is
most favourite in northern countries or wine in southern zone & vodka in eastern European and
supply them according to their demand. Its fruity brand is one of the most consuming soft drink
among customers. Romania is drinks lovers’ country, its people like to consume alcohol drinks
in their day to day life style (Caplow, 2017).
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It met their goal returning $208 billion in cash to shareholders through share purchases.
Core net ROIC expanded by 60 basis points and now stands at 10.7%. These are impressive
results especially in light of the global mega trends impacting their business including macro-
economic and political volatility. The aim of company is shifting customers or increasing
demand for nutritious beverage & foods, disruption of retail capturing growth in markets. The
other mega trends which influenced its business is the pace of digital innovation, internet-
enabled services, rise of big data.
Pepsi-co is one of the biggest competitor, who capture large numbers of market shares.
Legal structure of Europe Drinks S.A. is General Directors- Chief Executive Officer- Executive
Officer- Board of Directors- Management. They follow this cycle before making any decision.
They ask for employees’ suggestion while framing some important decision. In current situation
it has good market value, it uses different marketing channels like e-commerce helped drive
strong results in 2017. It’s this business medium in 2017 generated around 0.$5 billion in
annualized retail sales. It changes its business marketing techniques with the changing world
requirements. Today's everyone is connected with digital world and like to spend their free time
on internet or social media. To earn more profit and productivity it wants to expand business in
Greece. It spreading business through FDI in familiar economical country like Greek. It adopts
online marketing medium to explore their products and services worldwide. In 2017, it also
renewed its commitment to supporting their associates in other ways. It launched multiple
variants in services or goods.
2) Background information on the business environment-
Greece is a Mediterranean country in south Europe, or share border with Bulgaria,
Albania. It is one of the mountains country of Europe (Eshima and Anderson, 2017). The
'Kallikratis' introduced seven decentralized administrations on 1st January 2011 as a separate
regional entity. Greece is the 51st world largest economical or 3rd favouritism country of
Romania. Its political, technical, social environments are beneficial for business point. Its
background attracts foreign investors to invest their money here. Greece business background
environment also affected by macro factors. PESTLE is more useful method to analysis business
factors.
Political factors- According to constitute, power is exercised by President of the Republic and
government after 1986. President role in executive branch is ceremonial. It shows that head of
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government has power to make business policies and strategies. Its legislative power is exercised
by 300 members of parliament. Statutes passed by Parliament are approved by the President of
the Republic. Its elections are organized every four years, but President is bound to dissolve the
parliament assembly before the proposal of Cabinet Ministers Union. In the case of national
issue exceptional is important. He is also obliged to solve the meeting earlier, if oppositions
manage to pass a motion paper of no majority or confidence. European drink wants to expand
their business in Greece. It has good political environment for other countries who excited to
established their organization there.
All business policies are framed by government (Johnson, 2018). It is a developed
country on economic based. Greece was the largest foreign investor in Albania(2013) and top
three in Romania or Serbia. European drink is a Romania soft drink and beverage company. It
already operates many businesses from here, so Europe Drinks also can establish its business
here.. Political environment is familiar to company. Government policies easily allow them to
run their business from Greece. They welcome foreign investors and provide safe, healthy
business culture, low taxation policy, high rate profit. Good tax rate, highly revenue returns is the
attracting centre for investors. European Drink can easily earn more productivity and provide
qualitative foods or drinks.
Economic factors- Greece has growing GDP and its economy continues to face challenges like
high unemployment levels, insufficient public sector bureaucracy, corruption, global competition
is low etc. Its economy is the 51st largest and has 54th largest purchasing power parity in the
whole world. According to 2017, records it is the 17th largest economy among 28 members of
European Union. It is a developed country with an economical based services and products. In
2001, it adopted the Euro as its currency, replaced the Greek drachma at exchange rate of 340.75
per euro. Its GDP growth rate is expected to increase 2.3% in 2018 and then moderate to 2% in
2019 (Jordà, Schularick and Taylor, 2017). After 6 consecutive years’ period of recession and
modest recovery in 2016, its economy showed sign of improvement in next coming year. Europe
Drinks spreading their business in Greece, which is quite profitable for them. It is a developed
country with growing economic conditions. Its beneficial for business economical factor. High
GDP showing that it has good market opportunities to operate business. Romania is one of the
investors' country in Greece, its known of economic factors. Europe Drink can take advantages
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of growing or healthy GDP. Company have to produce those products which are beneficial in
monetary term.
Social factors- Income differences create a social status in society and it is the standard symbol
of big cities. Former bases of wealth and power vanished with departure of the Ottomans and
pieces of agriculture estates. Social status is not coterminous with economical class but results is
combination of education, occupation, income etc. The grace of class or status symbols of social
satisfaction are changeable and diverse. Its social life make effect on business industries or major
products are clothing, shoes, food and tobacco, beverages, constructions material, transportation
etc. Europe Drink has good opportunity for their business growth (Kapitsinis, 2018). Company
can easily earn more profit because Greece local citizens like drinks or beverages. It has large
numbers of youth those like drinks in their daily life. So, it is a great chance for Europe soft
drink to launch products here or make more money.
Technological factor- Technology in Greece developed in 5th century BC, and continuing up to.
Technological invention's credit goes to ancient Greece includes the screw, rotary mills, water
clock, water organ etc. Peaceful uses are shown by development of watermill. Information
technology services remains leading with software. In 2016 Greece IT markets is expected to
reduce a slower rate of 0.5% compared to 3.1% decline in same year. This services comprise IT
and business consulting services, software development. Telecommunication services is the
leading category of telecom sector cover 86% of market. Europe Drinks has good opportunities
to develop their products with the use of the latest technologies. It can take advantages of
established IT services and sale their drinks in market.
Legal factor- Greece have transparent policies and laws for future forecasting. Foreign
companies face complexity and other business issues due to strict government rules and
regulation and their irregular implementation. Government committed to spread reforms to
simplify legal structure for investment, involving bureaucratic obstacles. Europe Drinks has to
follow complex legal rules of Greece (Mantziki, Renders and Seidell, 2017). They have to
produce those kinds of products which fulfils the government legal conditions. It has to follow
copy right law to escape their products from any theft. In addition to this the another norm which
are required to be comply by an organisation are employment law, safety and security of
employees during working hours.
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Environmental factor- Every country has unique environment. Before establishing business in
foreign country company's owner has to evaluate environmental factors. Europe Drinks
production may be influence by climate change, transportation facilities, high prices of oil, water
or electricity supply etc. It is the responsibilities of organization that they do not damage
environment of other country when expanding their business.
3) Analysis of business scenario-
With the help of Porter's five forces model it is easy to analysis business situations. Its
useful equipment to evaluate macro or micro business environment. It is helpful to understand
opportunities of competitive current market or future forecasting. This model descried the
different effects on business of market environment like customers, suppliers’ behaviour, new
entrants' attitude, substitute services or competition.
Bargaining power of buyers- An organization buyers may be individual customers and
companies distribute its products or services to end users. Buyers with strong negotiation power
is not beneficial for company, they can bound industry profitability by demand of lowest price
products. (Pearson, 2017). This behaviour looks like a threat for business. Europe Drink has to
face all these conditions, if they sell their products at high cost. A reasonable price is necessary
to distribute their drinks among the customers. Costly product and services buyers do not want to
purchase. Qualitative goods and services always an attracting point of customers. Company has
to provide their products at suitable cost to sustain in market. Buyer has power to change whole
market structure if they want. They are the king of market. Company has to produce products
and services according to their demand. The bargaining power of customers is high. Buyer is the
king of market and organization has to produce qualitative products and services to satisfied
users needs.
The bargaining power of suppliers- Suppliers provide resources to the organization, like raw
material, services, labour (contract worker) etc. Their bargaining power refers to ability to raise
resources cost, charge high price. That's mean a powerful supplier also a threat for company.
Europe drink required contract labour, resources, service provider during business expansion in
Greece. If they fix prices against suppliers demand it becomes a critical situation for company.
This type of condition in business is not fair for producer, they have to make a deal with supplier
which suites both of them. In the retail sector supplier has power to shift one buyer to another if
they do not find a great deal.
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The threat of substitute products- Substitute products are those goods and services which are
available in market which do not belong to the same organization but perform similar functions
of company's products. Market existence of close substitute goods is a threat for other business
because it coats a reasonable price for available products. Europe drinks has to face competition
in Greece market because its social status like drinks and foods. Substitutes of its similar goods
are existed in local market. They arise a difficult market environment. Substitute products in
market is the biggest threat for any organization and to reduce this fear Europe drinks has to
launched their services with different quality. Substitute products are the biggest challenge in
business growth. If competitor has good and qualitative products and services, customers like to
purchase those products.
The threat of new entrants- New business entrants is always a challenge for existing
organization. They provide their products and services at reasonable cost compare to other
companies. Greece people love food, beverage or it is clear that there are many industries
offering same products (Schwartz, 2018). Europe Drinks has threat from new entrants in the
market, if they sell their goods at low price compare to Europe drinks is quite a challenge for it.
It also produces such products which suites Greece local people income. Highly expensive
products and services not get profit in low economic country . If producers enter in new market
with high prices, they have to face many challenges.
Competitive rivalry- Large numbers of competitors destroy the market productivity. They
propose undifferentiated products and services to increase competition level. Greece has many
industries which produce drinks or beverages. Europe Drink has huge numbers of competitors in
market. They all fight for capturing large market share but it is not an easy task (Voigt, Buliga
and Michl, 2017). High market competition reduce products price because everyone want to sell
their services, but quality maintenance is necessary for producers. High competition decrease the
chances of highly profits. More competitive environment is not good situation for business. To
increase revenue profit company has to reduce its competitors in the market and provide unique
products and services to attract more customers.
CONCLUSION
Report explains different market situations for Europe Drinks S.A. Its expanding business
from Romania to Greece and has good value in their own country and this encourage them to
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spread business across the world. Its working culture is excellent for foreign countries or social
status attract them. Political, economic, social (macro) environment are strong, they all attract
foreign inventors to make more profit. Its background is good and interesting for business
purpose. All required resources are available here at minimum cost. In short, Europe Drink has
great chance to increase their productivity or market share through the business expansion in
others countries.
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REFERENC
Books and Journals
Bone, J., 2017. The hard sell: an ethnographic study of the direct selling industry. Routledge.
Bordo, M.D. and Haubrich, J.G., 2017. Deep recessions, fast recoveries, and financial crises:
Evidence from the American record. Economic Inquiry, 55(1), pp.527-541.
Caplow, T., 2017. The academic marketplace. Routledge.
Eshima, Y. and Anderson, B.S., 2017. Firm growth, adaptive capability, and entrepreneurial
orientation. Strategic Management Journal, 38(3), pp.770-779.
Johnson, P., 2018. New firms: An economic perspective. Routledge.
Jordà, Ò., Schularick, M. and Taylor, A.M., 2017. Macrofinancial history and the new business
cycle facts. NBER Macroeconomics Annual, 31(1), pp.213-263.
Kapitsinis, N., 2018. Interpreting business mobility through socio-economic differentiation.
Greek firm relocation to Bulgaria before and after the 2007 global economic
crisis. Geoforum, 96, pp.119-128.
Mantziki, K., Renders, C.M. and Seidell, J.C., 2017. Water consumption in european children:
Associations with intake of fruit juices, soft drinks and related parenting
practices. International journal of environmental research and public health, 14(6), p.583.
Pearson, R., 2017. Insuring the industrial revolution: fire insurance in Great Britain, 1700–
1850. Routledge.
Schwartz, S.A., 2018. War, Climate Change, and Migration. Explore: The Journal of Science
and Healing.
Voigt, K.I., Buliga, O. and Michl, K., 2017. Business Model Pioneers. Springer International
Publishing.
Windolf, P., 2018. Expansion and structural change. Routledge.
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