BSNS 7360 International Business: V Drink UK Market Profile Report

This report provides a comprehensive market profile of the V Drink in the UK, analyzing the economic environment, cultural landscape, and the country's resources and comparative advantages. The economic analysis covers trends in GDP, income distribution, major economic sectors, inflation, currency exchange rates, and ease of doing business. The cultural analysis explores religion, language, social class structure, values, attitudes, and Hofstede's cultural dimensions. The report also examines Britain's resources and comparative advantages, applying the Heckscher-Ohlin trade theory. This detailed profile aims to provide insights for businesses considering entering the UK market.

Running head: MARKET PROFILE: V DRINK UK MARKET 1
Market Profile: V Drink UK market
Student’s Name
Institution Affiliation

MARKET PROFILE: V DRINK UK MARKET 2
Market Profile: V Drink UK market
A) Market Profile
(I) Economic Environment
 Trends in economic development, including GDP/capita, and GDP growth rate.
In 2016, the real Gross Domestic Product (GDP) of UK was estimated at 2.619
trillion USD with a per capita GDP of 42514.49 USD making the country one of the
countries with the highest Per Capita GDP in the world. The purchasing power parity
(PPP) calculated using the per capita GDP was estimated at USD 42,100. The UK has a
population of 65,637,239 people. Daigneault, Greenhalgh, & Samarasinghe, 2018).
 Income level and distribution,
Britain has one of the highest distribution inequalities in the world with a few
very rich people and large middle class and a sizeable number earning minimum wage.
Pay is at the highest point obviously, however different things matter as well: openings
for work, capacity to acquire efficiently, the estimation of our benefits including our
homes and the sentiment of a need to spare. For whatever length of time that the
activity advertises up, and there are no crash in-house costs, individuals will continue
spending (Daigneault, Greenhalgh, & Samarasinghe, 2018).
 Major sectors of the economy
The service sectors is one of the most important sectors of the UK economy
constituting about 80% of the GDP. The country exports a variety of manufactured
goods and import a number of capital goods and horticultural products (Rashbrooke,
2015).

MARKET PROFILE: V DRINK UK MARKET 3
 Inflation and currency exchange rates, ease of doing business, other relevant economic
characteristics
The export to the international market from the UK includes manufactured
products, bank services and capital good. The imports include horticultural products,
manufactured products and dairy products (Skallerud & Olsen, 2011). The main trading
export partners are the EU countries, the USA and China (Dinica, 2017).
 Inflation and currency exchange rates, ease of doing business, other relevant economic
characteristics
The inflation in the UK is high, but the monetary and fiscal policies are keeping it in
check. Furthermore, the UK has a flexible rate of exchange (Callander, & Barber, 2016).
Even after Bexit, the British economy has shown its resilience by bouncing back and
recording some gains (Peake, Green Alliance, & Circular Economy Task Force., 2017).
Extra spending does not undermine monetary maintainability, with government
obligation as yet declining as an offer of GDP. These loan fee increments are relied upon
to balance out expansion near the 2% midpoint of the Reserve Bank's objective range
(Organisation for Economic Co-operation and Development (2017).
Rising import costs have driven expansion to its largest amount for a long time.
However, the Bank of England predicts that the yearly rate will have crested in October
2017. Expansion has now fallen as the impact of the drop in the pounds goes out of the
figures, yet the national bank expects that a tight work market may before long prompt
residential inflationary weight (Berden et al., 2009)

MARKET PROFILE: V DRINK UK MARKET 4
The UK is one of the easiest places to set up a business as the registration processes
have been streamlined. The extensive use of information technology in most of the processes
of acquiring the necessary business permissions and even paying for the same has reduced the
red tape hastening the business processes (Wadsworth, 2015). In the UK, a person can apply or
access government services and business tools through the government website making it
easier to register and update business information (Giudice, Kuenzel, & Springbett, 2012). Also,
the government policies are for liberalisation with the deregulation allowing for fair
competition between businesses. Furthermore, online business services ensure the integrity of
the information and cut down on bureaucracy which might make a traditional offline system a
den of corruption and inefficiencies (Yazdifar, & Askarany, 2012).
Much vulnerability stays with the official exit from the EU booked for March 2019. Some
U.K. organizations are holding off on speculations to perceive how Brexit impacts exchange
relations, and development is estimated to moderate in 2018. However, Britain's business
atmosphere stays alluring. The U.K. positions first without precedent for Forbes' twelfth yearly
overview of the Best Countries for Business. None the less, the U.K. is positioned among the
best 25 nations (out of 153 estimated) in every one of the 15 measurements followed, outside
of political hazard where it positioned twenty-eighth. In other words, Britain is still a favourite
for many businesses as the best and easiest place to do business (Sampson, 2016).
(II) Cultural Environment
 predominant religion(s), language(s)
English is the official language of communication in Britain as most people within the
bounds of the Greater UK are native English speakers. Britain is made up of many religions but

MARKET PROFILE: V DRINK UK MARKET 5
the main religions are Christianity and Islam followed by Jainism and Buddhism. In the Christian
religion, Anglican dominates (McGuigan, 2010). The country is sometimes described as a
multicultural country and some people refer to is as a secular country.
 social class structure
Britain is a structured society with different social economic classes. The gap
between the poor and the rich is expansive but cannot compare to the gap between
the rich and the poor in the developing countries. The social structure is not a caste
system and people move between the classes depending on their economic
resources.
 values and attitudes,
Britons value hard work and winning and such people work hard to secure a
future in a competitive environment. Britons are individualistic and do not care a lot
about people outside their close relatives. The Britons are work hard to maintain
political stability in the knowledge that it is the environment that supports economic
development.
o Other relevant cultural characteristics (Using Greet Hofstede cultural dimensions).
(Hofstede, 2001)
 Power Distance
Power distance dimension in Hofstede’s cultural analysis deals with the issue of
inequality in the society. It is axiomatic that even in the most egalitarian societies there
are differences between the members of the societies, albeit minor differences.

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However, in most societies, the inequalities are so pronounced that the oppressed come
to accept the inequalities as a normal part of life. Power distance measures how ready
the people of a certain nationality are likely to consider power inequalities as an
acceptable part of life. The UK scores very low (35) on the Power Distance aspect as
most Britons recognize the differences in power distribution but do not believe they are
cast in stone. At the workplace, the juniors have a voice, and the seniors allow and even
encourage them to give suggestions on various matters The Managers even go as far as
accepting criticisms on decisions that they make. In the UK, the communication
between managers and employees tend to be informal, and the employees expect to be
consulted before decisions are made.
 Individualism
In some societies, people identify themselves as “we” while in other countries
the individual is the centre of relations. Individualism dimension measures the extent to
which members of a nation believe they should help as many members of the society as
humanly possible. In Britain, members of the society are quite individualistic and believe
in supporting only the closest members of the family. The country scored high on
individualism (89), the implication at the workplace is that the employees are expected
to be independent and people with initiative.
 Masculinity
The masculinity dimension speaks to the value system in a nation. Traits like
competitiveness and winner-takes-all attitude characterize masculinity. The opposite of
this trait is feminism, characterized by cooperation. Nations which score high in

MARKET PROFILE: V DRINK UK MARKET 7
masculinity such as the UK (66) are characterised by the desire to stand out and be a
winner, and not necessarily liking what one does.
 Uncertainty Avoidance
The future is uncertain, and their people have various levels of anxiety
depending on whether they feel they are in control and can predict the future or they
believe it will overwhelm them. The uncertainty avoidance measure for the UK is 35
meaning that Britons are happy to live one day at a time.
 Long-term orientation
Some nations have respect for traditions, and they believe it helps them face the
future, while others are more interested in engaging in activities that help them the
future with confidence such as education and saving for the future. The UK is a
balanced society with a low score of 51 on long-term orientation. Therefore, Britons are
a people who have strong attachments and respect to their traditions but are also alive
to the fact that the future awaits and they need to prepare for it.
 Indulgence
The cultural dimension refers to the values that children learn through the
socialization process and which they carry with them throughout life. Parents are either
strict with or permissive with their children developing in them the tendency to be
focused on gratifying their immediate needs or being patient for a better thing
tomorrow. Cultures with high scores in indulgence like Britain (69) are characterized
with people who live and enjoy their present to the maximum and hope tomorrow will
take care of itself. On the other hand, culture exhibiting low scores on indulgence

MARKET PROFILE: V DRINK UK MARKET 8
dimension have people with the tendency to save and invest for the future with little
enjoyment in the present.
(III) Britain’s Resources and Comparative advantage
According to Heckscher-Ohlin trade theory, skilled labour will be cheap in countries that
have an abundance of such skills and conversely will be expensive in countries where such
skilled labour is in low supply. At the same time, the theory proposes that movement to freer
trade will negatively affect skilled labour in countries where with abundant low-skilled labour
and favour high skilled labour in countries with an abundance of high skills labour. In other
words, all other factors remaining equal, free trade will encourage countries that have a
competitive advantage in skilled labour to produce more goods that need these skills to
produce. At the same time, countries with low skilled labour will produce more products that
require low skills.
The net effect is that more skilled labour will be required in skilled labour abundant
countries, while less skilled labour will be required in countries that have an abundance of low-
skilled labour. The competition for high-skilled labour prices in high-skilled labor abundant
countries will shoot up while the reduced demand for skilled labour in low-skilled labour
abundant countries will push down skilled labour prices. The net effect is that people with high
skills in high-skilled labour countries will be more welcoming of freer trade (globalization)
compared to people with high skills in low-skilled labour counties. New Zealand has a
competitive advantage of highly-skilled labour in the manufacturing and service sectors and
abundant low-skilled labour in the agricultural sector (O'Rourke & Trinity College (Dublin,
Ireland), 2003).

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Strong Economic Fundamentals
Economic and political stability are the engines that drive the economy, and Britain has
the two. The economy of the country has shown a tremendous resilience that even after the
world economic meltdown in 2008 it rose again from the ashes to produce impressive
economic growth figures (Minford, 2015). Also, the government policies are conducive to
business including the free-market economic practices and the Comprehensive trade
agreements with partner countries. All these factors provide a conducive environment for
business growth.
Infrastructure for Business
The UK has laid a very firm business foundation through the building of roads, railway,
and air transport, which support the movement of goods and service, without which business
would grind to a halt. At the same time, the country has established highly advanced and
reliable internet service ensuring that one can easily apply for business and update business
information easily.
Energy Supply
The UK is energy sufficient meaning that business is ensured enough electricity for its
production services. Energy cost in the country is also low relative to other developed countries
in the world ensuring that the cost of production of goods and services is low thus enhancing
their competitiveness in the market (Scheve & Matthew, 2001).
Research and Development (R&D)

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The British government supports the government/private partnerships especially
through the public universities which help the universities to research and come up with
innovative products which are consumed locally and internationally (Bloom et al., 2014).
(B). V Drink New Zealand Export to the UK
V drink is an energy drink made and distributed by Frucor which is a New Zealand
beverage company. The energy drink has been in the market from 1997 when the first product
hit the market and has grown exponentially to its current dominant market share in New
Zealand and Australia with 60% and 40% respectively.
I chose the product because of its current status in the market in the neighbouring
countries, and there is every possibility that the drink will perform well in the international
market. The large market informed the choice for exporting V energy drink to the UK, and the
chances of performing well in the market are high (Méjean & Schwellnus, 2009).
The British economy is service oriented with the sector constituting a huge chunk of the
country’s GDP. The Central Bank plays an important role in the maintenance of the price
stability supported by the reserve back which controls the monetary policy. These institutions
and their activities help to maintain a low-inflation environment (House of Commons, 2013).
The UK economy applies free market principles with little regulation, making it easier for the
business people to establish their enterprises in the country. Also, there are few regulations
including fewer regulations on bringing money into the country as well as repatriation of funds.
Furthermore, the UK has a flexible rate of exchange (Callander, & Barber, 2016).
Moreover, the UK has been performing fairly well for the past two decades by was hit by
the 2008/2009 world recession. However, the economy is resilient and was able to immediately

MARKET PROFILE: V DRINK UK MARKET 11
rebound to record impressive growth rates in the FY 2010. In FY 2017, the economy recorded
an improved growth rate of 1.7% courtesy of tourism, construction and favourable terms of
trade. The slow-down in the export sector of the economy due to reduced demand for products
is affecting the growth rate, but the UK economy is expected to show a slowdown in economic
growth to 1.5 in 2018 (Yazdifar, & Askarany, 2012).
C) Compute the Market Potential
Total number of Energy drinks sold in the UK (liters)
(Source: (Statista, 2018))
679 million
÷ Average UK population 65,637,239
= Average consumption of Energy drinks (L) 10.34474
X The average cost of one liter of energy drink 2.42
= Total amount spent on soft drinks 25.0342
X Total Population
= Total Potential market available for energy drinks 1643180000
The annual Market potential for V drinks by the
value of $
1643180000

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References
Berden, K., Francois, J., Tamminen, K., Thelle, M., & Wymenga, P. (2013). ‘Non-tariff
Barriers in EU-US Trade and Investment: An Economic Analysis’, Technical
Report, Institute for International and Development Economics.
Berden, K., Francois, J., Tamminen, S., Thelle, M., & Wymenga, P. (2009). ‘Non-Tariff
Measures in EU-US Trade and Investment – An Economic Analysis’, Ecorys
report prepared for the European Commission, Reference OJ 2007/S180219493.
Bloom, N., Romer, P., Terry, S., & Van Reenen, J (2014). ‘A Trapped Factors Model of
Innovation’, Centre for Economic Performance Discussion Paper No. 126
(http://cep.lse.ac.uk/pubs/download/dp1261.pdf).
Callander, A., & Barber, M. (2016). Understanding the economic
environment. Wellington: LexisNexis NZ Limited
Daigneault, A., Greenhalgh, S., & Samarasinghe, O. (April 01, 2018). Economic Impacts of
Multiple Agro-Environmental Policies on New Zealand Land Use. Environmental and
Resource Economics : the Official Journal of the European Association of Environmental
and Resource Economists, 69, 4, 763-785.
Dinica, V. (December 02, 2017). Tourism concessions in National Parks: neo-
liberal governance experiments for a Conservation Economy in New
Zealand. Journal of Sustainable Tourism, 25, 12, 1811-1829.
FUND, I. N. T. E. R. N. A. T. I. O. N. A. L. M. O. N. E. T. A. R. Y. (2016). New
Zealand. International Monetary Fund.