Industry Analysis of Britvic Plc: Adaptations in Soft Drinks Sector

This report offers a comprehensive analysis of the soft drinks sub-sector in the UK, with a specific focus on Britvic Plc. The analysis begins with a macro-environmental assessment using PESTEL analysis and then delves into the internal environment through Porter's Five Forces and Value Chain analysis. The report examines competitive rivalry, the threat of new entrants, supplier power, buyer power, and the threat of substitutes within the soft drinks sector. Furthermore, it provides a detailed value chain analysis of Britvic Plc, covering inbound logistics, production, outbound logistics, marketing and sales, and services. The report concludes by discussing potential adaptations for Britvic Plc based on the findings, and reflects on the usefulness of academic models in understanding the business environment.

INDUSTRY ANALYSIS AND
POSSIBLE ADAPTATIONS

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Macro environmental analysis of Soft Drinks Subsector within UK..........................................1
b. Value chain analysis of Britvic Plc.........................................................................................3
c. Explanation of befitting adaptations of the Britvic Plc...........................................................5
d. Reflection on the usefulness of an academic model...............................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Business environment can be referred to as the sum total of external and internal factors
which have a direct and significant influence upon the operations and functioning of business
(Wang and Zhao, 2017). Here, the internal factors comprise of workers, culture, organisational
policies etc. On the contrary, the external factors comprise of social, political, legal, demographic
factors etc. In this regard, the following essay is based upon Britvic Plc which is a British
manufacturer of soft drinks operating within the Soft Drinks Sub Sector of UK. This organisation
is headquartered in Hemel Hempstead, England and is a part of the FTSE 250 Index. This essay
includes PESTEL analysis to evaluate the impact of macro environment and Porter Five Forces
to analyse the internal environment. Analysis of internal environment is done by making use of
Value Chain. Further, the adaptations of company are given. Lastly, the usefulness of academic
model is described in the essay.
MAIN BODY
Macro environmental analysis of Soft Drinks Subsector within UK
Macro environmental analysis can be referred to as the evaluation of the impact of
external factors upon the functioning of business sector (Wheelen and et. al., 2017). In this
regard, Soft Drinks is an essential sub-sector of Food & Beverage industry of United Kingdom.
Porter Five Force analysis has been used to analyse the impact of environmental influences
factors upon Soft Drinks Sub sector of UK.
Porter's five forces model
This is regarded as one of the most significant and relevant models which is used to
identify the overall scenario of external influences. This comprise of five basic forces that
directly impacts upon the range of strategies used along with the products and services that are
offered by a business organisation within marketplace. By taking this approach into due
consideration, it can be said that an entity can easily gain competitive and strategic advantage
which provide assistance in ensuring long term sustainability of company in marketplace
(Radziszewska-Zielina and Śladowski, 2017). Besides this, this industry analysis model also aids
an organisation to make an assessment of the overall business sector which may help a company
to make appropriate decisions as per the needs and requirements. In this regard, Porter Five
Force Model consists of five factors which determine the competitive intensity, attractiveness
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and the profitability of a business sub sector. These five forces are, namely, competitive rivalry,
threat of new entrants, power of suppliers, power of buyers and threat of substitutes. All of these
are discussed below in context of Soft Drinks Sub Sector of United Kingdom as follows:-
Competitive rivalry in industry- This is regarded as one of the most crucial factors
which have a significant influence upon the functioning of an organisation. In this regard, the
competitive rivalry within Soft Drinks Sub Sector is found to be low as not many competitors
exist within the soft drinks industry. This sector is found to be growing very steadily and further,
growth rate is relatively small (Potts, 2017). The fixed costs are a high part of total cost of
companies operating within Soft Drinks industry. This acts as a barrier for entry to new firms
and thus, the number of organisations surviving within this sub sector and posing competition for
Soft Drinks Sub Sector is low. Thus, competition within Soft Drinks sub sector is low which
implies that Britvic possesses the power to charge customers with prices as per their own accord.
Threat of new entrants- Yet another crucial factor which impacts upon the operations as
well as functioning of businesses which are operating as a part of a business sector is the threat
posed by entry of new companies within the industry. It is generally seen that companies are not
able to adopt all the changes in accordance with the requirements of industry as such kind of
modification require huge investment to be made by organisations (Pereira, da Silva and Soule,
2018). Within Soft Drinks Sub Sector, it is usually seen that it is not easy for a firm to gain entry
into this sub sector owing to the high fixed costs that are to be incurred by an organisation for
sustaining in marketplace. This causes difficulties for new firms to gain entry into sub sector of
Soft Drinks. The presence of companies such as Britvic Plc pose threats for the existing entities
within UK as well as the new entities which are intending to gain entry into this sub sector.
Bargaining power of suppliers- This is a force which defines the power that suppliers or
vendors possess in relation to supply of goods and services to firms operating within a market
place. With regards to Soft Drinks Sub Sector, it is seen that the bargaining power of suppliers
within this sector is quite high as there are less number of soft drink companies in United
Kingdom.
Bargaining power of customers- Yet another important aspect of Porter's five forces
which have a substantial impact on the functioning and the operations of business organisations
is the negotiation power of consumers. It can be said that the Soft Drinks sub sector of United
Kingdom possess a large base of customers belonging to different age groups. The bargaining
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power of customers within this sub sector is quite low as there are lesser number of soft drink
companies available within United Kingdom. This implies that customers do not possess the
power to negotiate the prices with firms and have to, at times, surrender to the prices at which
products are offered by soft drink organisations within UK such as Britvic Plc, Coca-Cola.
Threat of substitutes- The hyper competitive environment of Soft Drinks sub sector
within United Kingdom has close substitutes such as Britvic Plc, Coca-Cola, Pepsi Co. which
poses threat to the existence of companies. It is essential for companies that are prevailing within
this sub sector of the nation to undertake effective measures through which they can gain a
strategic and competitive in market place over rivals operating within the nation. Further, a
number of other drinks are also available within the market such as hard drinks, caffeine,
alcoholic drinks (Rutty, M., and et. al., 2019). To build an effective brand image or gain a high
share in market, companies are required to make use of optimal strategies such as differentiation,
cost leadership etc.
b. Value chain analysis of Britvic Plc
It has been identified that within internal business environment of an organisation, there
are a different range of techniques and tools present, which can be utilised. This comprises of
various factors which range from factors such as strategies, employees, suppliers, investors and
many more as well. It is needed by business organisation to identify the internal factors and this
exclusively may assist in improvising market share via enhancing quality of services and
products. Some of models or tools for analysing the internal factors can be from Value Chain
analysis, SWOT Analysis and many others. With respect to the same, Britvic is also focusing on
enhancement of their market share and this be attained by appropriate internal analysis. For this
Britvic's has opted for value chain analysis. This has been provided below:
Value Chain Analysis
Porter's value chain analysis model is referred to as an effective strategic tool which can
be used by organisation to identify various ranges of internal activities which are conducted
within business to carry out their operations in required manner (Yeo and Grant, 2018). Taking
into consideration this model, a company such as Britvic can easily carry out appropriate
analysis, which will assist them to identify various activities which are adding more value to
Britvic. By this, enhance benefits such as competitive vantage can be attained by the
organisation. On the whole, manufacturing, maintenance, support, sales of products are the
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primary activities which comes under this. Internal activities may comprise of wide range of
factors and these are discussed below:
Inbound logistics- Within value chain analysis this type of factor comprises of
distinctive processes which are in particular includes things like receiving raw material, their
storage along with their internal distribution which are required to carry out operations, services
and products of an organisation such as Britvic Plc. In this case, it will be obligatory for Britvic
Plc to control their relationship with its suppliers so that they can have brand's value effective
and much more within the competitive business market (Rossnerova and et. al., 2017). Since,
Soft Drinks sector comprises of wide range of processes or things such as production, their
packaging, storage and distribution of bottles of soft drinks which comprises of flavoured
essence, energy and various other types of drinks for individuals by taking into consideration
their own requirements.
Production- The operational activities that may come under production may comprise of
production line along with production floor. On the whole, these are the activities of Britvic Plc
which are majorly developed or used for conversion of raw material into the finished products
and this comes with a wide range of processes that is commonly referred to as the supply chain
process. For creation of the value, it has been analysed that operational process mostly requires
that they must be appropriately managed by which good position can be grabbed within the
market (Gampfer and Geishecker, 2019). Within United Kingdom, Britvic Plc is a well known
and renowned business organisation their products are also famous for the same. Organisation
has their own production plant at its headquarter and in the identical way, Britvic Plc has also
taken an initial as a public offering. This enhanced benefits for both investors and for company
simultaneously, thereby resulting in enhancement of their brand image.
Outbound logistics- This type of logistics are associated with selling of services and
products to customers in UK. Storage, distribution and transportation are few elements of
outbound logistics which results in enhancement of customer base. Britvic is an business
organisation which is generally related to soft drinks business sub sector of United Kingdom,
whose outlets contains assorted range of products (soft drinks) for their customers who are
present in other nations. This export activity amend the value through and through channelising
their products via a range of transport channels and these mediums can vary depending upon
distance, they are air, rail, road and many more.
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Marketing and sales- It comprises of services and products within the business market
according to which advertisements are being built or developed by which sales of a business
organisation can be maximised. Sales and marketing comprises of management and generation
of effective customer relationships. These guiding principles will lead them to setting apart from
the competition. This provides the vantages to their customers. The sales and marketing of
Britvic Plc is done in an efficacious way (Montgomery, 2017). This organisation sells their
products under it's own brand name and apart from this they also offers bonuses and discounts
for their regular customers. This organisation initiates different marketing campaigns at
universities, colleges, shopping malls, etc. for augmentative the awareness about brand and their
products among their customers.
Services- This comprises of all the exercises which will aid them in abidance of the
approximation of the services or products which are associated with the clients. This provides
assurance associated with organisation that great services are being provided to the clients as
well as customers and they are satisfied by the products offered by the company. The soft drinks
of the organisation named as Britvic Plc offers high quality and are generally rejoiced by the
customers.
c. Explanation of befitting adaptations of the Britvic Plc
Britvic Plc is carrying out their functionalities as well as operations in United Kingdom
in soft drinks sector and it is headquartered in Hemel Hampstead. Organisation is also present
within London Stock Exchange and is ceaselessly attaining a good reputation within the market
of UK. Business organisation such as Britvic is providing public offerings which assist them to
enhance interest of shareholders by which investments can be made across the world. Generally,
Porter's Five Forces Model has been used by Britvic, which will assist them to enhance the profit
margins as well as sales and it will immediately help them to take right decisions as per the
needs. Decision making plays a critical role within a business organisation (Terziev, 2018). In
the similar way, by taking into consideration both the analysis, namely, Porter five forces model
and Porter Value Chain Model,immediate assistance can be taken so as to improve the process of
decision making process for Britvic Plc within the stipulated course of time. Furthermore, both
these models has aided business organisation (Britvic) to attain new heights by achieving
competitive edge. Some strategies are presented below:-
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Recognising global opportunities in kids, family and adult categories– Britvic tends
to focus n franchise, licensing agreement and licensing agreement. By this the company is able to
enhance existing benefit while considering selective acquisition regard to the companies
services and products. With this the business also have to create strong relationship with strong
local enterprises (Saidani and et. al., 2018). By this the business will be able to identify existing
market that have yet not been taped by the organisation.
Building trust and respect within communities- The organisation is constantly building
trust and respect in the existing communities. By acknowledging their impact on environment
they have adopted practices that will minimise the same. For this the company is adopting
sustainable business strategy that will ensure that the firm deliver a high performance along with
integrity.
Generating profitable growth within core markets- The organisation is performing in
different parts such as Ireland Brazil and France. Making there brand portfolio as one of leading
brand. With this its is apart of pepsi co. and it has helped the organisation in development of
balanced portfolio in the marketplace where the company is operating for instance the soft drink
business sub sector.
d. Reflection on the usefulness of an academic model
Porter's Five Force model is an excellent tool that is used by organisations with a view to
assess the competitive environment of relevant business sector. In this regard, it is essential that
the business entities take into account the usefulness as well as the the limitations of this
academic model so as to ensure that this model is used in the right direction with a view to gain
strategic and competitive edge in market place (Mandelli and et. al., 2017). In this regard the
usefulness and drawbacks of making use of Porter's Five Force model are briefly given below:-
The usefulness of Porter's Five Force Model
Determining the profitability: Porter Five Force Model provides assistance in gaining
knowledge about the extent of profitability of a particular business sector industry as it takes
account of the level of competition prevailing within the industry to determine the extent of
rivalry. With the help of this model, organisation can ensure that they continue delivering an
effective performance within the market with a view to enhance their sales and profitability.
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Easy to use: The most important advantage of making use of this model lies in the
easiness with which it can be used. This model helps in gaining an overall idea of the
competition within a business sector as there are a number of forces present within the external
environment of an industry that affects the operations and functioning of entity within
marketplace. This will aid the business to significantly enhance its sales as well as share in
market.
Limitations of using Porter's Five Force Model
Uncertainty: This academic model lacks the information about future prospects of an
organisation as it only communicates the present scenario of an industry and do not take into
account any adverse or favourable condition which may cause a significant shift in any of the
five forces of this industry analysis model.
Works at wider level only: Porter's Five Force Model works only at a broader level which
reflects that it does not take into account small industries and thus, small and medium enterprises
can not take advantage of using this model to gain knowledge about the rivalry prevailing within
a specified business sector (Goel, Sudhakar and Shahi, 2019). Further, even if the smaller
enterprises use this academic model to assess the relevant factors, it is probable that they may
derive wrong results.
Avoids non-market forces: The forces that comprise this model are found to have a
significant impact upon the operations of entities. However, this model tends to avoid the non-
market aspects which also pose a significant influence on companies, such as government
obligation, environmental concerns, tax issues, laws and legislations etc. As a result, this model
when used alone fails to provide relevant outcomes to companies.
Deals with qualitative aspects only: Yet another significant limitation of Porter Five
Force model is that it deals with only the qualitative aspects of an industry. This signifies that
this industry analysis model does not provide any information about other aspects which are
essential to be considered for the growth and sustainability of company.
CONCLUSION
From the above discussion, it can be concluded that soft drinks sub sector is a significant
industry for new entrants to gain entry, however, this sector requires companies to invest largely
as fixed cost. This reduces the threat of new entrants for existing organisations within this sector.
Further, value chain analysis reveals that the company conducts a wide range of activities and
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processes in order to ensure that the organisational goals and objectives are achieved in a timely
manner. The appropriate adaptions for the company have been given in the form of generating
profitable growth in core markets, recognising global opportunities and developing trust as well
as respect within society.
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