Industry Analysis: Soft Drinks Subsector in the UK Economy

This report provides an industry analysis of the UK soft drinks subsector, focusing on the application of Porter's Five Forces model to assess the competitive landscape. It examines the threats of new entrants, the bargaining power of suppliers and buyers, competitive rivalry, and the threat of substitutes within the UK market. The report also utilizes the value chain model to analyze the internal business environment of organizations within the sector, specifically highlighting the primary and support activities. Furthermore, it discusses appropriate adaptation techniques in response to external environmental factors and evaluates the usefulness and limitations of Porter's Five Forces model in understanding the industry's dynamics. The analysis encompasses the impact of various forces on the industry's profitability and growth, offering insights into strategic adaptations for businesses operating in the UK soft drinks market.

INDUSTRY ANALYSIS
REFLECTIVE

Table of Contents
INTRODUCTION...........................................................................................................................1
Main body........................................................................................................................................1
A) Porter's 5 forces model...........................................................................................................1
B) Value chain model .................................................................................................................3
C) Appropriate adaptations .........................................................................................................6
D) Usefulness and potential limitations of Porter's five forces model........................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Industry analysis is the function of business that has been completed by owner of
business and another individual to measure the actual businesses' environment. Analysis support
businesses to understand different economic pieces of market (Nag, Han and Yao, 2014). It helps
to understand how these various parts used to achieve objectives and gain competitive
advantages in marketplace. The present report is based on industry analysis, it describes Soft
drinks sub sector of UK the focus of study. It clarifies Porter's five forces model to analyse and
identify current environment impact on whole industry within UK economy. This report justify
value chain model to analyse internal business environment of organization and also explain
appropriate adaptations techniques in response to external business environment factors.
Furthermore, this study clarifies usefulness and potentail limitations of Porter's five force model
in understanding businesses' environment.
Main body
A) Porter's 5 forces model
Porter's 5 forces is one of the best model that analyses and identifies five competitive
elements that shape each industry as whole. It helps to determine the industry's strengths and
weaknesses (Grant, 2016). Threat of new entrants, bargaining power of suppliers, bargaining
power of buyers, competitive rivalry among existing organizations, threat of substitutes are the
five factors that make impact on every industry the most.
In UK Soft Drinks sub sector manufacture, distribute and marketing non alcoholic drinks
for customers. They generally produce carbonated, sweetened, flavoured and waste based
beverages sine many years ago. This sector is known for selling the best non alcoholic drinks
organizations who make its best and better products for every people in nation.
Current business environment effect on Soft Drinks sub sector in UK economy which
need to be essential to analyse, with the help of Porter's five forces model it is easy to analyse
and identify the influences of current environment on organization, it one of the reason behind
using this model (Bohari, Hin and Fuad, 2017). It contributes to analyse the nature of
competition within the industry that is quite much important to understand.
There are the Porter's five forces:
Threat of new entrants: The organization power and suitability is effected by force of
new entrance into marketplace. New entrants is considers as company, industry and other
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marketing functions or activity that influence on firms growth and popularity. The industry with
powerful and strong barriers to entry is the attractive characteristic for organizations that permit
them to charge higher negotiate and prices better terms. New entrants can be effect Soft drink
sub sector because their proprietary goods is make by anyone. Threat of new entrants is higher
as they affect industry and its market shares the most easily. Soft drinks is not branded products
because anyone can make soft drinks, that is one of the reason which impact Soft drinks Sub
sector with in UK.
Bargaining power of suppliers: This force define how easily and quickly suppliers drive
up the price of inputs. It is impacted by number of suppliers of principles inputs of services or
products, how different these inputs are (Ebrahimnejad and et.al., 2014). How many inputs
would price the organization to switch from one dealer to other. Suppliers hold the power of
increasing costs as if company have fewer number of dealers and they are totally depended on
them. But bargaining power of suppliers is moderate in which they will not be able to hold
much input costs. Moderate bargaining power of suppliers increase profitability of Soft drink
sector and enhance their productivity the most.
Bargaining power of buyers: This force is generally deals with the capability that
consumers have to drive product prices down. It influences by how many customers or buyers
the organization has, how much it could cost the firm to find new markets or clients for its
outputs and how important each consumer is (Mathooko and Ogutu, 2015). Bargaining power of
buyer is high which impact Soft drink sub sector in UK the most as company have the large
number of consumer, it means that Customer have the power to negotiate and effect lower prices.
Competitive rivalry among existing organizations: This force define the number of
competitors or business rivalry in same market that influence on Soft drink sub sector.
Competitive rivalry among existing companies has higher ranked, because soft drink industry is
growing rapidly, growth rate for sector is fast. Coca- Cola and another companies is the biggest
competitors of Soft drink sub sector within UK that affect its businesses and financial budgets.
Threat of substitutes products: This force refers to services or products that has been
used in place of organization's facilities or goods pose the threat. Organizations that produce
products for which there are no closer substitutes will have power to maximize prices (Aithal,
2016). On the other hand if close substitutes is available, consumers have option to chose another
goods of company and its power is weakened. The substitute goods can be regarded something
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that meets same need, it is produce in various industry within UK, but crucially satisfy the same
consumer needs. If there are many credible substitutes to company's products, they can limit
price that charged and reduce Soft Drink Sub sector industry profits. Threat of substitutes
products is moderate because customer are not likely to go for industry substitutes as brand
name and loyalty is strong and higher for its competitors within industry's.
With the helps of Porter's five forces model, it is easy to understand and examine which
factors influence on Soft Drinks sub sector in UK.
B) Value chain model
Value chain model is considered as the best strategy tool or method used to analyse
internal business environment of organization in Soft Drinks sub sector within UK. This model
contributes to helps only in analyse or identify the weaknesses and strength of each factors of
Purity soft Drinks company value chain (Kehoe and Mateer, 2015). Value chain model is not be
used to analyse or identify external threats and opportunities of company. It is one of the best and
systematic way of identifying series of functions and activities of organization performs to offer
its products to their customers.
Value chain identify ways to visually analyse firm business activities to see how they can
create and garb the competitive advantages for themselves. It also helps Purity soft drinks
understand how they add values to subsequently and something how they can sell their services
and products for more than price of adding value, thereby increase profit margin.
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The concept of value chain model is the best decision support tools as it way divide into
two parts and define competitive strategies' paradigm. Primary activities and support activities
are the parts of this paradigm that define the capability of company as weaknesses and strength.
The proper level for constructing value chain is the business group, not corporate level or
division (Camerinelli, 2016). Goods of company pass through chain of many activities in order
to gain some values and increase profit margin. It gives products add more values that sum of
included values of all actions. Firm need to understand every elements of their value program
that helps to sustain and achieve competitive advantages in market.
Primary activities-
It includes five activities which is essential for company in adding value and make
competitive advantages, they are:
Inbound logistics: Purity soft drinks company are able to arrange inbound movement of
materials and parts of products which they need to manufactures according to customers needs
and requirement. Company finished inventory from suppliers to assemble and manufacture
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Illustration 1: Value Chain Model
(Source:Value Chain Model, 2018)

goods, that helps to gain competitive advantages rather than before. Inbound logistics refers to
products being obtained from suppliers of company's and used for manufacturing end goods.
Operations: Operations of company concerned with managing procedure that converts
inputs into outputs. Purity soft drink organization are able to gather goods and raw materials into
manufacture into final products. At this stage value is included in goods as it moves through
presentation line.
Outbound logistics: Purity soft drink company manufacture the best products and efforts
to distribute to wholesalers, customers, distribute centres and retailers (Caridi and et.al., 2014).
Distribution of final products is known as outbound logistics. Organization distribute it goods
successful and within proper manner which helps to increase their profitability.
Marketing and sales: Marketing is one of the most essential or effective way to
introduce and sell products from target customers. At this stage Purity soft drink firm will not be
able to make effective marketing strategies that cannot helps them to garb the attention of
customers, still while they manufacture the best products.
Services: After company sell its product services is another primary activities that refers
to all support facilities does firm offer to their customers. Purity soft Drink organization serve
their additional services to consumer like guarantees and warranties of products, which assure
clients that company will concern about their health care and well being.
Support activities-
Firm infrastructure: Every companies need to assure that its finances, management
structure and legal structure work efficiently and contribute to drive company forwards.
Inefficient infrastructure could impact firm's market reputation, waste resources and even leave it
open to sanctions and fines. For example, Purity soft drink company infrastructure is quite much
attractive, they managed some functions of business and run it better than before. It helps them to
drive company towards success and business growth.
Human resource management: HRM play essential role in growth of businesses, they
contribute to recruit, develop and train appropriate candidates. In Purity soft drink organization
Human resource management cannot hire or recruit people according to requirement which
directly impact on its profitability and productivity the most.
Technology development: Use of new technologies to gain the competitive advantages
is very essential in current competition environment or technology driven atmosphere. It can be
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used in different ways within business including manufacture to add value and reduce cost.
Implementation of technologies in beverage industry within UK increase more and more that
drive as whole towards success. Purity soft firm used new technologies to obtain competitive
advantages and increase profit margin.
Procurement: It is the action of procuring or obtaining something, in other words
procurement is considers as one of the department in Purity soft Drink company that sources raw
materials for business and acquire the best price for doing so. To obtain or get the better possible
price and quality available on market for their budget is very challenging for them, as they can
gain prices the best for organisation that build their image in market and helps to achieve desired
goals and objectives.
C) Appropriate adaptations
Threats of new entrants, bargaining power of customers, threat of substitutes products or
services, competitive rivalry among existing organizations and bargaining power of suppliers is
the five forces that impact on UK Soft drink sub sector as it affect Purity soft drink company as
well (Hove and Masocha, 2014). All these above forces influence organization growth and
business success at different level or ways. Thus, company need to adapt appropriate strategies
and make effective plans to overcome within the impact of all factors and build strong reputation
and position in marketplace.
Adaptations techniques or strategies-
Techniques to reduce threat of new entrants- In above, section its has been mentioned
that threat of new entrants is higher which affect as whole industry of soft drink in UK. Purity
soft drink organization business activities is also get affected due new entrance in market. New
entries bring new and fresh ideas of marketing and also manufacture the best products or soft
drink for customers. Thus, to beat new entrants within Soft Drink sub sector, company produce
its goods better than before, they identify consumer needs and conduct market research to known
more about people preferences in context of soft drinks. With the help of identify customer
requirement or demand Purity soft drink firm can lower the threat of new entrants as they build
strong reputation in marketplace better than anyone.
Manufacture consumer satisfy products: Substitutes availability threat impact
profitability of Soft drink sub sector in UK because customers choose to buy substitute instead of
industry's services or goods. Thus, to over come with this factor Purity soft drink need to make
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plans who to manufacture their drinks better than the another company's products that reduce
moderate level of threat of substitutes and higher market share of company more and more rather
than before. Level of competition among substitute goods decides the stage of threat.
Build strong supply chain: number of supplier decided the level of bargaining power of
suppliers as bargaining power of dealer is moderate. Purity soft drink company need to build
waste connected with another suppliers which is quite beneficial for their businesses growth and
success.
Improve quality of existing products: Thus to lower the bargaining power of buyers
Purity soft drink company can improve the quality of their products which help to reduce power
of customers. Organisation does some innovation in their goods and offer to consumers that
contribute to grab the attention of new and existing clients and pressure them to purchase that
particular products.
Manufacture different and valuable products: Soft drink sub sector within UK is get
affected because competition among existing companies is higher rather than before that impact
on its whole businesses functions and activities as well as profit margin the most. To overcome
with this influence, Purity soft drink need to make their products different from another, they
have to include all the special ingredients that is related to people health and make them happy
and satisfy.
D) Usefulness and potential limitations of Porter's five forces model
Usefulness of Porter's five forces model-
Porter's five forces model is very useful tool, it helps to understand businesses
environment. It supports to analyse external business environment that impact on company
financial budgets, profitability, productivity and market share (Gallarza, Ruiz-Molina and Gil-
Saura, 2016). It considered as one of the best framework for analysing Purity soft drink company
competitive environment. With the helps to this model, it is easy to understand threat of new
entrants for organization. It also supports to understand who new entrants effect business and in
that case what strategies need to be adopted by company. Porter's five forces model contribute
find out the best plans to overcome within the effect five forces. As it helps to identify substitutes
services and products influence on firms in which they need to overcome and apply new methods
or techniques. This model is very helpful and useful for helping or improving company position
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and adjust their strategies to suit their competitive environment. Porter's five forces model helps
to improve or develop potential profit of Purity soft drink.
It supports to analyse and identify many factors that impact on business as whole, with
the help of this model Purity soft drink company can lower down the power of buyers and gain
profit more and more rather than before (Mathooko and Ogutu, 2015). As they will find out the
level of bargaining power of buyers and try to reduce it which is quite beneficial and profitable
for them. Porters five forces model is useful and helpful as they can identity and understand
external businesses' environment, organization identify which factors affect them the most. They
make plans and used appropriate methods or adopt techniques to overcome with influences
easily. This model is very useful and effective in way to understand businesses environment
because, when organization understand forces in its environment which affect their productivity,
market reputation and other activities, they can take actions and decision to reduce the impact.
Advantage of Porter's five force model-
Porter's five force model is beneficial and provide many advantages or opportunities to
organization to adjust their strategies within suited competitive environment. It offers advantage
to company to garb the attention of consumers and gain competitive advantage. Porter's five
forces determine firms businesses competitive environment, which impact profitability and
productivity the most. Industry rivalry in UK is likely to be high when many organizations is
vying for same consumer and intense competition leads to low profits and prices. As this model
support to get the best results and help company to achieve its desired organizational goals and
business objectives (Aithal, Shailashree and Kumar, 2016). It is used to analyse competition of
businesses, firm examine all the factors such as threat of new entrants, substitutes services or
goods and other. By analyse impact of factors Purity soft drink can bring many ideas and create
plans to get the outcomes as better than before. Porter's five forces model helps in gauging
competition, it contributes firms in gauging competition present in industry which Purity soft
drink is operated. It helps in planning and dealing with suppliers and buyers effectively.
Disadvantage of model-
Porter's five force model provide advantages, but brings disadvantages as well that make
some difficulties for organization. The biggest disadvantage of this model is that it makes into
account only few factors and porter's five force model ignores another factors which have
bearing on environment in which organisation is operating. Another limitations of porter's five
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force model is that is cannot be applied to every industries within UK. Other limitations with this
model is that it cannot be fit for industry perfectly.
CONCLUSION
The present report discuses about the industry analysis with the help of Porter' five force
model. It discusses the impact of external and internal factors on Soft drink sub sector in UK, it
also discusses that many factors affect company business. It has been concluded that threat of
new entrants, threat of substitutes products, bargaining power of suppliers, bargaining power of
consumers and competition among existing companies will influence industry and organization
as well. In this report it has been discussed that porter's five forces model helps to identify
external factors that affect businesses environment and also discuss Value chain model that helps
to analyse internal business environment of company. It discusses that value chain model is one
of the best tool framework that define company strength and weaknesses. Furthermore, it
discusses strategies and plans of firm which they adopt for the purpose of increasing profitability
and enhance their productivity more than before. It has been concluded the limitations of porter's
five forces model that refers to advantages and disadvantages of it and also discuss that this
model is very usefulness for Purity soft drink to garb competitive advantages in marketplace.
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