Analysis of Red Bull's International Business Strategies Report

This report provides a comprehensive analysis of Red Bull's international business operations, focusing on its foreign market entry strategies, competitive dynamics, organizational structure, knowledge management, and innovation. The report details Red Bull's use of partnerships and direct export as key market entry strategies, particularly in the United States and France, respectively. It examines the company's competitive dynamics, highlighting strategies such as business expansion, innovation, the development of healthy products, structural changes, attracting investors, and changes in production strategies. The report also assesses market conditions, including competition, political and legal regulations, cost reduction pressures, economic downturns, marketing approaches, and the emergence of new markets. Furthermore, it explores Red Bull's organizational structure, knowledge management practices leveraging IT infrastructure, and its continuous innovation efforts across various aspects of the business. The analysis incorporates relevant academic research to support its findings and conclusions.

INTERNATIONAL BUSINESS
ACROSS BORDERS

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Executive Summary
Energy drink market is expanding in all across the globe and this provides an opportunity for
the company that is operational at global levels such as Red Bull. In this report there is
illustration of the foreign market entry strategy used by the Red Bull. It was found that
company took partnerships and direct export as a major foreign market entry strategy. This
report highlights the competitive dynamics of Red Bull where it was found that Expanding
business, Innovation, Healthy products; Structural changes, adding more investors and
Changes in production strategy are some of the activities that is adopted by the Red Bull so as
to enhance its competitive dynamics. It was also found in the report that the market condition
of Red Bull is illustrated by the fact that There is higher Competition in the industry, Political
and legal regulations are making it difficult for Red Bull to do their business, competitors are
reducing cost of products, there is downfall in the economy, aggressive marketing in the
industry, emerging markets have higher scope for Red Bull like products, Sustainable
management and marketing is in practice. For the knowledge management this company is
taking the help of the IT companies that have great infrastructure for knowledge
management. Innovation at Red Bull is a regular process where they are making innovations
in every aspect of the business.

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Content
s
Introduction...........................................................................................................................................2
Foreign market entry strategy................................................................................................................2
Competitive dynamics and market conditions.......................................................................................3
Organisational structure.........................................................................................................................6
Knowledge Management.......................................................................................................................8
Innovation.............................................................................................................................................8
Conclusion.............................................................................................................................................9
References.............................................................................................................................................9

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Introduction
Beverage industry in the world is becoming highly competitive day by day. In the start there
were only few companies that were dealing in different beverage market but now there are
large numbers of firms that have emerged and are stealing market from the already
established companies. Red Bull is one of the best energy drinks company in the world but in
today’s market it is facing tough competition from many other firm. With the increasing
demand of the energy drinks all across the globe, Red Bull has better opportunities to expand
their business all across the globe. In this regards the role of innovation is critical along with
the strategies that are made by the firm for its success (Gorse, Chadwick and Burton, 2010).
There are many other internal factors such as organisational structure that has impact on the
operations and performance of the company. Red Bull is an Austrian energy drink company
established in the year 1987 and has highest market share of any energy drink company in the
world. This report highlights the foreign entry strategy, competitive dynamics, Organisational
structure, knowledge management strategies and the innovations that are Red Bull is doing.
Foreign market entry strategy
Companies all across the globe are crossing borders to make sure that they have new routes
for generating revenues. Multinational organisations have to be very specific about the
strategies that they are going to select while entering into the foreign markets. Specific
strategy that they are going to choose for expansion needs to be on the basis of the market
conditions and the opportunities that are available in the market (Ahmad, Musa and Harun,
2016). Choosing wrong entry mode strategy might have an impact on the overall operations
of the firm at the global levels. The selection of the foreign market entry must also be on the
basis of the resources and capabilities of the firm so that they can make it feasible for the
company to adopt and apply these strategies to gain success in the foreign market and to
achieve desired outcomes from that country. Red Bull also has applied different strategies
while entering into different markets however the company focuses on its unique idea to enter
into the foreign markets.
Red Bull entered into the United States market with the help of the internationalisation
strategy i.e. partnership. They did partnership with company Ozburn-Hessey to manage their
product outsourcing in the United States. Ozburn-Hessey logistics is a third-party logistics
firm that is helping Red Bull with transportation service and warehousing. This was an

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effective strategy to enter into in the market of US as it provided Red Bull with a great
network of distributors (Brasel and Gips, 2011). This partnership with the logistics firm
allowed them to gain control of the local market even at the rural areas.
While entering into the France they had to deal with the legal issues as there was not
legalisation of such drinks in the country. Before this Red Bull was only allowed to sell its
products in pharmacies just like the way they have to do in Norway and Denmark. The major
concern of the France was use of products such as taurine, high amount of caffeine and amino
acids however the refusal was challenged by European Commission and partially the
European Court of Justice. However Red Bull entered into the France in the year 2008. The
entry mode strategy used by Red Bull in France is direct export (Jankovic, 2012). Following
this strategy company started exporting their products in France and this company mainly
focused on their aggressive marketing strategies to ensure that the negative image about them
does not hampers its growth.
In most of the countries in which the Red Bull is operational they have used direct exporting
as a strategy to enter into the new markets. It is seen that companies like Red Bull which is
producing a special kinds of drinks has a special kinds of ingredients in it hence they have to
face legal challenges. They faced challenges in terms of taking legal routes. This company is
one of the best examples of how the companies can utilise its marketing so as to expand their
business in any country even when the negative marketing about their products has been done
by different sources. Sometimes in direct exporting they also take the help of the local
partners which has competencies related to strong distribution and supply chain (Bughin,
Doogan and Vetvik, 2010).
Direct export is a beneficial strategy for companies like Red Bull which are producing
products for that are unique and has unique property right. In the competitive environment it
is highly likely that the licensing and outsourcing might lead to stealing of the intellectual
property rights which will have impact on the competitive advantage of the firm and also on
the profit margins gathered by the firm (Chionne and Scozzese, 2014).
Competitive dynamics and market conditions
Competitive dynamics

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For the firms of the scale of Red Bull it is critical that they take steps to deal with the
competition that is increasing in the industry. There are many firms that are emerging in
energy drink industry and the types of innovations that are done by these might challenge the
business of the Red Bull. In this regards it is critical to understand the competitive dynamics
of the company. For dealing with this competition, the competitive dynamics of this firm can
be illustrated through strategic conduct (Armstrong, et al. 2018).
Some of the actions that are taken by Red Bull in order to deal with the competition are:
 Expanding business: They have focused on expanding business in different parts of
the world which has helped them in creating new set of resources. It has provided
them financial resources that can help them in doing marketing and all other things
that can enhance their competitiveness (Diamantopoulos, Schlegelmilch and
Palihawadana, 2011).
 Innovation: In order to remain highly competitive in the market. Innovation allows the
firm to attract new set of customers. Their main focus is on the innovations which
helps them in improving their attractiveness. For this they have created many partners
that help them in improving their innovation capability (Rauschnabel, Praxmarer and
Ivens, 2012).
 Healthy products: Since many of their rivals have already started to move towards
healthy products hence it is critical for the Red Bull to make sure that they are also
designing their own product according to the health norms in different parts of the
world. Increasing health conscious behaviour is dealt with adding ingredients that are
actually not affecting the health of the customers (Percy, 2016).
 Structural changes: This Company has also made structural changes in the way they
are dealing with their clients. For instance they are managing their customer
relationship program with the help of outsourcing. This has helped them in managing
the operational flaws which has given them higher chance to remain competitive in
the market (Carù and Cova, 2013).
 Adding more investors: Company is making many partnerships in different parts of
the world and at the same time they are adding independent investors so as to make
sure that they do not face problems related to the management of finances. This is also
true in terms of the fact that more investors will help the company to fund their new
projects (Davis and Hilbert, 2013).

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 Changes in production strategy: It is seen that production strategy within the firm has
been inclined towards reducing the cost of operations. They are using wall-to-wall
production mechanism which helps them in saving the energy consumption at the
workplace by 80%. Following this the can manufacturing and filling of the cans are
done at the same site which helps the company to save money in the transportation
(Kurz, et al 2014).
Market condition
It is critical to understand the competition that is present in the market but it is further more
essential to understand the market condition. In order to understand the market condition
some of the elements that need to be monitored are:
 Competition: As discussed above competition the market has reasonably increased.
This is a threat to Red Bull as they have higher market share which they would not
like to lose. It is seen that due to this competition Red Bull had to make lot of changes
in their strategies (Heckadon, 2010).
 Political and legal regulations: Due to increasing consciousness of the people for
having the products that are healthy, governments and legal bodies have become very
strict over the issues or unhealthy items being used in their products. There are
changes in the licensing norms that are not allowing the firms to innovate the products
as per the choice of the company (Purswani, 2010).
 Reducing cost of products: Red Bull believes in the premium pricing of their products
however their competitors have already started to reduce the prices. Since the
economic challenges are increasing hence companies like Red Bull will have to make
sure that they are dealing in the products that are available at lower cost for which
they will have to adopt cost reduction strategies while ensuring that the value that the
company is adding to its product is not reduced (Chanavat, Desbordes and Dickson,
2016).
 Economic downfall: The expansion plans of the company are under a serious threat
due to the reduction in the global financial condition. In the major markets like
American and Europe the stagnation in the economic health will have impact on the
revenue of the company. People will certainly move towards the products that are
available at low cost and at the same time products that are expensive is attracting
lesser numbers of people towards them (Singh, Kalafatis and Ledden, 2014).

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 Marketing: The marketing has become highly critical in this environment where it is
seen that companies are doing aggressive marketing so as to ensure that they remain
close to the customers. More connection with consumers will help the companies to
have an understanding of the requirements of the people and for development of sales
plan (Hoflander, 2010). Since the cost of marketing is increasing especially the type
of marketing that are done by Red Bull hence for the firms will have to arrange new
ways in which they can do their marketing for ensuring that they remain competitive
while at the same time the cost of marketing remains on the lower side. It is also seen
that the nature of the business that Red Bull has is supported by the mediums like
Social media to do their marketing but they also need to ensure that at this platform
there is higher chance to do negative marketing.
 Emerging markets: There is increase in the sports industry in the emerging countries.
This is giving a boost to the firms that are related to energy drinks. In this regards the
higher scope is for the companies that have bigger brand name. In the emerging
markets like India there is a very negative image of the company. This will have
impact on the organisation is performing in this country. Events are also increasing in
these countries hence it is a place that can be used by the firm to promote their
business.
 Sustainable management and marketing: Companies like Red Bull in today’s time is
pressurised to use mechanism that is more sustainable and marketing that is more
ethical and sustainable. Since this firm has lot of scope in the developing markets
hence they need to practice sustainable management approach (Baetzgen and Tropp,
2015).
The market condition of the energy drink is not very good for the companies that are aiming
to enter into the energy drink market. This is because the cost of operations are higher while
at the same time the control of the companies like Red Bull and Monster is on the higher side.
Energy Drink market needs new innovation apart from the areas like packaging.
Organisational structure
It is critical for the companies to design its organisational structure in a manner that it will
enable the firm to implement all its strategies appropriately and at the same time it also
allows the firms to improve their capabilities and their decision making process.
Organisational structure has to be defined on the basis of the requirements of the firm and the

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industry. Red Bull has operations in different parts of the world and hence it is critical that
firm designs an organisational structure that is more divisional. Following the divisional
structure in the organisation they have divided their operations in two large businesses i.e.
Red Bull Soft drinks and other businesses. In this organisational structure “companies group
all those employees together that are responsible for a specific type of products type or
market service as per the workflow. Red Bull soft drinks division are further bifurcated into
two sub-divisions i.e. Red Bull energy drinks and Red Bull Simply Cola and Carpe Diem.
This organisational structure allows them to focus on single product and services. This
provides a higher morale and knowledge to the market divisions. The organisational structure
of the company is flexible which allows the firm to make sure that according to the changes
in the organisational structure he changes are done accordingly (Getz, MacDonald and
Parent, 2015). However it is also the fact that the organisational structure within the firm is
not typically the divisional structure as it also implies some of the aspects of the hierarchical
structure. The red bull program where there was distribution of free product’s samples of
products comprises of 6 layers of management which includes team members and program
leaders.
(Fig: Organisational Structure of Red Bull Program)

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Knowledge Management
The knowledge management has a critical role to play in the strategy development and skill
development of the organisation. Since there are multiple sources through which company
collects their data and this vast sources of data acts as information on the basis of which they
can make their strategies. They are using advanced technologies so as to ensure that no data
is lost and also ensure that data is handled in an appropriate manner (Park, Eisingerich and
Pol, 2014). Effective utilisation of knowledge management theories will help the company to
make sure that they have a plan for dealing with the situations on the basis of the knowledge
base available with them.
Red Bull is actively developing the knowledge management structure at the global levels
where they are taking the help of the companies that are in the knowledge management
industry. They are also engaging with customers so as to ensure that they have market
knowledge which could help them in improving their knowledge. This will also have impact
on the innovations and researches that is going on in the firm (van Rensburg, 2012). There
are people from different parts of the world associated with the company hence knowledge
management training is given to all of them so as to ensure that they do not leak any data and
they know how to utilise this data for improving the effectiveness in their work. Red Bull
also applies standard training for the skills development in the knowledge management.
Innovation
Innovation plays a critical in the success of the organisation especially in the time when the
competition had gone to such higher levels within the firm. Red Bull which is aiming to
expand in the new markets will have to ensure that it is feasible in this market. For instance in
the emerging markets people want products that are cost effective hence setting higher prices
will not help the company in gaining desired profits. Due to this it is critical that firm
understands the innovation that they need to bring in different areas of the organisation. In
this regards companies like red Bull needs to make innovation plan that will ensure that
innovations are according to the market demands. It is seen that till now the company has
focused only on developing the innovations that are related to packaging or promotions such
as changing the material that is used for selling the cans. Innovation at Red Bull is a
continuous process (Harris, et al. 2011).

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Conclusion
From the above based report it can be concluded that Red Bull is the biggest energy drink
company in the world. Expanding business, Innovation, Healthy products, Structural changes,
Adding more investors and Changes in production strategy are some of the actions that is
taken by the Red Bull so as to ensure that their competitive dynamics remains on the higher
side. There is higher Competition in the industry, Political and legal regulations are making it
difficult for Red Bull to do their business, competitors are reducing cost of products, there is
downfall in the economy, aggressive marketing in the industry, emerging markets have
higher scope for Red Bull like products, Sustainable management and marketing is in
practice. Company also has higher focus on knowledge management and innovation.

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