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PESTEL analysis and Porters Five Forces For Innocent Drinks Company

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  1. Introduction
  2. Overview of Innocent Drinks Company
  3. PESTEL Analysis
  4. Porter's Five Forces Model
  5. Conclusion

Companies utilizing proactive approach cannot distance from conducting regular environment scanning to avoid hurried reactionary response to emerging trends. Performing a PESTEL analysis facilitates knowledge finer details of the external environment. In that view, the PESTEL analysis of Innocent Drinks Company below involves the examination of the trends in various environmental factors comprising political, economic, social, technological, environmental and legal issues. With companies facing pervasive change emerging from the dynamic environment, analysis of the trends in the external environment highlights the context within which Innocent should operate to avoid conflicting strategies. Initially, examination of the legal-political factors demonstrate the climate set by the UK government on issues such as packaging, advertising, environmental taxation, nutritional profiling, and eco-labelling. Although the political trends seem to influence the company from the environmental and legal platforms, Innocent must pay attention to the economic recovery, people-power, technology foodies and social networks to support their loyal customers. Application of the Porter's framework facilitates the knowledge of the industrial environment and identification of threats based on the strength or weakness of each force, relative to the company position. Examination of the five forces, including entry of competitors, bargaining power of suppliers, threat of buyers, rivalry and threat of substitutes, outline the competitiveness of Innocent relative to its industry position.

[...] However, with consumers becoming more demanding of nutritional content and pricing, the company should revise its premium pricing to avoid losing its loyal customers to rivals including Tropicana, Rubicon and Copella. Bargaining Power of Suppliers This emerges when the entire industry relies on the supply of inputs by fewer operators. The ability of suppliers to raise input prices force down the profits sparks a threat, conversely to when the industry has the opportunity to force down the price of raw materials (Hill & Jones p. 54). The company faces no threat given the expansive supply base, from which it draws its input. [...]

[...] Legal Allowing for the restrictions erected by the Food Standards Agency, Innocent products must meet the nutrient profile, already sustained through absence of artificial ingredients in their product. Further, the introduction of healthy-lifestyle education in the curriculum generates a positive effect to the consumption of fruit smoothies (Bainbridge p. 33). Thirdly, the UK legislation on safety of beverages mandates the manufactures to include distinguished labelling, whether they offer concentrated or pure fruit product. Similarly, the company should honour the agricultural treaty amongst European countries requiring manufacturers to utilize raw materials in their products from the region. [...]

[...] PESTEL Analysis and Porters Five Forces For Innocent Drinks Company 4 Introduction Paying attention to the endless changes in the external environment and competitiveness of the company, a PESTEL analysis and Porter's framework are vital to determine the strategic position of the organization. Pestle analysis involves scanning the external environment under a proactive approach to discover the influences that various environmental trends have on the present and the future of the company operations. This is ideal to break free from conducting reactionary adjustments to keep pace with the forces that are continually changing. [...]

[...] The company must comply with the assertive move assumed by Ofcom and the European Union on tougher advertising and labelling restrictions. (Frith & Mueller p. 129). Additionally, the company should abide by international trade treaties between the UK and its trading partners. The need for prevention and better health care alongside the call for weight management solutions amongst the developed countries is set to drive the functional food and beverage products (Hills, 2012). Economic The prevailing economic trends influence the consumer spending patterns as demonstrated by declined sales during the 2008 economic downturn. [...]

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