Q1: financial lenders meant Vithit were unable to
Q1: PESTEL Analysis Word Count: 857PoliticalPolitically some european countries are not members of the EU, so the free trade laws do not exist in these countries.For example, Iceland and Norway have been very successful markets recently for Vithit. For example, in Iceland a small population of 330,000 have generated sales of 300,000. However trading laws in this country may raise expenses, and seeing that these markets are so niche in comparison to the remainder of Europe and US, Vithit’s time and expenses may not be useful in these countries. EconomicOriginally Levin had to rely on external property market investments to fund the company through the Celtic Tiger Years. This was significant to keeping the company afloat during the Celtic Tiger era, as Vithit’s business strategy was failing as a lack of market demand saw the business a period of significant losses. Eventually the financial crash of 2007 in Ireland, saw the end of the Celtic Tiger era, as Vithit fell insolvent as the previous profitable property returns vanished. This lead to a very crucial business implementation, as Lavin turned to O’Rourke, exports manager, who’s company rebrand saved the company from closure. Vithit suffered some financial difficulty when they were unable to secure lending from the traditional finance institutions. This meant Vithit were unable to invest crucial capital into the business in order for it to excel in their current marketplace. At the time (2015), the lack of success from financial lenders meant Vithit were unable to expand and had to remain in the Small to Medium Enterprise market, as other enterprises in the business environment were able to gain competitive advantage, over Vithit. SociologicalSocially Vithit compete in an industry influenced by the recent health trend which occurred across the US,Ireland and the UK and Europe.”Right business wrong time”. Lavin when founding the business hadn’t properly considered the social trends of Ireland in the early 2000’s. When Ian O’Rourke entered the scene in 2008, he had stated that the health trend, then developing in the U.S., had not yet reached Ireland. This idea behind the countries varying social trends from O’Rourke, was what saved Vithit from financial closure, which at a stage was looking inevitable for Lavin and Vithit, and rendered the future success of the business.Today Vithit are continuously improving their product range to target the ever changing health drink market in the U.S.The definition of what makes foods and beverages healthier is becoming increasingly complex. The use of clean ingredients has moved from a trend to the norm for many categories and brands creating products that are fresh and eco-friendly is the new go-to (2017, prnewswire.com). The health drink market in the U.S. is ever expanding, and with various competitors constantly releasing new products to the target market, to meet the continuously developing trends, it means Vithit will have to invest large sums of money in R&D, to develop new products to reach out to their customers. However, by doing this correctly, they could become on of the markets main leaders, taking advantage of large returns. TechnologicalThe dramatic rise in electronic devices and the use of the internet in the last decade, has lead to the soar in the number of social media sites.The increasing availability of social media sites has seen a dramatic advance in the use of online advertising. In 2018, the amount of money spent on global online advertising is projected at 642.86$ Billion Dollars (Statista, 2018). To increase the competitive nature of Vithit, Lavin would have to heavily invest e.g. in the US market, where online advertising sales are highest. EnvironmentalMany environmental pressure groups exist in the modern day ‘health-drink’ industry in which Vithit compete.By complying with the agenda of these moral issues of these groups, Vithit can take advantage of the positive media. For example, in 2007 Vithit decided to use aseptic filler because of its environmental packaging benefits (case). This would have attracted positive attention towards Vithit, boosting their domestic corporate image, which would have been extremely beneficial especially at a time when their product was struggling in the market. By continuously being environmentally conscious, Lavin could soon see Vithit become market leader amongst competitors in their developing markets.LegalThe EU free trade agreement, allows the free movement of imports and exports between all countries existing in the EU today.As a business trading within the European Union, the European Economic Area (EEA) and Turkey, you have the right to export and import goods freely. This means that governments may not limit quantities of imports/exports nor restrict trade in any other way (2017, Europa.EU). This an obvious advantage for Vithit, which may see Lavin and O’Rourke, focus on the European market. From the case we can see that Vithit’s product range has become popular in several countries including Spain, Finland, Sweden, Denmark and Portugal, so this law should allow Vithit to endure further success in these areas. However the free trade agreement , could attract further competition, as Vithit’s market share could be reduced as a result. Q2: Porter’s Five Forces Word Count : 608Threat of new entrants”The acceleration of the health trend in Ireland in recent years has seen the emergence of new health drink offerings” (case). Porter in his theory suggested that where there is rapid growth within an industry, new rivals are likely to enter. It is evident that this is a market on the rise and the increasing availability of these products across stores in Ireland, will intensify the level of competition in the market as each company will aspire to achieve some of the market share, which could negatively affect Vithit’s sales revenue, as they may have to defend their current market position. However, Porter suggested that the degree of the threat of new entrants is determined by the barrier to entry. Vithit’s original product differentiation, which resulted in achieving significant customer loyalty, will act as an advantage as it acts as a barrier to potential new entrants in the domestic market.Power of Suppliers “Tax on sugar is due to implemented in Ireland and the U.K. in 2018” (RTE News, Oct 2017). This will lead to sugary alternatives of Vithit such as Coca-Cola’s prices for their products rising making the comparable difference between both products less than what they used to be. Porter in his theory of bargaining power of suppliers, advocates that when suppliers have bargaining power, they can apply pressure on a company by charging higher prices (Cleverism). So in Vithit’s case this will lower the demand for carbonated drinks, which will simultaneously increase the demand for ‘Hybrid Drink’ products. An increase in demand will engender more business for suppliers. Suppliers therefore have greater bargaining power as a result, overall leading to a rising cost being directed towards supply.Power of buyersPorter’s refers to this as the pressure consumers can exert on business to get them to provide higher quality products, better customer service and lower prices (The Strategic UFO, 2017). In the domestic market, where Vithit are the market leaders and essentially have a unique selling point, it is easier for the business to dictate the prices of their product in the market. However, in the US the health drink market view Vithit’s product as less of an exclusive product, as a range of different companies with similar products co-exist, for example ‘HINT Water,who average $90 million in revenue retail annually (case96)’.Threat of Subsitiution Porter states that substitute goods put a price ceiling on the good in the industry and that the comparative value for money will also determine the price it is possible to charge. One potential threat to Vithit and the health drink industry is booster bars. Vithit recently released their own ‘booster bar’ product range, however the fierce competition from fulfill saw them dominate the market. These healthy alternatives could lead to lower sales in the health drink industry and for Vithit overall. Lavin would have to cap or even reduce the price of his product range as more substitute brands and products become more readily available. In the future Vithit should plan to expand its product portfolio to reduce competition.Internal RivalryPorter states the three Facets of internal competition as price competition, advertising and new product development. In the U.S. there is intense rivalry amongst the industry in which Vithit competes. For example Vitamin Water…. High levels of internal rivalry can be healthy for innovation, in the industry offering a wider range of products to the customer base, allowing for market leaders to expand on their market share. However internal rivalry, can also lead to a significant increase in expenses, due to market research and product testing. Q3: Internationalization (Grenier and Mintzberg) Word Count :In relation to Grenier’s model of evolution and revolution as a business grows. Evolution is defined as a prolonged periods of undisturbed growth are termed evolutionary periods that do not require any changes by management.I believe that Vithit are in the third stage of evolution in the model – Delegation. Increased responsibility given to plant managers and market managers. Profits and bonuses used to motivate and that top management manage by exception based on periodic reports from below. Management concentrates on acquiring enterprises to adjoin existing divisions and that communication from top management is infrequent and brief. Heightens motivation and power of mid-level management, which leads to rapid growth. This can be seen through Vithit’s continuous expansion both state by state in America but also in the European market, as Grenier states responsibility is being given to plant and market managers.However with this comes a period of revolution. Evolutionary growth is not indefinitely sustainable. Periods of turbulence and management upheaval occur several times in companies’ life spans. It is typically brought on by high-level managers who realise that the management structure is outdated for the company’s present situation(refer). I think Vithit are in a revolutionary period known as crisis of control(Greier). Top management lose control because division becomes increasingly isolated and Parochial (limited, restricted) attitudes can develop. Top management may want to re-centralise control and Specialised coordination must be developed. As Vithit is constantly expanding decisions must be made in a variety of markets. Grenier also portrays part of this stage of revolution with top management wanting to re-centralise control, this can be seen within Vithit as Lavin and O’Rourke still wish to retain full control over all strategic decisions. In relation to Mintzberg’s model of Organizational design, I think that Vithit are designed similar to that of a professional bureaucracy. This is one where, Operating core is made up of trained professionals who have control over their work and Managers have little direct supervision; look after financing etc. instead. Large support staff involved in simple, routine jobs e.g. cleaning, security etc and for professionals. It’s democratic and workers able to perfect their skills offers. It also offers considerable autonomy. Sice O’rourkes arrival to the firm, he has very much took control of the co-ordinaion of the business and still does. For example through the variety of distribution networks in use. However, from the outlook Vithit look to have less management figures, meaning more autonomy is directed to lower levels as seen through the distribution networks currently in place.SummaryWord Count: By thoroughly analysing the external environmental affecting Vithit’s every day business operations, I was able to carry out a PESTEL analysis, determining the major factors influencing the market in which the business competes. The Political viewpoint of various countries… Domestically, Ireland is in a fluctuating economic situation seeing recent economic crisis, turn into economic boom, so the unstableness of this market may further support Vithit’s ideas of expansion. Financially Vithit have found it difficult recently to secure major finance from banks to allow expansion of the company, however recent success in smaller countries such as Iceland and similar countries in Europe has seen an economic upturn in the company. The introduction of Ian O’Rourke and his effective analysis of the social health trends of the people of US, followed by Ireland is essentially what saved the business and what is driving future success, in places such as Europe and South Africa. Technologically, the rise in online advertising through social media, may lead to higher expenses for the future of the business if they are enter major markets such as the U.S. The population of Vithit’s market is vastly becoming more conscious of environmentally issues in today’s environment. For example the use of Aseptic Filler, in the recent production of bottles, was likely to attract positive media, leading to a boost in sales. The free trade agreement in the EU will lower expenses when trading, however could lead to a rise in competition. Threats of substitute products in the market can see a company’s original market share decline as product pricing can be capped. Buyers in the industry can force companies such as Vithit to continously expand their product range and even lower prices, especially if the product is not as exclusive in the market. This can be seen in the U.S. as many ‘health drink’ products exist. When demand from suppliers is high porter states that suppliers can charge companies higher prices which could occur with Vithit with the incoming sugar tax law. Rapid growth in a market is likely to attract new entrants, driving the competition levels up. Many rivals exist today across all of Vithit’s for example Vitamin Water in the US and fulfill in Ireland and the UK. This can be healthy for a firm for product innovation, however can lead to a potential increase in Vithit’s expenses.BibliographyReferencesCleverism. (2018). Threat Of Substitutes | Porter’s Five Forces Model. online Available at: https://www.cleverism.com/threat-of-substitutes-porters-five-forces-model/ Accessed 15 Jan. 2018.Greiner, L. (1997). Evolution and Revolution as Organizations Grow. Family Business Review, 10(4), pp.397-409.Packaging, E. (2018). Four Key Beverage Industry Trends for 2017 are Changing What Consumers Buy. online Prnewswire.com. Available at: https://www.prnewswire.com/news-releases/four-key-beverage-industry-trends-for-2017-are-changing-what-consumers-buy-300384417.html Accessed 2 Jan. 2017.Porter, M. (1991). How competitive forces shape strategy. Boston: Harvard Business School Press.Statista. (2018). Global advertising spending 2017 | Statistic. online Available at: https://www.statista.com/statistics/273288/advertising-spending-worldwide/ Accessed 15 Jan. 2018.Sugar tax from April 2018, V. (2018). Sugar tax for soft drinks to be introduced from April. online RTE.ie. Available at: https://www.rte.ie/news/budget-2018/2017/1010/911256-sugar-tax-on-soft-drinks-set-to-be-introduced-from-apri/ Accessed 10 Oct. 2017.Your Europe – Business. (2018). 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