Project Deliverable 1: SWOT Analysis Paper
Running head: Project Deliverable 1: SWOT Analysis
Project Deliverable 1: SWOT Analysis
Whitney N Wright
BUS599 Spring 2015 Strategic Management
Dr. Scott Holtzclaw
Assignment 1
April 27, 2015
Strayer University
Non-Alcoholic Beverage Industry Chosen: Whitney’s Soft Drinks
Trends
A market trend can be defined as a tendency of financial markets to move in a particular direction over time. These trends can be classified as secular for long time frames, primary for medium time frames, and secondary for the short time frames. If we take a look at the market trends for the non-alcoholic beverage industry we know that the major trends within this industry are natural product increments, growth of drinks in emerging markets, flavor-fullness in ingredients, mixture of diverse nutrients, and foraged ingredients. There are major trends within the non-alcoholic beverage industry and they can be listed as natural product increment, …show more content…
growth of drinks emerging markets, flavor-fullness in ingredients, mixture of diverse nutrients, and foraged ingredients. The soft drink industry has been following the trends as it relates to natural and caffeine free products for quite some time now. There is also a trend of local and seasonal products that can be seen within several regions. The industry also has an increasing need of furnished and prepared drinks within high nutritional value. The soft drinks need to be delivered with next level ingredients and ready to deliver at the customer premises. The reason I chose Whitney’s Soft drinks is because we follow the trend of natural ingredients and have more convenient products better than their other key competitors such as coca cola. Whitney’s Soft drinks has built efficient distributions networks to have customers their required product at their doorstep. Whitney’s Soft drinks also offers diversity as well as a range of carbonated and natural drinks which help it follow the trend of diversity in the beverage industry. Whitney’s soft drinks mission is to be the world 's premier consumer products, company focused on convenient foods and beverages. We seek to produce financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity (www.pepsico.com).
Strategic Position According to the text a strategic position defines what you do. One of the greatest advantages of outlining a strategic position is it gives you a touchstone when making business decisions (Abrahams, R., pp.140-143). If we take a look at how Whitney’s Soft drinks distinguishes themselves and we look at the specific strategic position we know that they utilize the market share approach, and we know that they continue to focus on delivering top-quartile financial performance in both the near term and the long term, while making the global investments in key regions and targeted product categories to drive sustainable growth (pepsico.com). Because Whitney’s Soft drinks believes in the power of continuous improvement, their goals may further evolve as they learn from their day-to-day operations, pursue and adopt new technologies and other innovations, and adjust to changes in the external environment in which they operate. Whitney’s Soft drink is dedicated to shape the industry with low analytical probability hence getting its position for reinvention and continuous improvement. Whitney’s Soft drink has taken measures to evolve and conceptualize the development and revitalization of the beverage industry. This approach has been implemented by attractive mechanisms of growing beverages in snacks unheard of. The approach Whitney’s Soft drink has taken is to map a route as it relates to the basis of low probability and then take an innovative step to reshape the industry in order to become the leading force for other competitors to follow. The strategic plan of the company focuses on creating something new which has been lacking from the market. An example of this is Whitney’s Soft drinks has increased its brand diversity by including non-carbonated drinks, whole grain and savory snacks in its products. This diversity was lacking before and now other competitors are also following the initiatives taken by Whitney’s Soft drink. This has strengthened the company because now it does not solely rely on a few products or seasonal sales and can do its market business in different circumstances to the fullest.
Distribution Channels The distribution channels of Whitney’s Soft drinks include Direct to End users; value added reseller, wholesaler/distributor, and dealer network. In the first approach, company has a sales team that directly sells to major buyer networks. This channel also includes a smaller sale network of dealers who then sell to end users in their respective locations (Rama, 1996). Dealers are customers to company and need to be trained and looked after by the company in this approach. In the value added reseller approach, products of Whitney’s Soft drinks are sold to a company who in turns add additional features or services and resells the product. Value added reseller in this case may communicate with customers to determine their needs and modify the main product accordingly, and the issue of the main company regarding customers’ requirements are reduced. The best type of distribution channel of Whitney’s Soft drinks is mutual utilization of mixture of methods. This can increase market share and business revenue and profits are gained more quickly than the use of a single distribution channel. Also it is helpful for end users as they can get the required information and services more efficiently and can be more confident and relaxed before and after the purchase of the products. In case of distribution through wholesalers or value added resellers, Whitney’s soft drinks is able to create many progressive marketing and advertising programs that can help it to increase revenue through major channels and overall success and profit margin is increased. If distribution strategy is not effective, proposed goals are difficult to achieve. With ill-advised or non-suited distribution channel used, it is hard for the necessary information for people to think about buying the product of the company (Brownell, 2009). On the other hand it is hard to manage production unit in case of a problem with the distribution channel. Channel members can also take their liberty and sell the product more than the proposed price and overall company morale and operational integrity is affected massively.
Risk
The potential risk and or threats faced by Whitney’s Soft drinks include competitive risks, global risks, and sustainability risks. There is also an environmental risk associated as it relates to potential hazardous chemicals used in the production stages of beverages. Another major risk is the shift in consumer preferences toward healthier products. Carbonated soft drink makers have faced severe criticism from health officials, governments, and communities alike for the ill-effects of high sugar content, artificial sweeteners, and other harmful ingredients in their products, including those in diet soda variants. Consumers are also more conscious of the health risks associated with soft drinks such as obesity and nutritional deficiencies, especially in youth. As a result, they’re opting for other beverages that are non-carbonated and have fewer calories.
The World Health Organization suggests that sugar should account for only 5% of total energy intake per day.
That’s around 25 grams of sugar per day for an adult of normal body mass index. Health officials feel that this percentage should be even lower for a better quality of life. A single soda can contains around 40 grams of sugar. Other risk that are associated with the non-alcoholic beverage industry is carbonated beverage volumes are falling, primarily in developed markets. Beverage Digest indicates a 3% fall in 2013 overall carbonated soft drink (or CSD) volumes in the US, making it the ninth straight year in which demand has declined. Previously, US CSD volumes declined by 1.2% and 1% in 2012 and 2011, respectively. There are also health concerns as well as taxes that are being posed in specific areas. An example of this can be seen in Mexico where they have the highest rate for obesity in the world. Because of this Mexico has imposed a 10% tax on sugary beverages to discourage the consumption of these drinks (Bailey,
2014).
SWOT Analysis The SWOT analysis can be defined as a structured planning method used to evaluate the strengths, weaknesses, opportunities and threats involved in a project or in a business venture. See the SWOT analysis listed below for Whitney’s Soft drinks:
STRENGTHS
WEAKNESSES
Product diversity
Extensive distribution channel Corporate Social Responsibility (CSR) projects
Competency in mergers and acquisitions 5.22 brands earning more than $1 billion a year
Successful marketing and advertising campaigns
Complementary product sales Proactive and progressive Over-dependence on Wal-Mart Low pricing Questionable practices (using tap water but labeling it as mountain spring water) Much weaker brand awareness and market share in the world beverage market compared to Coca-Cola Too low net profit margin
Opportunities
Threats
Growing beverages and snacks consumption in emerging markets (especially BRIC) Increasing demand for healthy food and beverages Further expansion through acquisitions Bottled water consumption growth Savory snacks consumption growth
Changes in consumer tastes Water scarcity Decreasing gross profit margin Legal requirements to disclose negative information on product labels Strong dollar Increased competition from Snyder’s
References
Abrahams, R. (2014) Retrieved from: Successful Business Plan: Secrets & Strategies pp. 140-143.
Bailey, S. (2014) A guide to non-alcoholic beverage industry. Retrieved from: http://marketrealist.com/2014/11/guide-non-alcoholic-beverage-industry/
Brownell, K.D., Farley, T., Willett, W.C., Popkin, B.M., Chaloupka, F.J., Thompson, J.W., & Ludwig, D.S. (2009). Retrieved from: The public health and economic benefits of taxing sugar-sweetened beverages.
Rama, R., (1996). Empirical study on sources of innovation in international food and beverage industry. Agribusiness, pp. 123-124
Ovidijus, J. (2013) SWOT analysis for PepsiCo Retrieved from: http://www.strategicmanagementinsight.com/swot-analyses/pepsico-swot-analysis.html
PepsiCo.com, (2015) Performance with Purpose Goals Retrieved from: http://www.pepsico.com/Purpose/Performance-with-Purpose/Goals
Project Deliverable 1: SWOT Analysis
Whitney N Wright
BUS599 Spring 2015 Strategic Management
Dr. Scott Holtzclaw
Assignment 1
April 27, 2015
Strayer University
Non-Alcoholic Beverage Industry Chosen: Whitney’s Soft Drinks
Trends
A market trend can be defined as a tendency of financial markets to move in a particular direction over time. These trends can be classified as secular for long time frames, primary for medium time frames, and secondary for the short time frames. If we take a look at the market trends for the non-alcoholic beverage industry we know that the major trends within this industry are natural product increments, growth of drinks in emerging markets, flavor-fullness in ingredients, mixture of diverse nutrients, and foraged ingredients. There are major trends within the non-alcoholic beverage industry and they can be listed as natural product increment, …show more content…
growth of drinks emerging markets, flavor-fullness in ingredients, mixture of diverse nutrients, and foraged ingredients. The soft drink industry has been following the trends as it relates to natural and caffeine free products for quite some time now. There is also a trend of local and seasonal products that can be seen within several regions. The industry also has an increasing need of furnished and prepared drinks within high nutritional value. The soft drinks need to be delivered with next level ingredients and ready to deliver at the customer premises. The reason I chose Whitney’s Soft drinks is because we follow the trend of natural ingredients and have more convenient products better than their other key competitors such as coca cola. Whitney’s Soft drinks has built efficient distributions networks to have customers their required product at their doorstep. Whitney’s Soft drinks also offers diversity as well as a range of carbonated and natural drinks which help it follow the trend of diversity in the beverage industry. Whitney’s soft drinks mission is to be the world 's premier consumer products, company focused on convenient foods and beverages. We seek to produce financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity (www.pepsico.com).
Strategic Position According to the text a strategic position defines what you do. One of the greatest advantages of outlining a strategic position is it gives you a touchstone when making business decisions (Abrahams, R., pp.140-143). If we take a look at how Whitney’s Soft drinks distinguishes themselves and we look at the specific strategic position we know that they utilize the market share approach, and we know that they continue to focus on delivering top-quartile financial performance in both the near term and the long term, while making the global investments in key regions and targeted product categories to drive sustainable growth (pepsico.com). Because Whitney’s Soft drinks believes in the power of continuous improvement, their goals may further evolve as they learn from their day-to-day operations, pursue and adopt new technologies and other innovations, and adjust to changes in the external environment in which they operate. Whitney’s Soft drink is dedicated to shape the industry with low analytical probability hence getting its position for reinvention and continuous improvement. Whitney’s Soft drink has taken measures to evolve and conceptualize the development and revitalization of the beverage industry. This approach has been implemented by attractive mechanisms of growing beverages in snacks unheard of. The approach Whitney’s Soft drink has taken is to map a route as it relates to the basis of low probability and then take an innovative step to reshape the industry in order to become the leading force for other competitors to follow. The strategic plan of the company focuses on creating something new which has been lacking from the market. An example of this is Whitney’s Soft drinks has increased its brand diversity by including non-carbonated drinks, whole grain and savory snacks in its products. This diversity was lacking before and now other competitors are also following the initiatives taken by Whitney’s Soft drink. This has strengthened the company because now it does not solely rely on a few products or seasonal sales and can do its market business in different circumstances to the fullest.
Distribution Channels The distribution channels of Whitney’s Soft drinks include Direct to End users; value added reseller, wholesaler/distributor, and dealer network. In the first approach, company has a sales team that directly sells to major buyer networks. This channel also includes a smaller sale network of dealers who then sell to end users in their respective locations (Rama, 1996). Dealers are customers to company and need to be trained and looked after by the company in this approach. In the value added reseller approach, products of Whitney’s Soft drinks are sold to a company who in turns add additional features or services and resells the product. Value added reseller in this case may communicate with customers to determine their needs and modify the main product accordingly, and the issue of the main company regarding customers’ requirements are reduced. The best type of distribution channel of Whitney’s Soft drinks is mutual utilization of mixture of methods. This can increase market share and business revenue and profits are gained more quickly than the use of a single distribution channel. Also it is helpful for end users as they can get the required information and services more efficiently and can be more confident and relaxed before and after the purchase of the products. In case of distribution through wholesalers or value added resellers, Whitney’s soft drinks is able to create many progressive marketing and advertising programs that can help it to increase revenue through major channels and overall success and profit margin is increased. If distribution strategy is not effective, proposed goals are difficult to achieve. With ill-advised or non-suited distribution channel used, it is hard for the necessary information for people to think about buying the product of the company (Brownell, 2009). On the other hand it is hard to manage production unit in case of a problem with the distribution channel. Channel members can also take their liberty and sell the product more than the proposed price and overall company morale and operational integrity is affected massively.
Risk
The potential risk and or threats faced by Whitney’s Soft drinks include competitive risks, global risks, and sustainability risks. There is also an environmental risk associated as it relates to potential hazardous chemicals used in the production stages of beverages. Another major risk is the shift in consumer preferences toward healthier products. Carbonated soft drink makers have faced severe criticism from health officials, governments, and communities alike for the ill-effects of high sugar content, artificial sweeteners, and other harmful ingredients in their products, including those in diet soda variants. Consumers are also more conscious of the health risks associated with soft drinks such as obesity and nutritional deficiencies, especially in youth. As a result, they’re opting for other beverages that are non-carbonated and have fewer calories.
The World Health Organization suggests that sugar should account for only 5% of total energy intake per day.
That’s around 25 grams of sugar per day for an adult of normal body mass index. Health officials feel that this percentage should be even lower for a better quality of life. A single soda can contains around 40 grams of sugar. Other risk that are associated with the non-alcoholic beverage industry is carbonated beverage volumes are falling, primarily in developed markets. Beverage Digest indicates a 3% fall in 2013 overall carbonated soft drink (or CSD) volumes in the US, making it the ninth straight year in which demand has declined. Previously, US CSD volumes declined by 1.2% and 1% in 2012 and 2011, respectively. There are also health concerns as well as taxes that are being posed in specific areas. An example of this can be seen in Mexico where they have the highest rate for obesity in the world. Because of this Mexico has imposed a 10% tax on sugary beverages to discourage the consumption of these drinks (Bailey,
2014).
SWOT Analysis The SWOT analysis can be defined as a structured planning method used to evaluate the strengths, weaknesses, opportunities and threats involved in a project or in a business venture. See the SWOT analysis listed below for Whitney’s Soft drinks:
STRENGTHS
WEAKNESSES
Product diversity
Extensive distribution channel Corporate Social Responsibility (CSR) projects
Competency in mergers and acquisitions 5.22 brands earning more than $1 billion a year
Successful marketing and advertising campaigns
Complementary product sales Proactive and progressive Over-dependence on Wal-Mart Low pricing Questionable practices (using tap water but labeling it as mountain spring water) Much weaker brand awareness and market share in the world beverage market compared to Coca-Cola Too low net profit margin
Opportunities
Threats
Growing beverages and snacks consumption in emerging markets (especially BRIC) Increasing demand for healthy food and beverages Further expansion through acquisitions Bottled water consumption growth Savory snacks consumption growth
Changes in consumer tastes Water scarcity Decreasing gross profit margin Legal requirements to disclose negative information on product labels Strong dollar Increased competition from Snyder’s
References
Abrahams, R. (2014) Retrieved from: Successful Business Plan: Secrets & Strategies pp. 140-143.
Bailey, S. (2014) A guide to non-alcoholic beverage industry. Retrieved from: http://marketrealist.com/2014/11/guide-non-alcoholic-beverage-industry/
Brownell, K.D., Farley, T., Willett, W.C., Popkin, B.M., Chaloupka, F.J., Thompson, J.W., & Ludwig, D.S. (2009). Retrieved from: The public health and economic benefits of taxing sugar-sweetened beverages.
Rama, R., (1996). Empirical study on sources of innovation in international food and beverage industry. Agribusiness, pp. 123-124
Ovidijus, J. (2013) SWOT analysis for PepsiCo Retrieved from: http://www.strategicmanagementinsight.com/swot-analyses/pepsico-swot-analysis.html
PepsiCo.com, (2015) Performance with Purpose Goals Retrieved from: http://www.pepsico.com/Purpose/Performance-with-Purpose/Goals