Strategic analysis of the external environment

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Abstract

Purpose - The objective of this assignment is to conduct an extensive analysis of the external environment and evaluate the key drivers influencing the corporate strategic management of GlaxoSmithKline's company, Lucozade. It will concentrate on identifying, categorising and prioritising the key issues facing this organisation both in the macro-environment and the micro-environment.

Methodology - The tools used in this report to provide an external analysis of the key environmental forces and competitive drivers include; analytical frameworks such as the PESTEL framework, and Porter's 5-forces analysis. In addition an analysis of strategic groups, market segments and critical success factors are included.

Findings - To be completed

Value - The report utilises appropriate theory, conceptual frameworks and academic literature on future strategies and scenarios for Lucozade from an analytical perspective.

Introduction

The products and services Lucozade offer, will be defined in the sports and fitness nutrition industry, a distinct category of the nutraceutical sector. Dr Stephen DeFelice (1989) defined nutraceutical products as 'a food (or part of food) that provide medical or health benefits, including the prevention and/or treatment of a disease'. Emerging over the last decade within the nutraceutical sector, the sports and fitness nutrition industry has experienced growth due to increased awareness of the links between diet and health benefits. Advances in food technology have also played a part in this industries development.

Lucozade has a research arm known as The Lucozade Sports Science Academy, which has been carrying out nutritional research for over 30 years. It works in partnership with leading universities, coaches, nutritionists and sports professionals.

PESTEL

Political

HOME OFFICE website

Econimic

Sales of bottled sports drinks are down 4.5%

Powdered mixes are up 12%

Social

Consumer awareness of links of diet and disease

 The demand for nutraceuticals has been growing worldwide due to consumer awareness of the links of diet and disease, aging population, rising health care cost and innovations in food technology and nutrition. Three main products contributed to the industrys dramatic growth in 2004

• low carbohydrate products - which grew by as much as 154%

• sports energy beverages - which grew by 18%;

• sports supplements - which grew by 6%.

Research-substantiated claims.

Consumers' ability to make intelligent choices should never be underestimated. People place more faith endorsements by university professors and doctors and claims backed by independent research than by endorsements by celebrities.

Consumers are also looking for products that taste good and are easy to take. Taste is a major feature that can either make or break a product. The hunt is on for manufacturers to come up with better and new flavors.

One litre of Lucozade Energy contains 700 kCal and is 0.01% ethanol, which kept observant Muslims from being allowed to drink it until, in 2004, the Muslim Council of Britain decreed that no one would be committing a religious crime if they drank it. http://news.bbc.co.uk/1/hi/uk/3527724.stm

500ml (one bottle) of Lucozade Energy typically contains 21 teaspoons of sugar (85g), which has led to media criticism regarding public health. Lucozade also contains 12.5 teaspoons of sugar for every 380ml bottle.#

n Muslims in the UK have been given permission to consume soft drinks which contain minute traces of alcohol and pork products.

Under strict interpretation of Muslim law, Lucozade and Ribena were both previously considered to be "unclean".

Lucozade contains 0.01% ethyl alcohol to aid flavouring, which the Muslim Law Council now says is too small to matter

Ribena previously used gelatin - a pork by-product - in its production but has now changed its manufacturing methods.

Long-running dilemma

The Muslim Law Council - the UK's highest authority on halal (clean) food - consulted earlier rulings by imams on halal food before reaching its decision.

In the ruling, the Council's chair, Zaki Badawi, said precedents had been set allowing the use of non-halal ingredients in certain cases.

"I see no harm in consuming Ribena and Lucozade which contain traces of ethyl alcohol and animal ingredients that do not bear their original qualities and do not change the taste, colour or smell of the product," Mr Badawi said.

In its submission to the Muslim Law Council, the drinks' maker, GlaxoSmithKline, pointed out fruit juices and bread could also contain the same or higher trace amounts of alcohol due to natural fermentation.

The decision ends a long-running dilemma for some devout Muslims who have avoided buying the brands for fear of breaching religious rules.

In the wake of the ruling, the British Soft Drinks Association said it would not propose a new labelling policy but some companies might decide to mark their products "halal" to prevent any future confusion.

A spokesman said: "Soft drinks are non-alcoholic, we welcome this confirmation and hope that it can reassure those consumers who were concerned." 

Technological

Innovations in food technology

A good strategy now is to focus development of core products or integrating with large food and pharmaceutical concerns (e.g., Powerbar, BalanceBar).

E-commerce

For small companies that cannot or will not rely on strong distribution relationships, e-commerce is an increasingly attractive option.

Retailers and consumers clamor for "new," whether it means new forms of delivery (gels, effervescent tablets, functional beverages), new applications of or combinations with existing products, or all-natural sports nutrition products that are free of artificial ingredients and solvents.

Make your own sports drink

Sports drinks are really easy to make - not to mention a lot cheaper than buying expensive bottles in sho

http://news.bbc.co.uk/sport1/hi/health_and_fitness/4289704.stm

Sports drinks 'dissolving teeth'

Rehydrating sports drinks are up to 30 times more erosive to teeth than water, according to researchers at the University of Birmingham.

Environmental

Aging population

Legal

Regulatory agencies exist to protect the consumers. It is the responsibility of product manufacturers to undertake sound research and prove the efficacy and safety of their nutraceutical products. Products that are based on false or misleading marketing should be and are banned and condemned

http://news.bbc.co.uk/1/hi/uk/1121243.stm

AEROPLANES STOPPING LIQUIDS

The Organisation's Environment

Political Economic Social Technological Environmental Legal

Sources of Competition

Opportunities and Threats

Macroenvironment

PESTEL

Sources of competition

5-forces

Understanding competition

Strategic group analysis

Market segments

Critical success factors

Strategic gaps

Opportunities

Threats

Understanding the Environment

Diversity

Many different influences

Complexity

Interconnected influences

Speed of change

Particularly ICT

Not just a list of influences

Need to understand key drivers of change

Drivers of change have differential impact on industries, markets, and organisations

Focus is on future impact of environmental factors

Combined effect of some of the factors likely to be most important

Opportunities and Threats

Developed from external environment analysis (far and near)

Only the analysis (i.e. description or listing) is not enough - the critical aspects are the implications drawn from the analysis

These implications help guide strategic decisions and choices

Goals:

Reduce identified threats

Take advantage of identified opportunities

Strategic Gaps

= opportunities in the environment, which competitors do not (yet) exploit fully

5 Forces: gap is where rivalry is low

Strategic group map: gap is where no company is located on the map

Examples of such opportunities:

O in substitute industries

O in strategic spaces

O in targeting buyers

O in complementary products/services

O in new market segments

O over time

Sales of bottled sports drinks, the

category's mainstay, are down about

4.5 percent through the measured retail

channels for the year ending May 17,

2009. Powdered mixes, on the other

hand, are up 12 percent for the same

period.

Gatorade holds the lion's share of

the category, with eight of the top 10

bottled sports drink brands. Its newest

offerings, G2 and Gatorade Tiger, are

leading growth for the trademark. G2,

Gatorade's low-calorie offering, hit the

market in 2007, and saw an increase of

187 percent in dollar sales during the

past year. Gatorade Tiger was renamed

Gatorade Tiger Focus this year and

reformulated to contain 25 percent more

electrolytes than regular Gatorade and Ltheanine

for concentration, the company

says. The Tiger brand grew 172 percent

during the year ending May 17, and took

the No. 7 spot in the top sellers.

In addition to the Tiger repositioning,

Gatorade redesigned packaging

and renamed the sub-brands in its

entire line - Gatorade Fierce is now

Bring It; Gatorade X-Factor changed

to Be Tough; Gatorade AM, developed

for morning exercisers, is called Shine

On; and Gatorade Rain is No

Excuses.

Coca-Cola's Powerade Zero

saw the biggest increases in the

bottled sports drink category,

taking advantage of consumer

interest in lower-calorie drinks.

The brand rolled out last spring

and builds on Coca-Cola's

Zero platform. Coca-Cola Co.

also introduced Powerade

with ION4. The product contains four

electrolytes in the same ratio that is lost

in sweat, the company says.

Low-calorie options also helped the

sports drink mix category. Gatorade's

Propel is the top seller in that segment,

with a 12 percent increase, and G2

powdered stick packs took the fourth

spot on the list in their fi rst year on the

market.

In addition to low-calorie, natural

products are making a showing in

sports drinks. Dr Pepper Snapple

Group and Big Red/All Sport took

advantage of the recent Food and Drug

Administration approval of steviabased

Reb-A, and developed a lowcalorie

version of All Sport, All Sport

Naturally Zero.

Clif Bar & Co. is known more for

power bars, but it ventured into sports

beverages this spring, with Clif Quench,

made with all-natural and organic

ingredients.

And coconut waters, such as Zico

Coconut Water and O.N.E. Coconut

Water also are making inroads as sports

hydration beverages, thanks to their

naturally occurring electrolytes and low

calorie count. BI

Sports drinks

lighten up

SPORTS DRINKS, A BEVERAGE SEGMENT BUILT ON FITNESS, ARE SEEING LESS than-

robust sales these days, with a category decline of 4.4 percent through

U.S. supermarkets, drug stores and mass merchandise outlets, excluding

Wal-Mart, according to Information Resources Inc. But some brands and certain

sub-segments are out-performing the category as a whole. Low-calorie options

and powdered mixes, in particular, are enjoying success in 2009.

Sales of bottled sports drinks, the

category's mainstay, are down about

4.5 percent through the measured retail

channels for the year ending May 17,

2009. Powdered mixes, on the other

hand, are up 12 percent for the same

period.

Gatorade holds the lion's share of

the category, with eight of the top 10

bottled sports drink brands. Its newest

offerings, G2 and Gatorade Tiger, are

leading growth for the trademark. G2,

Gatorade's low-calorie offering, hit the

market in 2007, and saw an increase of

187 percent in dollar sales during the

past year. Gatorade Tiger was renamed

Gatorade Tiger Focus this year and

reformulated to contain 25 percent more

electrolytes than regular Gatorade and Ltheanine

for concentration, the company

says. The Tiger brand grew 172 percent

during the year ending May 17, and took

the No. 7 spot in the top sellers.

In addition to the Tiger repositioning,

Gatorade redesigned packaging

and renamed the sub-brands in its

entire line - Gatorade Fierce is now

Bring It; Gatorade X-Factor changed

to Be Tough; Gatorade AM, developed

for morning exercisers, is called Shine

On; and Gatorade Rain is No

Excuses.

Coca-Cola's Powerade Zero

saw the biggest increases in the

bottled sports drink category,

taking advantage of consumer

interest in lower-calorie drinks.

The brand rolled out last spring

and builds on Coca-Cola's

Zero platform. Coca-Cola Co.

also introduced Powerade

with ION4. The product contains four

electrolytes in the same ratio that is lost

in sweat, the company says.

Low-calorie options also helped the

sports drink mix category. Gatorade's

Propel is the top seller in that segment,

with a 12 percent increase, and G2

powdered stick packs took the fourth

spot on the list in their fi rst year on the

market.

In addition to low-calorie, natural

products are making a showing in

sports drinks. Dr Pepper Snapple

Group and Big Red/All Sport took

advantage of the recent Food and Drug

Administration approval of steviabased

Reb-A, and developed a lowcalorie

version of All Sport, All Sport

Naturally Zero.

Clif Bar & Co. is known more for

power bars, but it ventured into sports

beverages this spring, with Clif Quench,

made with all-natural and organic

ingredients.

And coconut waters, such as Zico

Coconut Water and O.N.E. Coconut

Water also are making inroads as sports

hydration beverages, thanks to their

naturally occurring electrolytes and low

calorie count.

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