CONTENTS

MISSION STATEMENT EVALUATION ................................ ................................ ................................ ... 4 VISION STATEMENT EVALUATION (based on building your company s vision, published in Harvard Business Review) ................................ ................................ ................................ ............................... 4 1. MACRO-ENVIRONMENTAL ANALYSIS AND INDUSTRY ATTRACTIVENESS ................................ ........ 7 Porter s Five Forces................................ ................................ ................................ ........................ 7 1. 2. 3. 4. 5. Threat of new Entrants:................................ ................................ ................................ ...... 7 Bargaining power of suppliers ................................ ................................ ............................ 9 Bargaining Power of Buyers................................ ................................ .............................. 10 Threat of Substitutes: ................................ ................................ ................................ ....... 11 Determinants of Rivalry among Existing Firms: ................................ ................................ . 13

Overall Industry Rating:................................ ................................ ................................ ............ 14 SUMMARY OF PORTER S 5 FORCES ANALYSIS:................................ ................................ .............. 15 PEST ANALYSIS:................................ ................................ ................................ ................................ 16 1. 2. 3. 4. Political Aspects ................................ ................................ ................................ ................... 16 Economical Aspects ................................ ................................ ................................ .............. 16 Social Aspects ................................ ................................ ................................ ...................... 16 Technological Aspects ................................ ................................ ................................ .......... 17

EXTERNAL FACTOR EVALUATION (EFE)................................ ................................ ............................. 18 EXPLANATION ................................ ................................ ................................ .............................. 18 2. COMPANY AND COMPETITOR ANALYSIS:- ................................ ................................ .................... 20 CPM (competitive profile matrix) ................................ ................................ ................................ . 20 EXPLANATION: ................................ ................................ ................................ ......................... 20 3. MICRO-ENVIRONMENTAL ANALYSIS AND INTERNAL COMPANY RESOURCES: ............................... 22 1. MANAGEMENT OF VALUE CHAIN ................................ ................................ ......................... 22 Support Activities:................................ ................................ ................................ .................... 22 Primary Activities: ................................ ................................ ................................ .................... 23 CORE COMPETENCIES ................................ ................................ ................................ .................. 24 STRATEGIC COST MANAGEMENT PROCESS: ................................ ................................ ................. 25 FINANCIAL TREND ................................ ................................ ................................ ........................ 26 INTERNAL FACTOR EVALUATION (IFE) ................................ ................................ .......................... 27 EXPLANATION: ................................ ................................ ................................ ......................... 27 1

STRATEGIC ANALYSIS AND RECOMMENDATIONS: ................................ ................................ ............ 29 4. STRATEGIC ANALYSIS AND RECOMMENDATIONS: ................................ ................................ ........ 30 GENERIC STRATEGIES ................................ ................................ ................................ ................... 30 Reasoning ................................ ................................ ................................ ................................ 30 Strategy ................................ ................................ ................................ ................................ ... 31 Pros/cons................................ ................................ ................................ ................................ . 31 Corporate Strategy................................ ................................ ................................ ................... 31 Market Penetration ................................ ................................ ................................ ..................... 31 Product Development ................................ ................................ ................................ .................. 32 Current Strategy ................................ ................................ ................................ ...................... 32 SOURCE OF COMPETITIVE ADVANTAGE ................................ ................................ ................... 33 STRATEGY AND PROPOSED CHANGES ................................ ................................ ...................... 34 MATCHING STAGE: ................................ ................................ ................................ .......................... 35 1. 2. 3. 4. 5. TOWS MATRIX................................ ................................ ................................ ...................... 35 SPACE MATRIX ................................ ................................ ................................ ..................... 36 GRAND STRATEGY MATRIX ................................ ................................ ................................ ... 37 IE MATRIX ................................ ................................ ................................ ............................ 38 BCG ................................ ................................ ................................ ................................ ...... 39

MATRIX ANALYSIS AND TOWS SUMMARY ................................ ................................ .................... 40 DECISION STAGE ................................ ................................ ................................ .............................. 41 STRATEGIC IMPLEMENTATION................................ ................................ ................................ ......... 43 5. STRATEGIC IMPLEMENTATION: ................................ ................................ ................................ .... 44 STRUCTURE & CULTURE ................................ ................................ ................................ ............... 44 RESOURCES................................ ................................ ................................ ................................ .. 44 STRATEGY # 1: TAURINE FREE RED BULL................................ ................................ ....................... 44 STRATEGY # 2: DIVERSIFYING INTO SPORTS DRINKS MARKET ................................ ....................... 45 SYNERGIES IN VALUE CHAIN................................ ................................ ................................ ......... 46 PITFALLS IN STRATEGIC IMPLEMENTATION ................................ ................................ .................. 46 SCORE CARD ................................ ................................ ................................ ................................ 48 DIAGNOSTIC SURVEY OF PRIMARY AND SECONDARY MANAGEMENT PRACTICES:........................ 49 BIBLIOGRAPHY: ................................ ................................ ................................ ................................ 55

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MISSION AND VISION EVALUATION

RED BULLL GIVES YOU WIIINGS...

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MISSION STATEMENT EVALUATION
"We are dedicated to upholding Red Bull standards, while maintaining the leadership position in the energy drinks category when delivering superior customer service in a highly efficient and profitable manner. We create a culture where employees share best practices dedicated to coaching and developing our organisation as an employer of choice." Mission statement is evaluated of following nine components:
y y y y y y y y

customers products or services geographically where does the firm compete concern for growth and profitability Philosophy (basic beliefs, values, competence or major competitive advantage ) Self-concept Concern for public image Concern for employees

Red Bull s mission statement does not talk about who their customers are. This may be reason why Red Bull targets athletes, students, professionals, clubbers, concert singers, etc. Whereas it talks about its product which is energy drink. They have not specified the geographical locations. Concern for growth and profitability is highlighted in their mission statement. Their philosophy is to maintain Red Bull standards. It is stated that company s mission is to maintain the leadership position in energy market, but this part of the mission statement should be included in vision statement under BHAG goals. As far as self-concept is concerned, mission statement lacks proper description what are company s major strengths and competitive advantage. Concern for public image is also not included in the statement. However, this statement has clearly stated about concern for employees.

VISION STATEMENT EVALUATION (based on building your
company s vision, published in Harvard Business Review)
To spread our wings over the world"

Mission statement has to be evaluated of the following basis: 1. Core ideology (enduring character of an organization)

a. Core purpose
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b. Core values 2. Envisioned future a. BHAG (big, hairy, audacious goals) b. Vivid description Vision statement s main purpose is to describe where company wants to go. When vision statement is created for a company it talks about dreams and hopes for your business. Based on the above stated elements Red Bull s vision should include core values which are guiding principles by which a company navigates. Guiding principles are not about how company would capitalize on an opportunity, it is about values core purpose and values on which a company stands. A company can change its entire product line and enter into a new market segment but core values remain the same. Core purpose defines the need which a company seeks to satisfy. BHAG are ambitious plans which a company aims to achieve in a specified period of time. Vivid description describes what will be the outcome of achieving BHAG. Red Bull s vision statement should be: We create a working environment in which employees are respected and are trained to maximize their skills. We seek to provide reliable products to our customers and will never compromise on cost for quality. We will maintain our leadership position in the energy drink market. Through this we aim to increase profitability and become a brand which is well known in energy drink market.

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6 .MACRO-ENVIRONMENTAL ANALYSIS AND INDUSTRY ATTRACTIVENESS RED BULLL GIVES YOU WIIINGS...

which in fact comes under one industry: the beverage industry. Therefore. We are also including the distribution industry. or qualifications that are difficult to obtain? Can the newcomer expect strong retaliation on entering the market? A 1 2 3 4 5 6 7 8 9 10 11 12 YES ~ X X X NO X X X X X X X X X Large firms do have a cost or performance advantage in our segment of industry. we are referring to not only the Red Bull s import from Austria via Dubai. but because Red Bull Pakistan is a wholly owned subsidiary of Red Bull Austria. When discussing the beverage industry. MACRO-ENVIRONMENTAL ATTRACTIVENESS Porter s Five Forces ANALYSIS AND INDUSTRY Applying Porter s five forces to the Pakistani energy drink market allows us to garner a retrospective view of the potential attractiveness in terms of profitability of the industry. Threat of new Entrants: THREAT OF NEW ENTRANTS Do large firms have a cost performance advantage in your segment of the industry? Are there any proprietary product differences in your industry? Are there any established brand identities in your industry? Do your customers incur any significant costs in switching suppliers? Is a lot of capital needed to enter your industry? Is serviceable used equipment expensive? Does the newcomer to your industry face difficulty in assessing distribution channels? Does experience help you t o continuously lower cost? Does the newcomer have any problems in obtaining the necessary skilled people. They are concerned with packing whatever ingredients they can to improve the stamina and 7 .1. from the perspective of Red bull. insurances. all our ana lytical studies will follow both the importing and distributing. because Red b ull has its distribution partners (DPs) Chawla Group for its distribution all over Karachi. they differ greatly in their ingredients and its concentration level. We first must analyze the industry through the five-force template. 1. materials or suppliers? Does your product or service have any proprietary features that give you lower costs? Are there any licences. Energy drink market is growing like a weed. Companies are striving to put out the best energy drink designed for the potential customer that they have in mind. which will allow us to more accurately gauge the industry in terms of its potential. Although energy drinks are similar in their nature.

power plus. power house. they come to Pakistan via importing of whole sellers. cheap and convenient to buy any other brand they wish. as they are free to choose any brands they wish. This retaliation comes naturally as Red Bull is strong brand. Good relationship created through long term business dealings with distributors ensures distributors confidence and lower bargaining power over the company itself. Therefore before starting a business. Most of the foreign energy drink brands sold in Pakistan have manufacturing plants in their home country. Except power plus all the existing brands in this industry belongs to foreign companies. Therefore. Therefore. this also shows how different companies will compete more on distribution channels than the product itself. It is easy. almost acting like a monopoly. Main cost faced in Pakistan by these foreign companies consists of distribution cost. Experience does helps in continuou sly lower costs. In Pakistan people have misconception about the product ingredients and its side effects. This is because of strong distribution partnership made between the company and distributor. This is because of the agreements made between the distributors and companies under which distributors are allowed to circulate only company related brands. Wholesalers do no t find it difficult to import energy drinks in Pakistan because they do not need a lot of capital to do so.physical performance of human beings. the primary difference that distinguishes many energy drinks is the ingredient list. New comers face excessive cost to turn these distributors in their favour. There are some basic requirements that need to be fulfilled before entering this industry. Distributors on the other hand. Government needs to be assured of product quality and standard. as a 8 . while in Pakistan they mostly focus on distribution channels and marketing. No factor restricts them to use any particular brand. other brands of energy drinks do not have a franchise based system but only they are imported by whole sellers who make them available in markets and create a competition in the industry. Therefore. There are many established brand identities in this industry such as blue ox. company needs to get permission for business. have to make sure that product is available throughout the country and therefore face high costs. New comer expects strong retaliation on entering the market. Therefore some restrictions are placed by government before initiating any of such projects. Customers do not face any significant costs in switching suppliers. Gatorade. The new comers face difficulty in accessing distribution channels in Pakistan. Mostly. Red Bull has 5 distr ibution partners who are responsible for everything after landing of this product to Pakistan s franchise of Red Bull.

2. labour. Overall. services etc. niacin.) are needed by other industries as well and Red bull has the option of switching its suppliers because the inpu ts are standard therefore Red Bull has a power over their suppliers. (65 per can) cost is incurred when this product is imported. therefore they are most likely not interested in entering into distribution business. sucrose. inositol. Bargaining power of suppliers D BARGAINING POWER OF SUPPLIERS 1 My inputs (materials. glucose.) are standards rather than unique or differentiated. YES X ~ NO X X X X X X The inputs are standard rather than unique or differentiated. taurine. Suppliers involvement into distribution system might result in additional cost. 3 My suppliers would find it difficult to enter my business or my customers would find it difficult to perform my function in house. caffeine. Therefore the product that these distributors get is standardized. glucuronolactone. pantothenic acid. therefore this force is getting a neutral rating. suppliers.monopolist it is expected for them to maintain its position and derai l anyone who comes as an obstacle. vitamin B6. 7 My costs of purchases has. This is because managing a distribution system from such a distance is very complicated and involves huge amount of resources. carbon dioxide. Main reason for this is the necessity of strong distribution channel required for widespread availability of the product and strong brand names that exist in the market. agave. 2 I can switch between the suppliers quickly and cheaply. sodium citrates. caramel and riboflavin. 9 . Suppliers of the ingredients of Red Bull (Water. vitamin B12. 6 My business is important to my suppliers. 4 I can substitute my inputs readily. Red bull s suppliers would find it difficult to enter this business. the suppliers have number of other industries to supply to therefore they also have a power in the industries. Suppliers are getting their work done though distributors at reasonable and competitive rates. This is because Red Bull operating in Pakistan is a just a franchise which imports basic products from the supplier in Austria and Dubai and sold it in Pakistan through 5 distribution partners. it can be concluded that it has high barrier to entry and thus more profitable for firm. Red bull s business is important to its suppliers as it generates great deal of revenue for them and cost of purchase does have a significant influence on the overall costs. 5 I have many potential suppliers. But on the other hand.

Its use helps to increase endurance and heighten alertness as well as reactions and generally spoken the use of Red Bull helps to cope with the challenges of everyday life. Three main stereotyped uses can be identified. Although there aren t a large number of customers and customers don t incur any costs in switching brands. the so -called 'millennia s': people born after 1981 who are believed to be cynical of traditional marketing strategies.3. Globally Red Bull associates its brand with youth culture and extreme and adventure-related sports one 10 . The company promotes the Red Bull brand directly to Generation Y. Bargaining Power of Buyers B BARGAINING POWER OF BUYERS YES ~ NO (To what extent your customers locked into you?) 1 Are there a large number of buyers relative to the number of firms X in the business? 2 Do you have a large number of customers. which includes work. leisure and sports. the customer doesn t require any important information regarding the product. distributes their energy drink in over twenty countries. expecting that growing numbers of target consumers 'catch the bug' and its reputation spreads. X 9 Your customers businesses are profitable. Also the company basically focuses on Viral Marketing. X Red Bull. X 10 You provide incentives to the decision makers. It s an energy drink with its apparent functionality and there s no need to convey additional information concerning the usage of Red Bull. The branding of Red Bull has carefully implemented. each with relatively X small purchases? 3 Does the customer face any significant costs in switching suppliers? X 4 Does the buyer need a lot of important information? X 5 Is the buyer aware of the need for additional information? X 6 Is there anything that prevents your customer from taking your X function in house? 7 Your customers are not highly sensitive to price. So it would be not very useful to restrict the target market to the geographic areas as well as the psychographic segmentation for the targeted consumer that s because for a product like Red Bull it would be far too narrow as it cuts across lifestyles. First of all. Red Bull is not just an energy drink it is primarily a utility drink to be taken against mental or physical weariness or exhaustion. Red Bull caters to a nic he market in Pakistan and it is not price sensitive. the industry seems pretty attractive in terms of buyer power. who is originally from Austria where it is still produced. It has a very strong presence in the market. So the best solution would be to set the target market as a behavioural segmentation. demographics and socio-economic boundaries. The price of Red Bull has gone 65 PKR to 135 PKR and yet there has been no visible change in the sales. X 8 Your product is unique to some degree or has accepted branding. The reason for t hat decision is because in a behavioural segmentation the individual s relationship with the product and the use and benefit sought from the product. The bargaining power of buyer is low in this industry.

For example. their performance is not justified by X their higher price. which in turn provide to the consumers. The customer will incur a cost in switching to a substitute . Red Bull sells to the DPs. Substitutes have performance limitations that do not completely offset their lowest price. However in Pakistan there are no extreme sports that Red Bull as a brand can relate to. Red Bull concentrates on students. energetic and happening personalities. Red Bull suppliers are called the Distribution Partners. The distributors have to incur a high cost due to this mass distribution. the traits that the urban population of Pakistan most wants to relate to. To counter this flaw Red Bull lets the DPs deal with the final price. Red Bull falls in this category. Threat of Substitutes: THREAT OF SUBSTITUTES YES ~ (Some other product or service that performs the same job as yours).example of which is that Red Bull sponsors its own team in NASCAR Sprint Cup Series. working men and women (professionals) who need to stay up at night and people participating in sports Red Bull drinker s are considered dynamic. coffee can be substitute for Red Bull because of the general perception of consumer that its consumption promotes mental alertness. amino acids and herbal stimulants. There are a total of 5 Distribution Partners in Pakistan. Your customer has no real substitute. was discovered in 9th century. Formerly Red Bull was only available at limited outlets. now Red Bull is available at every store of prominent cities. Your customer is not likely to a substitute. Energy drinks are used to satisfy the need for quick mental alertness. This helps in making Red Bull s primary customers business profitable. C 1 2 3 4 4. NO X X X Most energy drinks are carbonated drinks that contain large amounts of caffeine and sugar with additional ingredients. Or. A number of other substitutes for energy drinks are: 11 . Several substitutes were in the market for energy drinks even before energy drinks were introduced. The above mentioned arguments leave us with the idea that buyer power is low in the industry because consumers do not have enough choices to switch to other brands and they are ready to pay higher prices. such as B vitamins.

search costs. threat of substitute is high. These include exit fees. installation and start-up costs. iced Tea. Mountain Dew. green Hot cocoa Chocolate Milk (8 oz) Caffeine content in milligrams 80-135 100 65-100 47 30 15 14 5 SOURCES: National Soft Drink Association. Instant Tea. Some studies also suggest that taurine caused anxiety. and social risk. and self -mutilations. However. Dr Pepper. need for mental alertness or extra energy can also be satisfied by consuming dark chocolate. As none of the above stated cost can be associated with energy drink market. US Food and Drug Administration. Pepsi. Another very important factor which has increased threat of substitution is about Taurine content of energy drinks especially Red Bull. When compared with coffee or tea there are no controversies or side effects. learning costs. equipment costs. Switching costs is the price we pay for switching to another product.8-ounce Beverage Coffee. Besides the substitutes mentioned above. company claims that Taurine used is synthetically produced. Pre sence of taurine in Red Bull has a negative impact of consumer because they believe it is extracted from bull urine. Espresso (2 ounces) Coffee. irritability. 12 . Pepsi and others containing caffeine can a be sub stitute for energy drinks. emotional costs. This reason has created a misconception in the minds of consumers. Sprite 3G. high sensitivity to noise. because over consumption can cause heart troubles. cognitive effort. Presences of many substitutes in the market that are easily available pose a certain threat to energy drinks. psychological risk. Brewed Coffee. instant Tea. Bunker and McWilliams. Other soft drinks such as Coca Cola. Also consumption quantity of energy drinks is limited. financial risk. This suggests that consumers are likely to substitute. These substitutes are easily available in shops and have a better distribution as compared to Red Bull s distribution. Slim-Fast.

Exit barriers are high in the industry due to the high technology and research and development used in making and designing of the products. E 1 2 3 4 5 6 7 8 9 5. Red Bull has created an image. Market growth rate is low and the existing firms have to fight for market. An energy drink has special 13 . YES ~ X X X NO X X X X X X The energy drink industry in Pakistan has a high concentration ratio. This can be due to the higher prices of the product. It would not be hard to get out of the business because there are no specialized skills and facilities or long term contract commitments etc. The intensity of rivalry in the industry is defined by many characteristics as explained below. The fixed costs of the business are a relatively low portion of total costs. Determinants of Rivalry among Existing Firms: DETERMINANTS OF RIVALRY AMONGST EXISTING COMPETITORS The industry is growing rapidly. My competitors are all of approximately the same size as I am. threats of substitutes if high as strong substitutes are present in the market and consumers have a misconception about certain ingredients contained in the drinks. There are a small number of firms in the industry with a high market share as opposed to many firms with similar market shares. Especially since this market is smaller in Pakistan then in other countries and also has a slower growth rate. which is an unfavourable factor for the industry. such that consumers are very brand loyal. Though there is little difference in the product itself. The competitors are diversified rather than specialized. Customers here can freely switch their brand preference without incurring any costs. There are significant product differences and brand identities between the competitors.Therefore. My customers would incur significant costs in switching to a competitor. This means that energy drink industry is less competitive and this fact makes the industry favourable. making it a positive for the industry. The highest rivalry towards Red Bull is followed by Power Horse. meaning that fewer firms hold the larger part of the market. The industry is not cyclical with intermittent overcapacity. My product is complex and requires a detailed understanding on the part of my customers.

and need specialized skills and expertise and expensive fixed costs involved. with a forecast of high industry growth. The slow growth rate of market and high exit barriers all make an industry unfavourable and difficult to operate in. since supply exceeded demand. For instance. thus other competitors may constantly try to employ strategies to gain more market share. The energy market industry has already experienced an industry shakeout. but whole sellers import them and put them in competition with Red Bull. Blue Ox discontinued in 2005. which use expensive and rare raw materials. Though Pakistani industry do not have direct franchise of rival brands. Overall Industry Rating: Favourable 1) Threat of 7 new entrants 2) Bargaining power of 5 buyers 3) Threat of 1 substitutes 4) Bargaining power of 3 suppliers 5) Intensity of rivalry among 3 the competitors Moderate 3 1 - Unfavourable 2 4 3 4 1 5 14 . but then all the incompetent firms had to exit. as many new entrants jumped in. The rivals are not diversified as most of the firms have similar backgrounds and history.ingredients. The energy drink industry has rather predictable business cycles as demand increases with advent of sports events and exams. The competitors are smaller than Red Bull. The analysis leaves us with the conclusion that the energy drink industry has more characteristics that are negative than positive. which makes the industry stable and favourable .

SUMMARY OF PORTER S 5 FORCES ANALYSIS: The beverage industry with its 60 years of established presence is unattractive for energy drinks because of facts discussed above through Porter s Five Forces.e. Potential Entrants + + + The Industry Suppliers _ Rivalry among Existing Firms Buyers + _ Substitutes _ _ _ 15 . though industr y is unattractive but more other companies are importing other energy drinks. only few people are involved in the management and rest is taken care by distribution partner (DP) i. Red Bull is well positioned in this industry so as to attain a competitive edge. Chawla group. This is also a reason why the company set up of Red Bull does not include tall organization structure. which is increasing the competition in the market. Buyers are in a niche market hence the higher prices are of no concern to them so they have low bargaining power. Importing procedures are also easy in Pakistan only heavy taxes are paid and energy drinks can be imported effortlessly.

Their target market include students. Economical Aspects Energy drinks face little exposure to economic cycles as they are special drinks. Furthermore a research proved that Red Bull has stimulating effects like caffeine. At first the Health Organisation was suspicious that Red Bull could be a starter drug. The consumers are male and females regardless of age. which shows that supplier power is low. Social factors like changing 16 . 15% central excise duty. There is significant political pressure on the beverage industry in Pakistan. yet the result is positively in favour of beverage industry including energy drinks. Nevertheless Red Bull still needs to be approved by each country where it shall be sold. Secondly. as well as 18% sales tax. There are few substitutes and through their well positioned advertisements their sales are increasing. but does not lead to addiction. Political factors have no direct impact on bargaining powers of buyers. who are very sporty or work very hard. Social Aspects A major social trend in the urban areas of Pakistan has been a shift from drinking coffee or tea in youngsters to improve their efficiency towards energy drinks which creates a sense of style in the youth. However. 3. 2. Their scepticism even increased after rumours that Red Bull con tains ingredients like bull s galls. the fact that Red Bull has been used in Austr ia for 9 years and in Asia even for 30 years without any complaints led to increased confidence. people are now much more open for new experiences.PEST ANALYSIS: 1. This encouraged the appearance of more brands in the same industry of beverages which is sub divided into the market of energy drinks by importing them from foreign countries and making a competition in the market. This extremely high double taxation rate greatly deters the players in the industry from charging premium prices for perceived value additi on but as Red bull is for a niche market so it charges higher prices which reduces the buyer power. office going people / professionals. the distribution partners (DPs) also incur a big chunk of cost that is why they import at Rs. who need a push up . though advertisements are not made in Pakistan as yet. 135 in the market. Economic factors like increasing population seem favourable for the industry but the adverse economic condition and decreasing purchasing power is critical. This pressure mostly arises from a high levy of taxes. Political Aspects Red Bull was introduced into the market as a new non -alcoholic drink with a new concept. serving a niche market in Pakistan. as their lifestyles are changing and getting more and more influenced by western culture. namely energy drink which comes under beverage industry. Unlike the 1980 s. where nobody wanted to try something new. This trend has spurned more from impressive distribution networks and less from increased advertising. which totals up to about 36% of retail prices. which is very time consuming and therefore expensive. 65 per can and sell at Rs.

Secondly in that way the recipe will be kept safely i n one place. 17 . as it is not heavily dependent on technological advancements like the consumer electronics industry. the consciousness of status symbols and an attitude inclined towards foreigners all make this industry highly favourable. 4.lifestyle trends in Pakistan. Every cola contains 0. Another very important aspect of the social pressure on Red Bull is due to the increased awareness of Taurine and Caffeine on health. Especially after ban was imposed on Red Bull in Germany after the exceeding limit of cocaine was found in Red Bull cola. First it guaranties consistency in taste. Red Bull wants to ensure that it tastes the same all over the world. technology in this industry is therefore limited to function as a catalyst to improve production. Because beverage products are non-tech based in nature. or the s oftware industry. in order to meet domestic preferences. Red Bull gets exclusively produced in Austria from where it is exported to 28 countries including Pakistan.03% of cocaine (raw form of cocoa plant) in it but only one lot of Red Bull contained 0. There are two reasons why it does not get produced in any other country.04% of cocaine. Red Bull has a string trademark and patent protectio n. Technological Aspects Technology plays a secondary role in th is industry. Technological advancements have enabled buyers to make informed decisions. The Coke sold in UK tastes for examples slightly different from the one sold in Pakistan.01 0.

Opportunities Expansion in new markets e.1 0.39 0. Possible threats for this industry are increasing due to increased awareness of consumers about side effects of caffeine and Taurine. Product development for new entirely new market is an opportunity because other industries such as sp orts drink healthy drinks show impressive growth rates.g. 4. Also.20 0.15 0. Energy drinks are not being advertised on local channels and Red Bull should do it to gain an advantage over its competitor. Changing trends and increasing demand for products that are considered status symbols is an opportunity and Red Bull can capitalize on it. 18 .12 3 1 4 2 1 0. 4. 5.15 0.05 0.3 0.3 0. 3.45 0. Threats Health concerns. there has been publicity about ban on Red Bull in Germany and France.21 EXPLANATION Expansion in new market here implies that with increasing population in Asia there is an opportunity to increase the geographical coverage of our product.15 0.05 0.high caffeine Changing perception of consumer about energy drinks Consumer income is low/ low purchasing power Publicity on the more content of cocaine in Red Bull Cola Presence of substitutes in the market 0. 5.12 1.g.15 0.1 2. 2.1 0.05 1 2 3 2 4 2 0.13 0. sports drink Extension of product line to increase market share Increased advertisement in Asian market Consciousness of status symbol and attitude towards foreigners.1 0.EXTERNAL FACTOR EVALUATION (EFE) 1. 0. Asia Diversify in other segments e. 3.05 0. 2.

19 ...COMPANY AND COMPETITOR ANALYSIS RED BULLL GIVES YOU WIIINGS.

06 0.64 0.13 0.12 0.08 0.12 0.24 0.24 1 1 3 1 3 2 2 2 2 2 1.07 0.07 on competitive profile matrix.08 0.07 0.30 0. Yet the company is the doing fairly well than rest of its competitors in Pakistan.15 0.04 0.10 0. This low figure suggests Red bulls inability to tamper into the market properly.36 0. Red bull should make distribution its core competency in order to have a competitive advantage in long run. Red bull lacks in product variety hence new flavours in energy drinks should be introduced.13 0. 20 .26 0.08 0.16 0. Hence with the expertise of its sales team it can make red bull at customers reach at every outlet.16 EXPLANATION: Red bull received a score of 2.15 0.08 0.0 3 2 3 1 3 3 2 2 2 3 2.24 0.10 0.16 0.21 0.12 0. There is a low rating on market share which should be increased by doing market penetration and heavy promotion through advertisement campaign. It should be given proper shelf space and be easily available at all retail stores.08 1.14 0. COMPANY AND COMPETITOR ANALYSIS:CPM (competitive profile matrix) Red Bull Critical success factors weight Rating Weighted Score Power Horse Rating Weighted Score Market share Advertising Global Expansion Product Variety Product Quality Company Image Price Competition Management Experience Distribution Customer Loyalty Total 0.2.10 0.36 0. Further red bull cannot capitalize on its strengths or retain its existing segment of customers unless its distribution network is improved.

.MICRO-ENVIRONMENTAL ANALYSIS AND INTERNAL COMPANY RESOURCES RED BULL GIVES YOU WIINGSSS.. 21 .

Firm infrastructure of Red Bull is very strong globally.3. As this is a truly global organization every research is done in the headquarters and then implemented globally. it tries to buy those raw materials which are superior in quality. The management of all the franchises are sent to Austria. Human Resource Management: HR activities are decided in the head quarters of Red bull in Austria. MICRO-ENVIRONMENTAL ANALYSIS AND INTERNAL COMPANY RESOURCES: 1. New methodologies of communicating with the consumers are adopted. Technology development: Red bull invests heavily in R&D and always try to come up with something unique which serves their name best in order to let them stay the market leader of energy drinks market. Tokyo. MANAGEMENT OF VALUE CHAIN Support Activities: these include the following: y Firm infrastructure: refers to the number of employees and their management techniques according to which the consumer perspectives relating to a product are identified. as it is a truly global company the structure in all the countries is the same. Procurement: Red Bull has more than one supplier and the inputs or raw materials are not unique but rather standard so. and they are implemented in all the franchises all over the world. The budget for any event to be organized in any country in also sent from the headquarters and it is the work of that franchise management to effectively manage that budget and make the best use of that budget. Red Bull cannot compromise o n the quality of the product hence raw materials which are acquired from different resources are of a premium quality y y y 22 . Dubai. change oriented behaviour is used throughout the organization. Singapore for training and development programs and performance management teams from Austria go to every franchise management all over the world for evaluating the performance of employees. which will allow the final product to be better than the previous one in order to satisfy consumers and meet their demands. Hence Red Bull s HR systems are very strong and globally implemented. but the involvement of distribution partners is handled here by the Pakistani management only and sales representatives are the only members of the firm who are not on the direct pay roll of Red bull headquarters.

Afghanistan and Bangladesh. Operations carried out are according to customer s specifications and requireme nts which are unique in processes and produce innovative outputs. Outbound Logistics: As mentioned previously. Management of Red Bull is basically managing the franchise of the parent company and they have given their distribution work further. further distribution for the end consumers is done by Distribution Partners (DPs) and now the work of timely delivery to retailers is done by these DPs. Red Bull is manufactured in one factory in Austria. Sales: All the sales are carried out through distribution partners (DPs). Operations are carried out such that new product can be developed by investing more and more in research and development. When Red Bull reaches Pakistani market. they are also granted credits and Red Bull has a very strong relationship with these DPs.Primary Activities: these include: y Inbound Logistics: Red bull is a truly global company and has centralised production facility for everywhere to be distributed around the world. Red Bull has strong distribution set up with the help of these DPs. y y y 23 . These distribution partners are also the customers of Red Bull. Operations: Innovating new and unique products is one of the competency of Red Bull. canned and then packed in cases for selling and exporting. Consumer s attention span towards any product is decreasing with time so consumers also expect companies to bring something new every time and Red Bull has been successful in doing so. Raw materials are handled effectively there in order to produce the best product so that the final product has improved quality every time. hence all the cans of Red Bull are manufactured in Austria and for distributing in Asian market they are sent to Dubai. Red Bull is truly a global company and it has centralized processes of manufacturing. From Dubai then the cans are exported to Pakistan and other Asian countries including India.

Red Bull offers a premium drink that serves the office worker. but they believe that since competitors don t really have a formal structure they cannot be counted.CORE COMPETENCIES Red Bull has several competencies are critical for achieving competitive advantage. the student and the sportsperson when they need to remain focused and alert. Formal Franchise Red Bull doesn t believe that it has real competition in the Pakistan market. All the other competitors dont have an organizational existence in Pakistan and are only imported into the market. 24 . This competency adds a lot to the brand positioning of Red Bull as it is a unique way of promotion. Offering premium and functional drink to the customers. The competition does have an indirect impact on its sales. Media Houses A core element of Red Bull is its stringent association with extreme sports. This network is strong and vast. The image and performance of the product is strong and customers are happy with what they are getting from Red Bull. Also it is a totally innovative and unique idea to cater to the vast market that is Pakistan. This department not only includes event managers but also athletes and professio nal sports photographers. This is the reason why having formal franchise is a core competence for Red Bull as it is unique among all the competitors in the industry. They are described as follows: A clear distinctive brand proposition that satisfies customer s need As mentioned before Red Bull has a very strong brand presence in that market. Distribution Partners Red Bull has deployed a network of Distribution Partners who help in the distribution of the drink. Red Bull is familiar with the market and can address their needs quickly and efficiently. This is the reason why Red Bull has separate Media Houses with employees on payroll of Red Bull who organize events.

Red Bull has done a lot of events in Pakistan . The other one was Bobby Bike. advertisement in paper. Red bull usually makes a cost effective use of their promotion tools by reusing them with some innovation. They can distribute samples at discounted or company price for promoting their brand. Lowest price quotation is being considered. Red bull control their costs by receiving quotations from different supplier of panaflexes . Red Bull got a budgeted amount from Austria for these events and for this jump show they got Rs.Most of the events were related to students competition. Recent events include Paper wings in which students suppose to make paper wings and fly them.Besides that they should give brochures that states the benefits of RedBull. Red bull has a very strong marketing.In which they organize the whole show by using promotion tools like panaflexes . Recommendation: Red Bull should minimize its cost by cutting down its expenses. red bull models etc. 25 .2m. The major cost they incur comes from their free sampling which they do a lot.STRATEGIC COST MANAGEMENT PROCESS: In Pakistan Red Bull incur its cost mainly in one of its operations that is marketing but its managing its cost quiet effectively. Avoid a lot of free sampling.Quotations tender offer are made through several ways : direct contact. Karachi based jump which was held at MCB towers it was a big hit.

000 per year. Red Bull approximately sells 1800 cases per month.e.RS 70 per can. Red Bull sells it to retailers at RS 114 per can.000 per year. From time to time. advertising expenses and transportation. Estimated profit generation is RS 4 10.000 per month.104. Net profit margin comes up to 83%. In Pakistan Red Bull is solely concerned with import and distribution system therefore all its expenses and revenue is related to the import and distribution system will be discussed. It has it own unique media house campaigns and unique Red Bull cars are occasionally found on roads for p ublicity. RS 4920. Red Bull has managed high profits despite the costly m arketing expenses. Then custom and excise duties vary according to Pakistan trading policies. These cans are imported in cases. i. Moreover Red Bull makes sure timely inflow of outflow of cash so that it is not left with excessive and unnecessary liabilities and receivables. 21600 cases per year. taxes. They do not disclose complete financial picture of the organization. import duty. which shows company efficiency in managing its overall process. thus taxes on imported goods are considerably lower than past.097.600 per year.800 per month and RS 59. Therefore estimated cost for Red Bull comes around RS 2. Average cost at which they purchase these cans from manufacturer falls in a range of RS 60. As each case contains 24 bottles. 26 . shipping cost. Total revenue generation from sales is roughly RS 4. as it as a huge backup of foreign group.924. Pakistani government is pressurized to encourage free trade. promotional and advertising cost. This cost represents only purchasing cost. it organizes social events at different colleges and universities. it approximately sells 518400 cans per year. After add ition of custom duties.000.000. It has good amount of resources available for different programs it needs to carry out for importing and promoting Red Bull. Cost of production and packaging does not come under it as cans come fully packed. Overall. Red Bull does not face any liquidity crisis. financial position of Red Bull is a lot better than its competitors. Currently. This has enabled Red Bull to enjoy comparatively low cost structure in recent years. i.592. This figure is remarkably better than its competitors who have their net profit margin from 21% to 30%. each case contains 24 bottles.000 per month and RS 31. promotional expenditures. Few of the expenses incurred by import system are.FINANCIAL TREND Red Bull is a private limited company. Red Bull spends a huge amount on advertising and promotional activities. excise duty.e. who then sell it at RS 165 in the market.

27 .36 0. Another strength or competency of Red Bull is the involvement in extreme sports..56 0.04 0. 0.12 0. They have a very strong collaboration with distribution partners and this collaboration has let their distribution to spread out in the whole country.INTERNAL FACTOR EVALUATION (IFE) Key internal factors Strengths No strong competitor Red bull s collaboration with distribution partners (DPs) in Pakistan No visible change in sales even after price increase Behavioural segmentation for the targeted consumer Extreme sport promotion for the first time in Pakistan Red bull Karachi base jump. They have a very strong brand and the population they target are so loyal to this brand that even after price increase no marginal or visible change is seen in the sales of Red Bull throughout the country. Behaviours of consumers are noticed and then according to them it is seen where this product should be placed.2 0. Weaknesses Higher prices Presence of taurine in Red bull No lab testing by Red Bull management at the time of launching the product No formal organization structure Red Bull is only manufactured in one factory in Austria Weight Rating Weighted score 3 4 3 3 3 0. The event recently carried out in Pakistan was Karachi base jump. This is also because Red Bull targets to a niche who are brand loyal and brand conscious and they do not give importance to money over quality.14 0. 3.14 0. 5. Globally the segmentation is done behaviourally and this methodology is used in Pakistan too.1 0.14 0. This is also carried out globally and hence it is carried out here as well. 0.48 EXPLANATION: Above mentioned are the internal strengths and weaknesses of the company. 2.12 0.24 0.1 0.3 0.16 2. 4.08 1. 5. 4. Strengths are such that they do not have any strong competitor in the energy drinks market which has made them a market leader.12 0. This jump was done from MCB towers being the tallest building in Pakistan and was carried out by professional jumpers. 3.16 0.08 0. This event was covered by professional photographers in the media house of the Red Bull which exists globally and the photographers came from Austria to cov er this event in Karachi.08 1 1 2 2 2 2 0.24 1. 2.

The original formula of Red Bull did no t contain Taurine as an ingredient in it. If they reduce their prices more people will be able to buy their product. 28 . so globally this problem has to be solved by deducing such a strategy which will nullify this effect. Red bull is only manufactured in one factory in Austria which turns out to be a weakness in the sense that transportation costs out of Austria are very high which let increased selling prices of the product. it has a higher price which is somehow decreasing their market share and sales. this was added afterwards and this ingredient has been controversial all over the world.Now coming towards the weaknesses.

STRATEGIC ANALYSIS AND RECOMMENDATIONS: RED BULL GIVES YOU WIIINGSSS 29 .

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which is young professionals. Corporate Strategy Two recommended corporate strategy from its competitive advantage is product development and market penetration. it is suggested that Red Bull should entirely focus on one segment. behavior and consumption pattern. Focusing on niche marketing will enable them to understand changing customers trends and their needs. Red Bull should invest extensively in researching consumer psyche. They in fact. Porter s model already suggested presence of high rivalry. Therefore Red bull should make it compulsory to remain consistent as far as differentiation is concerned. This can be done by bringing taurine free Red Bull. and thus comparatively lesser number of firms will help them to satisfy the expectations of their mainstream customers by capitalizing its internal resources and strengths. it is expected that competitor will come with more appealing product in this same segment. Therefore. Within this target market they should try to differentiate thems elves by 31 . they should differentiate it from other competitors. which is also an important customer segment. therefore its target market and related strategies will be entirely different from proposed Red Bull. Currently. Within this segment. which target to their market specifically. it should come up with totally a new product that caters to entire new segment of sports drink. Red Bull needs to maintain a regular check on changing customer s needs. Through this they will gain competitive advantage by providing unique product features. have good promotional campaigns. For this purpose. However. as threat of entry are comparatively low. Another p roblem with this strategy is continuous changes in customers needs. Market Penetration Under this strategy it is recommended that Red Bull further explores target market of young professional and students. Therefore focusing on one segment.Red Bull has good know how of communicating value to consumers and p ositioning their brand. Moreover. This new product will not be a red bull. Thus it will make them more cost efficient and organized. they are trying to keep track of changing taste and needs of customers. Strategy Considering facts mentioned above. major proportion of their expenses is faced by marketing department. especially marketing expenses. For a sports market. this competitive advantage can be utilized in targeting specifically to young professionals. Pros/cons This will help them to manage their expenses. chances for new entrant is not that high. Thus. as taurine is major controversial ingredient present in Red Bull. generic strategy that they need to adopt is focused differentiation. With continuous development and innovations.

cliff driving. concentration and alertness. Current Strategy Target Market Although red bull is marketed as energy drink. These sports involve elements of adventure and risk.introducing taurine free Red Bull. Red Bull's association with F1 Racing. They can use their build image for promotion and quality on their new product. or professionals who work hard and are looking for something to boost their energy levels. Red Bull is already well known for promotional campaigns relating sports events. Anyone who wants to get pushed up and would rather like to have a Red Bull than a coffee. snowboarding. The beverage was targeted at people who sought increased endurance. Three broad categories will includes The Athlete It is usually a person who takes his sport very serious. what means he wants to get the best out of his body. Red Bull is also targeting people who needs energy for extreme sports activity. So in this case Red Bull is for him a very good and easy way to improve his endurance or speed. Media House scheme will help them in achieving this objective. Formula 1 racing. Marketing know how and brand name will mak e it possible to compete effectively with other competitors. and taurine is a major ingredient that discourages potential customers from actually using this product. speed. Analysts said that the company's sponsorship of extreme sports that req uired stamina 32 . which usually focuses on mental alertness only rather than physical alertness. This is important as customer needs keeps on changing with time. Red Bull claims to combat both physical and mental fatigue. Therefore you can say that Red Bull is part of his diet and sport life. and base jumping. Few examples are windsurfing. The Student This could be one of those students who have to pull an all neither due to upcoming exams or meeting deadlines for assignments or reports. one of the world's most glamorous and expensive sports. Product Development Under this strategy. The Worker This could be anyone who has to work hard such as a manager or a street worker. Red Bull has been associated with sports throughout its operation. Red Bull does not only target young people mainly students who need more alertness. completely new product targeting sportsmen should be introduced. Main reason behind this is huge difference between ingredients and characteristics of energy drink and sports drink. also helped enhance its image as a trendy drink. Their financial strength provides them with enough resources to keep track of changes in customers requirements.

5 mg of pantothenic acid and 5 g of vitamin B12 . at MCB tower. Recently they also h ad base jumping.4 U. As a result of marketing campaign. 1000 mg of taurine. in almost all countries where it operates. Through happenings such as these the roles of engagement and brand experience play a critical role. 5. Red Bull contains. Red Bull also has good financial strength to anal yze changes in customer s needs and wants. The reason why Red Bull has been successful in broad differentiation is because it has a vast network of sales team w ho successfully communicate the strengths of Red Bull.25 g of glucose. danger and youth culture. The brand uses traditional media channels. Whenever a consumer is in need of energy. 33 . playing on associations with energy. 80 mg of caffeine.and energy was also just right for the image of the beverage. 5 mg of vitamin B6. Red Bull has unique proprietary feature due to these ingredients and its composition.5 g sucrose. about 21. Also having a highly skilled product development team is also a plus point.) serving. The strategy for building the brand has been created around a simple goal. 50 mg of inositol. Red Bull passes its costs mostly to the customers in form of the high price. fl. Red Bull also has good distribution system to make sure that target customers get the product.S. but more important has been the role of word of mouth marketing. schools and other areas. Red Bull associates itself with numerous sports events along with young professionals and students who need a high energy level. It s corporate image for quality and uniqueness also plays a major part in its success. Moreover. per 250 mL (8. Such a strong brand name makes it natural leader among all energy drink providers. as well as street culture and music events. SOURCE OF COMPETITIVE ADVANTAGE Red Bull has a strong marketing strategy for communicating product value to customers.oz. These campaigns have created a strong brand name globally. This has been fostered through an alignment with extreme sports and adrenalin-fuelled activities. However cost structure for these extensive marketing programs is expensive and constitute major chunk of their total cost. 600 mg of glucuronolactone. it has managed to attain at least 70% of market share. the company wants then to automatically think of Red Bull. Red Bull offers a product that has unique attributes that are values by the customer. For example Red Bull claims that it has the most unique taste and customers may even agree to it. Customers perceive Red Bull to be different from all the other energy drinks and this allows the company to charge a premium price. vitamin B 20 mg of niacin. In Pakistan all these sports are not so common. but still Red Bull manages to sponsor few sports event held in different universities.

STRATEGY AND PROPOSED CHANGES Analysis on target market and sources of competitive advantage shows that currently it is doing broad differentiation. As per the proposed generic strategy discussed and its reasoning it is recommended that Red Bull should change its current strategy of broad differentiation into focused differentiation. advertising campaigns and taste. Extraordinary marketing skills can be adopted more impressively on a specific customer segment. athletes. Sports drink which has sportsmen as a target market and energy drink with another target market are two broad categories. They are trying to differentiate themselves mainly by brand name. It has broad segment of young professionals. Important sports event which has a large target market is saturated by other carbonated drink providers. and students. 34 . which should not be merged together. Changing customer needs required a more focused approach to keep oneself updated about such changes.

Bring a new product that has no caffeine as we have no competitor (s1. Presence of substitutes in the market(especially sports drinks) 35 . Introduce taurine free Red Bull (s4. Health concerns. TOWS MATRIX Strengths 1. Behavioral segmentation of the target market. 5. Design Promotional campaigns taking advantage of changing trends.o2) 5. Introduce new caffeine free energy drink (w2. Threats 1.o1) Targeting a new segment called experiencers.t1) 2.t1) 2. 3. Bring an energy drinks that has no Taurine (w2.t1) Weaknesses 1. Higher prices 2. (s5. 4. Establish DPs in unattended Asian countries (s2. Expand in Asian markets as there is no real competitor (S1. Presence of Taurine in Red bull 3. Extreme sport promotion for the first time in Pakistan ² Red bull Karachi base jump. 4. Opportunities 1.o3) 2.o5) W-T Strategies 1. Introduce new taurine free energy drink (w1. No strong competitor 2.g.t2) 4. No lab testing by Red Bull management at the time of launching the product No formal organization structure Centralized production facility for the global market W-O Strategies 1. Changing perception of consumer about energy drinks Consumer income is low/ low purchasing power Publicity on the more content of cocaine in Red Bull Cola S-T Strategies 1.g.o2) Diversify into sports drink market. Diversify in other segments e. Conduct an official lab testing of red bull in order to remove the misconceptions of people.high caffeine 2. Asia S-O Strategies 1. 3. No visible change in sales even after price increase 4.W3) 5. (s4. 5.(s5.O1) 2. Red bull·s collaboration with distribution partners (DPs) in Pakistan 3. 4. (T2.MATCHING STAGE: It includes 5 matrices which are evaluated as follows: 1. 3. Establishing new production facilities in different regions in world. o1) 2. 3. decreasing transportation cost (w1. sports drink Extension of product line to increase market share Increased advertisement in Asian market Consciousness of status symbol and attitude towards foreigners. Expansion in new markets e. 5.

Therefore market penetration. forward integration. concentric diversification. backward integration. market development. product development. horizontal Diversification or a combination strategy can all be feasible. and (3) avoid external threats.2. Some of the aggressive strategies best suited for red bull should be : y y y y Introduction of new taurine free Red Bull Diversification into Sports Drink Market Extensive promotional campaigns directed at the targeted market to take advantage of the changing trends in Pakistan. conglomerate diversificat ion. SPACE MATRIX Conservative 21 +6 +5 +4 +3 +2 +1 +0 -5 -4 -3 -2 -1 -1 -2 -3 -4 -5 -6 +0 +1 +2 +3 +4 +5 FS Aggressive CA IS Defensive ES Competitive A firm in the Aggressive quadrant should use its internal strengths to (1) take advantage of External opportunities. 36 . Conduct an official lab testing of red bull in order to remove the misconceptions of people in Pakistan. horizontal integration. (2) overcome internal weaknesses.

Product Development.3. Red Bull should concentrate on the current markets through market penetration and development. vertical and horizontal integration can put its 37 . which put it in an excellent position to take advantage of external opportunities as well as take risks aggressively when needed. GRAND STRATEGY MATRIX RAPID MARKET GROWTH Quadrant II Quadrant I RED BULL WEAK COMPETITIVE POSITION STRONG COMPETITIVE POSITION Quadrant III SLOW MARKET GROWTH Quadrant IV Red Bull stands in quadrant I.

38 .0 to 3. In the case of Red Bull it should: y Go for market penetration by increasing promotional campaigns in Pakistan y Introduce taurine free Red Bull y Develop new product for sports segment.0 High 3. V and VII cells employ HOLD and MAINTAIN strategies.99 VII VIII IX HOLD AND MAINTAIN Divisions that fall into the III.resources to efficient use.0 to 4. y Diversify by entering into sports drink market. y Do product development by introducing taurine free Red Bull .0 to 2.99 III The EFE Total Weighted Score Medium 2. y Consider new geographical and demographic segments.0 to 1.99 IV V VI RED BULL Low 1. Grand Matrix suggests Red Bull should: y Penetrate market by increasing promotional campaigns.0 to 2. y Forward Integration by acquiring more Distribution Channels.99 I Average 2. 4.99 II Weak 1. IE MATRIX The IFE Total Weighted Score Strong 3. Whereas slight diversification can reduce its risks.0 to 1.

Cash Cows have a high relative market share in a low growth industry and Red B ull energy drink and sugar free divisions lie here. ’ “ vw vutr ssrq p iehfa gf e ddcb a Re Re e e y s ee  ‰ ` STA y y Qu stion Mark Re B c Carpe e B anic ater (re axing. harmonizing and vitalizing) ˆ‡ † …„ ƒ ‚  € y x QPEDE PI D HGCF EDCB W VE U F e Re ve e s ‘ YPX TSER . investment characteristics and needs of the organizations various divisions y y y 39 ” The Question Marks have a low relative market share position in a high growth industry Red Bull s division Red bull cola is placed in this quadrant. Quince and Cranberry) Red bull energy shots (sugar free also available) The BCG matrix draws our attention to the cash flow.5. BCG y y Cash Co y y Do Carpe Diem Kombucha (Classic. Red Bull energy drink and sugar free divisions lie here. The Stars represent divisions with a high relative market share in a high industry growth rate. None of Red Bulls divisions falls in this.

The BCG matrix suggests following strategies: y y y Promotion of Red Bull cola should be carried out in Pakistan to spread awareness in Pakistani markets. Product Development by introducing taurine free red bull and other flavours. Red bull energy shots is represented in this quadrant. Market penetration can be done through introducing a taurine free version of Red Bull and unrelated diversification can be done by going into a different segment of sports 40 . MATRIX ANALYSIS AND TOWS SUMMARY Alternative Strategies Forward Integration Backward Integration Horizontal Integration Market Penetration Market Development Product Development Concentric Diversification Conglomerate Diversification Horizontal Diversification Joint Venture Retrenchment Divestiture Liquidation IE SPACE X X X GRAND X X X X X X X BCG COUNT 3 3 3 4 3 4 2 1 1 0 0 0 0 X X X X - X X X X x x x x x x Product development. market penetration and diversification received the highest scores which is complying with our strategies in QSPM. Establishment of more Distribution Partners in unattended Asian cou ntries.y Dogs mean low relative market share in a slow or no growth market.

56 0.00 3.00 ---1.00 3.00 TAS 0.14 0.30 0.00 2.00 3.00 4.00 1.10 0.00 3.28 0.24 0.24 0.12 0.00 3.12 0.08 0.08 1.00 4.04 0.40 0.20 0.12 0.DECISION STAGE QUANTITATIVE STRATEGIC PLANNING MATRIX FOR RED BULL Critical Success Factors Weight Strategic Alternatives Taurine free Red Expansion in Bull sports drink market AS 4.00 ---1.36 ---0.00 TAS 0.56 0.12 0.14 0.10 0.36 ---0.00 41 .12 0.20 0.00 2.00 3.08 0.00 4.00 2.00 3.08 2.12 Strengths No strong competitor Red bull s collaboration with distribution partners (DPs) in Pakistan No visible change in sales even after price increase Behavioral segmentation for the targeted consumer Extreme sport promotion for the first time in Pakistan Red bull Karachi base jump.08 2.48 0. Weaknesses Higher prices Presence of Taurine in Red bull No lab testing by Red Bull management at the time of launching the product No formal organization structure Centralized production facility for the global market SUBTOTAL 0.72 AS 1.14 0.

57 For the decision stage.00 0.60 0.10 0. Strategy of Taurine free Red Bull is in accordance with product development and other strategy is in accordance with diversification 42 .00 0.45 5. Introduction of taurine free red bull 2.30 0.10 0.05 0.20 0.00 0.15 4.10 0.00 3.00 4.00 4.00 2.00 2.00 1.00 4.10 0.00 4.00 0. as they are recurring in most matrices.60 0.00 3.10 2.30 2.15 0.high caffeine Misconception amongst people about product ingredients and side-effects Consumer income is low/ low purchasing power Ban on Red Bull in Germany due to cocaine issue Presence of many substitutes in the market(especially sports drinks) SUBTOTAL SUM TOTAL ATTRACTIVENESS SCORE Weight 0.20 3.15 0. we chose two strategies: 1. Diversification into sports drink market As they best suit market development.00 0.00 4.40 5.00 ---0.00 Taurine free Red Bull AS TAS 2. we can penetrate the market and raise the market share and diversification according to the market analysis and future demands.15 0.60 ---4.05 0.60 0.20 2.Critical Success Factors Opportunities Increase in Asian population Increased demand for healthy drinks Increase in demand of energy drinks Regional advertisement Changing trends and increasing peer pressure Threats Health concerns.05 0.30 3.10 1.40 0.15 0.40 3.15 0. market penetration and product development. As the scores for both the strategies are very close so we will implement both of them.00 0.12 Expansion in sports drink market AS TAS 2. With taurine free red bull.40 0.10 0.00 0.00 2.

STRATEGIC IMPLEMENTATION RED BULL GIVES YOU WIIINGS 43 .

Taurine is naturally occurring in our body. heart and blood.and definitely NOT from bull semen or urine. STRATEGIC IMPLEMENTATION: STRUCTURE & CULTURE All the strategies to be implemented are initiated from the Austrian Management Head and then it trickles down to management of different countries. Thus. In Pakistan for example it reaches the Business Head who is the head of both Pakistan and Afghanistan divis ions. The company is adaptable to any strategy as long as it is relevant and maintains Red Bull s image as the high-end energy drink. removing ammonia from the body. The composition of Red Bull will not differ much 44 . It is almost always synthesised from other chemicals/compounds without an y animal-based input. brain. This strategy is communicated to the Brand Manager and National Sales Manager of the division who convey the strategy further down the hierarch. The entire hiring takes place according to business needs. and the release o f hormones and it is one of 20 natural amino acids. a chemical which is used in the energy beverages that plays an important role in cell division. The culture of Red Bull is very change oriented and is flexible with any amendments applied to way busine ss is done. Red Bull has the necessary funds to execute relevant strategies. Arginine can be bought by the same suppliers of different ingredients of Red Bull and wouldn t have to compromise on quality. The training and development for the South Asia division takes place in Dubai. The Taurine used in products you may purchase to use/eat/drink etc. immune function.5. While it's true that Taurine is found in bull urine and semen. Red Bull had sales of 48 crores PKR. year on year. There is much hue and cry about Taurine being the extracted from bull urine or bull semen. Taurine. the healing of wounds. In Pakistan alone. Red Bull 2008 sales figures showed the brand s continued growth in the UK energy drink market. Red Bull has soaring sales all around the world and is the largest energy drink company of the world. The whole process is conducted abroad. STRATEGY # 1: TAURINE FREE RED BULL There has been a lot of misconception about this one ingredient of Red Bull.5 million cans. an increase of 14%. with end of year sales of 329. it is not the source of Taurine in the pharmaceutical or food industry. Taurine is a conditionally essential amino acid. RESOURCES To implement any strategy the most important resource is the human resources. does not come from animals . mainly in muscle. or over 40 million cans. We suggest that Taurine be replaced by Arginine.

If we exclude caffeine. which are used up after strenuous exercise. This market shift has led some sports drinks manufacturers to specifically target and develop products aimed at non-athletes. They often include electrolytes. The functional energy drink market consists of energy drinks. Approximately 38. The production will take place in the plant is Austria as it is centralized. Red Bull does cater to sportspeople but their main focus is on sports that require mental alertness.3% of market sales are distributed through on -trade retailers. Sports drinks basically contain different forms of sugar and water. This new sports drink will be launched under the brand name of Red Bull. The global sports drinks market increased by 10% in 2008. brand and flavour extensions. smoothies (milk and juice blends) and sports drinks. Sports drinks are linked to the science of nutrition and sports medicine and often provide rehydration. the introduction of new brands. sugar and other nutrients. Energy drinks provide sugar and caffeine only with no other benefits. such as low-sodium or low-calorie sports drinks. Sports drinks replenish electrolytes and are generally isotonic. Since Red Bull increases mental alertness. Red Bull is successful in that field. New growth will likely be driven by reaching new demographic groups. niacin and Taurine add different forms of sugar and minerals then the composition would be of a sports drink. Red Bull already has sucrose and water content in it. Sports drinks are different from energy drinks. training or compet ition. which is 1000 mg in a 250 ml drink. 45 .either as Arginine as the same effect as Taurine and can be used in the same quantity. carbohydrates. If it is well marketed as a Taurine free Red Bull we will be able to cater to those individuals in our targeted segments who believe that Taurine is bad for heal th and is taken from Bull excretion. and proteins in the form of amino acids and peptides. and an increased focus on exercise in health and well being. boost sports performance and aid muscle recovery. neutraceutical drinks. The sports drinks market covers a wide range of products from advanced specialist sports nutrition for body builders and athletes to products for common consumer. The sports drinks market is approximately US $300 billion in terms of sales worldwide in 2008. Fructose and glucose can be purchased from the same suppliers. STRATEGY # 2: DIVERSIFYING INTO SPORTS DRINKS MARKET A sports drink is a beverage to help rehydrate and replenish electrolytes. We want Red Bull to cater to sports like tennis and swimming whe re individuals are looking for a drink that offers hydration and electrolyte replenishment. Currently the sports drink market is targeted not only at athletes but also towards health-conscious general consumers and the largest growing segment of the sports drink market is for non-athletes.

No accountability: Accountability and high visibility help drive change. We will have synergies in terms of procuring sucrose. objective. it ll be business as usual for all but a frustrated few. Both the strategy entails addition of subtraction of certain elements of composition of the drink. 46 . and the plan only measures what s easy. Lack of communication: If the plan doesn t get communicated well across the organization employees won t understand how they will contribute to it. PITFALLS IN STRATEGIC IMPLEMENTATION Lack of ownership: The most common reason a plan fails is lack of ownership. To launch into a new industry Red Bull has to convey the details of the strategy well.SYNERGIES IN VALUE CHAIN For implementing either of the strategies we see three major synergies in the existing value chain of Red Bull. Red Bull needs to have every employee what part does he or she play in the strategy implementation and take responsibility for it. data source. not what s important. Since most the raw materials are the same. and initiative must have an owner. No progress report: There s no method to track progress. There are as follows: y y y R&D RAW MATERIALS PROCUREMENT PRODUCTION Red Bull has a very strong Research and Development department. This is why the production can take place in the centralized production plant at Austria. glucose and the vitamins. If the strategy execution isn t properly monitored there are chances that the pitfalls that may come will go unnoticed. This means that each measure. If people don t have a stake and responsibility in the plan. Diversifying into sports drink or launching a Taurine free Red Bull will require people to take liability for the execution of the strategy. Whichever strategy we chose to implement research and development will play a major role in it. This department has helped Red Bull launch its other brands and we would need its support in the launc h of Taurine Free Red Bull and Sports Drink.

and tools necessary to impact relevant measures Red Bull may have issues with the suppliers regarding the provision of the chemicals that Red Bull doesn t currently use. It s easier to avoid pitfalls when they re clearly identified. lack of empowerment among employees will be a great hindrance. Also the production facilities may not be able to foster the production of two sets or Red Bull and a whole new extension into Sports drinks. Otherwise. they may resist involvement and ownership. 47 . responsibility.Lack of empowerment: Although accountability may provide strong motivation for improving performance. If Red Bull wants the strategy implementation to be a success it needs to give every employee employees the authority.

SCORE CARD 48 .

5 1 2 3 4 The company has strong external antennae and quickly anticipates external shocks. emerging opportunities.DIAGNOSTIC SURVEY OF PRIMARY AND SECONDARY MANAGEMENT PRACTICES: Answer the following questions using a scale from 1 -5. Strategy Inferior Average Superior The company has a clearly articulated and widely understood strategy. 5 1 2 3 4 The company is focused on extending/improving its core business or businesses and is committed to growing them aggressively. where 1=inferior to industry peers. and market downturns. 5 1 2 3 4 49 . 3=about the same as industry peers. and 5=superior to industry peers. 5 1 2 3 4 Subtotal of Strategy score: 16 Execution Inferior Average Superior The company s products and services consistently meet customer expectations. 5 1 2 3 4 The company has a very good understanding of its competitors and can anticipate competitors moves.

5 1 2 3 4 The company has clear values that people in the company abide by. 5 1 2 3 4 Subtotal of Execution score: 15 Culture Inferior Average Superior The company sets demanding performance standards for all of its employees. 5 1 2 3 4 The company s programs and initiatives consistently achieve desired outcomes.The company consistently improves employee productivity. engaging. and fun. 5 1 2 3 4 Subtotal of Culture score: 16 50 . 5 1 2 3 4 The company s culture is exciting. 5 1 2 3 4 The company consistently raises the performance bar. 5 1 2 3 4 The company s IT systems enhance its ability to execute its value proposition.

5 1 2 3 4 The company s business processes are simple. 5 1 2 3 4 Subtotal of Organizational Structure score: 11 Talent Inferior Average Superior The company has great talent and bench strength at each position. 5 1 2 3 4 The company minimizes bureaucracy. 5 1 2 3 4 The company effectively cooperates across the organization.Organizational Structure Inferior Average Superior The company makes decisions quickly. 5 1 2 3 4 51 .

The company successfully develops talent. 5 1 2 3 4 Subtotal of Talent score: 17 Quality of CEO/Board Leadership Inferior Average Superior The CEO is uncanny at spotting opportunities and problems before others. 5 1 2 3 4 People at all levels of the organization feel connected to the CEO. 5 1 2 3 4 The CEO matches words with actions ( walks the talk ). 1 2 3 4 5 52 . 5 1 2 3 4 The company s board members know the business and have a significant stake in the success of the company. 5 1 2 3 4 The company designs jobs that intrigue and challenge talented employees. 5 1 2 3 4 The company s senior management is personally involved in recruiting and developing talent.

5 1 2 3 4 The company does not hesitate to cannibalize its existing business or businesses. 5 1 2 3 4 The company s products. 5 1 2 3 4 People who have new ideas are respected and enjoy high status in the company. or innovations are better than those of its competitors. 5 1 2 3 4 Subtotal of Innovation score: 12 M&A Growth Inferior Average Superior The company consistently identifies good M&A possibilities. devices. 5 1 2 3 4 53 .Subtotal of CEO/Board score: 11 Innovation Capability Inferior Average Superior The company is continually transforming or reshaping its industry.

Company is improving employee productivity by arranging the trainings for them. 5 1 2 3 4 The company s mergers and acquisitions achieve most of their projected cost and revenue benefits. They have their athletes who perform in their events just to show the level of energy they got and promoting the brand. engaging and fun. 5 1 2 3 4 Subtotal of M&A score: 5 Total score: 103 This score shows that the company is doing well as compared to its peers in the industry. 5 1 2 3 4 The company is consistently better than its competitors at integrating mergers and acquisitions. Company s culture is very exciting. The culture of the company is so flexible that where ever it conducts its activities and events they promote the culture of that country. Red bull should consider its innovation capabilities and do some innovations in its brand by launching some other variants which could be widely acceptable or by diversifying in other sector like sports drink industry. It is focusing on the improvement of its core business and is committed to growing them aggressively. Red bull spends so much on the training and development of its employees. 54 .The company rarely overpays for mergers & acquisitions. The company has great talent and its continuously developing their talent.

asp Harvard Business School Articles 55 .uk/compfact/redbull/redbullindex.researchwikis.bized.com/Sports_Drinks_Marketing_Research http://www.co.drawert.redbull.htm http://tutor2u.htm http://www.BIBLIOGRAPHY: http://www.com.php http://www.my/product.com/red_bull_3.net/business/strategy/core_competencies.

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