Competition in Energy Drinks,soprts Drinks and Vitamin-Enhanced Beverages

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Assignment#1

Case: Competition in Energy Drinks,Soprts Drinks and Vitamin-Enhanced Beverages

7/3/2015

Student ID : EMBA S580014

Wimonphan Tancharoen

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(QUESTION 1.1)

What are the strategically relevant compoments of the global and U.S. beverage industry macro-enviroment?

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In general, The strategically relevant components of the macro-environment consist of six.principal.compoment.:..Political..Factors.,.Economic..Conditions,.Sociocultural..Forces, Technological Factors, Environmental and Forces Legal/Regulatory Factors. An Analysis of the components of the global and U.S. beverage industry range from the most to lower impacted. First is “Sociocultural Forces”, because the trend change to healthier lifestyles so that the consumers were reducing their consumption of cargonated soft drink and rapid growth on the alternative beverage segment in mid 2000s

The second is “Economic Conditions”. Which is macroeconomic factors affect in different way and to different degree on the sale of alternative beverage, such as the lingering economic downturn in the United State between 2008 and 2009  had been hit not only the sale volume of sport drinks that decrease to 12.3% but also the vitamin-enhanced water had declined by 12.5%. Apart from the sales of energy drink fare better over the same period.

The third is “Technological Factors”. It can classify to two sides, first is the globalization create demand in developing countries. It supports entrepreneurs of alternative beverage easy intent on expanding the market by introducing energy drink, sport drink and in more and more emerging international markets, while developing countries had been maturity market. Another side is product innovation such as new entry relaxation drinks that make consumer feel different traditional beverages.

The three remaining of strategically relevant components of the macro-environment as Political Factors, Environmental and Forces Legal/Regulatory Factors, it seems does not influence in beverage market. Especially the energy drinks was not regulated by the U.S. Food and Drug Administration. But the Regulatory Factors will force to contend with criticism about health risks for consumer and could produce heart arrhythmias and insomnia while excessive consumption from large doses of caffeine and the maker of non-nutritive ingredient.

(QUESTION 1.2)

How do the economic characteristics of the alternative beverage segment of the industry differ from that of other beverage categories? Explain

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The obvious of the alternative beverage economic characteristics were high prices and high returns, its mean they offered profit margins much higher than the other beverages. And they were also positioned within their respective segment on the basis differentiation from traditional drinks such as carbonated soft drinks or fruit juices. Moreover they were successful to possess well-developed brand-building skills and attempted to develop brand loyalty base on taste, the energy-boosting properties of their ingredients and image.