Macro-Environment Assessment of Innocent Drinks
Contents: 1. Introduction 1.1 Innocent Drinks – Company Overview 2. Macro Audit of Innocent Drinks 3. The Economic Impact – What can Innocent Drinks do to minimise this impact? 4. What could happen to Innocent Drinks if it did nothing about this economic issue? 5. Conclusion 6. Reference 7. Bibliography
The purpose of this report is to analyse the Macro-Environment of an organisation in the UK by identifying the top four factors of each PESTEL element and explaining the implication these will have on the chosen organisation. The Macro-Environment is: ‘The external factors which affect a company's planning and performance, and are beyond its control’ (www.cim.co.uk) The 6 Macro-Environmental factors are: • • • • • • Political Economic Social Technological Environmental Legal
The organisation being analysed for this report is Innocent Drinks. 1.1 Company Overview Innocent Drinks was started by three friends in 1999. They developed premium smoothies containing 100% fruit and no added water or sugar. It is one of the fastest growing businesses in the UK. They give 10% of all profits to charity and continually participate in fund-raising activities. Their brand is simple, fun and friendly. Their merge with Coca Cola in 2009 has given them opportunities to expand into Europe. ‘We started innocent in 1999 after selling our smoothies at a music festival. We put up a big sign asking people if they thought we should give up our jobs to make smoothies, and put a bin saying 'Yes' and a bin saying 'No" in front of the stall. Then we got people to vote with their empties. At the end of the weekend, the 'Yes' bin was full, so we resigned from our jobs the next day and got cracking. Since then we've started making veg pots, juices and kids' drinks, in our quest to make natural, delicious, healthy foods that help people live well and die old.’ (www.innocentdrinks.co.uk )
2. Macro Audit of Innocent Drinks
The following table shows a macro-environment audit of the Innocent Drinks organisation. The first column states each of the PESTEL factors, the second column defines the main factors of each of the PESTEL factor that will affect Innocent Drinks and the third column list the implications these factors could have on he Innocent Drinks organisation. PESTEL POLITICAL
• • • • Legislation Regulations Pressure groups Rulings
Possible Treat – Trading Standards ensure consumer safety by enforcing clear labelling of product and clarifying ingredients. Regulations on plastic bottles are controlled by the FDA and must adhere to PET regulations. Any changes to these legislations or regulations will incur extra production costs. Possible Threat – Pressure groups such as the Advertising Standards Agency are there to act on complaints and proactively check the media to take action against misleading, harmful or offensive advertisements. Possible Threat – Department of Health can make changes to product requirements such as ruling that Innocent Smoothies contain 2 of your 5 a day. This again could incur extra production costs. Possible Threat – Poor economic growth = less spending power. Costs of energy and ingredients pose a threat in today’s economic climate. Possible Threat – in 2010, a judge ruled that the fruit ingredients used in Innocent Smoothies was to be subject to VAT, despite raw ingredients or junk food being let off. Not only does his increase costs for the company but they decided to go to a tribunal and this would cost considerably more money and time. Possible Threat – Inflation affects price of product.
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UK Economy Tax Inflation Industry factors
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Possible Threat – Innocent Drinks have to find manufacturers that are willing to work with the difficult and challenging logistics of making the...