Report Sample on Analysis of Red Bull

Analysis of Red Bull

Porter Five Force Analysis

            External analysis of an organization is considered to be a major step that allows it to analyze its performance and efficiency and helps in identifying its strengths and weaknesses. Based on that analysis, the organization can review its strategy and concentrate on accomplishing its goal and objectives (Aeby et.al, 2007, 35). External factors that can influence the company’s performance and profitability include social forces, economic forces, competitive forces and market trends.  Porter’s five forces concentrate on providing an external analysis of the firm, based on five forces: threat of entrants, substitute powers, bargaining power of suppliers, bargaining power of buyers and rivalry among competitors (Aeby et.al, 2007, 37). These are the five forces that can influence the energy drink industry.

Threat of New Entrants

Red Bull is considered to be the number one energy drink in the energy drink industry. New entrants in the industry may include soft drink companies that do not produce bubble drinks, supermarket energy drink brands and medium range drink companies (Aeby et.al, 2007, 38). The threat of new entrants depends on brand name and brand loyalty, cost of the product and health benefits. In terms of brand loyalty, Red Bull Energy Drink is a well-known product and had a strong brand name (Bloomberg, 2011). Through innovation, research and strong marketing strategy, Red Bull has been successful in winning the loyalties of consumers and therefore, new entrants may experience strict competition. If new entrants have to compete with Red Bull Energy Drink, they have to ensure that their product is equivalent to that of Red Bull (Beuker, 2010). Furthermore, they must adopt marketing strategy to promote their product in order to give strict competition. However, if Red Bull is banned from other countries as it is banned in Norway and Denmark, then it will lose its customers and therefore, consumers may opt for healthier options. In this case, new entrants may start to promote new healthy, energy drinks. Red Bull is an established name and because of its efficient and better production processes and experience allows it to maintain its quality (Ted, 2010, 1193,1200). However, it needs to ensure that the drinks it produces are healthy and are not detrimental for human health.  If it is banned in other countries, then it will lose its brand name and therefore, it will lose its consumers to other competitors. Therefore, it is essential that Red Bull concentrates on providing quality drinks and new healthy alternates to maintain its position in the market.