Today, the business world is characterized by a dynamic setting whereby consumers have diverse preferences, sustainability matters, and corporate responsibilities, forcing companies to adapt. This paper explores Innocent Drinks by integrating internal and external analysis to reveal how the company is doing A and what lies ahead for its future. The research critically analyzes the results to evaluate the implication of the strategies, Innocent Drinks’ profit, and the company’s moral responsibility. As the report ventures into the unique aspects associated with Innocent Drinks, it will conclude with viable recommendations for the company to thrive in the dynamic and competitive current business world.
1.1 External Analysis
Innocent Drinks Company operates in an environment characterized by government regulations, trade laws, and policies. In the UK, a levy on soft drinks has been proposed for businesses operating in the beverage industry (Law et al., 2020). Also, businesses in the UK are required to meet the standards the EU has provided regarding food labeling and safety. However, The UK’s Foods & Drinks International Action Plan 2016 –2020 provides an overview of what the government and industry commitments will deliver over the next five years to speed up UK export expansion (Department for International Trade, 2020). This plan is meant to raise the number of food and beverage firms that are exporting, enhance the same firms’ export performance, and expand the respective firms in the international market. This is an opportunity for Innocent company to expand its customer base and market share not only in the local markets but also in untapped international markets.
The UK’s GDP growth rate has fluctuated over the past few periods. For example, in 2021, the United Kingdom’s GDP increased by as much as 7.5%. A higher GDP growth rate usually implies increased consumer spending and activities (Office for National Statistics, 2022). This can positively affect the demand for Innocent drinks’ manufactured goods. The cost of production has increased in the UK regarding food and drinks, leading to incremental prices for consumers. Innocent Drinks is one of those businesses greatly affected by high inflation as it may drive up its production cost, thus decreasing its ability to attain profits.
Additionally, in March 2022, 28 percent of the food and beverage companies operating on the UK side reported a shortage of staff (Office for National Statistics, 2022). According to (Statista Research Department (2023), in the UK, there is an increased unemployment rate of 4.3%. Although this can bring down consumer expenditure, it may as well provide a company such as Innocent Drinks with cheap labor.
Based on the Office for National Statistics (2022), the UK population is likely to grow and increase by o.4%. Sustainability and environmental consciousness are highly valued in the UK market. Innocent Drinks company has social priorities, which include using 100% recycled plastic in its bottles and reducing waste to encourage recycling (Macarthur, 2022) (see Figure 1). The UK market has also changed, increasing demand for healthy foods among consumers. This is an opportunity for Innocent Drinks to thrive in the market due to its ethos of supplying healthy, natural products that coincide with the evolving consumer preferences within the UK.
Figure 1: Innocent Drinks Elimination of Plastic Packaging
Source: (Macarthur, 2022)
The beverage industry in the UK is characterized by new technologies for various activities such as production, especially those directed towards sustainability and corporate social responsibility. Approximately €800 million has been invested in research and development to discover new technologies (Food & Drinks Federation, 2022). Also, social media has become a trend, and most businesses in the UK are embracing it as a channel to market their products and gain access to consumers. Although Innocent Drinks company has incorporated some technologies to ensure the use of recycled materials, it is likely to face competition due to the rapid growth of technologies.
Environmental and Legal factors
The UK has a legal framework with which all businesses must comply. It declared accession with the Paris Agreement in April 2016 (Clark & Hurd, 2016). Regarding international relations, the Paris Agreement intends to limit global warming by emphasizing keeping temperatures well under two degrees Celsius above the levels prior to industrialization. The consequence is that Innocent Drinks company will be forced to consider its contribution towards climate change in fields like manufacturing. However, Innocent can offset some possible costs by optimizing their process improvements and resource effectiveness. This may encompass research, cooperation, knowledge development, and education along the supply chain.
|Government regulations, trade policies, and EU standards will likely impact how businesses operate, sourcing strategies, and production.
|Recovery of the economy and overcoming the economic downturns will affect consumer spending and demand for premium beverages.
|A high population and increased health and well-being consciousness present an opportunity for product expansion.
|Adopting new advanced technologies will increase the competitive edge through increased innovation.
|Climate change and sustainability are key concerns, and they are forcing businesses to seek improvements.
|The legal framework requires businesses to make changes and adjustments to their operations and activities toward sustainability.
1.2 Internal Analysis
Use of renewable resources: Innocent Drinks stands a chance of using renewable resources and marketing itself as an environmentally friendly firm (Innocent Drinks, 2023). Innocent Drinks could also use renewable sources as part of its sustainability and social responsibility commitment, enabling it to have a better image and remain competitive.
Innovative culture: Innovative culture within Innocent Drinks can produce more diverse new recipes (Innocent Drinks Report, 2022). The innovation allows the firm to maintain its competitive edge and align with consumers’ tastes and demands. Continued advancements and development of their products could enable Innocent Drinks to remain on top against other competitors and gain more customers.
Embrace health and wellness trends: In the modern business world, most people prefer healthy and organic products (Uttama, 2021). Therefore, Innocent Drinks could tap into this opportunity to grab a larger market share. This trend suits the company’s goal of providing quality natural products, contributing to building a good brand image, and enhancing its competitiveness.
Expansion into new markets and target demographics: Innocent Drink can venture into new ventures, such as providing healthy breakfasts and targeting new users. The company is also widely established in Europe and Asia (Innocent Drinks Report, 2022). Incorporating new market segments will facilitate further penetration beyond existing customers, leading to an expansion of Innocent Drinks’ customer base and, ultimately, an increase in market share.
Stiff competition: This is due to the company’s reputation for offering 100% pure fruit juices, which may limit the company’s growth potential (Innocent Drinks Report, 2022). It has a limited potential for growth because of its market focus on those who regard themselves as health-conscious. Innocent Drinks must broaden its products and extend its market reach to include different types of consumers.
Potential regulatory challenges due to changing consumer preferences and health concerns: Changes in consumer preferences and health concerns also pose regulatory issues for Innocent Drinks recipes (Innocent Drinks Report, 2022). The company needs to track changes in regulatory practices and modify its products to meet changing requirements and satisfy customers.
Economic disruption includes factors such as inflation and GDP growth rate, which can impact consumer spending and the company’s profitability (Uttama, 2021). Additionally, inflation and the growth rate of GDP may affect consumer consumption levels and, ultimately, Innocent Drinks’ profitability. To ensure that it remains profitable and competitive and continues to provide value for money, the company must continuously review changes in economic indicators and adapt its price policy accordingly.
|§ Geographic expansion
§ Product portfolio
§ Positive brand image
§ Emphasis on sustainability and social responsibility
|§ Only restricted to healthy juices
§ Limited penetration to other markets
§ Premium pricing due to premium suppliers and production costs
|§ Prioritize renewable resources
§ Adopt an innovative culture to stand out in the market
§ Embrace health and wellness trend
§ Expansion into new markets and target demographics
|§ Competition from existing brands
§ Potential regulatory challenges due to changing consumer preferences and health concerns
§ Economic disruptions
Based on the findings, the company holds an outstanding brand value, especially due to its commitment to sustainability and social responsibility, which is a strong asset to stand within the beverage industry. For this to translate into a strategic competitive advantage, the organization’s leadership must take a diversified approach. Thus, a strong emphasis must be on the willingness to uphold a sustainable and responsible society. Bocken and Geradts (2020) insist that the integration of these values should not be limited to marketing communications only; they must trickle down into operational procedures as well. Innocent Drinks can achieve this by adopting the prevailing customer tastes while at the same time strengthening the ethical basis for the brand’s existence as the market continues emphasizing environmental and social issues, such as their ethics becoming so important to the brand. Diversification should be the top priority in strategic management and will likely eliminate the strategic dilemma that might be faced due to being restricted to healthy juices. Introducing new product categories that follow the current health and well-being trends may be a way of expanding the markets and lessening vulnerability to boom. However, understanding consumer preferences, market dynamics, and cultural nuance is essential while developing this expansion strategy. The move towards a diversified stream of revenues is more secure due to a phased approach in which international expansion begins by strategically selecting certain markets.
In conclusion, the beverage industry is ever-changing, and Innocent Drinks is crucial in making critical decisions about shaping its future. Its strong brand image and commitment to sustainability have the potential to help the company further solidify its market position and build stronger consumer relationships. Health and wellness are global trends nowadays. Thus, diversifying the product portfolio and growing into new markets while considering the global trends in health and wellness are promising ways for the company to thrive. Suppose Innocent Drinks considers navigating the strategic paths. In that case, it will maintain a competitive advantage and fulfill the company’s obligation towards ethical and social responsibility, thus being prepared for a viable future in this complex marketplace.
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