Factors That Affect the External Environment of Red Bull Corporation

The six main factors that affect the external environment of any organization are; Political factor, Economic factor, Sociological factor, Technological factor and the legal factor which are also known as PESTEL analysis. Nevertheless, a single organization is normally unable to directly affect the external factors; a collection of companies can wield some pressure on these factors, mainly on political factors through the smart use of political lobbying. Proper understanding of these major factors allows the organization to highlight business opportunity strengths, and also possible threats to the business when combined with a proper understanding of the organization’s weaknesses. Thus, for effective strategic planning, analysis of the external factors is the most important.

Political

There are some political factors that affect Red Bull directly or indirectly. Specifically, a range of political factors affecting Red Bull directly includes government stability or instability, levels of corruption and bureaucracy in markets, the role and freedom of the press, home market lobbying initiatives and home market protectionism measures. Red Bull attempts to influence certain political factors and relevant rules and regulations via its lobbying efforts. For example, the US Food and Drug Administration (FDA) set off to investigate reports of illness, injury or death of people who took products marketed as energy drinks. Red Bull North America has hired Podesta and Partners, the lobbying firm run by power broker Heather Podesta, to educate policymakers regarding energy beverages.

Another example would be if Government imposes health and safety restrictions on the how much energy drinks should be consumed, it would affect the number of energy drinks that are bought and also introduce new import and export charges on the energy drinks market, it may decrease the number of energy drinks that are imported and exported. Another major area of the political factor is the increased public concern for the environment has also been codified in regulatory arrangements in many economies. As a direct response to this development, in an effort to reduce waste, and accommodate the green lobby, the company was also forced to introduce slimmer cans that utilize less aluminum, and to promote a recycling program via their website.

Economics

In spite of the recent recession, generally, the outlook for the world economy is positive. Technological developments and increased efficiency and productivity in emerging markets in Asia are likely to drive significant increases in global output over the coming years. This is great news for Red Bull since rising incomes generally translate into rising demand. On the other hand, as the company expands into the Asian Pacific market, it will need to consider the fact that income disparities remain between households in the Low-Income Countries (LICs), Middle-Income Countries (MICs), and High-Income Countries (HICs). Currently, prices for the energy drink are constant across markets, which analyst has said that this is a weakness. In terms of future development, the company might need to adopt a more diverse pricing strategy that takes account of rising demand for the product among individuals with lower income levels.

Social

Generally, the public is very open to accepting Red Bull energy drinks. However, there is a growing campaign among educators and health groups against the possible side effects on adolescent and adult health. The drink itself has been questioned recently in America, with Red Bull being blamed for a case of an unexpected death by heartache after a basketball player consumed one of the cans, which has led to Red Bull being sued for $85million. It is well known that the energy drink is high in caffeine, with many critics suggesting it shouldn’t be consumed, something that France, Norway, and Denmark have all taken into consideration and acted by banning the product. The social implications of this are obvious, giving the company a bad name for continuing to produce their drink with the given recipe. To ensure they are reaching out to a wider market, Red Bull introduced the sugar-free version of their energy drink. This would appeal to people that are more health conscious, which is something that Red Bull recognized and acted on to prevent the loss of customers.

The taste in this product, as well as the original, is another important social factor that Red Bull need to control. Much of the criticism concerns the target market of the company and its efforts to court them. In Europe and the United States, Red Bull energy is particularly popular among young athletes and bar and club patrons, and it is argued that this group has been courted through Red Bull’s marketing efforts which are sports and culturally inclined. For instance, Red Bull sponsors junior basketball teams and runs a music academy for aspiring musicians.

Technology

With Red Bulls marketing techniques being recognized as highly controversial and unique, they are required to pay out large amounts of money to their stuntmen/women due to the dangers they face. This being the case, the internet is something that Red Bull heavily rely on in order to promote their product. Websites such as YouTube, as well as social networking sites such as Facebook and Twitter, will play an important role in helping their adverts become recognized. Not only is this a free way of advertising, but it is also perfect for their target audience of active sports persons between 15-30, something that matches Facebook’s target market of active mobile phone users.

Environmental

Naturally, Red Bull’s production and global distribution needs energy and thus causes an environmental impact. In 2009, there was an environmental agency published a list about the top ten companies awarded the biggest fines for waste activity and Red Bull was one of them. Red Bull was awarded fine of £260,000 due to the recycling problem. Red Bull realized their responsibility and improved their recycling system in recent years. Red Bull has made a conscious decision to use aluminum cans. Today Red Bull cans weigh significantly less than some years ago, which saves precious raw material. Once they are collected they are fully recyclable over and over again without any loss in quality.

Legal

To ensure their product can be sold in stores, the Red Bull energy drink will need to meet legal requirements applicable to the countries the product is available in, in order for trading to commence. The drink needs to be safe for humans to consume, meaning the customer doesn’t receive any adverse side effects, i.e. vomiting. In conjunction with this, the ingredients, along with the quantities they use, need to be clearly stated on each can or pack. This is a legal requirement to avoid consumers having a reaction, potentially leading to them filing a lawsuit generating bad press.

The Task Environment

The task environment has 11 groups that help with the daily task handling which are:

Customer

Customers and their satisfaction is the most important priority for our company. Red bull focused on their customers first and then the products. The customers are interested in high quality and appropriate pricing of Red Bulls’ products. Red bull targets people from 16 to 30 years old as they are usually the most active.

Competitors

Although Red Bull still maintains a dominant position in many significant markets, it is no longer the only player. There are many more energy drinks and the major ones competing with Red Bull is Monster energy drink and Rockstar. With Monster energy the taste is almost similar to Red Bull but they only target males. It is also much cheaper than Red Bull and is twice the size. Rockstar is double the size and price and is cheaper than red bull.

Suppliers

For suppliers, Red bull is not much affected because the product ingredients are very simple and they can find the raw materials anywhere and is easily available for them.

Distributors

Red bull as their own distribution company called North America and they have been distributing red bull energy drinks since 1997. They are responsible for all sales and marketing activities in the US and Canada.

Strategic Allies

Strategic allies provide additional support to the organization. Red Bull and GoPro have signed a partnership. Both Red Bull and GoPro have used extreme action sports to take their brands to the next level. Red bull will now receive equity in GoPro and GoPro will become Red Bull's exclusive provider of point view imaging technology for capturing immersive videos of Red Bulls 1800 media productions and events across more than 100 countries. This sets them further apart from the competition.

Employee’s Organizations

Red bull employees 12,239 in 171 countries. Each country has its own set of labor laws. Some countries require employee organization while some don’t require them. Employee organization provide benefits to employees and ensures that the rights of employees have been provided without any harassment. Having a close relationship/partnership with an employee organization provides the employees with a positive work environment.

Local Communities

Local Communities are also key stakeholders of the Red Bull. Red Bull has managed to establish a good brand image which created excitement around the product but transmitting positive marketing messages.

Financial Institutions

The amount of capital that was used to start up Red bull was about 1 million. Each partner agreed to invest $500,00 in the company. Red Bull has now also joined the list of growing corporate companies that invests in young entrepreneurs. One of Red Bulls football teams has also partnered with a provident bank in America.

Government Regulators

Food and beverage industry is one of the most strictly regulated industries globally. The energy drinks industry has requirements that they have to meet according to different countries that they sell it. They have to make sure that their products don’t have any side effects when consumed. A good relation with government regulators and understanding about local regulation helps ensure smooth operation for Red Bull.

Special - interest group

There are numerous special interest groups who closely monitor each and every activity of the Energy drink market. They want to make sure that they adhere to the requirements. As more people become health conscious more of these groups have formed. It’s the responsibility of owners and employees to make such a group believe that Red Bull follows all the norms and practices without compromising the quality or health of customers.

Mass Media

Mass media plays a very important role in maintaining brand personality. People can easily spread fake news on the media about the company. Red Bull has its very own media house. It’s a multi-platform media company and they are responsible for all Red Bulls’ media.

Internal Stakeholders

Employees

Red bull has about 12,239 employees. These employees not only provide service to the customer but also gather feedback from the customer which in turn helps to tune the business process.

Owners

The owners of the company are Dietrich Mateschitz and Thai businessman Chaleo Yoovidhva. They are also responsible for investments that are to be made.