Strategic Leadership Capstone

Strategic Leadership Capstone (MGMT 650)
Assignment: A2
Geo-Political Environment Research Paper (Red Bull)
Submitted to: Dr. Sinan Caykoylu
Submitted by: Diksha Batta (1234894)

INTRODUCTION:
Red Bull is an energy drink sold by an Australian company. It was introduced in 1987 at Thailand. It is
the highest selling drink among other energy drinks. The company’s slogan is “Red Bull gives you
wings”. Instead of following the old approaches of marketing, they promote their product through sport
event series such as Red Bull Cliff Diving World Series, Red Bull Air Race, Red Bull Crashed Ice. It is
available in many flavors and follow a sugar free formula. It is very famous among young generation. It is
available in 166 countries all over the world.

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ISSUES IN COMPANY:
Following issues can be seen in the company:
1. Small product base:
It deals in single line of product that is Red Bull Energy Drink. No doubt it has various flavours, but they
do not have different products as their competitors have. They have small product base. They only
provide energy drinks including sugar free drinks. But there are lot of competitors in the market who sell
different types of energy drinks which attract the customers. Other brands are entering into the market
with variety of energy drinks which become the major threat for red bull company.
2. High price and other expenses:
Their prices are higher as compared to other drinks available in the market. They use the modern methods
of promoting their product instead of using the traditional methods of promotion. They advertise the
product by sponsoring the sport events. Their promotional techniques are considered as highly
controversial. They must pay a large amount to the people who perform stunts in the advertisements,
create a brand image in the minds of the customers.
3. Considered to be unhealthy:
The consumption of red bull is linked to two cases whose outcome is not good for consumers. But it can
only be possible by the overconsumption of energy drink. Studies show that over consumption of energy
drink leads to death sometimes. Some studies show that it contains the amount of caffeine more than
required because of this its selling was banned in some countries like France, Norway etc. its prescribed
by the government that how much caffeine is fine to use in one drink but after analysing their drink, it
found out that it contains higher amount which is not good for all age group people.

RECOMMENDATIONS:
Following the recommendations for solving their issues:
• To get a stable position in the market and to compete with other competitors, they have to
overcome this issue. They should introduce new products which attract the customers. Company
face a lack of innovation. In this modern era, its difficult for them to survive with the single
product. They must think about it and start planning to introduce a new product.
• They should lower their prices because lot of energy drinks are available in the market at the
lower price. They can produce the drink in different sizes and sell at different prices. They can
also find another way of promotion where they need to incur less money.
• They should use the amount of caffeine according to the prescribed norms. People of all age
group buy this drink, so they must keep in mind the use of caffeine, otherwise it will affect the
health of consumers. If they use the more caffeine, then they can mention on the can as a
warning.

INTERNAL AND EXTERNAL ANALYSIS:
Micro and macro environment factors play a vital role in the success of company. These factors should be
considered in depth while taking any decisions. Keeping these factors in account will help the company to
make a brand image in the long term. It includes the SWOT analysis of the company.

STRENGTHS:
-strong market position
-solid financial position
-promotional activities
-cutsomer engagement
WEAKNESSES:
-limited line of product
-expensive
-considered to be unhealthy
OPPORTUNITIES:
-change in policy
-introduction of new product
-entering into chinese market
THREATS:
-competitors
-concerns for health

PESTEL analysis is used to scan the macro environment of the company:
Political:
Political factors related to the government. It includes the imposition of regulations on the use of caffeine
like how much caffeine is used in one drink according to the age group of customers who drink the red
bull, if they follow their rules then it will create a great impact on the sale of energy drink cans. The
health authority banned the sale of red bull in France because they found that it contains higher level of
caffeine and taurine, which can cause “neurophysiological problems”. They also agreed upon the contain
of high caffeine but as well they must give warning against consumption of the drink by pregnant women
and children. They should, specially, mention on their cans about the moderate consumption. (Matt
Whittaker, n.d.)
Environmental:
Environmental factors can be seen in every company. Like in the previous years, red bull also had to face
the environmental issue that is pollution. In 2009, red bull was one of the top ten companies who were
charged with the fines for waste activity. They paid 260,000 pounds because of their recycling process.
But now they are fully aware of it and follow the environment rules. After paying that much fine for
wastage, the decided to use the aluminum cans which can be recyclable. Their cans are now weigh less
than the cans they used before and 100% recyclable. They feel their responsibility towards environment
and upgrade their recycle system. (Gordon, n.d.)
Social:
When the product of a company put an adverse impact on the customers then it will affect the market
image of the company. Likely in this company, there is one case in America where one basketball player
died after the consumption of red bull. He died unexpectedly by heart ache after consuming the can of red
bull. After that they sued the company with $85 million, which deteriorate the market image of the
company. After that drink was tested and it was found that it contains the high volume of caffeine. It was
banned in France, Norway and Denmark. This issue leads to decrease in the company image. To keep the
position in the market and in the minds of customers, they introduced the sugar free energy drinks. This
drink attracts those customers who are very conscious for their health but can not drink them because of
high sugar. This help them to recognise their company image. (Matt Whittaker, n.d.)
Technology:

Red bull uses the modern ways of promoting the product instead of using the traditional methods of
promotion. Their techniques are considered as highly controversial and unique, they have to pay a large
amount of money to the people who do stunts in their advertisements by facing a so much danger. They
largely depend on the internet to promote their product. They mostly promote their product on You tube,
twitter and Facebook. (Matt Whittaker, n.d.)
Economic:
Economic factors such as competitors pricing strategy, inflation rate, exchange rate, rate of
unemployment, cost of labour etc., put a great impact on the business. Red bull sales decreased by 1.5%
on the previous 12 months because of the global economic crisis in 2009. The exchange rate between
EURO and other currencies is another factor which put an effect on the revenue of the red bull. In 2015,
weak EURO help to increase the income of the red bull. (Gordon, n.d.)
Legal:
For the safe side, they should meet the legal requirements of the country in which their product is sold.
They must consider the requirements of the consumers before selling the product so that they will not put
an adverse impact on the health of the consumers. In addition to this, they must clearly mention the
ingredients on can they use, so that consumers will not get any reaction. (Matt Whittaker, n.d.)

Conclusion:
Red bull is a very famous energy drink among youth. They depend on this drink. Consumers feel that it is
the activator, red bull helps them to get energy and focus on their studies and other activities. No doubt, it
has many positive sides but also it has some weaknesses which needs to be overcome. The
overconsumption of red bull put an adverse impact on the health of consumers. Consumers feel refresh
and energetic after drinking this. At last, red bull is able to create a successful mage in the minds of the
customers.

References:
• Whittaker, M. (n.d.). Retrieved from
MACRO (PESTEL) AND MICRO ENVIRONMENT
• Sodahl, K. (2013, august 2). Retrieved from https://prezi.com/updcaex0hvbw/strategic-group-
redbull/
• (n.d.) death by red bull. Retrieved from https://www.caffeineinformer.com/death-by-red-bull
• Essays, UK. (November 2013). Red Bull SWOT analysis. Retrieved from
https://www.ukessays.com/essays/business/redbull-swot-analysis-business-essay.php
• Haseeb, (2015, December 9). Retrieved fromhttp://marketingdawn.com/consumer-behavior-of-
red-bull/

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