PESTLE analysis, identifying the industry in which VITHIT competes and the significant influences in the general environment that impact on the industry.The forces driving competition in the industry assessed using the Porter 5 Forces framework.Assessing VITHIT's strategy of internationalization.General Note VITHIT primarily competes in the soft drink industry which is largely dominated by powerful firms such as Coca Cola and Pepsi. The industry is characterised as an oligopoly. Due to the power and scale of the giants in the industry new companies often struggle to compete. VITHIT found success by competing in a niche area of the soft drinks industry, targeting people looking for a healthy low calorie alternative to typical soft drinks which have recently been shown in a negative light in the media for containing high amounts of sugar and other damaging additives. Gary Lavin recognised there was a market for this kind of product when he seen people drinking energy drinks, which were high in sugar, after training in the gym (Blair-White et al 2017). He could not understand why people were re-consuming all the calories they burned off while training. Vitz was born from this, a low calorie alternative to soft drinks, but it lacked guidance. Vitz knew the health craze sweeping America was going to hit soon and it needed to gain a strong foothold in Ireland and Europe for future expansion. Ian O'Rourke was then brought onboard and helped rebrand the drink to VITHIT. He then used his industry expertise to turn it from a largely unsuccessful small scale product, into the multinational company it is today. In my opinion, VITHIT's success is primarily focused around one key marketing point that "diet" brands of popular drinks have overlooked; VITHIT's image is that the drink is good for you, while diet drinks are marketed as less bad for you. Q1: PESTLE analysis, identifying the industry in which VITHIT competes and the significant influences in the general environment that impact on the industry.Political Factors Political factors explore how the government influence the economy in which VITHIT competes in. Specifically the Irish Government and British Government as VITHIT have attained a strong foothold in these countries, although expansion to other countries has began they've primarily competed in Ireland and England (Blair-White et al 2017). Government regulations have a strong impact on the company. Breaking FDA (Food and Drug Administration) regulations can result in legal action. In the soft drink industry safety is a major concern and has led to strict regulations. This includes regulation of additives and contact substances, as well as honest nutritional information and additional label information (Fda.gov, 2018). In America VITHIT had to reformulate it's product to remove L-carnitine which is not permitted in liquid products (Blair-White et al 2017). In Ireland the upcoming sugar tax, beginning in April 2018, should be very beneficial for VITHIT. It states that drinks with over 8 grams of sugar per 100ml will be taxed €0.30 per litre and drinks with 5 to 8 grams of sugar will be taxed €0.20 per litre (RTE.ie, 2018). This will raise the price of most soft drinks, possibly turning people to the more healthier alternatives. Coca Cola, the dominating firm in the soft drink industry, has 10.6 grams of sugar per 100ml in its standard drink meaning the premium sugar tax will be imposed on it (Coca-cola.ie, 2018). In comparison, none of VITHIT's drinks qualify for either of the sugar taxes. This should higher the price of regular soft drinks meaning VITHIT will be able to compete price wise with much larger scale firms.Economic One of the core economic factors that affects the soft drink market is the wealth of the country the drink is being sold in. Generally, less developed countries aren't as health conscious, therefore sales of VITHIT in these countries would be lower. VITHIT could also be considered a "luxury" item as it is more expensive than the standard soft drink meaning its sales are strongly affected by the wealth of the market, although incoming taxes may change this. Following the 2008 recession period, from 2011 to 2015 the soft drink industry recovered well and grew at a compound annual growth rate of 6% (Prnewswire.com, 2018). The industry is stable, growing and performing well, and expected to further expand in the future.Social Brand image is paramount to a firm's success in the soft drink industry. The social media health craze has had a strong impact on the industry. It has led many brands to diversify into diet products and created an entire niche market for products such as functional health drinks. In my opinion sites such as instagram and youtube have been the catalyst for this, where social media icons or models often endorse products that they believe in. This has added a whole new sector to marketing and advertising as it can be very low cost in comparison to TV advertisements and reach a much more targeted market. This led to VITHITs success in Iceland (Blair-White et al 2017), where many people with large social media followings often advertised the drink. Consumer lifestyle is a clear factor in whether VITHIT should target a specific market and generally more developed countries are more into the current health craze, as it's now trendy to be healthy. The "functional drink" niche also has a wide demographic as it appeals to anyone who is trying to lose weight and become healthier. VITHIT strongly promotes the fact it contains low sugar and few calories. The trendy branding also creates a "rainbow" effect in stores (Blair-White et al 2017). This is visually appealing and brings a feeling of youth. VITHIT is also an Irish owned company meaning many Irish people will support it.Technological Social media and branding have a strong influence on soft drinks. Clever product endorsement can often lead to success, such as well known social media stars and models who advertised VITHIT (Blair-White et al 2017). VITHIT are also well established on nearly all social media sites including facebook and instagram. The official VITHIT facebook page has over 60 thousand likes at the time of writing (Facebook.com, 2018). VITHIT's aseptic filling is also a specialised tech feature which helps preserve the drink and is more environmentally friendly than standard filling methods and utilizes thinner plastic. Legal Soft drink companies have to comply to strict regulations or legal action can be taken on them. This includes FDA regulations, honest advertising, good working conditions in factories, and complying with government's minimum wage. VITHIT must be careful with its advertising claims, as many companies have come under scrutiny or even lawsuits for using "natural" claims. VITHIT's "DETOX" drink could be noted here as many scientific studies have proved you can't detox your body (Mohammadi, 2018). Here VITHIT are clearly taking advantage of a "buzz word" which in my opinion is unethical, and could even lead to legal problems in the future.Environmental Increasing environmental awareness from the public is a concern in the soft drink industry, although there are no known good alternatives to plastic bottles, thinner plastic being used is supported because of its environmental benefits. VITHIT takes advantage of this by using Aseptic Filling, and a thinner plastic (Blair-White et al 2017). As VIHIT brands as a healthier alternative to common soft drinks, it could also advertise it's bottles are better for the environment to increase growth with people who are environmentally conscious. Q2: The forces driving competition in the industry assessed using the Porter 5 Forces framework.Power of Buyers In the soft drink industry there are many substitutes, from other flavours to other drinks such as alcohol, tea and juice. This would suggest strong buyer power, however, people are often loyal to their favourite brands. Most big firms also bring out multiple flavours and diversify into other sectors to combat substitutes, such as low calorie versions of their product or new flavours. This can be seen today as Coca Cola have just launched a whole new range of diet flavours in America (The Coca-Cola Company, 2018). Retailers are also seen as bulk buyers and also have low switching costs from supplier to supplier. This should suggest a low power of buyers but due to the high brand loyalty it could be ranked moderate or higher.Power of Suppliers Most inputs for soft drink's are readily available from multiple suppliers giving suppliers low power. Many companies backwards integrate and own supply chains. Certain specialised supplies can experience price fluctuations, one example of this is Aspartame. One specialised supplier is the company that do Aseptic filling for VITHIT. Initially this was done in Ireland but after the company closed down it forced VITHIT to move its Aseptic filling to England. This is one example where a specialised procedure gives a supplier power. Bottlers tend to have more power over smaller firms as they can't relocate to different bottling companies as easily. As a firm grows in the soft drink industry the power of suppliers falls.Threat of New Entrants The recent growth surge in the industry (6% a year from 2011-2015 (Prnewswire.com, 2018)) would attract new firms to the market, but it can also be very capital intensive to start a soft drinks company. Government regulations are also very strict in the preparation of drinks which could be challenging to newer firms. The oligopolistic nature of the industry means the few large firms also benefit greatly from scale, making it harder for new entrants to enter. Changing consumer preferences are leading to niche markets being exploited and many new firms entering them, specifically health related markets such as functional drinks. This has brought success to many companies such as Honest tea and of course VITHIT. Threat of Substitutes There are many substitutes within the market such as other flavours or health orientated drinks. There are also many substitutes to other types of drinks such as alcohol or warm drinks like tea or coffee. There should be a high threat of substitutes but due to very strong brand loyalty the threat is not as noticeable. Rivalry among Existing Competitors Rivalry among existing competitors is strong. The market is mainly oligopolistic and controlled by few firms. New firms would struggle to gain any market foothold competing against these firms. The only real successes have been companies competing in niche markets. As these niche markets grow, rivalry also grows within them. Firms that enter niche markets early also gain first mover advantage making it hard for other firms to follow. Although VITHIT dominate Ireland's functional juice market due to their first mover advantage, they could struggle to compete against bigger firms abroad such as Honest tea in America. Advertising plays a key role here as people are brand loyal. A successful marketing campaign could provide a company with many new buyers that will continue to buy the drink for a long time. Because of these factors and the loyalty consumers have to their favourite drink, rivalry among existing competitors is strong. Many over the larger firms also buy out smaller ones to reduce long term competition. Barriers to Entry/Exit Once government regulations are met, the soft drink industry is not that hard to enter, although it could be quite capital intensive to set up. It is likely newer firms would struggle to compete due to the scale advantage larger firms have who control most of the market. Brand loyalty is also strong which would hinder new firms. Current trends can be an entry point for firms, such as the health conscious trend we're now seeing. This has led to newer companies finding success in these niche markets, such as VITHIT.Q3: Assessing VITHIT's strategy of internationalization. VITHIT's internationalization strategy has been successful so far and it has been mainly controlled by Ian O'Rourke. In the early days, Gary Lavin exported VITHIT internationally which gave some small scale success but it was mainly just to get capital to make ends meet (Blair-White et al 2017). O'Rourke used a much more directed and planned approach when going international. The organisation follows Greiner's developmental phases (Greiner, L. 1998), where in phase 1 Lavin created a great concept but had no leadership in the company. Lavin himself acknowledged this saying he realised he was bad at "planning and accounting" but good at "creating and selling products" (Blair-White et al 2017). O'Rourke was brought on board and direction was given on how to structure and expand VITHIT. He likes to gain a strong foothold in one market before moving to another one, taking each market one at a time and adapting to the fact that each market is different. Examples of this can be seen throughout their expansion, such as when they reformulated the drink in Nordic countries as they have a lower RDA for certain vitamins, or to sell in the drink in cans in South African countries as consumer preference there is on cans over bottles (Blair-White et al 2017). Careful planning is also put into which markets VITHIT enter. O'Rourke says markets are carefully selected and that they don't just fire at every country (Blair-White et al 2017). He has cleverly picked more health conscious open minded markets, such as the state of Virginia in America, and avoided close minded markets such as Germany. VITHIT also gained a first mover-like advantage in Ireland and the UK as they were one of the first low sugar functional drinks to be found in the front fridges of large retailers. This gave them a strong base to expand into Europe from. This advantage was not seen in America where companies such as Honest Tea which have sold over a billion bottles (Blair-White et al 2017). To succeed here clever marketing was employed emphasising health benefits. As the niche market that VITHIT competes in expands, marketing will be a key factor in its path to go global as there may be already established brands in future markets.Conclusion VITHIT owes most of its success to the clever guidance of O'Rourke. Although the product developed by Lavin was creative, if it were not for O'Rourkes expertise in planning, managing distribution lines and international expansion, the product would have failed. The two clearly have a strong partnership as they continue to successfully conquer market after market as they expand. I also think they're strategy to take each market one at a time is highly intelligent as they only have a small team of people working full time at VITHIT. This allows them to focus on building the brand in the market they're trying to expand to while outsourcing lighter work. I think VITHIT's success is only beginning and that there will be alot of future growth as the health craze continues to expand further into Europe. I also see success in America due to the clever marketing, distribution lines and strategies of O'Rourke. VITHIT have built a strong base to be one of the dominating forces in the low calorie functional drink area of the soft drink market. Reference'sBlair-White, H., Byrne, N., Collins, A., Crowe, L., Earley, A., and Greene, C. (2017) VIT-HIT Strateg-Tea: TBS Case Study, Dublin: Trinity Business School, Trinity College. Fda.gov. (2018). Carbonated Soft Drinks: What You Should Know. online Available at: https://www.fda.gov/Food/ResourcesForYou/Consumers/ucm232528.htm Accessed 10 Jan. 2018.RTE.ie. (2018). Sugar tax for soft drinks to be introduced from April. online Available at: https://www.rte.ie/news/budget-2018/2017/1010/911256-sugar-tax-on-soft-drinks-set-to-be-introduced-from-apri/ Accessed 10 Jan. 2018.Coca-cola.ie. (2018). How much sugar is in Coca?Cola Classic? | FAQ | Coca-Cola IE. online Available at: http://www.coca-cola.ie/faq/how-much-sugar-is-in-coca-cola Accessed 10 Jan. 2018.'Global Soft Drinks' 2016, Soft Drinks Industry Profile: Global, pp. 1-40, Business Source Complete, EBSCOhost, viewed 10 January 2018.Prnewswire.com. (2018). Carbonated Soft Drinks Global Industry Guide_2017. online Available at: https://www.prnewswire.com/news-releases/carbonated-soft-drinks-global-industry-guide2017-300454550.html Accessed 8 Jan. 2018.The Coca-Cola Company. (2018). Diet Coke Launches Into 2018 With Full Brand Restage in North America. online Available at: http://www.coca-colacompany.com/stories/diet-coke-relaunch Accessed 11 Jan. 2018.Mintzberg, H. (1981), "Organisations Design: Fashion or Fit", Harvard Business Review, January-February 1981, page 103-116. Accessed 3 January 2018Greiner, L. (1998), "Evolution and revolution as organisations grow, Harvard Business Review, May- June 1998, page 55-67. Accessed 9 January 2018Mohammadi, D. (2018). You can't detox your body. It's a myth. So how do you get healthy?. online the Guardian. Available at: https://www.theguardian.com/lifeandstyle/2014/dec/05/detox-myth-health-diet-science-ignorance Accessed 13 Jan. 2018.Facebook.com. (2018). VitHit. online Available at: https://www.facebook.com/vithitdrinks/?ref=br_rs Accessed 13 Jan. 2018.
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