Unit 5 International
Business – External
factors and Cultural
differences – By
William Axelby
,P5: Explain the external factors that influence a selected business considering
trading internationally.
Innocent drinks are an international company owned by Coca Cola Plc which makes
juices and smoothies from 100% natural ingredients. Innocent drinks are sold in
most supermarkets, coffee shops and other outlets within the UK as well as being
extremely present within international outlets. Innocent is the current market leader
in the UK and Europe with a sales turnover of around £200 million per year
(https://www.innocentdrinks.co.uk/us/press/about-innocent [Online] 16/03/21 by
Innocent drinks) To be able to be such a successful company within 17 years, there
are many different ways in which they will perform analysis to keep up to date with
the global environment. Within this report I will be discussing different ways in which
Innocent have done this.
A PESTLE analysis is a form of analysis used by many businesses to analyse the
different external factors that may have an impact on the operation of the business
this is one of the most successful analyse techniques used by businesses when
entering a foreign market and to keep up with changes within the international
market.
Significant Political factors that could affect the operation of Innocent drinks is the
guidelines and rulings from government bodies. Some of these bodies include
Department of Health advertising standard authority, Office of fair trading, Trading
standards and Foreign trade policy. The department of health first recognised that
smoothies with the correct portioning of fruit and veg were able to be classed as 1 of
your five a day In 2006, However in 2016 we saw changes to the rules on smoothies
due to their high sugar intake in which the department for health changed the
guidelines in which smoothies were only allowed to be classed as one of your five a
day and that members of the public should aim to drink no more than a 150ml glass
per day. This mean that innocent drinks which often come in 250ml bottles could no
longer promote that their products contained 2 or even in some cases 3 of your five a
day.( https://www.independent.co.uk/news/uk/home-news/smoothies-can-only-be-
one-five-day-public-health-england-warns-a6936646.html [Online] 17/03/16 by Elsa
Vulliamy) Although still being able to promote their products as 1 of your five a day it
has taken away from the fact many people would choose Innocent as they were able
to promote that they could serve half of your five a day in one drink which often
appealed to customers due to the increase in the health industry over recent years.
As innocent is a global business when thinking about new places to trade, they must
think about what rules and regulations they may face which are different to ones the
already face now. For example, if Innocent drinks were to decide to begin operations
with China, they may face stricter advertising rules as they are a communist state
and therefore business rules are significantly stricter.
, One of the main economical influences that Innocent have to factor in is the
economic situations in the countries that they operate within. Tax policies as well as
other market factors have significant influences on how Innocent drinks operate
within its different countries. For example, in 2011 2 years after the economic
recession of the UK Smoothies sales were down by 1/3 due to the lack of customer
satisfaction when purchasing a Smoothie as the pricing was too high for what the
product offered (Smoothie sales down a third as they're 'too expensive' for credit-crunch Brits |
Daily Mail Online [Online] by Andrew Levy 01/11/11) Due to the current COVID 19
Pandemic, we may begin to see people become more aware when purchasing
products with higher prices as many people have been negatively affected
economically by the Pandemic and therefore we may see another decrease within
sales of more premium products such as smoothies. Another factor for innocent
when looking at the economy in which they will trade is the level of taxation that they
will face when beginning trade. One of the most recent changes to trading for
Innocent from the UK is that they are no longer part of the EU and therefore the UK
can no longer freely trade within the EU therefore it is making it more expensive for
businesses such as Innocent to trade within the EU and Europe. Although there are
changes to trading rules between the UK and the EU it has allowed for the UK to
create new trade deals that they were previously unable to while being in the EU
therefore this may make innocent more inclined to begin trading in a new country as
trade deals may be better than previous between the UK and other countries.
Social/Cultural factors for Innocent include the consumer buying patterns and
attitudes that are constantly changing within the market and with different
demographics. Currently we have seen many people across the UK and Europe
become increasingly interested with living a healthy lifestyle with many young people
now opting to live a sober lifestyle with adults now consuming almost 10% less
alcohol than in 1990 (Global alcohol consumption has increased 70% in less than 30 years, new
research shows | The Independent | The Independent [Online] by Adam Forrest 08/05/19) this has
allowed for considerable new opportunities to be opened to Innocent drinks, as the
company is associated with healthy lifestyles and ethical values. In terms of cultural
successes for Innocent drinks as a business is the fact that they have taken into
consideration that when trading internationally it would be beneficial to translate their
products into their native languages therefore making it more recognisable for
customers internationally as if they were to of kept the branding in English it may
have created a cultural disconnect and therefore customers may have been less
inclined to purchase their products.
We live in an era where there are constant technological developments constantly
which change the way in which consumers interact with products and how they view
them. Innocent has used technology to help the business grow, reach new
Business – External
factors and Cultural
differences – By
William Axelby
,P5: Explain the external factors that influence a selected business considering
trading internationally.
Innocent drinks are an international company owned by Coca Cola Plc which makes
juices and smoothies from 100% natural ingredients. Innocent drinks are sold in
most supermarkets, coffee shops and other outlets within the UK as well as being
extremely present within international outlets. Innocent is the current market leader
in the UK and Europe with a sales turnover of around £200 million per year
(https://www.innocentdrinks.co.uk/us/press/about-innocent [Online] 16/03/21 by
Innocent drinks) To be able to be such a successful company within 17 years, there
are many different ways in which they will perform analysis to keep up to date with
the global environment. Within this report I will be discussing different ways in which
Innocent have done this.
A PESTLE analysis is a form of analysis used by many businesses to analyse the
different external factors that may have an impact on the operation of the business
this is one of the most successful analyse techniques used by businesses when
entering a foreign market and to keep up with changes within the international
market.
Significant Political factors that could affect the operation of Innocent drinks is the
guidelines and rulings from government bodies. Some of these bodies include
Department of Health advertising standard authority, Office of fair trading, Trading
standards and Foreign trade policy. The department of health first recognised that
smoothies with the correct portioning of fruit and veg were able to be classed as 1 of
your five a day In 2006, However in 2016 we saw changes to the rules on smoothies
due to their high sugar intake in which the department for health changed the
guidelines in which smoothies were only allowed to be classed as one of your five a
day and that members of the public should aim to drink no more than a 150ml glass
per day. This mean that innocent drinks which often come in 250ml bottles could no
longer promote that their products contained 2 or even in some cases 3 of your five a
day.( https://www.independent.co.uk/news/uk/home-news/smoothies-can-only-be-
one-five-day-public-health-england-warns-a6936646.html [Online] 17/03/16 by Elsa
Vulliamy) Although still being able to promote their products as 1 of your five a day it
has taken away from the fact many people would choose Innocent as they were able
to promote that they could serve half of your five a day in one drink which often
appealed to customers due to the increase in the health industry over recent years.
As innocent is a global business when thinking about new places to trade, they must
think about what rules and regulations they may face which are different to ones the
already face now. For example, if Innocent drinks were to decide to begin operations
with China, they may face stricter advertising rules as they are a communist state
and therefore business rules are significantly stricter.
, One of the main economical influences that Innocent have to factor in is the
economic situations in the countries that they operate within. Tax policies as well as
other market factors have significant influences on how Innocent drinks operate
within its different countries. For example, in 2011 2 years after the economic
recession of the UK Smoothies sales were down by 1/3 due to the lack of customer
satisfaction when purchasing a Smoothie as the pricing was too high for what the
product offered (Smoothie sales down a third as they're 'too expensive' for credit-crunch Brits |
Daily Mail Online [Online] by Andrew Levy 01/11/11) Due to the current COVID 19
Pandemic, we may begin to see people become more aware when purchasing
products with higher prices as many people have been negatively affected
economically by the Pandemic and therefore we may see another decrease within
sales of more premium products such as smoothies. Another factor for innocent
when looking at the economy in which they will trade is the level of taxation that they
will face when beginning trade. One of the most recent changes to trading for
Innocent from the UK is that they are no longer part of the EU and therefore the UK
can no longer freely trade within the EU therefore it is making it more expensive for
businesses such as Innocent to trade within the EU and Europe. Although there are
changes to trading rules between the UK and the EU it has allowed for the UK to
create new trade deals that they were previously unable to while being in the EU
therefore this may make innocent more inclined to begin trading in a new country as
trade deals may be better than previous between the UK and other countries.
Social/Cultural factors for Innocent include the consumer buying patterns and
attitudes that are constantly changing within the market and with different
demographics. Currently we have seen many people across the UK and Europe
become increasingly interested with living a healthy lifestyle with many young people
now opting to live a sober lifestyle with adults now consuming almost 10% less
alcohol than in 1990 (Global alcohol consumption has increased 70% in less than 30 years, new
research shows | The Independent | The Independent [Online] by Adam Forrest 08/05/19) this has
allowed for considerable new opportunities to be opened to Innocent drinks, as the
company is associated with healthy lifestyles and ethical values. In terms of cultural
successes for Innocent drinks as a business is the fact that they have taken into
consideration that when trading internationally it would be beneficial to translate their
products into their native languages therefore making it more recognisable for
customers internationally as if they were to of kept the branding in English it may
have created a cultural disconnect and therefore customers may have been less
inclined to purchase their products.
We live in an era where there are constant technological developments constantly
which change the way in which consumers interact with products and how they view
them. Innocent has used technology to help the business grow, reach new
