The organisation that I will discuss in this assignment is Vithit. Vithit is an Irish company founded in 2000 that develops fruit and plant based vitamin water with a focus on healthy and exotic flavours. The drink, which is a low-calorie mix of teas, juices, water and vitamins in a range of flavours, has seen sales shoot up as numbers of health-conscious consumers are turning away from high-sugar carbonated drinks. Vithit is in the fastest growing soft drinks brand nationally and is selling in over 16 countries worldwide. Vithit is now larger than Innocent, Tropicana and Capri Sun. In Ireland it is expected to sell more than nine million bottles this year. Overall turnover is expected to double to about €10m and the new deal is expected to add €20m to that within two to three years. It is leading the health market in Boots and is the fastest growing health drink in Tesco and Sainsbury’s. According to Mintzberg’s configurations, Vithit is a simple structure organisation. It is an entrepreneurial organisation as it is one large unit with one or two top managers. Gary Lavin and Ian O’Rourke are a dynamic and complementary partnership managing Vithit. They employ 20 full-time staff. Vithit is competing in the health drinks industry. Major players in this industry include the recently launched Bai and the popular US brand VitaminWater along with Honest Tea and HINT water to name a few. I will analyse and evaluate Vithit using the PESTLE analysis and Porter’s five forces framework. Finally, I will conclude by discussing Vithit’s strategy of internationalisation. PESTLE analysis The PESTLE analysis (Political, Economic, Socio-Cultural, Technological, Legal, Environmental) is a tool used for measuring the Macro influences that may impact on an organisation. The Pestle analysis helps identify the external and internal analysis of a company and the vision, mission and values of a company. I will further discuss Vithit under the various factors below:Political: These factors include issues such as the guidelines and rulings from government bodies on nutritional information on drinks. Today’s political factors include Brexit, which may have both direct and indirect impacts on Vithit in areas such as trade agreements and the potential opportunities, such as access to new markets, and threats, such as trade tariffs, which may arise from these. Government regulations have a strong impact on the company. The Food and Drug administration has regulations on additives and contact substances, as well as honest nutritional information and additional label information. According to Hardiman,Vithit can not only think of the internal market in Ireland to globalise. They must consider the domestic market and trade policies of the different countries they trade with. Therefore, Vithit altered their product to meet the requirements of different countries policies for example by removing L-Carnitine from the product as this is not authorized in liquid products in the US.Economic: Economic factors have an important impact on how an organisation grows and how profitable they are. The health drinks industry is stable, fast-growing and performing well and expected to expand further in the future. The economic situation in Ireland can impact on the sale of Vithit due to their premium price and the availability of cheaper substitutes. Vithit has chosen not to trade with the likes of Germany and France as they are price conscious countries. Growth will be driven by greater consumer purchasing power because of the improving economy, as well as a growing desire for better quality and healthier product. Ireland’s growingeconomy in recent years helped drive demand for better quality health drink products. After the recession period, the juice industry recovered well and grew at a compound annual growth rate of 6% from 2011 to 2015.Socio-Cultural: Socio-cultural factors which impact on Vithit includes changing consumer tastes, which helpedVithit become successful due to its ethos of natural ingredients and premium price. Vithit was also able to address a growing interest amongst consumers regarding health concerns and the willingness of consumers to pay a premium price for this. Brand image is key for a firm’s success in the health drinks industry. The social media health craze had led to an entire niche market for healthy drinks. This is evident with Vithit’s success in Iceland. Through social media advertisement and branding Vithit for ‘young mindsets’, it resulted in Vithit being sold in almost every Icelandic convenience store and its population of 330,000 people generates annual sales on average of 300,000 units. The ‘functional drink’ has a wide demographic as it appeals to anyone who is actively trying to lose weight or be healthy.Technological: Vithit is well-known on social media amongst young people which increases brand awareness greatly today. Bloggers like Rosanna Davison and the Kearny brothers have been seen posting images of Vithit on social media websites. This has a strong influence on young people. This is a new way of communicating with their target markets. Vithit also used aseptic filling which is a specialised form of packaging unlike traditional methods. It’s very specialised technology that can only take place in the UK.Legal: Vithit must comply with legal regulations including FDA regulations, honest advertising, good working conditions and government’s minimum wage. The sugar tax is being introduced by Minister Paschal Donohue’s which may have taken the fizz from many drink industries. It states that drinks above 8 grams of sugar per 100ml will be taxed 30c per litre and drinks with 5-8 grams of sugar will be taxed 20c per litre.Vithit’s drinks do not qualify for this tax. This means that competitor’s price levels are likely to rise and is a great opportunity for Vithit. It is essential that Vithit are careful when they are advertising ‘natural’ claims as many companies have come under lawsuits for this. Vithit’s ‘DETOX’ drink could possibly come under legal problems in the future as scientific studies have shown you cannot detox your body.Environmental: Vithit uses aseptic filling and a thinner plastic. An aseptic fill means there is no need to heat the liquid which means a thinner plastic can be used for bottling. Although there is not a great alternative to plastic bottles, thinner plastic bottles are a good alternative. Vithit advertises themselves as a ‘clean product, clean message’. This helps them grow as today people are more environmentally conscious. The Forces Driving Competition in the Industry According to Porter, the five forces analysis is an important tool for companies to evaluate the industry attractiveness, how trends will affect industry competition, which industries should a company compete in and how companies can organise themselves for success. Porter argued that the profit potential of an industry is ultimately determined by the power of these forces . Interestingly, Hambrick and Fredrickson did not fully agree with the five forces analysis. They argued that strategy is not simply pricing or setting research and development budgets. They are elements of strategy and cannot be examined in isolation. Vithit is competing in the health drink industry.Vithit begun in a low-growth industry in Ireland and now it is a high-growth industry. It is an emerging and promising industry. It is becoming increasingly important due to the fact people are becoming much more health conscious today for several reasons such as obesity. Today, 60% of Irish consumers are overweight or obese. Sugar sweetened drinks are one of the main contributors to obesity.This analysis clearly demonstrates how each force contributes to the profitability of the industry. I will discuss the different forces driving competition in the industry below. Power of Buyers: The power of buyers is high in the health drinks industry. Buyers have many substitutes they can choose from and the switching cost is low. The size and concentration of buyers relative to products is high. It also is inexpensive to switch loyalties. In relation to Vithit, to differentiate itself from other competitors, it highlights its ‘hybrid health’ element with its marketing campaigns and have customised their product to American consumer tastes. Vithit has furtherdifferentiated its products in some countries for example, in South Africa, Vithit was repackaged in slim cans to attract local preferences. Power of Suppliers: Firms can switch between suppliers quickly and easily making the power of suppliers’ low. Suppliers to the industry are bottling equipment manufacturers and secondary packaging suppliers. In terms of equipment manufacturers, the suppliers are generally providing the same products. The number of equipment suppliers is not in short supply, so it is easy for a company to switch suppliers. This takes away much of suppliers’ bargaining power.The companies will choose the suppliers that do the best job and have the best price. If another supplier does the same job but is cheaper, the firm can switch without much hassle. There are many current and potential suppliers in this industry. The main revenue for these supply companies comes from delivering the healthy drink beverages and equipment for the firms to the customers. Vithit has switched between suppliers and distributors including Pepsi Virginia USA, Richmond marketing Ireland, Haugen group Norway, Valora tradeDenmark and Red star beverages UK. Specialised suppliers have a higher power as Vithit must go to England to avail of the aseptic filling procedure which requires high-technology. Threat of New Entrants: The threat of new entrants is low. Health drinks are not proprietary products as anyone can produce health drinks. The only proprietorship is on various flavours and brands. There are large capital costs needed for entering this industry for manufacturing, Bottling, and distribution. Storage could be contracted out, but it would likely increase costs eventually and weaken the supply chain. There are licenses, insurances, and other difficult qualifications required in this industry. Companies must get FDA approval to sell their product, have licenses to produce and distribute internationally, and insurance to cover potential lawsuits, accidents, or faulty product. This industry is an oligopoly in which existing firms having strong distribution channels, relationships with suppliers, retailers, and brand value to customers. The industry leaders have the tools necessary to force out new competitors.Threat of Substitutes: The threat of substitutes is moderate. The reason why a customer switches from one drink to another is due to the price factor and quality. Health drinks tend to be more expensive due to their ingredients. People may not want to spend more money on a health drink and instead buy a cheap soft carbonated drink. However, people may tend to stay away from sports drinks and soft drinks due to the high levels of sugar in them. Colas and sports drink contain 20-28g of sugar when the recommended total sugar intake daily per person is only 25g. Another substitute could be reformulation of well-known brands such as Coca Cola into healthier options such as sugar-free or Coke zero. However due to the shift in consumer preferences to healthier options the threat of substitutes remains moderate. Vithit view themselves as competing against ‘anything that is low calorie and up and coming’.Intensity of Rivalry: Due to the fast-growing industry, there is a high intensity of rivalry within health drinks. According to Umney, Vithit is based in a liberal market economy, meaning competition exists between firms. There are major market players in this industry including Bai, and the popular US brand Vitamin Water. Honest Tea being another strong competitor has sold over a billion bottles and HINT water which receives $90million on average in retail revenue annually. However, Vithit is performing well and in 2019 the company is hoping to have sales of 60 million bottles, compared with the 96,000 bottles it sold when it launched in 2007. Vithit is officially the fastest growing soft drink in Ireland and the 15th biggest selling soft drink nationally. Vithit now sells over 17 million bottles per year in 8 countries and in the UK, it is the market leader in health drinks in both Boots and Tesco. Vithit’s strategy of internationalisation I believe that Vithit is a highly successful organisation and it will continue to internationalise over the next number of years. I feel this way for the following reasons and I will discuss it using a SWOT analysis which is a vital part of strategic planning for the future (O’Connor, 2005). Vithit have more opportunities than threats so that is why I think they are likely to grow. Strengths Vithit must continue to play to their strengths forcontinued growth internationally:• Moorman, Deshpande and Zaltman (1993) believe trust and commitment are two key elements to make a cooperation work. This is evident with the strong relationship between Gary Lavin and Ian O’Rourke. They are highly committed to the brand due to the fact they ‘kind of revived it and went through the hard times and so we want to see where it goes! (O’Rourke, 2017). They also have a complementary relationship as Gary is good at the creative side of things where O’Rourke would be strong on the financial side of things. They have remained positive throughout which is essential for expanding globally.• According to Porter (1985), competitive advantage grows from the customer value a firm creates. Vithit are constantly putting the customer first. For example, it tailored its product to suit American consumer tastes and they repacked the product into slim cans in South Africa to appeal to the locals. If they continue to please the customers, they will have a strong competitive advantage resulting in global expansion.• Yip argued that the global strategy levels are affected by each industry’s globalisation drivers for example market drivers. Vithit has understood what aspect of the product needs to be standardised and which customised for each country. Vithit has already undergone transferable marketing when it changed its name from ‘Vitz’ to the catchier ‘Vithit’ as O’Rourke realised that the Germanic name ‘Vitz’ would not be successful internationally. . Levitt argues that the multinational corporation is outdatedand the global corporation is superior due to consumers wants being homogenised. Yip contrasts with Levitt as Yip shows the drawbacks of global strategy such as globalisation can result in significant management costs due to extra staff, reporting requirements along with increased coordination. Product standardisation can be unsatisfactory in a country e.g. in the U.S as L-Carnitine is not legally permitted in drinks. Therefore, as Yip argues against Levitt, a globally standardised product is created for the global market, but it is unlikely to satisfy all needs in all countries. I believe Vithit found the right balance. • Vithit has a strong distribution network which is key for internationalisation. Alfred Chandler and Ian agreed on this that ‘you can have the best product in the world, but if you can’t physically get it to the mass market, there is no point’.• Vithit survive by differentiation. They emphasise they are a ‘Hybrid’ drink and Vithit’s white labels expose the colourful drink flavours adding to the ‘rainbow effect’ of the drinks. This helps them stand out among competitors internationally. • According to Hambrick and Fredrickson, Vithit has a highly coherent strategy and all five elements reinforce each other. Vithit’s strategy is not primarily about planning and they have made intentional, informed and integrated choices such as changing their name and choosing the countries wisely to sell their product in.• They have a strong brand identity such as ‘Healthy, good looking and tasty. Finally something to take home to Mum!’ Weaknesses • I agree with Chandler that the idea of ‘owners managed, and mangers owned’ is out dated to grow internationally as firms need careful coordination of several people to allow the firm to be more efficient thus leading to larger economies of scale. Currently, Vithit only employ 20 people which is not sufficient for internationalisation. • Vithit do not have a big budget for advertising and marketing. This could be better considering other industries in the Soft drink industry such as Coca-Cola spend a huge amount on it. Coca cola spent 41.86 billion U.S. dollars on advertising in 2016 for example. However their global revenue amounted to 41.86 billion in that year while Vithit has a turnover of approximately €8m. Therefore, Vithit must be smart on where to invest money and what to do with it. • Another weakness would be that their drink is quite price-heavy. Hopefully with improved distribution and economies of scale the prices will be lowered to internationalise. They could then enter the Germany and French markets which tend to be quite price-conscious. Opportunities • Vithit begun in a low-growth industry in Ireland and are now in a high-growth industry. It is one of the fastest growing industry’s which lends itself for a huge opportunity for internationalisation.Vithit is growing at 40% nationally and growing at 50%+ internationally. It is in the top 2 fastest growing soft drinks brand nationally selling in over 15 countries leading the health market in boots and is the fastest growing health drink in Tesco and Sainsbury.• The growing interest in the health movement is a huge opportunity. Obesity and diabetes is becoming huge. By 2025, 37 per cent of Irish women will be obese and 38 per cent in the UK.• Minister Paschal Donohue’s new sugar tax may have taken the fizz from many drink industries.This means that competitor’s price levels are likely to rise. This is expected to cause Vithit’s sales to rise. • Vithit has signed a new US distribution deal worth at least €17.5 million over the next two years. The agreement with the Honickman Group will see VitHit sales double from an expected 18 million bottles this year to 36 million next year. This is a huge opportunity for them to expand all over the U.S. Threats • Due to the increasing awareness of the health trend has led to similar markets emerging. This will lead to competition. Vithit was unable to compete with Fulfil bars in 2015. O’Rourke even admitted that fulfil ‘did it much better than us’.• Bai was bought for US$1.5 billion by Dr Pepper. Health companies being bought over by huge firms is a huge threat as they can afford to spend much more money on advertising and marketing. Conclusion I have discussed and analysed Porter’s 5 forces framework and conducted a PESTLE analysis and linked it to Vithit to describe its industry and present form. I have also given a description of Vithit’s strategy of internationalisation using a SWOT framework. I believe that this business will continue to grow internationally and evolve if Vithit continue to play to their strengths, avail of future opportunities and minimise their threats.