Introduction
This is instinctive report that is aimed to achieve three main points;
- identify the nature and purpose of Innocent drinks as a business,
- analyse the organisational environment,
- methodically identify, examine and evaluate the various practises that innocent drinks is adopting in terms of micro and macro environmental forces (internal and external factors) in achieving its organisational objectives.
Nature and purpose of Innocent drinks
Innocent drinks is an innovative favourite UK brand which focuses mainly on producing natural smoothies, 100% pure fruit juices, healthy coconut water and suitable kid’s drinks. It currently has this operations in over 13 countries and has employed over 250 people across Europe. The purpose of their business is clearly stated in their mission statement as providing easy access to towards getting naturally and healthy products to as many people as possible. This approach enables them to create value and to make a difference in every way. The innovative concept for innocent drinks to adequately improve on things, they are always looking for new ways of doing things better and efficiently.
This great brand has been existing for over 15 years, it started as an SME in 1999 and has now grown to become a global brand in the last 10 years. This was attained by giving coca cola the chance to completely own the company after the organisation experienced a huge downturn in profit in 2008 during the global financial crisis. Innocent has been seen as a successful business brand considering how much they have kept their market relevance in the last 10 years, they have consistently hit an annual sales of 350millilion pounds annually since they gave coca cola complete ownership in 2013. The amazing thing about giving coca cola total ownership is the relationship the founders have secured with coca cola brand, the partnership ensures that the three founder of innocent drinks sit on the board of the brand and also ensures that coca cola is still committed to the business ethnics of innocent drinks thereby allowing innocent brand to function autonomously as a full-fledged business entity more or less operating as a stand-alone business not as the coca cola brand. According to Richard Reed who is one of the three co-founder of the innocent drinks said “what attracted them mostly to coca cola amongst many other 10 companies that had interest in owning the company was the fact that coca cola accepted to still operate within the ethical values and objectives of innocent drinks and was also ready to give the founders the chance to be Part of the board”. One of the ethical policies that was upheld was that the company will continue to give 10% of her profit to charity annually.
With coca cola accepting this, it clearly shows that innocent drinks strongly upholds the value of the organisation and they had clear objectives as a company which they have built over time and it has significantly contributed to their success in the previous years.
Comparing this to other company like Motorola that also experienced a downturn in profit from 2008-2009 due to organisational restructuring in the company; google had to step in when they bought over the company in 2011, it turned out to be a flop for google as it resulted to less profit. If Motorola had a sound business structure, clear objective built on strong value like innocent drinks that would have been a good leverage for google when they bought over the company in terms of profit turn over. If google had looked closely at the organisational structure of Motorola they would have release that Motorola only had a product that cannot be sustained for long period of time due to lack of organisational structure.
Organisational environment of Innocent Drinks.
According to boddy (2004: 80) he identified organisational environment as the external and internal factors, the external comprises of the macro environment that includes the Political, Economy, Society, Technology, Legal and Environment (PESTLE) while the micro involves Customers, Supplier, Competitors, New entrant and Substitute and then the internal factors comprises of the Business process, structure, objective, power, people.
Macro Environment (PESTEL) Analysis for Innocent Drinks.
Political Factor.
This factor has to do with the way and manner in which government influences preceding in a certain terms, guidelines, conditions and rules that affects business strategy within an organisation. Boddy (2014:81). This is an external force that has a direct impact on the internal processes of every organisation as they have to ensure they meet up every rules and regulations from Government agencies. They are certain regulations which ensures that food and drink companies must meet a particular standard in their production, one of such regulation is the (Food and Drink Innovation Network 2016). The regulations ensures that all food and drink companies must meet the EU food safety and labelling standard otherwise the product would not be allowed in the European market. Innocent drink has always ensured they keep to the condition of the EU standard if they will continue keep their market relevance. However, the Brexit speculations would pose a big treat to the company has they will now have two standards to keep up with which is the UK standard and the EU standard.
Economic Factor.
The major part of this factor includes taxation, inflation, deflation, exchange rates, disposable income, interest rate, currency fluctuation etc. Innocent drinks has harnessed the potentials of the European market in terms of access to importation of cheap fruits, it is much more easier and cheaper to import fresh fruits from other EU countries but with the Brexit, innocent will have to spend more to import fresh fruits that will in turn affect the prices which they sale their product it will therefore have a negative impact on consumers as of production will go up. As a company that will want to keep his market relevance it is important that they take proactive measures in order to provide substitute mechanism on how to keep their prices from going too high if Brexit finally stands.
Social Cultural Factor.
This factors includes the value of the society and its culture, demographic changes, lifestyles, distributions of income. Before the start of Innocent drinks as a company in (1999) one of the first things they did was to change the consumers taste and perception by introducing natural smoothies which they gave out for free to consumers for feedbacks and then it later turned out that most people wants it natural and fresh that helped their business to be more successful because they are known for natural favours and premium price (Britvic 2016). To effectively connect with the society, Innocent drinks donate 10% of her profit to charity annually (Innocent 2017), these concept helps the consumers to feel connected with the brand positively. For organisation to keep their reputation in the society it is essential that they carry out projections and initiative which the consumers can relate with, innocent is doing that through the knit a hat campaign which raises money for the age UK (withers 2017).
Technological factor.
As a company whose mission and objective is to be innovate at all times and also seeking new ways of doing things, technology will always be the pivotal that drives such innovations, innocent is one of the companies that uses 100% of recycled plastic bottles which directly address issues surrounding the amount of plastic wastage; this was achieved by investing more on technological advancement (innocent 2017). Innocent has successfully adopted social media as a tool to drive conversation and obdurate engagements with consumers. To keep efficiency going with the production process they have also developed an app that helps to measure and reduce the amount of water consumptions in Spain by strawberry farmers (Leahy 2016).
Environmental Factor.
For an organisation whose sore aim is basically to use natural ingredient for its product, it is very important that they show extreme commitment to environmental sustainability by reducing and also ensuring that they control and combat the rate of carbon emission during the cost of production. Innocent is also in the forefront of addressing the negative effect of climate change through the use of their app that measures the usage of water, it correlate with the Sinks and reservoirs (Art. 5) of the United Nations Paris agreement (2015) where parties were encouraged to enhance, conserve and appropriate resources which the United Kingdom also signed agreement to combat climate change. To further improve on their environmental sustainability they can also invest more on research, establishing collaborations and education that will strengthen their supply chain (Leahy 2016).
Legal Factor.
Innocent drink as a food and drink company, it is very essential and paramount that they act in accordance with the health and safety laws, food manufactural laws (food and drink innovation network 2016). Over the years this laws has been regulated by EU, however, with the Brexit speculations Innocent will be facing some new policies as the UK laws will be going through substantial regulations and adjustment after the European Union exit. Area that might be affected legally after the Brexit includes the corporate governance and financial reporting.
Innocent Drinks internal organisational culture.
There are several factor that make up the internal environment such factors include People (employees and employers), Business process, culture, objectives and power.
Cameron and Quinn (1999) identified four major areas that forms an organisation culture, they also controls and influences the internal environment in terms of People, Business process, Objectives, Power. These culture includes Clan, Adhocracy, Hierarchy and Market culture. As an internal policy, Innocent has adapted the clan culture. The clan culture provides room for employee and employers to work more as a family in a common environment, they are operating on a flat structure were employees are considered in the decision making process. The work environment for innocent drinks is an open plan workplace where top manager and employees share same office space, these has also become an intrinsic form of motivation for employees as they see themselves as part of the business. The significant effect of this open plan workplace is that top managers seize it has an opportunity to mentor their subordinate since there seems to be no barrier in communication and approach, it also encourages employees to be innovative and creative.
SWOT Analysis for Innocent Drinks.
Strength; One major source of strength for Innocent Drinks is the ability to use natural ingredients to produce drinks, it has become a household brand identity for most consumers. Selling the ownership to coca cola is another major source of strength rather than competing with bigger brand they collaborated. Coca cola being a big brand gives them a high leverage to be innovate has they have more room for risk taking.
Weakness; The brexit poses a huge treat to the innocent brand, over the years innocent drinks had their dominance in the European market as a result of their ability to harness the common trade amongst the EU member states. If the UK finally exit the EU lots of things will change and it will affect the supply chains in terms of the labour force, importation of ingredients, high rate on movement of goods and services.
Opportunities: having coca cola has the owner gives them a much bigger platform to expand their market to the number of countries where coca cola is currently operating in. it is huge leverage for them to scale up their business to a much wider market.
Threats: as a company that solely rely on fresh ingredients for production, natural disaster poses a huge challenge to them, in cases whereby local farmers were unable to supply them fresh fruits due to erosion that erupts their farms or other natural disaster, these will affect production in meeting demands when this happen consumer might turn to other substitute products and that will in turn affect brand perception for Innocent drinks in terms of meeting demands.
Porter’s Five Forces with regards to the Micro Environment.
The micro environment is an external environment that have a direct impact in the business process of every organisation. According to Boddy (2014:88-91) The Posters five forces also identified this factors as a technique for competitive advantage relevant to the profitability of every organisation (Poster, 1980). These includes Bargaining Power of buyers (Consumers), Bargain power of suppliers, Competitors, Threat of Substitute Product, Threat of New Entrant.
Bargain Power of Buyers.
Innocent drinks over the years has rely on the feedbacks from consumer which determines the quality of their product hereby giving the consumer much access to information of what the product is all about and the benefit attached to it in terms of the health and other social benefit. Buyers can make their decisions based on the access to the information.
Bargain Power of Suppliers.
Suppliers has been a major aim of innocent drinks, to reduce much dependant on external supplier and also to control the bargain power of suppliers Innocent is also setting up farms whereby creating more access to their ingredients rather depending solely on suppliers.
Competitors.
The biggest brand in the food and beverage industry is coca cola having a company like innocent drink to compete with them would have been a major constrains for innocent, rather than competing they gave them the controlling shares which have in turn given innocent a competitive advantage to stay relevant in the market.
Threat of Product Substitute.
Considering how much consumers will desire variety of substitute products, innocent drink is also producing substitute of variety of products to keep consumers within their market reach, they also have different product for different target market.
Threat of new entrant.
Other products are springing up every day in the market, innocent drink clearly understand what this threat poses to their business, however they have been able to carve a niche for their brand they known for producing natural drinks. Innocent is consistently innovating their product so as to appear new and fresh in the market thereby reducing the threat of new entrant.
Summary.
In conclusion, the nature and purpose of Innocent drink has been clearly stated and how their ethical values has given them a strong leverage to function autonomously from the coca cola brand despite the ownership. We have also looked how they are functioning adequately within the macro environment in respect to the PESTEL analysis and they are adopting the Posters five forces within the micro environment. Also we established how the clan culture is creating an intrinsic form of motivation for the employee as they feel more as part of the business with high level of recognition and a strong feel of ownership as they are part of the decision making process. We also looked how the open plan workplace is bridging the gap between the top managers and the employees were everyone is treated with equal opportunity.
25.10.2018