Global Business Environment - Red Bulls Diversification Plans - Business Environment Assignment Help

Assignment Task :

LO1:  Analyze the key factors which drive globalization.

LO2:  Determine the strategic complexities associated with operating in a global environment.

LO3 Evaluate how operating in global market influences an organization’s structure, culture and functions.

LO4 Evaluate the influence of globalization on organizational decision making and strategy.

PART 01- Group Presentation and Report on the case of Red Bull’s diversification plans (LO 01 and LO 02)

Background to the case 

The Middle East's energy drinks sector is at its peak with unprecedented sales in the retail and hospitality sectors. Yet competition is fierce as international players strive to cash in on the trend. "The margins are so high in this sector that many companies come to take a piece of the pie and then disappear. Most of them are not surviving, as success is dependent on how long brands have been in the market," says Omar El Banna, Power Horse's regional marketing manager, Middle East. The margins are so high in this sector that many companies come to take a piece of the pie and then disappear. Most of them are not surviving as success is dependent on how long brands have been in the market. "Looking at Saudi Arabia, it is almost over-congested with energy drinks brands, with hotels and restaurants accounting for around 20% of our regional business this year, but Egypt holds potential and the entire energy drinks sector grew by 9% last year," he adds. Egypt is currently Power Horse's strongest emerging market, with rising numbers of clients in the hospitality sector 

including Marriott, The Ritz-Carlton Hotels & Resorts and InterContinental Hotels and Resorts. With ingredients including taurine, glucuronolactone, caffeine, and inositol, Power Horse first entered the region in Saudi Arabia in 1997, followed by the UAE, but it is now seeing demand from emerging markets like Qatar, Bahrain and Oman.

While energy drinks routinely combine methylxanthines, B vitamins, inositol, carnitine, creatine, glucuronolcatone, ginkbo biloba, taurine, ginseng, and maltodextrin, El Banna says Power Horse informs customers not to mix the drink with alcohol, however there are no strict regulations in place against the move, so it has become a regular feature on drinks menus. But is not just Power Horse that is popular in the market, with Red Bull taking the greatest share of the energy drink market in the region. A far cry from the modern packaging and dynamic marketing of today's brands, Japanese-based Taisho Pharmaceutical first introduced Lipovitan back in the 1960's. One of the earliest known energy drinks; the brown 100ml bottles became widespread in East Asia. However, it was Red Bull in its silver and blue bullet-can format - initially developed by Thai businessman Chaleo Yoovidhya as a drink called Krating Daeng - that really activated the presence of energy beverages on a global scale. Red Bull kick-started marketing campaigns for its namesake drink in Austria in 1987, and distribution expanded to Hungary, Slovenia, Germany, the UK and the US by 1997. The company achieved sales of 300 million cans in the following year, and boasted availability in more than 50 countries by 1999.Since its UAE launch in 1998, Red Bull has maintained its status at the top of the country's energy drink leader board, yet Raed Gerges, its director of communications, is confident the brand will continue to surpass rivals, due to its premium image and significant presence in the foodservice sector spanning every country in the Middle East. "The sales growth in the UAE has been rising in strength since its launch, so we are expecting further growth in this dynamic country for Red Bull, which created the category and has been leading since," comments Gerges. Breaking down its content, each 250ml can contains ingredients including 27g of sugar, 1000mg of taurine, 80g of caffeine, as well as sodium citrates, caramel and riboflavin colours and inositol, believed to serve as a source of metabolic regulators and as membrane anchors for certain proteins. Although a practise advised against on the labelling of most brands, the onset of the 21st century marked the commencement of energy components being added to alcoholic beverages, which continues to ramp up sales today

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