Red Bull Porter's Five Forces Analysis Essay

756 Words 4 Pages
By completing an external analysis using Porter’s five forces, we can learn much about the energy drink industry. The five forces include: a threat of suppliers, a threat of new entrants, a threat of rivals, a threat of buyers or consumers, and a threat of substitutes. The first threat brought to the table is the threat of suppliers. The threat of suppliers is relatively low because the production of energy drinks is not a complicated process, and it also inexpensive to produce. Because there is such a large number of suppliers in the energy drink industry, they do not have strong bargaining power. Next, the threat of new entrants can be argued both ways. In a way, it is actually a strong threat because the barriers to enter are not high. …show more content…
It is a well known fact that energy drinks are not the healthiest drink option; therefore, some people would choose to drink water or juice instead. According to the case study, some countries’ governments have even created laws on the caffeine amount that drinks may contain. Sports drinks and sodas also pose as a threat to the industry because they claim to have the same benefits but are usually the cheaper option.

Even though Red Bull commenced in 1987, it took over a decade for the company to start making a successful profit, and it was only after the company expanded out of Austria that it began to happen. Since its expansion, Red Bull has developed many competitive advantages, which consist of its sales in bars and clubs, advertising, and sport sponsorship. The first competitive advantage Red Bull had over its competitors is the club scene. Around 1997, Mateschitz expanded to the United States, offering free coolers to bars, and it was not long before bartenders figured out that the new drink was great to mix with vodka or Jägermeister. This allowed the consumers to drink alcohol incessantly without feeling the suppressant effects. The company went as far as suing a bar for serving a cheaper counterpart when the consumer had asked for Red
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Over 500 adventurous athletes are invited to specific events all over the world to participate, and even more people come to the shows and watch. According to an article on sellingpower.com, in 2012, Red Bull sponsored Felix Baumgartner as he became the first man to fly across the English Channel, allowing more than 200 million people around the globe to see the world record event, and more importantly, the Red Bull logo. These events and athletes are one of Red Bull’s biggest competitive advantages and most valuable assets. From studying to partying, working to surfing down the Amazon, Red Bull makes sure it’s the drink to keep its customers going and

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