NON-MARKET FORCES AFFECTING PEPSICO PRODUCT LAUNCH IN CANADA
Solution.
NON-MARKET FORCES AFFECTING PEPSICO PRODUCT LAUNCH IN CANADA
Table of Contents
Product idea and new country. 3
Non-market forces that can impact the organization. 7
Nonmarket forces that can impact on product launch. 7
Impact of each force on the company. 9
Health and safety protection. 9
International trade policy. 10
Strategy and tactics towards coping with the possible impact of each non-market force. 10
Environmental analysis is integral to the sustenance of successful operations for an organization. It is through environmental analysis that an organization comprehends both the market and non-market forces that may impede on the operations. Most specifically, non-market forces such as politics and regulations can impact either positively or negatively on the organizational product launch process. Therefore, this paper will examine PepsiCo in its new product launch through an analysis of the non-market forces as per the case questions.
PepsiCo is an international leader in the food and beverage sector. With an over $65 billion revenue, the company has been on the steadfast path in regards to performance through diversification of its brand portfolio (Bondy and Starkey, 2014). The company has an over 100-year operation as evident from its establishment in 1902; PepsiCo has maintained competitive advantage through product and service diversification. PepsiCo has numerous products under its portfolio such as Gatorade, Tropicana, and Pepsi cola. Hence, the prospect of enjoyable foods and beverages has been the determining factor towards its successful operations in the global sector (Traore, et al., 2014). The organizational customers have been the most important resource towards profitability and revenue growth.
Targeting the Canadian market presents PepsiCo with a lucrative environment towards development and launching of a new product. From the analysis of the Canadian environment, the prospect of long periods of winter results into an environment whereby it is unfavorable to grow coconut trees. Therefore, as a new product, PepsiCo Hong Kong would like to launch a coconut chocolate infused drink into the market (Bondy, et al., 2012). The product is geared towards presenting the potential market with a new taste that is both unique and preferential to the customers. Through the acquisition of the company CocoLibre, the organization will capitalize on the already existing distribution and operational structure of the organization. PepsiCo will manage to invest in its competitive advantage about its supply chain process and launch various coconut flavored beverages to the Canadian market. A picturesque representation of the beverages is as follows:
To achieve successful operations in the Canadian market, it is fundamental for PepsiCo to maintain a clear understanding of the potential customers. The Canadian market exudes potential towards profitability due to the millions of potential customers who are not accustomed to coconut water infused drinks (Ocasio and Radoynovska, 2016). Hence a representation of the potential customers is as follows:
Coconut water is a naturally occurring drink whose adoption has been gradual in the majority of the developed economies. The prospect that there is a disparity in weather among nations such as Canada has led to unfavorable conditions for the growth of coconut (Ocasio and Radoynovska, 2016). Therefore, as a new drink to launch in the market, the three customers, youth, working class, and athletes will generate a favorable environment for a successful initial launch. The main reason for the targeting of the evident customers is their active, lively hood. Coconut water in reference to Mueller and Remaud, (2013) has both cleansing and antioxidant elements that are important for individuals with an active lifestyle. Of utmost importance are the athletes. In Canada, the widespread popularity of ice hockey should form a lucrative avenue for PepsiCo in establishing its market position. Through marketing to the ice hockey athletes, multiplicities of outcomes are bound to prevail due to the use of the popular athletes in marketing the beverage.
USP or the Unique Selling Point denotes a factor of consideration that an organization sets forth as the reason as to why one product or service is unique and better than that of an evident competitor. Therefore, determining of the products USP requires comprehensive soul-searching coupled with innovation (Dicken, 2015).
PepsiCo’s coconut water is unique and exotic for the Canadian market. Despite the available online coconut-based beverages that the customers can purchase, PepsiCo aims towards maintaining a direct interaction with the customers towards developing of different tastes to further improve on the product offerings of the coconut water. Most importantly, the organization is still in its development process to infuse coconut water with its trademark pepsin to develop a new beverage. Further, as a unique selling point, PepsiCo believes that acquisition of CocoLibre will offer the organization with a new approach towards setting up operations in Canada and involving the local community in the day to day product development process (Teitelbaum, 2014). The significant resources that the organization has should form an effective ground towards the development of new sites in Canada aimed specifically at the development of the coconut brand.
The target nation is Canada. As a North American Country, the nation presents a favorable marketplace for the venture by PepsiCo in its launch of its coconut water infused drinks. Its location south of the Arctic Circle entails that there are long periods of winter hence an unfavorable location for the growth of coconut trees. Hence, capitalizing on its potential 35 million inhabitants will be a sound strategy for PepsiCo (Choi and Moon, 2016). As an additional reason for the venture into Canada, the market remains widely untapped in regards to acceptance of coconut water as a new drink of choice. In reference to Dicken, (2015) coconut water acceptability in the sector has been at 4% with ineffective communication a facet of concern regarding the reduced levels of market acceptance.
Non-market forces that can impact the organization
The market environment denotes the various interactions between the organization and other parties in the markets or private contractual agreements. As such, the market environment is evidenced by both market and non-market forces that can either positively and negatively impact on an organization (Short, et al., 2013). Of utmost relevance to this research are the non-market forces. Baron, (2012) emphasizes that non-market forces denote social, political or legal arrangements that are impactful on the structuring of the interactions outside but in partnership with markets coupled with private agreements. Dicken, (2015) further emphasizes that among the examples of the non-market issues are inclusive of environmental protection, international trade policy, corporate responsibility, and technology policy.
Nonmarket forces that can impact on product launch
The product launch requires an enabling environment that is free from any form of obstacle. However, in setting up of operations in Canada, there are myriads of obstacles that may impede on the product launch process. Among the most important non-market forces that may impede product launch process include:
Across the globe, there have been debates and widespread condemnation of deforestation that has led to the growth of the palm industry. Admittedly, coconut water emanates from palm trees that are imperative towards the growth of the coconut fruits. The suppliers of the coconuts emanate from countries such as Indonesia and Vietnam that exude widespread deforestation of land area for the growth of the trees (Pearson, 2016). As such, Canada which has strict environmental protection regulations will have to examine the suppliers of coconut to PepsiCo.
Asif, et al., (2013) emphasizes that increase in environmental awareness and concerns about the preservation of the forests as led to new environmental laws in Canada that impact on both local and foreign companies. As such, the regulatory regime focused on environmental protection across Canada is complex. Despite the initiatives towards harmonization of the environmental standards, it is evident that companies have to consider a comprehensive analysis of the environmental laws and how they impede on their operations.
Health and safety regulations are fundamental towards sustenance of the wellbeing of the local population. In a global environment whereby genetically modified organisms (GMO) are becoming a facet of concern, it is fundamental to examine the health implications of the coconut water on the Canadian population. In accordance to Belsky, (2015) the Canadian market exudes a new marketplace whose majority of the customers are not aware of coconut water as a result of the unfavorable climate for their growth. Thereby, introducing an exotic drink to the market should call for comprehensive analysis of the health and safety implications on the public. Of utmost significance is the evaluation of the impact of the beverages on the metabolism of the potential customers.
Hong Kong and Canada operate under diverse trade regulations (Donoso, Melo, and Jordan, 2014). The unavailability of effective policies towards the trading initiative should present a challenging environment for the exportation of the beverages by PepsiCo from Hong Kong to Canada (Deng, et al., 2013). Additionally, the prospect that Canada is a member of NAFTA should pose a daunting environment for the establishment of the right policies towards avoiding infringement of the NAFTA agreement between Canada, USA, and Mexico.
Impact of each force on the company
The environmental protection regulations across Canada shape the operational dynamics of foreign companies willing to set up operations. Admittedly the Canadian Environmental Assessment Act (CEAA) passed on 2012 is impactful to the operations of PepsiCo. Through the regulation, there is a clear description of the various actions that can render it unjustifiable for an organization to sell products and services in the market. From the analysis of Pederson and Gwozdz, (2014) there is an 18-month review of the operations of an organization aiming to set up operations in Canada of their practices and the stakeholders who are imperative towards the provision of the raw materials to the organization. Undertaking a comprehensive assessment of the organization is to ascertain that it does not contradict the environmental policies in Canada regarding issues such as forest conservation. Therefore, PepsiCo will have to undergo a comprehensive investigation to determine whether or not their operations conform to the Canadian values of the environment.
The Canadian Environmental Protection Act is influential and impactful to the operations of both local and foreign organizations. Admittedly, the regulation governs the importation of new products into Canada. Therefore, through the act, the various regulatory bodies will have to undertake comprehensive tests on the coconut water infused beverages that PepsiCo plans to launch into the market. As such, Jamali, (2016) emphasizes that the bureaucratic nature of the investigations may delay the product launch process. The regulatory committee will have to undertake comprehensive investigations into what constitute the products and ensure that there are no negative effects on the local population (Deng, et al., 2013).
Hong Kong is not a member of the NAFTA. Therefore, before launching the product in Canada, trade agreement formation process will have to be undertaken. The trade agreement process will comprise of the taxes to be imposed and the practices that PepsiCo will have to meet to ensure that they do not infringe on member nation organizations (Peng, et al., 2015). Without conformity to the trade agreements, the shutting down of operations may prevail.
Strategy and tactics towards coping with the possible impact of each non-market force
Emphasis on a corporate social responsibility policy and the guideline is an approach towards mitigating or handling environmental protection issues. Before establishing trade relations with potential suppliers of coconuts, PepsiCo has to ensure that its suppliers conform to the CSR guidelines. The guidelines should be based on transparency in revealing the facts about the land used to grow the trees, termination of the contract in the instance that there are environmental malpractices and the establishment of guidelines on environmental conservation initiatives (Cheng, et al., 2014).
On the other hand, investing in bilateral trade relations between Hong Kong and Canada would be the most effective initiative towards tackling the international trade policy challenges. From the analysis of Choi and Moon, (2016) the bilateral trade relations should set forth a positive ground towards the development of a comprehensive trade contract towards setting up of operations by PepsiCo in Canada in their new product launch.
Lastly, widespread public empowerment campaigns should result in awareness of coconut water and its health benefits. The public awareness campaigns by PepsiCo should be geared towards the provision of information on coconut water, recent trends in GMO pertaining coconuts and the organizational focus on non-GMO products (Huang, et al., 2016). Further, to alleviate any health and safety concerns, PepsiCo should allow the Canadian inspectors into the organization to view and experience firsthand the beverage making process.
Product
launch into a new market requires an environmental understanding of the diverse
factors that may impede on the success of the operations. From the above
analysis, it is evident that the non-market forces such as health and safety
can impact on PepsiCo in their launch of their coconut water-infused beverages.
However, the development of an open environment that is based on strict
guidelines for its suppliers and information relay to the potential customers,
successful product launch is bound to prevail.
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