MILESTONE II

Question:

For Milestone Two, you will submit the Overview section of your final project, which continues building on what you started in Milestone One to complete Section I of the final project critical elements. You will provide the business profile and governmental action, revised according to feedback received on Milestone One, then add organization and teams, stakeholders, and current environment. Be sure to support all factual claims/positions with appropriate citations to your research materials.

Rubric

This is Milestone I to give you an idea of the business that I chose

I) Topic Selection: Business profile
a. Selected business and business idea

The company that we are selecting is Gatorade. It is a company that manufactures food and beverages products that generally aim to promote performance of athletes and sports fan. The company was created in 1965 after a group of scientists from the University of South Florida observed that electrolytes and carbohydrates lost through sweat need to be supplemented. Without such proper supplementation, injuries and health related complication will be likely to occur. As such, the initial goal of the researchers was to prevent injury caused by strong physical activity. (Ingram & Herzog, 2016)

Our business idea is to produce a new organic based formula called G 7. This product will be manufactured as a drink, available in high calorie and low calorie. Such categorization is based on the intent to target consumers across broader categories of athletic profile.

b. Industry and market share

The industry in which Gatorade operates is the sports drink market. Gatorade was the pioneer in the market. In fact, in the 1970’s, it seized a market that no other company was part of. In addition, Gatorade was adopted as the first official sports drink for the National Football League (NFL) and other athletic leagues. Since then, Gatorade has remained at the vanguard of the market of sports drink beverages. Evidence showed that in 2012, Gatorade’s portion in the US market was 77.2 percent. (Ingram & Herzog, 2016)

c. Competitors

In order to adequately analyze the competitive situation for G 7, we must consider the five forces that shape the industry’s competition. They are potential entrants, suppliers, consumers, and substitute products. Profitability and competition are driven by industry structure, instead of the age of the organization, level of technology, and the product of service provided. In industries with intense competitive forces attractive returns on investments is unseen. Profits, for some companies, seem limitless in industries with benign competitive forces. In this situation, we would be the new entrant to the market, and the ones to leverage our existing capabilities and cash flows, shaking up the competition; as PepsiCo had when entering the bottled water industry. Of the current competition, there are only two well established organizations capable of holding down their prices, boosting their investment, or having supply-side economies of scale to deter us as new entrants. The other, not as established, competitors would not be capable of supply-side economies of scale. Consumers already patronize Gatorade and are loyal to our brand; it is through this loyalty that network effects will benefit us. Consumer switching costs will not be applicable, as we can match any price currently offered by competitors. The level of capital requirements associated with entering this industry will deter other new entrants from entering the market; this will not only reduce the number of competitors we are likely to face in the industry. Our current Gatorade distribution relationships can be utilized to distribute G 7. Through history to present, Gatorade has always adhered to all environmental and safety government regulations so this will not be a concern. Even with all this information, it is crucial to perform in depth analysis of barriers to entry and expected retaliation. The major competitors of G top 7 are the following: powerade, Isostar, Revive, 100plus, 10-K Thirst Quencher, Accelerade, pocari Sweat, Staminade. (Ingram & Herzog, 2016)

d. Opportunities & threats

Opportunities

• -  Consumer loyalty program for increasing customer base 


• -  Global advertising opportunity 


• -  Affiliation with relatively unpopular 
sports (soccer, box) 


II) Topic selection: Governmental action

Threats

• -  Involvement of government 


• -  Competition with PowerAde and 
vitamin water 


• -  Potential price wars 


• -  Threats from substitutes such as 
fruit juice 


Population based studies have suggested that
causes of obesity and diabetes in the US. In addition, epidemiological research have reported that consumption of sugary drinks significantly increases the risk of incident heart diseases (Ahima, 2013). Furthermore, it is known that heart disease is the leading cause of mortality among male and female in the U.S. Such evidences have sparked the attention of consumers, public health professionals and decision makers, with regards to findings solutions to reducing the burden of chronic morbidities and subsequent mortalities associated with sugary drinks. Many scientists have suggested that the most effective way to tackle these issues would be on the governmental level. Therefore, the main potential governmental influence would be policies that will push manufacturers to promote healthy consumption among target consumers. These policies might concern the amount of sugar, the size of bottles, the marketing, the labeling, the tax (Boston & +1495-1000, 2012)

sugary drinks represent one of the major

However, there are 2 main governmental actions that are worth noting. The first one would be the implementation of soda tax. As of now, sugared beverages are not taxed in some states. However, some researcher such as Brownell and coworkers have published strong arguments for taxing sugary drinks (Dietz & Gortmaker, 2001). These researchers are suggesting that it appears logical to tax sugary drinks like cigarettes and alcohol, with regards to the health risks for the consumer. The second one would be the regulation of marketing and sale to children. In fact, researchers have stated that children represent a vulnerable population, whose targeting should be regulated. Furthermore, school based sales of sugary drink are widely debated between policy makers and public health advocates. (Goldberg et al., 2004).

Reference:

Ahima, R. S. (2013). Childhood Obesity : Prevalence, Pathophysiology, and Management. Oakwood: CRC Press.

Boston, 677 Huntington Avenue, & +1495-1000, M. 02115. (2012, October 21). School Obesity Prevention Recommendations: Complete List. Retrieved February 18, 2016, from http://www.hsph.harvard.edu/obesity-prevention-source/obesity- prevention/schools/school-obesity-prevention-recommendations-read-and-print/

Dietz, W. H., & Gortmaker, S. L. (2001). Preventing obesity in children and adolescents. Annual Review of Public Health, 22, 337–353. https://doi.org/10.1146/annurev.publhealth.22.1.337

Goldberg, J. P., Belury, M. A., Elam, P., Finn, S. C., Hayes, D., Lyle, R., ... Hellwig, J. P. (2004). The obesity crisis: don’t blame it on the pyramid. Journal of the American Dietetic Association, 104(7), 1141–1147. https://doi.org/10.1016/j.jada.2004.04.026

Ingram, F. C., & Herzog, C. (2016). The Gatorade Company Inc.