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Question:
Write a critical analysis report on Gatorade sports drink
Answer:
Introduction:
The sources of competitive advantages help a firm to create greater value for its customers than the value created by the competitor organizations . Identification and managing the sources of competitive advantage is important for facilitating an organization to perform better than other organizations in the market. Therefore, it is necessary for the organizations to recognize its sources of competitive advantage and optimizing the benefits obtain from those sources especially when an organization operates in an intensely competitive market.
The sports drinks is a sector where the level of competition is quite high (West et al.2015). Therefore , identification of the sources of competitive advantage is important for n the organizations operating in this sector. The Gatorade Company, Inc. is one of the largest manufacturers of sports drinks and food products (Gatorade.com, 2018). However, The USA based company is well-known for its sports drinks which are distributed over 80 nations. However, the sports drinks of Gatorade were first manufactured for replenishing the carbohydrate levels among the student –athletes. In 1987 Gatorade was bought by Quaker Oats company and in 2000, the organization was bought by PepsiCo. Now Gatorade is considered as one of the largest brands for PepsiCo.
Being the manufacturer of a number of signature sports drinks, Gatorade is able to get a distinctive place in the sports drinks sector because of its multiple sources of competitive advantages. The current assignment deals with identification and assessment of the sources of competitive advantages for Gatorade.
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VRIO Framework and identifying the source of competitive advantage:
The VRIO framework is an effective tool to identify the sources of competitive advantage for an organization (Porter & Magretta, 2014). Here, the VRIO analysis for Gatorade is conducted for identifying the sources of competitive advantage for the Organization.
Resources Valuable? Rare? Difficult to imitate? Organised? Result
Large distribution network Yes Yes Yes Yes Long Term competitive advantage
Infrastructure Yes Yes Yes Yes Long Term competitive advantage
R&D activities Yes Yes Yes Yes Long Term competitive advantage
Brand Reputation Yes Yes Yes Yes Long Term competitive advantage
Strong base of loyal customers Yes Yes Yes Yes Long Term competitive advantage
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Large distribution network: The distribution network helps a business to move its products and services to the customers. Having an efficient and large distribution network is effective to reach the customers faster. Gatorade has a distribution network spread over 80 countries which help the organization to reach the customers faster (West et al.2015). However, developing a large distribution channel requires investment of huge resources which may not be affordable for all the organizations. On the other hand, managing all the parts of the distribution network is another critical task which require special capabilities. As Gatorade is capable to manage its distribution network effectively, it attains a better position than the other organizations in the sports drinks industry.
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Infrastructure: Presence of advanced infrastructure helps the organizations to manufacture products in a more efficient way. Presence of advanced infrastructure also helps the organizations to carry out its operational activities effectively. Offering the customers with quality products help the organizations to satisfy them and it strengthens the position of the organization in market (West et al.2015). Presence of advanced infrastructure in the organization helps it to deliver quality products to the customers. Offering products of the distinctive quality also assists the organizations to differentiate their products from the others. It, in turn, helps the organization to attract more number of customers and larger share in the market.
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R&D activities: Offering the customers with innovative products is the key to sustain in the highly competitive market (Porter & Lee, 2015). A focus of the management on the R&D activities helps the organization to create innovative products for the customers. In case of Gatorade also, the organization gives special emphasis on carrying out research and development activities. As a result, the organization can offer distinctive products to the customers. It, in turn, helps the organization to attract the customers easily with unique products. However, investing on the R&D activities and undertaking these projects on continuous basis is not easy for all businesses. Being a part of the PepsiCo, the Gatorade management can invest adequate capital and resources for R&D activities. Presence of the rare and inimitable research and development activities help the organization to obtain long term competitive advantages.
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Brand Reputation: The customers prefer using products from reputable brands (Porter & Magretta, 2014). Acquiring new customers and retaining the existing customers become easier for the reputed businesses. Therefore, the brand reputation of Gatorade gives competitive advantages. However, the Gatorade has developed the brand image by serving the customers with unique products for years. On the other hand , creating such a unique brand image may not be possible for the organizations which are comparatively new in the market therefore , it can be stated the history of providing quality products to the customers for long time can help the Gatorade management to obtain competitive advantage for long term.
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Strong base of loyal customers: The strong base of loyal customers help an organization to the hold its position in the market. In 2017, Gatorade Perform, a a drink of Gatorade brought more than 3250 million USD to the organization whereas the Gatorade Frost brought about 770.51 million dollar to the organization (Bragg et al.2018). Presence of the loyal customers keeps demand of the products offered by the organization high. It also helps the organization to increase sales. So, the base of loyal customers can also be considered as a source of long term competitive advantage for the organization.
Conclusion:
The above discussion on the competitive advantages of Gatorade indicates that the organization has both tangible and intangible resources to hold its place in the market. The capabilities like strong brand reputation and the base of loyal customers are effective to helping the organization to compete with its customers. On the other hand, the capabilities like advanced infrastructure, focus on R&D activities and the large distribution network provide the organization with competitive advantages so that the organization can obtain a distinctive place in the market.
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Bragg, M. A., Roberto, C. A., Harris, J. L., Brownell, K. D., & Elbel, B. (2018). Marketing Food and Beverages to Youth Through Sports. Journal of Adolescent Health, 62(1), 5-13.\
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Broughton, D., Fairchild, R. M., & Morgan, M. Z. (2016). A survey of sports drinks consumption among adolescents. British dental journal, 220(12), 639.
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Gatorade.com. (2018). Help rebuild muscles.. Gatorade.com. Retrieved 14 February 2018, from https://www.gatorade.com/
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Porter, M. E., & Lee, T. H. (2015). Why strategy matters now. New England Journal of Medicine, 372(18), 1681-1684.
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Porter, M., & Magretta, J. (2014). Strategy and Competition: The Porter Collection (3 Items). Harvard Business Review Press.
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West, D. C., Ford, J., & Ibrahim, E. (2015). Strategic marketing: creating competitive advantage. Oxford University Press, USA.
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