The microeconomic factors of soft drink market of US are analysed in order to understand the market conditions. Below is the discussion of the microeconomic factors.
Competitors: total market value is developed by identifying the market value of leading companies in the soft drink market of US. The main players in the soft drink market are PepsiCo Inc., The coca cola company, Nestle, Red Bull, Danone, Peppale Snaple Group. These companies focus upon offering creative, innovative and cost-effective marketing options for consumers. These companies have increased the research and development spending in order to create new flavours, which can help in providing the health benefits to consumers. This has helped the companies to establish a competitive advantage in comparison to the other companies (Grand View Research, 2018). Hence, the competition in the soft drink market is high and it is important to make sure to offer a highly beneficial and unique product to customers in order to become successful.
Customers: The people of US are mostly health conscious. The offering of all natural beverages by the company will help it attract US people. As the beverage contains only 25 calories, no chemicals or preservatives, 5 grams of sugar and, it comes in four fruit flavours: orange, pineapple, apple and grape, which can help influence the people to buy it. The beverages of the company will be able to target only the health- conscious population of US. The effective marketing campaigns can help in building the customer base and can increase the revenues as well.
Employees: The population of US is educated, as the education system of the country is good. The people in the country attain high qualification and like to learn new things. This shows that the company can get highly qualified and skilled employees. They will be able to produce the beverages in a highly effective manner. The skills of the employees will help them to sell the beverages in an easier manner to a large number of customers (Kokemuller, 2018). They will also be able to inform the customers about the qualities of the beverages, which will help in increasing the sales of the beverages in an efficient manner.
Distribution Channels and Suppliers: The leading companies in US are able to survive in the market due to strong distribution channel, advertising and the brand loyalty of consumers. Many of the companies have adopted the acquisition and mergers as the main strategy to maintain their position in the market. The companies are highly focused upon the selection of right distribution channels. Hence, it is important to use the right channel of distribution and advertising such as choosing an appropriate advertising agency and celebrity branding. The suppliers play an important role in the success of any business and meeting the needs of customers. It is important to choose right suppliers and maintain good relationships with them so that they can provide good quality and cost-effective supplies at the right time.
The macroeconomic factors of US are analysed in order to understand the market conditions. Below is the discussion of the macroeconomic factors.
Economic output: the economy of US will remain robust in the future quarters due to the increase in the spending of the government. Although, it is expected that it will be moderate. The risk that can be faced by US is due to the deteriorating trade outlook. The uncertainties related to trade will keep weighing upon the investment and the business confidence. On the other hand, the increase in the tariff actions could affect the consumer spending. The GDP may increase in the year 2018 by 2.8 % (Focus Economics, 2018). Along with this, the moderating growth can be noticed in the year 2019 to 2.4 %. In the year 2017, the GDP of US was USD 19,391 billion. The economic growth increased by 2.3 % as per the data of 2017 (Focus Economics, 2018). The economic conditions of the country are good and hence, the idea of the expansion of the soft drink business in US can be successful.
Unemployment: in July of this year, the rate of unemployment has reduced to 3.9 % which was 4% in June 2018 (Trading Economics , 2018). It remained unchanged in August 2018. This is the lowest rate of unemployment in the current year. The number of unemployed people reduced by 46 thousand to 6.23 million. The average unemployment rate in US is 5.77 percent from 1948 to 2018 (Trading Economics , 2018). The rate of unemployment in US is comparatively low.
Inflation: The inflation rate of US as per the data of August 2018 is 2.7 % ( Trading Economics, 2018). It has reduced by 0.2 % in comparison to July 2018. This is the lowest inflation rate in four months. The average inflation rate of = is 3.27 from 1914 to 2018 ( Trading Economics, 2018). The inflation rate in US is low and hence, the scope of the soft drink business in US is quite large and can result in success.
Political factor: US is the largest economy. The reputation of the country is great. It is the second largest economy in the world. The political climate is stable. The country promotes democracy. The position of the country is good in terms of stable political environment, technology and advanced technology. The country is a good destination for foreign direct investment (David, 2017). This can help the company to establish its business in US in an easier manner, as the political environment is stable. The company will not have to face any kind of difficulty in establishing the business.
Social factor: the country is the third most populated country. The education system of the country is good. The healthcare system is highly effective. The people of are mainly health conscious, but the culture of fast food has resulted in illness and widespread obesity (David, 2017). Though the people are health conscious, but still they can get attracted towards the beverages of the company, as the company will offer all natural, fruit flavoured and sparkling beverage with low calories.
Legal factors: the legal environment in US is strong. Each state of the country has its own legal scheme and own government structure, which can create problem for the company to establish the business. (David, 2017). The company have to follow all the legal schemes and regulations in order to establish the business in US.
The management accounting practices are important for the company to implement, in order to support the planned expansion. The key management accounting practices are:
Standard costs: Standard cost is the main principle of the managerial accounting. The standard cost can be identified by implementing the practice of evaluating the different factors associated with the business model such as direct labour, direct materials and overheads. The standard costs are assigned by the company for different processes and the items after the analysis (AccountingCoach, 2018). This can also help in tracking the actual costs and the process in an effective manner and can be compared with the standard costs (Johnson, 2018). The company can use this method for identifying the variation. It can be used by the cost accountants for the identification of main cause of variance. This can help the company to maintain the cost of the items in an effective manner.
Variance Analysis: Variance analysis helps in identifying the root cause of the variation in the management accounting. It is a type of quantitative investigation of the variation among the actual and the planned budget or the behaviour (Accounting Tools , 2017). It is used to control the business in an effective manner. This analysis is effective when the amount of variance is reviewed on trend line and therefore the rapid changes invariance level can be apparent (Oyerogba, 2015). This method can be helpful for the company in order to investigate the planned performance in comparison to the actual performance. By using this method, the company can eliminate the cause of the variance through its analysis.
Cost Volume Profit Analysis: it is a practice that is used in the managerial accounting for the purpose to describe the connection among the selling price, sales volume, profitability and the cost of the product (Hansen & Heitger, 2015). The information collected from the research related to the sales and cost volume is used by the managerial accountant for the purpose to identify the impact of it, upon the organization. The changes in the selling price, sales volume, fixed costs and variable product cost is determined in order to take the steps to maintain the control (Cafferky, 2010). This practice can help to effectively understand the ability of the product to provide the profit to the company. It helps in analysing that what sales volume is required to attain the fixed profit levels. The expected future budget of the company can be highlighted. The fixed cost of the company can be calculated with the help of this method as well as this can also help in measuring the risk associated with investment. Hence, using this method provides the ability to manage the profitability in an effective manner.
References
Trading Economics. (2018). United States Inflation Rate . Retrieved from tradingeconomics.com: https://tradingeconomics.com/united-states/inflation-cpi
Accounting Tools . (2017). Variance analysis. Retrieved from www.accountingtools.com: https://www.accountingtools.com/articles/what-is-variance-analysis.html
AccountingCoach. (2018). Introduction to Standard Costing. Retrieved from www.accountingcoach.com: https://www.accountingcoach.com/standard-costing/explanation
Cafferky, M. (2010). Breakeven Analysis: The Definitive Guide to Cost-Volume-Profit Analysis. Business Expert Press.
David, J. (2017). PESTEL analysis of USA. Retrieved from www.howandwhat.net: https://www.howandwhat.net/pestel-analysis-usa/
Focus Economics. (2018). U.S. Economic Outlook. Retrieved from www.focus-economics.com: https://www.focus-economics.com/countries/united-states
Grand View Research. (2018). U.S. Soft Drinks Market Size, Share & Trends Analysis Report By Product (Carbonated Drinks, Packaged Water, Iced/RTD Tea Drinks, Fruit Beverages, Energy Drinks) And Segment Forecasts, 2018 – 2025. Retrieved from www.grandviewresearch.com: https://www.grandviewresearch.com/industry-analysis/us-soft-drinks-market
Hansen, M. M., & Heitger, D. L. (2015). Cornerstones of Managerial Accounting. Cencage Learning.
Johnson, J. (2018). Overview of Managerial Accounting Practices. Hearst Newspapers .
Kokemuller, N. (2018). Six Microenvironmental Factors That Affect Businesses. Hearst Newspaper.
Oyerogba, E. O. (2015). Management Accounting Practices in the Developing Economies: The Case of Nigeria Listed Companies. The Journal of Accounting and Management, 5(2).
Trading Economics . (2018). United States Unemployment Rate. Retrieved from tradingeconomics.com: https://tradingeconomics.com/united-states/unemployment-rate
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