Red Bull GmbH began its operations in 1987 with three shareholders which are Chaleo Yoovidha with 49% shares, his son with 2% shares, and Dietrich Mateschitz the CEO having the rest of the shares. The company is headquartered in Austria and has a global presence in over 145 countries. The company deals with energy drinks which are manufactured in the headquarters in Austria and distributed through regional centres located in Tokyo, Singapore, and Dubai. The report will analyse the company through looking at its leadership, organisation culture and structure, product lines, corporate and business level strategies, competitors, and HR and processes.
Red Bull is a company that began its operations in 1987 and has three shareholders which are Chaleo Yoovidha with 49% shares, his son with 2% shares, and Dietrich Mateschitz the CEO having the rest of the shares (Red Bull). The company is headquartered in Austria and has a global presence in over 145 countries. The company deals with energy drinks which are manufactured in the headquarters in Austria and distributed through regional centres located in Tokyo, Singapore, Dubai, North America, France, and UK. The company culture is coming up with a product that has an attribute of being common and unique while maintaining the highest standards (Scribd). In making sure that the culture is maintained the employees are satisfied and they remain leaders in the energy drink industry.
The organisation structure is a hybrid one that contains a mixture of a functional and divisional one that are all aimed at creating a successful franchising model of the business Raichaudhuri, 2010). The company offers four types of products which are all geared at attracting young urban professional. They are Red Bull energy drink, Red Bull sugar free, Red Bull Cola, and Red Bull Energy Shots. Over the last two decades several competitors have emerged and have eaten into Red Bulls market share which was tending to a monopoly. Monster energy drink is the closest competitor having a market share of 23% compared with 29% of Red Bull (Cirillo, 2009).
The company operates through franchising model of business with operations in marketing and manufacturing being decentralised. The company employs aggressive strategies to sell their brand with the original successful strategy being viral marketing. Viral marketing was done through distributing free cases of the energy drink to universities hence creating a surge of demand for the product amongst the youth (Scribd). Thereafter, they have sponsored sport personalities and sport events, owned sport enterprises, sponsored charity events, and celebrities who have enabled them access the lucrative youth market. The company has 6900 employees who are all hired regionally. Regional managers are trained at regional centres with performance teams from headquarter in Austria being sent to assess them. In conclusion, the brand has managed to become an identity with both generation Y and X, and with sports hence a success.
Leadership and Management
Red Bull, a company that has its headquarters in Austria, is managed by Dietrich Mateschitz since 1987 when it was licensed. The share allocation of the company is 49% owned by Chaleo Yoovidha, owner of the Thai company TC Pharmaceuticals, 2% owned by his son, and the rest by Mateschitz (Red Bull). The two major owners provide 90% of the company’s funds while the rest 10% is through bank loans. The foundations of the company are on identity, authenticity, credibility, masculinity, and perseverance. The company has managed to define the energy drinks industry through coming up with a ubiquitous brand that has managed to infiltrate in popular culture and sports, and other traditional sports and media.
The company presently is distributed globally, with each franchise having its own CEO, and a marketing team. Other regional headquarters in the world apart from the headquarters are based in Tokyo, Dubai and Singapore, France, UK, and North America who concentrate in marketing and distributing the product to the final consumer (Scribd). The success of the company is attributed to its one-brand distribution network operated by Red Bull which has yielded results in countries such as USA. The company has also a separate firm whose function is to develop and market other drinks such as LunAqua a water brand, and a sugar free version of Red Bull.
Since the manager Mateschitz has a history of marketing from Blendex, German toothpaste, the strategy of selling the product has been through aggressive marketing. Aggressive marketing has mainly been successful through viral marketing, sport sponsorship, sport ownership, and promotional activities and events (Gorse et al., 2010). The personnel are also organised on a regional basis with special emphasis research and development and a designing team that ensures that products stand out and have a global presence. Distribution partners who are to make sure the product reaches the end consumer are not on the payroll of the company but are treated as customers who can obtain extra credits (Scribd).Even though there have been set backs in terms of unhealthy association of the drink, the company has solved the problem through coming up with different products for different countries like the Austrian formular for Austria and also the US market while the sweeter and less carbonated version of the drink for countries such as Thailand.
The company has a vision of coming up with a mixture of a unique and ubiquitous brand that would easily be identified by customers. The quest for uniqueness began in 1984 up to the year 1986 before Red Bull was given a licence to carry out its operations. Mateschitz and his team carried out extensive research in those years coming up with over 200 different packages and setting up the basis of their brand identity (Cirillo, 2009). In 1987, the company came up with the vision of “Spreading our Wings Worldwide” which would be the basis of their organisation culture (Red Bull).
The company differentiates itself from other carbonated drinks by being consistent in their offerings such as its distinctive blue and silver colours, different dimensions which are tall and slimmer than for competitors (Gorse et al., 2009). It also stands out by setting higher prices than its competitors so as to reinforce the brand’s efficacy and status, and establishing it as a premium brand in the eyes of consumers. The culture of the company is also brought out in its mission statement where it is noted that the focus is on maintenance of Red Bull standards while making sure that the company remains in pole position in the global energy drink category in a profitable and efficient manner.
In making sure that the set guidelines and standards are maintained employees are integrated in a culture where best practices are shared all aiming at making the company the company of choice amongst employees. The company culture does not specify who their customers are, but they target a variety of customers, who range from athletes, live bands, students, professionals, clubbers, sports personalities and so on (Red Bull). There is also no specific geographical location of the company but its aim is to attract the youth, athletes and sport personalities at an international level. Prospective employees and employees work in a team that is headed by a manager that brings the best out of them.
The company has two major share holders but it’s managed by Mateschitz a co-founder. The organisational structure type employed in the company is that of a hierarchical hybrid one where different structures are blended together to enable the Red Bull product to be marketed and sold effectively. The two types of organization structure employed at the company are functional and divisional types which are all intended to make the company adaptive and flexible to the diverse economic conditions (Daft & Marcic, 2009). The factors that influenced the set up of the current organisational structure are global competition, market changes, and technological changes (Raichaudhuri, 2010).
The hierarchy of authority in the company follows the functional type of organization structure as shown in figure 1 (Scribd). The system is best suited to its franchising strategy and is based in the headquarters in Austria and the regional headquarters such as Singapore, Tokyo, and Dubai, North America, France, and even UK. Furthermore, the structure is considered basic and makes sense hence making operations being effectively. The structure shows that decisions in the company are centralised based and are done at the top hence making red bull have more upper management control (Scribd).
Figure 1: Functional Organisational structure of Red Bull
However, the functional structure had its disadvantages which included disunity amongst employees and so in 2004, the management decided to blend the structure with a divisional structure. This was done through incorporation of the major departments in all the divisions of the company. For instance, the R&D department was incorporated in departments of production, marketing and even accounting so that personnel might blend their skills to come up with progressive decisions and products. The divisional strategy is also important in handling customer issues like the 2004 scenario of the energy drink having detrimental effects on human health (Scribd).
Initially, the company was set up to produce and market one product line, Red Bull energy drink. Since 2003, the company diversified its product and now presently it has added three more product lines. The three other product lines include: Red Bull sugar free, Red Bull cola, and Red Bull energy shots. The guidelines that were followed in coming up with the product lines are based on four other aspects which include: demographics, psychographics, usage behaviour, and consumption collection (Red Bull). An analysis of the products offered is as follows.
Red Bull Energy Drink
It is a useful beverage that has been scientifically proven to revitalize the mind and body. The product is to be used by individuals aiming to: clear and focus their mind, physically perform, and get consistent peak performances while still having fun. The key ingredients of the product are glucose, taurine, glucoronolactone, sucrose, caffeine, and Vitamin B group (Scribd).
Red Bull Sugar Free
The product basically is the normal energy drink minus glucose and sucrose. Additional ingredients also include aspartame, acesulfame K, and suclarose. Consumer targets of the product are those who are health conscious and Diabetics.
Red Bull Cola
The product is not an energy drink but a cola drink intended to compete with major players such as Coke and Pepsi. It contains 100% natural products which are kola nut and coca leaf extract. All the ingredients are not hidden but clearly labelled on the can. The product sparked controversy, specifically in Germany, where it was speculated that minute traces of cocaine were found (Scribd).
Red Bull Energy Shots
The product is a concentrated version of Red Bull energy drink that does not need to be chilled. A minimum amount of 60ml has the same energy as the full normal Red Bull energy drink. The product was developed with the intention of providing energy to individuals who have no time to stop and at the same time want to perform to the maximum. It is packed in a small case where it can fit easily in bags, glove boxes, jacket, and hand bags where they can be taken any time since they do not require to be chilled.
Since 1978, Red Bull has dominated the energy drink market but of more than two decades later the industry has vastly changed. The company still leads in controlling 29% market with Monster energy drink closing the gap with 23% (Parker, 2005). The figure below shows the average market share of different companies as per the year 2008 (Scribd).
Figure 2: Market Share in Percentage of Different Companies
The decreasing market share value over the years has been attributed to many reasons. Companies such as Lucozade from UK and Gatorade from US who were well established companies entered into the energy drink industry. Furthermore, in Asia the company Kratin Daneng held a vast amount of market share although not having the carbonated form of energy drinks. In the case of Monster, the market shifted when Hansen bought out the company in 1997. They applied the same marketing strategies as Red Bull such as “Unleash the Beast” to appeal to certain consumers, and “Monster Army” to tap into the athletes and sport market (Parker, 2005). They also used events to promote their products hence being at par with Red Bull.
It has also been noticed that Red Bull’s market share has been because the current energy drink companies have been riding on the success of Red Bull and bringing out similar products. The products have no patent hence the reason why competitors can undercut Red Bull and produce similar products that ultimately eat into Red Bull’s market share. Furthermore, other products such as coffee energy drinks have entered the market. The company SHOCK coffee has been successful in this product line but Red Bull has not which means that SHOCK has infiltrated into a chunk of the market (Parker, 2005). Therefore, it is speculated that in the future more entrants will come up in the industry bringing with fierce competition that Red Bull will have to prepare themselves for.
Red Bull’s Operations
The company’s operations are based in the headquarters in Austria and have 6900 employees globally. The firm’s infrastructure is based in such a way that new tactics of communicating with consumers are adopted, which commonly is change oriented behaviour (Raichaudhuri, 2010). Operations are globally based and very strong with regional headquarters based in Dubai, Tokyo, and Singapore. Every employee in the global companies is on direct pay from headquarters with the exception of sales representatives. The major avenue for advertisement of their products is through events where the budget of every event to be organised is sent to the country in question from the headquarters. In the headquarters the franchise management have a duty to effectively manage the budget and make sure that it is best utilized.
When coming up with unique products and operations, the company invests heavily on technology development through the R&D department. The department always tries to come up with something new and unique that will enable them always be leaders in the industry. Since the company is a global organisation the R&D department is run in the headquarters and new innovations are implemented globally. In procurement of supplies, the company has many suppliers with inputs being standard as opposed to unique so that the final product can be of superior quality.
Production of products in the company is central based where a production facility is based in the headquarters. In the facility, the energy drink is manufactures, canned, and cased ready to be distributed internationally. Production is based on customer’s specifics and requirements that result in unique processes and innovative products. When the products reach their intended market through regional distribution companies, then further distribution is done by ‘DPs’ (Distribution Partners) to ensure that end consumers get the product in a timely manner (Raichaudhuri, 2010). All sales are also done through these same DPs and they have strong relationships with the parent company being given credits hence considered also as customers.
Corporate and Business level Strategies
In order to market its products the company has implemented an aggressive international marketing strategy. The activities are diverse ranging from sports activities such as extreme sports, art shows, and video games. Their strategy is mostly concerned with attracting young professionals and sport personalities. In ensuring that the youth are attracted, they enlist the help of celebrities such as Eminem in sponsoring the contest “Red Bull EmSee Battle Rap Championships” (Red Bull). They have also used social websites such as face book in carrying out SWOT analysis’s so as to customise their products to the liking of target consumers and at the same time unique and different.
Sponsoring is not only their forte but they have also ventured in sport ownership where they purchase and re-brand an entire sports team. Presently, they have teams from ice hockey, motor sports, and even American football. They also use promotional cars where, Mobile Energy Team (MET) programs are developed to consist with mostly college students whose function is to drive specially designed red bull racers (Red Bull). The racers are specified with the company’s logo with an oversized can of red bull on their chassis. They complete daily missions such as businesses, sport events, and so on. The racers are also equipped with knowledge of the drink who also presents them to consumers. There is also a strategy of supporting events in aid of charity. For instance, it has sponsored the “Don’t Walk Charity Fashion Show” at the University of St. Andrews in Scotland (Scribd).
HR, Strategies, and Processes
The company has 6900 employees with HR activities being decided in the headquarters in Austria and are to be implemented in all the franchises globally. The managers of the global franchises are sent to regional headquarters for training and development programs so that they can be of great successes in their individual branches. Performance management teams from Austria also help the managers in evaluating their employees hence the reason why Red Bull’s HR team is considered very strong and globally implemented (Scribd).
Their marketing is based on top-down approach where decentralised sales and marketing teams are employed. Regional sales and marketing teams are charged with the task of creating awareness amongst cultural icons, growing the brand through word of mouth (Gorse et al., 2010). There is also a control on the products release and availability coupled with high premium prices compared to other energy drinks. This aspect has made the drink a mystique and has exaggerated the demand of the drink amongst the youth who refer to it as a generation X standard or “a poor man’s cocaine” (Gorse et al., 2010). Again, the focus on night life enjoying and increasing product awareness across borders has also evolved the product into a generation Y product.
Apart from cementing the products position amongst generation Y and X, Red Bull has also managed to establish the brand as a sport property. This was achieved through avoiding competing with well known sport drinks such as Gatorade, and Lucozade. This has led to creation of new and innovative sport properties, new sponsorships, and owners in the sport industry all thanks to Red Bull.
Red Bull has developed over the last twenty four years surviving a volatile market that was non-existent in 1987. Despite the negative PR on its products the company employed revolutionary marketing techniques making the brand once again profitable and well known. The market share of the energy drink is also becoming diverse with other competitors coming in and using Red Bull’s strategies. However, the unique and ubiquitous products of the company will enable the brand stay for long in the market.
Case study analysis at:
Cirillo, J. (2009). Running of the Bull. (Cover story). Beverage World, 128(6), 18-22. Retrieved from EBSCOhost.
Company website at:
Daft, R. L., & Marcic, D. (2009). Understanding Management. Ohio: Cengage Learning. Pp. 160-173
Gorse, S., Chadwick, S., & Burton, N. (2010). Entrepreneurship through sports marketing: A case analysis of Red Bull in sport. Journal of Sponsorship, 3(4), 348-357. Retrieved from EBSCOhost.
Parker, P. M. (2005). 2006-2011 World Outlook for Energy Drinks. World Outlook Report 2006-2011: Energy Drinks, 1. Retrieved from EBSCOhost.
Raichaudhuri, A. (2010). Managing New Ventures: Concepts and cases on entrepreneurship. New Delhi: PHI. Pp. 112-117