Running head: EXTERNAL AND INTERNAL ASSESSMENTS 1

External Factors Affecting Barcadi Limited

Name:

Institution:
 Introduction

To run a business correctly, an organization has specific strategic plans. A strategic plan

is a blueprint for an organization to reach a particular goal. Different groups have different

worked out strategic plans. It is the focal and preliminary step en route to the success and

existence of any business organization. As a critical part of any organization, its success is

dependent on the strategic plan of the company, its vision, and mission. One of the primary

objectives of a strategic plan is its external factors which include political, economic, social and

technological factors.

Buyers, Sellers, and Competitors

As spirits and wines industry, Bacardi has its presence in more than 160 markets

worldwide including United States of America, Spain, Germany, Mexico, Brazil, Russia, China

among others.

The company functions an extensive distribution network of its brands. Wholesalers and

retail outlets such as convenience stores, hotels restaurants and tax-free shops and independent

distributors are amongst its customers. It allows their consumers to access a large variety of its

brands in various distribution channels.

Major competitors of Bacardi Limited include Beam Suntory Inc, Pernod Ricard and

Diageo Plc in the USA among others

Substitute products
 Bacardi has a variety of non-alcoholic drinks ranging from beer, wine, cider which poses

a potential threat its market share. The increasing health awareness will also create a negative

influence on alcohol consumption and therefore the alcohol market as a whole will be affected

Political factors

This factor dictates the guidelines to competition, operation cost and the existence of

diverse lobby groups. It is important that the company adopts a more practical Political

contribution policy for contributions to political parties, office public candidates, and political

organizations. It should be consistent with the company’s core values and the law

The US Immigration policy reiterates the establishment in the Standards of Business Conduct.

Early approval of political contributions and forms guidelines for revising requests is required.

Under the plan, the company’s management’s is necessary to provide reports to the Board's

Audit Committee concerning political contributions that have been made.

Economic factors

This factor has a crucial importance for any industry development.Barcadi has achieved

commercial scale. The development of an organization clearly depends on its financial condition

which is earned through profit maximization and cost minimization. Bacardi is trying to make

that.

Social factors

Demand tendencies designed by the subsequent primary issues include demographic

changes, beliefs, and fashion sequences. Population changes generate

different marketplaces; whereas fashion cycles and ideas create essential growth, Bacardi has a

Corporate Responsibility Committee, which advice the management on guidelines and strategies
that affect Bacardi’s social function, dealing with issues related to product and workplace safety,

training of employees, business environment, and sustainable supply chain initiatives.

Environmental:

Most governments are focusing on attracting foreign direct investments in the

environmental segment, with stress on pollution control and water resources administration

Barriers to entries in new markets

The spirits and wines industry is an extremely profitable and competitive business, where

major players hold approximately 65% of the market share. More often, there are new players in

the market but due to the existence of big and established brands companies such as Bacardi

make it hard for the small players to succeed within the marketplace. Underlining the fact that

not all innovations succeed, the multinationals and major players continue to pose an advantage

of the potentially higher channel of significant amounts of money into the market.

Internal factors

These factors of a company are often studied in SWOT analysis. This analysis is often

used to monitor a business and its environment. It analyses the strengths, weaknesses,

opportunities and risks.

Strengths

Bacardi maintains the world's leading rum brand. Bacardi recorded global sector volume

sales of 18% in the year 2005, providing the name a strong consumer base and a significant level

of credit in Western Europe and North American markets. Bacardi also has healthy finances with
an ocean of resources to expand in which ever location and market it wishes. It also has a broad

sector coverage as it has expanded its portfolio as fast-growing spirits such as vodka, blended

scotch, tequila amongst others while capturing share in large markets while moving towards

premium products.

Barcadi has a strong distribution network as it has achieved a large world with a strong

distribution network in Western Europe America. Strategic and significant alliances with

alcoholic beverage products have been made which is important to overcome challenges a

rapidly consolidating market encounters.

Weaknesses

On the other hand, Bacardi is excessively dependent on rum despite acquisitions which

accounted for just over 60% of the company's volume auctions FY05, which is its only spirit

with a global scope.

The company has a broad coverage but weaker depth where Bacardi has an insufficient

variety of brands in each product area and is too reliant on the main brands like Rum, Grey

Goose in vodka and Dewar's in whisky. Product collection is therefore still wanted. Bacardi still

suffers from the small presence in some sectors, such as single malt whisky, cognac, and

liqueurs. The first two are growing strongly though relatively small, and due to their premium

nature, they offer good margins. Liqueurs are projected to have a strong growth particularly in

western Europe and North America.

Opportunities
 Bacardi's primary sector, Dynamic rum, is expected to have significant growth in the

coming years.It is shown through its volume sales of up to 15%, in Asia-Pacific, North and

Latin America, Western Europe. Rum’s fittingness for use with mixers as well as in cocktails

has will increase its demand

Dynamic vodka is likely to have robust growth in two important regions i.e., North

America and Western Europe. The company looks suited to explore this markets

Scotch whisky is expected to grow in developing markets such as China while

Booming tequila in the US and Mexico seems to increase noticeably in its presence in the

tequila market. Tequila sales are projected to grow by up to 30% in the next five years,in the

Mexicans and Us markets.

Threats

Merging in global spirits industry for instance Fortune and Pernod Ricard's Brand's

achievement of Allied Domecq, Bacardi has fallen to third in the US. Bacardi's trading power

has declined related to Pernod's after Allied Domecq acquisition in Europe.

The business has been entangled in some legal suites, for example, Havana Club dispute

which has a significant potential drain on the enterprise resources.

Changing government policies on the marketing of spirits might severely affect spirits

producers as they become gradually sensitive to the negative impacts alcohol consumption

has on the population as well rise in underage drinking

 Conclusion

For maximum exploitation in the organic business openings i.e. tequila, rum, and vodka,

it is important to invest in innovation in actual core brands.

Bacardi should strive towards fully possessing or combined venturing towards

marketplaces in Eastern Europe, Asia-Pacific, Africa and Middle-East. Most of these areas,

however, it is important to possess a brown spirits range or a single malt scotch whisky, which

no company has realized. Thus, it is critical to obtain formerly reliable products, so that

expansion in distribution delivers vastly positive returns

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