Threats Under the 10 external forces:

1. Economic Factors
There are many key economic variables that can be looked at when analysing the threats for
Primo Water Corporation. These include the inflation rates, price fluctuations, interest rates,
exchange rates, and more.
Over the last few years, it is evident that there been a significant change regarding inflation. It
has had a very big impact on businesses including Primo. With the rise of inflation, it has
increased the cost of production, thus, majorly affecting businesses profitability. Primo has had a
successful outcome with regards to revenue, as it has increased over the last few years. However,
inflation rates still are a very big threat to a business as the value of the investments need to keep
up with the inflation. Additionally, with the slowly deteriorating economic conditions, customers
and consumers spending patterns have changed, thus affecting the performance of a business.
Although there has been an upward trend of revenue increasing over the last few years, this has
also resulted in an increase in expenses. Due to higher route operations, and the rise of fuel
prices because of inflation, Primo has suffered a 13% increase in expenses. Overall, companies
all across the industry have suffered.
Primo Water corporation operates in 21 different countries and with the fluctuating interest rates,
it does not allow for a stable economic environment. This uncertainty is a big threat as it gives
the possibility for a decrease in the value of an asset, due to the fluctuation of interest rates.
Likewise, with the exchange rates also fluctuating, this has affected the sales of a company like
Primo water corporation which operates internationally due to suppliers being local.

“News Details.” Primo Water Corporation, 18 May 2022,

https://primowatercorp.com/investors/press-releases/news-details/?news_id=d6dde6c9-
5287-4bfa-aaa7-f1b7004c5b5f.

2. Social Factors
Social factors play a major role when analysing the potential threats to a company such as
Primo Water Corporation. For a company like Primo, they would take social factors when
considering how they would market and develop their products.
Primo Water corporation is known for its ability to provide the best water quality through
there filtration systems. As they lead in providing the best water quality, they have lots of
eyes on them. This means that they also hold that expectation of catering the best. One of the
major threats have been the change of customers preferences. Ultimately, this places a lot of
pressure on companies like Primo, to continuously make changes and develop their products,
adapting to the customer needs. With the covid pandemic, there has been very big changes to
 the business environments. For Primo to adapt and change there marketing and plan with
regards to there products is a major threat as they have already established themselves.

 Shortage of skilled labour in the market can make it difficult for the
organisation to attract talent with the right skills set.
 Suppliers: The bargaining power of suppliers has increased over the years
with the decrease in the number of suppliers. This means that the costs of
inputs could increase for Primo Water Corporation.
 Shortage of skilled workforce in certain global market represents a threat to
steady growth of profits for Primo Water Corporation   in those markets.
 Shortage of skilled workforce in certain global market represents a threat to
steady growth of profits for Primo Water Corporation   in those markets.
 No regular supply of innovative products – Over the years the company has
developed numerous products but those are often response to the development
by other players. Secondly the supply of new products is not regular thus leading
to high and low swings in the sales number over period of time.

3. Cultural Factors

Cultural threats are very important for a company like Primo Water Corporation to consider as
they operate in 21 different countries. Often the cultural factors are not acknowledged, which
ultimately can lead to the loss of a great opportunity and market.
Companies often want to expand internationally, however when they face cultural diversity, it
has a major impact on the organization. This is why it is very essential to have cultural
knowledge and intelligence.
Some of the cultural threats include:
 The ability to not acknowledge differences.
 Not being able to understand the legal and ethical issues.
 Managing diversity.
 Understanding the local business market.
Understanding cultural differences and the change in environment is necessary because when a
business does not consider these cultural variations they often fail. Primo has made it clear that
their “goal is to create a truly inclusive work culture”, however as they continue to expand and
grow, they need to keep these threats in mind.

“People.” Primo Water Corporation, 29 Apr. 2022,

https://primowatercorp.com/sustainability/social/people/.
 4. Demographic Factors

Demographic factors are often used to assess and evaluate the target market. If the target market
is changed or there is a potential of change, this can result in many threats for a company like
Primo.
There are many demographic risks that must be considered. Some of these risks include, income,
rising prices, and immigration.
Income is a major demographic threat as it is marketed where it can be afforded. Primo water
corporation is known for their ability to provide the best clean water available. Primo averages
around $0.50/gallon, varying depending on location. However, if they were sell this in the lower
income areas, that would significantly affect the business as the amount of people able to afford
it would decrease. The rising prices due to inflation make a major impact on demographic threats
because tying into the first threat, the amount of people able to afford certain products changes
depending on location. Immigration is a great opportunity for Primo Corporation to expand and
take advantage, however it also is a threat as more individuals are looking at different options.
Similarly, how this could be an opportunity for Primo, it potentially could be an opportunity for
their competitors as well.

“Primo® Water Refill Stations: At Grocery Stores near You!” Primo® Water and Water
Dispensers, 27 Jan. 2023, https://primowater.com/self-service-refill-water/.

5. Natural Environmental Forces

Natural environmental forces play a very important role for a business as more customers and
consumers are taking into consideration the effects the business processes can potentially have in
the world. With businesses like Primo water corporation, the rising raw material poses a major
threat to the ability to achieve maximum profit. Due to the rise of raw material, the overall prices
increase.
Another major threat has been the increasing environmental stability trend. This is a major threat
as when products or services are not known as environmentally friendly, it affects the business
significantly. It can potentially damage the reputation and create a very bad image for the
company against their competitors. As Primo is known as the top leader for clean water, they
must be aware of these threats to continue this reputation and image.

“Environmental.” Primo Water Corporation, 8 Apr. 2021,

https://primowatercorp.com/sustainability/environmental/.
 6. Political Forces

Political threats play an important role for a business to analyze and look over. The nature of
politics is very inconsistent therefore, its very important for businesses like Primo to be attentive
and ready for anything such as importing restrictions, unnecessary costs, taxing, etc.
Majority of Primo water corporations sources are government owned, therefore as mentioned
above, they must be very attentive and prepared for potential changes. When political change
occurs, it is essential for companies to adjust and modify according to the rules and regulations.
This allows them to continue running their business, however, these changes that may occur,
could have major impacts on profits, costs, etc. Primo operates in many countries around the
world, consequently, they must continue paying close attention to this.
Some of the things Primo Water corporation should pay close attention to include:
Pricing Regulations
Wage Legislation
Trade Regulations
Legal Framework

Department, Strategic Management. “Primo Water Corporation Pestel Analysis & Environment
Analysis.” Fern Fort University, Fern Fort University, http://fernfortuniversity.com/term-
papers/pestel/nyse4/797-primo-water-corporation.php.

7. Legal Forces

Legal forces play a big role for a company such as Primo Water corporation. In different
countries there are different legal threats. In some countries the legal framework is not strong or
reliable enough to protect the rights of the company. For Primo, the 21 countries they have
expanded to, they protect them. As they continue to expand and grow as a company, it is
important for them to keep that in mind.
Some other things that Primo should keep in mind, in relation with legal threats include the
following:
Health and safety
Employment Law
Copyright/patents
Another major threat for Primo Water Corporation is the changing regulation framework and
with the legal standards being complex, it is very expensive if a company fails to follow the
changes in regulations. It is challenging for businesses however, Primo needs to continue
following and adapting to changing regulations.

Corporation, Primo Water. “Primo Water Corporation Releases Inaugural Environmental, Social
and Governance Report.” Cision Canada, 11 July 2022, https://www.newswire.ca/news-
releases/primo-water-corporation-releases-inaugural-environmental-social-and-
governance-report-894892870.html.

8. Government Forces

Governments can influence businesses in many different ways which may potentially lead to
threats in a business. They also play an important role for how an organization must change and
adapt according to their influence.
A major threat has been the continuous change for the regulations on international trade. Due to
this, it requires Primo’s compliance in order to operate globally and Primo must, as they operate
in several countries across the globe.
Another major threat is that governments have the ability to make changes to fiscal and monetary
policies. This allows them to increase or decrease interest rates. This has a big impact on
businesses and can play a significant role in the success of Primo.

Hall, Mary. “How Governments Influence Markets.” Investopedia, Investopedia, 29 Oct. 2022,
https://www.investopedia.com/articles/economics/11/how-governments-influence-
markets.asp.

 Governments have the capacity to make broad changes to monetary

and fiscal policy, including raising or lowering interest rates, which has
a huge impact on business.

 Increasing trend toward isolationism in the American economy can lead to similar
reaction from other government thus negatively impacting the international sales.
 9. Technological Forces

The technological force is a very big threat for businesses because of how fast technologies is
disrupting industries around the world. Overall there are many things for Primo to consider
through technological forces because if they do not, it’ll may potentially lead to a big risk for the
company. Some key technological factors to analyze include:
Technological advancements made by competitors.
Technologies impact on the ability to offer a product.
The advancements made by Primo’s competitors pose a major threat as now they attract a lot
more customers to their business. This results in a decrease to Primo’s market share. The new
technological advancements and developments also mean that businesses need a team to be
trained to keep up with the changes. They need to understand the new advancements as well.
Without being able to do so, it will lead to a loss of business for Primo.

Plc, GlobalData. “Primo Water Corp Company Profile - Primo Water Corp Overview.”
GlobalData, https://www.globaldata.com/company-profile/primo-water-corp/.

10. Competitive Forces

Primo Water Corporation is known as providing the cleanest water; however, they still face a lot
of competitive threat. In order to maintain the leading position Primo needs to continue to
monitor and study the market and competition.

There has been a large number of new entrants in the industry. They have quickly joined and are
now not only gaining market share but also attracting the customers of existing companies. This
is a major threat to Primo Water Corporation as they must continue providing, advancing and
attracting their customers and new customers in order to not potentially lose them to the new
businesses entering the industry. Also, the increase of competitors directly and indirectly is a
major competitive threat as this makes it difficult for Primo to expand and sustain their customer
base.

The developing of new technologies is another competitive threat with the attraction it presents
to customers. This also allows loyal customers to be intrigued and interested in these new
changes. This ties in with the next competitive threat, price changing. With technological
advancements and more competition, companies are putting pressure on prices affecting a
company like Primo to adapt and manage as now they are put in a position to adjust according to
their competitors.

Competition is also paying more higher fees to distributors thus, resulting in competitive threat in
the market. If another company is willing to pay more to the local distributor, the local distributor
is more likely to take advantage of that, ultimately resulting in a company like Primo having to
pay more or losing their distributors.

 Growing strengths of local distributors also presents a threat in some markets as the
competition is paying higher margins to the local distributors.
 Increased promotions by competitors have been a threat for Primo Water
Corporation. On most media, there is more clutter than ever, and customers are
bombarded with multiple messages. This reduces the effectiveness of
promotional messages by Primo Water Corporation.

The Primo Water Corporation SWOT Analysis requires Primo Water Corporation to
differentiate between threats having short-term or long-term implications. Threats with
immediate implications need to be addressed on a priority basis to avoid any possible
harm. While threats with long-term implications can be tackled after addressing the
immediate threatening factors.