Executive Summary
The objective of this assignment is the environmental analysis of Coca-Cola Company. This analysis consists of matching the internal environment strengths with external environment opportunities. This means that the strategic actions of the Company are analyzed to confirm that the Company utilizes its SWOT analysis results. The strategies that the Company is using given the fierce and stiff competition in the market could be analyzed by making the use of Porter’s Generic Strategies. These strategies that the Company uses to tackle the challenges and utilize opportunities in the environment will determine the quality decision of management for strategic improvement given the Company constraints. The brand value and the relation to Company mission and vision are thus made clear in the report.
Introduction
The analysis of a Company’s business strategy can be done by using the Porter’s five forces framework. Out of the five forces, three could be said to have relations with competition in the market. Coca-Cola and other Companies use the porter’s forces to ascertain what strategy it needs to use in the market. It is thus a strategic tool that businesses use to strengthen their positions. The external forces directly influence the operations of business. The display of these forces can easily be traced with the Porter’s five forces. The risks that are inherent in the external environment of the business are traced by the management using the Porter’s generic forces analysis. The difference in the business environment of different market segments demands the company is involved in varied environmental analysis for each segment.
The purpose of the paper is the examination of Porter strategy types that is used by Coca-Cola for determining and tackling the risks in the business. The attempt is to make an analysis of whether Coca-Cola has been able to use optimally these generic strategies to gain a competitive advantage in the market.
Discussion
Q1.
Differentiation strategy used by Coca-Cola
The generic strategy that the Coca-Cola Company uses to gain a competitive advantage is differentiation. This means that the Company tries to provide such products and services, which are not easily available in the market or are not provided by any other competitors. The specialization of the company in a certain type of business environment determines the capacity of the Company to produce different products. This comprises of the valuation of features, durability, support, functionality and support by the potential customer base. The use of differentiation strategy by Coca-Cola is reflected not only in the product line but also the advertising and other operations strategies that the Company uses. This strategy is significant in the market that it functions because the competition is very high, and the market segment whose needs are to be catered is huge. For instance, there are non-price attributes of Coca-Cola that are provided so that premium can be charged from the customers.
The major area of differentiation for the company is marketing, where it uses unique campaigns and promotional tools for attracting the potential and present customers. This is done with the intention of establishing brand loyalty on one hand and increasing the frequency use on the other. Another area of differentiation is in packaging; whereby the Company produces bottles of different shapes and sizes. The service and flavor product differentiation are also there. One of the examples could be Coca-Cola Freestyle machine. This differentiation machine allows customers to match and mix all the favorite Coca-Cola drinks by the use of different flavors that are of their choice. This is one strategy that no other company has been able to provide. However, there needs to be continuous improvement in the differentiation strategy as after some time; these become imitable. Continuous efforts thus need to be invested so that competition can be tactfully handled.
Q2.
SWOT Analysis of Coca-Cola
Strength
Well established Brand Equity
The Coca-Cola Company has been able to establish the highest level of brand equity. The proof of the same could be the brand equity award that it received in 2011.
Strong Company Valuation
One of the most valued brands in the world, Coca-Cola, is a global phenomenon. The estimated value of the Company is about $800 billion. The valuation comprises of total brand value and asset presence on the global level.
High Customer Loyalty
Coca-Cola as a Company has been able to capture a large share of the market, which is loyal to the strong products that the Company has in its portfolio. The differentiation strategy in marketing and services has given the Company a huge customer base and high customer loyalty.
Strong Distribution Network
Since the demand for the Coca-Cola products is high, the Company has been able to deploy the largest distribution network around the globe so that the customers can be reached. Distribution is one strong aspect of Coca-Cola, which will be very difficult for competitors to catch up. This strength is one of the competitive advantages of the Company.
Weakness
High Competition
The major competitor of Coca-Cola is Pepsi. There would almost be the monopoly of Coke in case Pepsi was absent in the market. There is fierce competition between these two brands, because of which too; the Company had to resort to differentiation strategies for making its products and services unique.
Low Product Diversification
There is high diversification of Pepsi into the varied business environment in comparison to Coca-Cola. To tackle this diversification strategy by Pepsi, Coca-Cola has resorted to the differentiation strategy.
Opportunities
Diversifications into new markets and product lines
There is high capacity for the Company to venture into new areas and product lines such as food and health. This will help further strengthen the relationship of the brand with its customer base. The profit of the Company will also be enhanced through the process of cross-selling the products to the present customers.
Supply Chain Development
Though the Company may boast that it has the highest supply chain globally, it is also true that the operations costs and issues also rise as the supplier number rises. There need to be improvements in the area of supply chain management so that the differentiation strategy can be strengthened.
Threats
Sourcing of Raw Materials
One of the most important raw materials required for the production of Coca-Cola products is water. One of the weaknesses that the Company is subjected to is the doubts that pesticides are used for the production. The high amount of water use is another issue alarming the Company. The causes may be global warming which has caused water sources to dry out.
Q3.
The leverage of strengths and shoring up of weaknesses by changing the Strategic choices
There are many strengths of the Company that can still be more utilized if the strategic choices are altered to fit the organizational capacity. The strengths that need more attention would be dominating the strong market share that it has and making the most use of its beverage supply chain. The other factors require the Company to focus on a robust advertising strategy, increasing the loyalty of the customer, having a greater bargaining power towards suppliers, among others. There are certain limits that the Company is bound to; given its present market position. By changing the strategic choices, the chances of Coca-Cola meeting its mission, vision and objectives are increased. The concentration of the Company should now shift towards identifying and utilizing the strategic alternatives, analysis of the same, evaluation and then finally selecting the best. These measures will be crucial in handling the Company threats like negative forms of publicity, failure of brands and a product portfolio that is undiversified.
Taking the Favorability of Opportunities in the Environment to minimize threats
There needs to be the adoption of a better approach for the selection of those strategic choices that are selected through a process of authentication, communication, beliefs and delivery strength. The changes in strategy could involve increasing the product line to maintain differentiation strategy or to find a better solution for tackling the water scarcity problems.
One of such examples could be to tap the information that there is an increase in the amount of bottled water consumption, which is an opportunity for the business so that it can benefit from strategic choice changes.
Q4.
The Strategic analysis affecting the Mission and Vision Change of the Coca-Cola Company
The strategic analysis that the Company uses is effective to the Company in terms of confirming the mission and vision of the Company, time and again. Sustainability focus is one of the core factors that help the Company focus on its robust objectives. The reconfirmation of the Company objectives by taking into account the validity addition for goal accomplishment is a privilege for the Company. The strategic analysis that Coca-Cola performs has a huge effect on the whole approach of the Company towards the review of its position in the external environment. As the strategic shift happens, the approach will also change. The Company thus needs to have favorable strategic shifts so that the correct approach for goal achievement is selected.
The analysis of Coca-Cola mission and vision statements suggests that there is no need for revision of the same at the moment. The critical assessment of the mission and vision explain that there is consideration of a wide range of external and internal dynamics so that objective achievement is ascertained. There is the high accuracy of the mission statement as there is a certification that the Company is tilted towards environment refreshment and optimism. The value statement of the Company demonstrates the same.
Conclusion
There need to be studied like this one so that Companies like Coca-Cola can focus on finding the right strategic choices for their organizational goal accomplishment. There are many companies, which fail to align their strengths and weaknesses with the opportunities in the market by the mix of correct strategies. The analysis of strengths, weaknesses, opportunities and threats is thus crucial. These should be put into action by using the correct strategies, and these strategies should be reflected in the mission, mission and value statements published by the Company. For Coca-Cola, the strategy of differentiation is reflected in its communication; however there are still some areas where the Company could work on to strengthen its strategic position.
