Abstract
This paper discusses and explores the Coca-Cola Company. In particular, this paper examines the strengths, which include its many different and distinct beverage products such as Coke Life, Diet Coke and Fanta; and weaknesses, which include the usage of high fructose corn syrup and lack of diversification outside of beverages, related to the giant. The paper looks at the internal and external dynamics of the company with a specific emphasis on its 2020 vision as well as its marketing. The paper also analyzes its fiscal position as of the end of 2015 in order to better comprehend why it continues to flourish. The paper additionally explores the opportunities and threats that Coca-Cola faces as it moves forward within the consumer marketplace. The paper finally reasons how the company has become so prominent in the eyes of consumers – and maintained loyalists.
Introduction
Frequently ranked as one of the Fortune 500 companies, the Coca-Cola Company is a beverage manufacturer headquartered in Atlanta, GA. The company is noted for its multiple brands including the carbonated soft drink of the same name, along with other brands. The origins of the company are believed to have started in 1886, when John Pemberton developed a medicinal beverage that subsequently, was turned into a soft-drink. Throughout the 20th century, the company's key beverage, Coca-Cola is said to have evolved substantially with multiple formula recipes and a significant amount of changes as far as flavors including the popular Diet Coke, and Cherry Coke. Distributed, served and sold in more than 200 countries, the beverage company is considered to be one of the most fascinating companies in the world, with consumers taking in roughly 1.8 servings of some type of Coca-Cola beverage daily (The Coca-Cola Company, 2016).
Internal & External Dynamics of Coca-Cola
The Coca-Cola Company (2016) states that its mission is one that has endured since its inception. It is to "refresh the world, create value and make a difference [and] inspire moments of optimism and happiness" (p.1). The vision associated with the beverage giant is to achieve growth through its portfolio of products; be a responsible citizen to the planet; provide a great place for people to both work and be inspired; to remain profitable; to create and nurture a network of suppliers and customers and to produce a highly effective organization (The Coca-Cola Company, 2016). The focus of Coca-Cola Company is mainly to ensure that it offers a winning culture and makes this a reality for both internal and external stakeholders.
Given the various elements of both the mission and vision of the company, it has recently developed what it refers to as its 2020 Vision. The 2020 Vision includes seven values: collaboration; integrity; leadership; accountability; passion; quality and diversity. Each of these values plays a key role in how it focuses on the consumer marketplace, works efficiently to ensure that all facets of its business work to achieve productivity and that the brand continues to flourish as far as reputation (The Coca-Cola Company, 2016). Arguably, the Coca-Cola Company has benefited and continued to benefit from a tremendous love that people have for beverages, particularly soft drinks.
According to Deichert et al. (2006), there is a considerable amount of saturation of soft drinks in the United States alone, let alone globally. Profitability as it relates to the soft drink industry is believed to remain solid, even with other options and alternatives that individuals have (i.e. bottled water and sports drinks). Companies such as Coca-Cola, Pepsi and Cadbury do not have to worry about soft drink purchases, because they dominate with Coca-Cola remaining on top. It provides many of the world's most popular soft drinks including Barq's, Fanta products, Sprite as well as Coca-Cola itself. As of 2006, the company is noted to have grossed roughly $18 billion, with Pepsi and Cadbury coming in second and third, respectively (p.3). Simply put, the Coca-Cola Company thoroughly understands how to run its operations regarding distribution and overall sales.
A substantive area where Coca-Cola is recognized for is in its employee and workplace. According to The Coca-Cola Company (2016), protecting workplace rights is an underlying aspect to making sure its business is sustainable. This means providing an environment where people are safe and healthy and treated fairly. The company discusses its policies and requirements for quality and safety in what is refers to as its KORE, or Operating Requirements. This document maintains a model for occupational health and safety procedures as well as the applicable laws and regulations connected with health requirements of the Food and Drug Administration. It also explains the processes related to diversity and overall implementation of enhancing the best guidelines for how to handle incidents that may occur in its manufacturing and distribution areas. The aim of the document is to stress the importance and relevance of safety and leadership to enforce said practices (p.1). Essentially, the company is committed to safety, diversity and making sure there is a culture within the workplace.
Aydin & Ceylan (2009) and Shahzad et al. (2012) write that in order for companies to successfully grow, that there must be a focus on safety standards, and dedication to making sure that employees are satisfied. Aydin & Ceylan (2009) explain that this is how effectiveness of an organization can be measured. A company's internal stakeholders should be contented as much as possible and that these individuals play an essential role just as much as the external ones (p.34). For Coca-Cola, communication is one of the most important areas that reveals their belief in having a workplace environment that is noteworthy.
The Coca-Cola Company (2016) stresses that it encourages open communication and innovation among each individual that works within any of its entities and subsidiaries. The company wholeheartedly believes that it can benefit from ingenuity among its global associates and bottling partners. Moreover, the company is also noted for richly rewarding employees with compensation and benefits packages that align with its reputation for instilling optimism. Further, the company also provides one of the most in-depth and extensive training programs for associates and managers in order to effectively develop them to represent both themselves and the Coca-Cola Company (p.1). Another area where the company is highlighted to be strong in is in its advertising campaigns.
Vrontis & Sharp (2003) believe that much of Coca-Cola's success has been on its strategic positioning within the marketplace. The company extensively studies consumers and applies certain principles to the needs of said groups. From there, the company then creates marketing campaigns that appeal to the beverage wants and desires of consumers. This has allowed them to gain a significant and strong foothold in the beverage industry, specifically in the area of soft drinks.
du Plessis (2015) discusses that Coca-Cola marketing campaigns tell a story. Whether the company is using social media or going the conventional route in marketing its products, each piece of content within said campaign tells a story. Brand storytelling is an important internal and external aspect of a company in conveying its message to an extensive audience. The marketing team at the company knows what it must do to tap into the emotions of the consumer, so that it can effectively create awareness around each of the products. While each of the products within the Coca-Cola umbrella are different and unique, there is an underlying technique that the company utilizes for each. This is referred to as informative entertainment. The company produces marketing and advertising that is personalized and fits the consumer within that particular target segment (p.84-86). In other words, the company tells a story for each of its products, and the marketing/advertising for each is geared to that market. For example, Coca-Cola advertisements in China and the United States will be different in terms of the story, but the overall dynamics of the advertisements will be to effectively market the soft drink and propel consumers to purchase it. Given the many strengths associated with the Coca-Cola Company, it becomes necessary to perform a SWOT analysis to determine its continued viability.
Strengths
Advertising – as noted earlier, Coca-Cola is known for its prominent displays of advertising both in the conventional sense (television, radio and billboard) and via social media. In 2015 alone, the company notes that it spent roughly $3.98 billion in advertising of its many portfolio products (p.1). This provides them with a significant advantage of the prime competition – Cadbury (now known as the Dr. Pepper Snapple Group), and Pepsi.
Global Presence – Coca-Cola has a substantial presence not only in the United States, but in other countries within North America and worldwide. There is probably not a country that does not have Coca-Cola, or some form of Coke products within it. If there is a country that does not have any Coke products, it can be said that the company is working to put said products in that country.
Customer loyalty – Mise et al. (2013) write that consumer loyalty is one of the prime movers of company dynamics. It is their lifeblood, essentially. This is especially true for companies such as Coca-Cola, who only provide one type of product (beverages). There is relevance to the company beginning to market its products early on so that it can effectively capitalize on consumer preferences and tastes (p.49-50). To this end, the Coca-Cola Company has worked tirelessly to create a certain rapport with its consumers. Questionably, most Pepsi drinkers are not fans of Coca-Cola and vice versa. This is how dominant the Coke brand is within the consumer marketplace.
Weaknesses
Health of beverages - Coca-Cola uses what is referred to as high fructose corn syrup. According to Bocarsly et al. (2010) and Parker, Salas & Nwosu (2010), high fructose corn syrup is a sweetener made from corn. It provides a tremendous amount of advantages in terms of its usage in beverages because of its solubility, acidity and relative cheapness. However, it tends to cause a significant quantity of issues as it relates to body weight and other problems such as tooth enamel erosion and addictive properties. The body, despite what many advertisements note, does not process high fructose corn syrup in the same fashion as traditional sugar. High fructose corn syrup has also been linked to mercury poisoning and when consumed in large quantities (which are ever present in sodas), rising rates of obesity (2010). Coca-Cola recognizes this as an issue and has attempted to assuage the general public’s concern over their health with the Coke Life, which uses a natural sweetener known as Stevia, and the use of cane sugar in many of its soda and beverage products.
Minimal Diversification in Products – although the company has been around for decades, it only operates within the beverage industry. This debatably has left the proverbial door open for other competitors to work their magic on the consumer and entice them. Coca-Cola is a dominator in the beverage industry, but has never ventured outside of said industry, which could be hurting them financially.
Opportunities
Market products that are not selling as much – there are products without a doubt that are not selling as much as Coca-Cola and Diet Coke. This affords the company an opportunity to invest in those products.
Move into Countries Where They Are Not in – while the company’s products are in more than 200 countries, this does not mean they are in all of them. As such, this presents an incredible opportunity for the company to tackle these countries. While many of them may include developing countries, since Coca-Cola is slanted toward sustainability and assisting with the development of nations and people – by intertwining its products in these countries, the company might benefit from marketing its portfolio.
Threats
Competition – there are many consumers who just do not like Coca-Cola, or any of its products. This will unfortunately always be the case, especially as more and more people learn about the issues related to high fructose corn syrup. Many consumers prefer alternatives such as water, tea and coffee as opposed to soft drinks – which is the dominant aspect of the Coca-Cola portfolio.
Supply Chain issues – it is true that supply chain issues plague many companies, but this is especially the case for Coke as its business platform depends on efficient distribution and production. The company needs to ensure that its I’s are dotted and t’s are crossed as it relates to this area so that other companies do not take advantage should something go awry.
Perhaps one of the largest focuses of the Coca-Cola Company, other than its marketing – is in its finances. The Coca-Cola Company (2015) comments that its financial revenue is generated by selling syrups and concentrates as well as its via its canning operations. The company manufactures, markets and sells still beverages as well as beverage bases. The company maintains that water is the main ingredient in its products and proper raw materials being used in a manner that is conducive and in compliance with health standards is important and relevant to its fiscal position. In examination of its summary of operations, the company notes that it has $44,294,000 in net operating revenues and long term debt of $28,407,000. Its total assets are $90,093,000. This is as of the end of 2015. Of the net operating revenues, 37% of that comes from its concentrate operations and the remaining 63% comes from its finished product operations (2015).
It is noted that the company's net operating revenues decreased about $1,704,000 from 2014 to 2015. In examination of the key factors in its operating segments the volume percentage reflects a 2% change in Eurasia and Africa, a 6% change in its bottling investments, a 2% change in Asia Pacific, a 1% change in North America, a 2% change in Europe and a 1% in Latin America. Much of its net operating revenues come from North America, with that number totaling 49.2%. The numbers then trickle across the other areas where the products are sold. Eurasia and Africa total 5.5%, Europe has 10.3%, Latin America composes 9%, Asia Pacific is 10.6%, the corporate revenue is 0.3% and the bottling investments area is 15.1%. The company highlights that it puts a significant amount of revenue in its bottling plants in order to ensure that these entities are available if necessary (The Coca-Cola Company, 2015).
Bickle (2011) states that the reason Coca-Cola is so successful is that it thoroughly understands innovation and the nature of the beast of advertising and marketing. It comprehends how to market to other businesses and to consumers. Moreover, the company has taken on other companies and either acquired them or beat them like a boxer does in the ring (p.1). In essence, even with other competitors such as Pepsi, the Dr. Pepper Group and others, Coke has managed to not only maintain its prominence among consumers, but to keep its position on the Fortune 500 list time and time again.
Conclusion
This paper discussed Coca-Cola. Specifically, the paper delved into why the company has been so successful in its beverage industry operations. It has appeared and continues to appear that much of the prominence associated with Coca-Cola is in its marketing campaigns and diversity of products. While the company has maintained operations in beverage products solely, this has not caused substantial problems as it relates to its overall success. The company has been recommended to diversify outside of beverages by many analysts given the many different alternative beverages that consumers have to select from – and just for reputation alone. Presently, the company has not opted to venture outside of the beverage industry as this would more than likely cause a considerable amount of issues within the consumer marketplace because of its current reputation and viability.
References
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