COCACOLA COMPANY
Coca-Cola Company
Introduction
Basing on the report of the EDGAR and United States Security and Exchange Commission, Coca-Cola Company is one of the best non-alcoholic companies leading in various global operation sectors like marketing, manufacturing and distributing its products at global level. The company’s main products include different beverage products that are distributed around the world, and it also distributes concentrates and syrups globally. The company has several objectives. Some of them are serving customers adequately, valuing their interest, protecting company's assets, minimizing business risks and maintaining a sustainable environment that is often friendly to customers.
Segments of the general external environment that affects the company
Coca-Cola Company is known to be the world's number one beverage producing and supplying company. However, the general external segments of operation must be carefully considered according to EDGAR and PESTLE analysis i.e. Political, Economic, Social, Technological, Environmental and Legal. PESTEL is mainly used as a tool for most companies to analyze the external environment based on the company's operating conditions. Considering both the external and the internal environments, the highest ranked segments affecting Coca-Cola Company include the segments that are discussed below.
The social cultural segment majorly covers the general society's relationship with the firm and effects on the firm's performances. The society’s attitudes and cultural values are among the factors, which are of the greatest concern to the Coca-Cola Company because they often drive the economic, political, technological advances and changes in the economy. Coca-Cola Company, being one of the major competitive companies in the world must have the awareness of the changes taking place in the society and associated culture in which they are competing. The awareness will challenge the firm in the industry to find new ways of handling their competitors like Pepsi Company as well as other companies that produce beverages globally.
Another major segment is the political factors, which establish the extent as to which the political policies and rules influence the economy or the company. Furthermore, the political issues also involve the association between the companies and its competitors for attention and resources. It focuses on the laws and regulations that guide the collaboration among states, corporations and various local governmental organizations. Therefore, this calls for the company and other firms to come up with various strategies to study the situation and come up with solutions that may help in dealing successfully with the market opportunities and threats, which might surface at different points in time. The political segment also includes protest and political violence, which might shake the demand for the product and makes it hard for the goods to probe or penetrate the market during the political crisis in a region.
Most Significant Sources of competition to Coca-Cola Company
The Coca-Cola Company owns several brands of non-alcoholic beverages ranging from still beverages like water, juice drinks, coffees and teas to energy and sports drinks. The company, therefore, licenses, owns and markets 500 beverage brands with the world's largest beverage distribution system to almost two hundred countries. The Company’s main sources of competition are market and supply force from industries that supply beverages and water. For instance, Pepsi Company is an American global food; snack and Beverage Company that centers in New York, United States with works in the manufacturing, marketing, and distribution of grain-based snack foods, beverages, and other products. Centering on net revenue, PepsiCo is the second-largest food and beverage business in the world. Within the region of North America, Pepsi Company has the biggest food and drink business by net revenue. The Coca-Cola Corporation has traditionally been considered Pepsi Company's primary competitor in the beverage market, and in December 2005, PepsiCo outshined the Coca-Cola Company in terms of market worth for the first time in 112 years since both corporations began to compete.
Pepsi’s major supplies include Pepsi soda, Mountain Dew, Lay's, Gatorade, and Tropicana, 7 UP, Lipton Teas, Quaker Foods, Cheetos, Mirinda, Ruffles, Aquafina, Pepsi Max and Fritos. The similarities i.e. the similarity in the beverage products and to some extent in the taste, like coke and Pepsi sodas increase their competition forces.
Coca-Cola Company faces very stiff competition in terms of market forces or new entrants into the market like Nestle, which is a Swiss transnational food and beverage company headquartered in Vaud, Switzerland. Nestle is the leading food company in the world measured by revenues (Loew, 2015). Its competitive products include bottled water, coffee, tea, snacks and frozen food among other products. Due to the massive supply of its products in almost 194 countries, it still tops the world’s beverage market supplies despite the fact that Coca-Cola supplies its products to over 200 countries. Nestle company gives Coca-Cola Company one of the world's toughest competition force as compared to Pepsi.
What can the company do to improve its ability to address these forces in the near future?
In order for the Coca-Cola Company to deal with the current market forces globally, it has to formulate various corporate strategies that will enable it to defend the forces. The collective strength of the forces may be tenderly deceptive to all the competitors. In order to manage the forces, the strategist must explore below the surface and investigate the sources of each. For example, what makes the industry susceptible to entry and what regulates the trading power of suppliers. Information about these fundamental sources of competitive pressure offers the basis to develop a strategic plan of action. They highlight strengths and weaknesses of the company, along with assessing the need to shift the positioning of the corporation in its industry. They modernize the areas where strategic alterations may yield the utmost payoff, and highlight the places where industry drifts promise to hold the utmost significance either as opportunities or threats. By understanding these sources, they also prove to be helpful in considering areas for expansion for the Coca-Cola Company.
The strongest competitive force or forces regulate the profitability of an industry and those forces play the most important role in strategy formulation mainly while focusing on market demand. Any new entrants to the industry bring new technology and capacity with the aim of increasing the market share as well as the substantial resources. The companies, which are diversifying through acquisition into the industry from other markets often, leverage their resources to cause a shake-up in the competitiveness of the business. The seriousness of the hazard of the new entry is dependent on the entry barriers as well as the response of the competitors. However, barriers might exist. If barriers to entry are high and newcomers can expect sharp retaliation from the fixed competitors, the newcomers noticeably will not pose a serious threat of entering.
Assess the external threats affecting this company and the prospects available to the corporation. Give your thoughts on how the corporation should deal with the most serious threat and the greatest opportunity. Justify your answer.
Basing on Morrison (2006:130-1) statement, "Coca- Cola Company's strength has been in the carbonated soft drinks market with the help of its top brand i.e. coke, and supported by global advertising campaigns". This has helped the company come up with brand recognition and brand constancy, which is shaped by sets of affirmative associations that link the saver to the brand. It thus builds a rapport of trust, likability, and devotion (Jones, 1999). Through this, local managers are enabled to devise their own marketing strategies and choose the products from the coke's portfolio that are best suited to local tastes like one of the best opportunities available to Coca-Cola company.
Coca-Cola Company also has a long lasting historic connection with the International Olympic Committee, which mainly organizes Olympic Games for participants from over 200 Olympic committees all over the world where most of Coca Cola's supplies are distributed. These are few global opportunities that the company has over other companies.
Coca-Cola company, like any other company, is faced with a number of drawbacks despite its strive to get to the top market list in the world (Hill, 1984). One of the threats is government constraints that impose heavy tax on their products which adversely affect the company's progress. The poor relationships with the neighboring Perumatti society in the southern India also acts as a threat due to the claim that the company utilizes all their drinking water in cleaning bottles and instability of the workforce in the company.
Coca-Cola Company should constantly be conducting client's survey. This will be a significant strategy for the company; the reason would be to identify customer's response from consumption of the products, available complaints on prices and available competitor's strengths and customer care services. Pepsi, for instance, battles with coke in almost a close margin. Coming up with ways to know the reason for these, customer's survey must be applied as a strategy to approach and get views from customers regarding the sweetness or flavors. And, afterward rightful measures put in place to capture customer's attention.
Opinions on the corporation's greatest strengths and most significant weaknesses must be prioritized. While choosing the strategy or tactic, the corporation should select to take maximum advantage of its strengths and to fix its most substantial weakness.
Greatest Strength:
It has helped in building strong brand recognition and brand loyalty. Coca-Cola's brand name is popular globally. The strength can also be the 'multi-local' strategy, which is in possession with the company's fluctuating markets. Therefore, local managers are enabled to formulate their own marketing strategies and select the products from the portfolio of Coca-Cola that best serve the local tastes.
According to this, the company may optimistically manage to overcome Pepsi Company to its original position from which it dropped in 2009. Its market entry will also be minimized.
Most significant weakness
Negative publicity
Coca-Cola Company's products are said to contain high level of sugar and caffeine content. This is dangerous to human health from a medical perspective. This observation possesses a negative publicity against the company's products. Despite the reputation, the publicity markets the product and its one way of assessing customer's response.
One strategy that the company can choose in maintaining its strength is through scenario planning through which the management of the company should focus ahead, understand the trends and forces that will shape its future and move swiftly to prepare the entire organization for what's to come.
Concerning the company's significant weakness, an appropriate strategy may be the reduction of the sugar and caffeine content in the drinks to a level that is suitable for a majority of the consumers. This will minimize on the negative comments concerning the products.
Determine the company's resources, capabilities, and core competencies
The company's resources
Among the several major resources, the one of the resource is water. This is one among the many resources that the company has and values the most. Following its recent renewal and partnership with the worldwide wildlife funds, the company is missioned to continue supplying and maintaining clean water in communities worldwide.
Beverages included in bottling beverage group
The Coca-Cola Company's main purpose is the production, marketing, and selling many of the world's most adored beverages.
Coca-Cola has a very sustainable and strong resource base in terms of finance.
They use strong financial capitals to invest billions of dollars in chief markets such as India, Russia, China and some few prospective markets such as Vietnam. The investment money is used to figure out the brand, infrastructure and to advance their close partner to expand supply network.
Coca-Cola Refreshments
The Coca-Cola Company and the leading bottler Coca-Cola Initiatives took actions in 2010 and 2011 to tactically progress in partnership. The Coca-Cola Company has attained CCE's entire North American business, retitling the sales and operative essentials of Coca-Cola Initiatives North American dealings to Coca-Cola Refreshments (CCR)
Coca-Cola invests in modernize machinery
In term of technical resource, Coca-Cola can accelerate the production process to keep the product quality established and protected working environment (Olkarinaite, 2010).
Capabilities and core competencies
The strong financial resources of Coca-Cola are stated (Dess, 2012). With such financial power, they can proceed to advance the market on a great scale in many countries. The money is used to build infrastructure, train workers, and develop the supply network. Even they can fully bear the losses for a long time to invest into the probable market. More particularly, Coca-Cola had lost 10 successive years in Vietnam with a total of about 200 million states (TuoiTre News, 2012).
In addition, Coca-Cola owns a capable organizational capability. They can run more than 100 thousand people and offers the accumulation of more than 500 soft drinks brands in nearly 200 countries around the world. They have their products supplied mostly in restaurants, supermarkets, and schools among many more areas of supply.
It can help some corporations find new business ideas, as well as talent in the company. This can be achieved by providing open and positive working environment where employees can exchange and suggest ideas.
Competencies
Coca-Cola Company is facing competition from companies like Pepsi. The company has a stable financial position than Pepsi, and therefore, it has a great competitive advantage over it.
Moreover, a billion dollar is spent for annual advertising activities. In addition, Coca-Cola uses technological resources to study new brands to increase competitiveness with Pepsi, which finds it hard to imitate because of vast cost. In addition to the talents from within the skills and information of the local market, analysis of the company's value chain is done to determine where they can create value using the resources, capabilities, and core competencies discussed above.
Basing on the described Coca-Cola company resources, capabilities, and competencies, the corporation relies on these issues to create value for its customers and meet demands for global competition. In this perspective, it implies that value is measured by the product's performance characteristics and its general attributes for which customers are willing to pay.
Competencies and capabilities serve as a source of a firm's competitive advantage over rivals like Pepsi Company. Basing on the resources and capabilities, it covers a spectrum on an individual. It, therefore, implies that the resources that the company owns cannot yield competitive advantage alone. There are several resources and unique building and generating competencies and capabilities in the company (Thompson, Strickland, & Thompson, 2001). For instance, Coca-Cola Company services and distributes resources to develop its competitive advantage.
Capabilities refer to the firm's abilities to deploy resources. For instance, financial resources have been purposely integrated to achieve a given goal. It can probably emerge over the interaction of resources. They are therefore based on developing, exchanging and carrying information through the company's human capital.
References
Thompson, A., Strickland, A., & Thompson, A. (2001). Crafting and executing strategy. Boston, MA: McGraw-Hill/Irvin.
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Dess, G. (2012). Strategic management. New York: McGraw-Hill/Irwin.
Hill, D. (1984). Wallace-Homestead price guide to Coca Cola collectibles. West Des Moines, Iowa: Wallace-Homestead Book Co.
Senker, C. & Foy, D. (2012). Coca-Cola. London: Wayland
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Thompson, A., Strickland, A, & Thompson, A. (2001). Crafting and executing strategy. Boston, MA: McGraw-Hill/Irvin.
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