The Coca Cola Company has constantly been reporting tremendous business performance and profitability which have been attributed to its overall success in the beverage sector. However, the success of this global company would also be impacted by the company culture which is embodied in its mission and vision. The mission of the company aims at refreshing the world, inspiring moments of cheerfulness using their actions and brands and creating value, as well as making a difference wherever they are engaged. Consequently, the company’s vision aims at fulfilling its mission by focusing on vital areas which include; people, partners, planet, profit and portfolio. Hence, the company strives tirelessly to succeed in these important areas laid in its vision so as to accomplish its ultimate mission (Dhar, 2005). The major stakeholders of the organization are its employees whom it holds preciously due to their competence at work. The mission of the company states clearly its intended purpose and aspirations and hence, the stakeholders can effortlessly comprehend it. For this reason, the stakeholders of the company can work passionately so as to accomplish the organization’s vision. The company has also utilized its vision and mission in developing a company culture which is incorporated in the values and beliefs of Coca Cola.
The culture of the company is thus, acknowledged by the entire stakeholders of the company who work hard to sustain it. Coca Cola’s culture is based on passion to execute its mission so as to accomplish its critical goals. The stakeholders of the company are endowed with the capability of changing their passion into favorable actions which help to propel the performance of the company. The company stakeholders are also gifted with appropriate values which guarantee business success. Some of these values include; innovation, leadership, integrity, collaboration, quality, passion, diversity and accountability. Besides having these important values, the stakeholders still have the competence to turn their passion into creative actions that transform to real benefits for the company. As a result, the company’s mission, vision and its stakeholders play a vital role in ensuring the continued success of the company in the beverage sector. According to Porter, a business that operates in a competitive environment is driven by five significant forces which also determine its profitability in that particular market. These five forces include; threat of new entrants, substitute products, rivalry, buyer power and supplier’s power. Foremost, the threat of new entrants in the soft drinks sector is very low due to the soaring fixed costs of production and asset acquisition.
Consequently, the bottlers available are limited and hence, a new entrant would be required to set up a bottling plant which is quite an expensive activity. The soft drinks business also necessitates the need for vast spending in marketing and advertising so as to create product awareness, as well as the demand (Cinarli & Sancar, 2012). The retailers of soft drinks also have the benefit of better margins which ranges from 15%-20% to compensate their shelf space. Thus, it becomes difficult for a new entrant to offer margins below those offered by Coca Cola. Conversely, Coca Cola has dominated in the beverage sector making it more difficult for any new entrant to thrive in the market. As a result, the company has a low threat to new entrants in its competitive environment. Secondly, the company experiences a strong threat to substitutes given the fact that we have many beverages that can be taken by consumers instead of Coca Cola’s products. Some of these substitutes include; coffee, tea, bottled water and energy drinks. Recently, the majority of consumers has become health responsive and thus, is opting to consume more bottled water and energy drinks. In addition, the low switching costs associated with these substitutes makes it easy for consumers to change their preferences.
Hence, the threat to substitution is very strong for Coca Cola. Thirdly, the company has a low threat of suppliers due to the reason that the major suppliers of the company are bottlers and product ingredients suppliers. However, the ingredients required by the company are basic commodities which can be cheaply obtained. Therefore, the suppliers in this industry have a low bargaining power and hence they cannot determine the prices of these raw materials. The company also has its bottling plant which it controls hence; all these factors weaken the bargaining influence of suppliers. Fourthly, the company experiences moderate bargaining power of buyers in the market (Cinarli & Sancar, 2012). The buyers include; restaurants, convenience stores, large grocers and supermarkets. Consequently, a majority of these buyers usually purchase large stock of the company products which thus, accords them a right to bargain for lower prices. Likewise, the diminishing demand for unhealthy soft drinks also empowers the buyers to demand for price bargains hence allowing them to have a larger bargaining power. Lastly, the company faces strong rivalry from its major competitor, Pepsi Company. Both companies have been in the soft drinks business for a long period which makes them equally competitive in the market.
Pepsi dominates in the North American market whereas Coca Cola leads the soft drinks sector globally. The strong rivalry is however, promoted by brand loyalty since it is believed that Pepsi customers are very loyal. A SWOT analysis of the company provides us with the weaknesses, threats, strengths and opportunities that are present for the company (David, 2013). To begin with, Coca Cola being a global leader is endowed with numerous strengths which help to keep it on top of the game. The company is the finest world brand globally with regards to worth which is valued at $77,839 billion. Coca Cola also boasts of having the leading market share in the beverage sector. The company also has well-built advertising and marketing. Another strength that the company has is enjoying immense customer loyalty. Coca Cola also has the most widespread distribution channels of beverages. Consequently, the company also has a higher bargaining power than its suppliers and hence it receives raw materials at low prices. Lastly, the company has a complex corporate social responsibility which helps to maintain a good public image. Secondly, the weaknesses that exist in Coca Cola are quite less than the strengths. One of its weaknesses is that the company has laid more focus on production of carbonated drinks without diversifying.
Hence, it has undiversified commodity portfolio. Another weakness of the company is having accrued an elevated debt level as a result of the acquisitions that it undertakes in business. The company has also recorded some form of negative publicity which tarnishes its image. Finally, the company also suffers from brand failures. Thirdly, the company is also exposed to a couple of opportunities which it can take to its advantage in the market. Foremost, there has been an increased consumption of bottled water which is a significant opportunity for the bottling company (Cinarli & Sancar, 2012). Consequently, there has also been a swell up in the demand for healthy beverage and food. There are also emerging markets with potential consumption of beverages. As a final point, Coca Cola has an opportunity to realize expansion through acquisitions. Fourthly, the company is also susceptible to some threats that are presented in the market environment. To begin with, there have been rapid changes in the preferences and tastes of customers. The company is also threatened by the looming scarcity of water in the world. The strengthening of the dollar is also a threat for the company since it also operates in some non dollar countries.
The company is also experiencing some drops in its gross profit as well as the profits after tax. Another important threat facing Coca Cola is the unending aggressive competition from its rival Pepsi. Lastly, the company also faces the threat of a saturated market for carbonated drinks. A strategy that would be efficient for Coca Cola to benefit from on its strengths and opportunities while minimizing its weaknesses and threats would probably offer an expansion approach for the company. The company should seek ways of expanding through embracing diversity so that it may produce differentiated products to take advantage of opportunities which present themselves. Diversification for instance, in the line of bottled water and healthy beverages would be a good move for the company to improve its market share as well as profitability from the increased product portfolio (Goodman, 2009). Another important strategy that the company would adopt is seeking for a way to have its own production of water so as to escape the threat of water scarcity. Acquisition of a water plant would also be vital for the company to take advantage of bottled water which is an untapped opportunity for Coca Cola. The company may use different levels and types of strategies to improve its profitability and competitiveness in the market.
The company can adopt a business level strategy to boost their performance and competitiveness. The best type of strategy to be used in the business level would be a differentiation strategy which would be significant in demonstrating the uniqueness of the company’s products. When differentiation is coupled with the right level of marketing and advertisement it would reciprocate into improved customer loyalty for the company. Differentiation would also be a good strategy to support future diversification efforts of the company so as to utilize the emerging opportunities in the market. The company can also integrate corporate level strategies in its business to accrue the benefits that they present. The most effective type of strategy that can be adopted at the corporate level is the product development policy. This would allow the company to penetrate into emerging markets as well as providing new products to their existing market. This strategy would be sustained by the fact that the company has greater brand responsiveness all over the world. Hence, using their paramount reputation, the company can diversify by embracing new products development. Consequently, Coca Cola can also undertake a global and a local strategy to drive its growth and support in the grasp of its mission.
This is because the corporation is a global company and yet its mission is to ensure that every consumer enjoys and gets refreshed with its products. To be able to achieve this, it would be prudent for the company to develop local strategies which would ensure a focused attention on individual consumers. However, for the company to achieve a global and local strategy it must develop an organization structure that would support these policies. Proper communication in an organization is regarded as a vital policy that would play a big role in determining the performance of the company’s stakeholders. Consequently, some issues should be considered before choosing on the right method of communication to be adopted in an organization, especially in global firm like Coca Cola. It is essential to recognize that the company is a global multi-cultural firm which embraces diversity amongst its shareholders (Cinarli & Sancar, 2012). Hence, the communication plan to be adopted must be able to be effective in relaying information to shareholders who exhibit great diversity in culture. There is importance in knowing that a global scene has differentiated level of infrastructure development which might hamper the effectiveness of some modes of communications which require better infrastructure.
However, in this case we seek to improve the awareness of the new strategies to the shareholders of the company. The best communication policy to be adopted would be one that incorporates both written and face to face methods of communication. Accordingly, it is apt for the top management to perform face to face communication even if it has to be a video conferencing session. Face to face communication is very effective and it also guarantees proper comprehension of the message conveyed. Consequently, written communication should be used to ensure that all stake holders in the company are aware of the new strategies. This would be done through emails and memos in the workplace. Written communication would be best suited, particularly to reach the junior shareholders of the company which might not be in contact with the company’s top executives. One mechanism of corporate governance that has been established in Coca Cola is the Ethics and Compliance Committee.
This committee is constituted of a team from the senior management and it is in charge for the supervision of the Code of Business Conduct in the company. This team is tasked with overseeing all of the company’s ethics and compliance plans and also resolves any violations to the Code, as well as spelling out any disciplinary measures to be taken against shareholders found guilty (Lawrence & Weber, 2013). This committee is very effective in executing its intended managerial role. This is evidenced through the committee offering consultation, education, monitoring and appraisals associated with compliance concerns and the Code of Business Conduct. Another corporate governance mechanism that is present in the Coca Cola Company is The Board. It is accorded the mandate to watch over the interests of shareowners in the long term and also the achievements of the business, as well as its financial potency. It is evident that The Board performs its managerial roles effectively. For instance, it is The Board that selects and manages the senior management who are tasked with conducting the company’s business. The Board has also formulated corporate governance guidelines that offer a mechanism for the efficient authority of Coca Cola.
The leadership of this company is quite effective in executing their duties due to the fact that the company regards leadership on the basis of integrity, innovation, quality, collaboration and accountability. However, I would recommend the company to improve its leadership retention strategies to ensure that they retain the quality leaders whom they produce under the acceptable values of the company. The company has undertaken numerous efforts to show its ethical task to the society and the public in general. The continued efforts of the company to demonstrate corporate social responsibility have been very beneficial to the company. To begin with, these efforts have helped to create extra awareness about the brand products hence increasing their market demand. Consequently, efforts performed to show corporate social responsibility also paints a good picture to the company’s public image. Lastly, social responsibility has been helpful for the company in ensuring constant customer loyalty from the consumers. An example that would be used to indicate Coca Cola’s obligation to ethical responsibility is the Contribution of $2.5 million in typhoon relief aid and the release of Coca Cola’s 2012-2013 Global Sustainability Report.
Conclusion
The Coca Cola Company has formulated understandable mission and vision for the company’s shareholders to easily comprehend. However, the company culture is developed with a strong foundation based on its beliefs and values. The company’s culture is also aligned to its mission and vision and this culture of the company has the capability to change passion into action. This presents a plan to facilitate the company shareholders to reap benefits for the company, which transforms to continued success. An investigation of the forces of competition presents a competitive market that is characterized by; low threat of new entrants, strong threat of substitutes, low suppliers power, moderate buyers power and strong rivalry which is experienced from Pepsi. Consequently, the company’s SWOT analysis symbolizes that the company has a favorable internal environment due to many strengths that are coupled with little weaknesses. However, the external environment also offers some significant opportunities that have not been utilized by the company. Conversely, the company also has some external threats that it should be leveraged from to ensure its continued stability in the beverage sector.
The company can formulate various strategies to help in maintaining its profitability and competitiveness. These strategies include; corporate level strategies, business level strategies, global strategies and local strategies. The communication plan that would be adopted in this global organization would be a combination of both the face to face communication and written communication. This ensures that information is relayed to all the company shareholders regardless of their cultural diversity. The company has established various corporate governance mechanisms that are mandated in overseeing some given duties. These include; The Board and the Ethics and Compliance Committee. The company has been found out to be developing quality leadership that helps significantly in driving the global company to business success. The Coca Cola Company is also an active player in the subject of corporate social responsibility since it has partnered with various communities to offer support. However, this role is deemed to be beneficial in various ways which include; increased product awareness, good public image and enhanced customer loyalty.
References
Cinarli, I., & Sancar, G. (2012). Environmental Sustainability and Strategic Stakeholder Management: The Coca-Cola Company in Turkey and Water Management.
David, F. (2013). Strategic management concepts and cases: A competitive advantage approach. Boston: Pearson.
Dhar, T., Chavas, J., Cotterill, R., & Gould, B. (2005). An Econometric Analysis of Brand-Level Strategic Pricing between Coca-Cola Company and PepsiCo. Journal of Economics & Management Strategy
Goodman, J. (2009). Strategic customer service: Managing the customer experience to increase positive word of mouth, build loyalty, and maximize profits.
Lawrence, A., & Weber, J. (2013). Business and society: Stakeholders, ethics, public policy. New York, NY: McGraw-Hill, a business unit of The McGraw-Hill Companies, Inc.
