Management Final Paper
Management Final Paper
Coca-Cola Company is a multinational beverage corporation based in the United States with its head offices in Atlanta, Georgia. The company is known for its wide range of non-alcoholic soft drinks and beverages concentrates and syrups (Coca-Cola, 2013). Coca-Cola Company was started by a pharmacist John Stith Pemberton in Columbus, Georgia. Coca-Cola Company is the world leading beverage and soft drink producer and distributor controlling several stores and distribution agencies. The company is in over 200 countries (Coca-Cola, 2013). Recent reports of the company indicate the Coca-Cola Company products are consumed by very many people worldwide daily. In fact, products bearing the trademark Coca-Cola or Coke constitute over 76% of the company’s substantial sales (Coca-Cola, 2013).The company has over 500 brands in more than 200 countries globally.This dissertation seeks to analyze the management strategies in Coca-Cola Company and suggest suitable strategic plan for the company.
Mission statement
Mission statement is a brief declaration of the activities that the company engages in with the added value. It covers the needs of the customers and how the company is determined to serve the consumers. The mission statement of Coca-Cola Company is outlined as follows:
Vision Statement
A vision statement is a brief declaration that gives a broad aspiration of the company’s future that the company is determined to achieve through deliberately planned actions and activities. The vision statement for Coca-Cola Company is as follows:
External Environment
External business environment refers to the forces outside the business that have the capacity to directly or indirectly influence operations and the overall success of the business (L.Pellisier, 2012). External economic environment include the uncontrollable political, economic, social, technological and natural environment factors that present opportunities and threats.
Political factors
The political environment in which Coca-Cola Company operates is favorable since the government is stable and implements pro-business policies in the form of zero corporation taxes. It enables the company to experience low cost base for its operations and enhances profitability.
Ecological factors
Change in the climate and the environmental conditions influence the success of Coca-Cola. Much attention has been given to ecological factors. The implication of the ecological factors on Coca-Cola is that the company must ensure that it brings into line its operations to the global ecological needs.Notably, Coca-Cola Company reputation got defamed due to environmental issues. For example, in 2003, an Indian based NGO raised concerns that some Coca-Cola products were associated with cancer causing chemicals. In fact, the company recorded 11% decline in its sales in the Indian markets.
Economic factors
The economic factor in the United States is conducive for the operations of Coca-Cola Company. The sales in the U.S markets makeup for over 43% of total sales of Coca-Cola products. Nevertheless, the increasing prices of raw materials and variations in the consumers’ income levels significantly influence the operations of Coca-Cola Company.
Technological factors
Changes in technology significantly influence the operations of the company. For instance, innovations in food and beverage manufacturing and utilization of the internet-enabled technology in the production process are very influential on the success levels of Coca-Cola. The rate of production in the company has risen by 18% due to the use of new technology in production and bottling since 2004.
Internal environment
Internal business environment refers to factors within the business that directly or indirectly influence its operations. Usually, internal environment of business is contained in the company’s management (Regassa, 2011). Some of the most essential internal environments factors that Coca-Cola Company has put in place include proper organizational skills, effective communication networks and efficiency in production, inbound warehouses.
Coca-Cola Company has a trademark that is valued at approximately $25 billion (Coca-Cola, 2013). The Company brand indeed selling itself. However, the company is not taking anything for granted. It is in constant research on the consumers’ needs to provide products that consumers love.
The company has effectively internal admiration structured into the following divisions; Human Resource, Information Technology and Accounting.
The internal environment of the company is organized in a way that supports the company’s activities. Coca-Cola Company has a team of qualified staff that works tirelessly to deliver value to its consumers. The company at all times tries to align its internal environment to the need of the external environment.
SWOT Analysis of Coca-Cola Company
SWOT analysis is pneumonic for Strengths, Weaknesses, Opportunities and Threats that a business or an organization enjoys or faces in its operation. Opportunities and threats are associated with the external environment where as strengths and weaknesses are associated with the internal environment.
SWOT analysis should enable the company to identify the opportunities that need to be exploited by using its strengths while overcoming the threats and weaknesses. Coca-Cola Company, just like any other organization, has its strengths, weaknesses, opportunities and threats. They are discussed as follows:
Strengths
- Large market control in almost every country all over world
- Penetrating fast growing markets such as Latin America, Eurasia, Africa and Pacific
- Ability to consistently pay its dividends to retain and attract more shareholders
- Relatively un-volatile stock with a Beta of 0.51
Weaknesses
- The company has some slow growing markets that cost the overall performance such as Europe and North America with growth rates of about 2% and 1% respectively.
- Health concerns associated with the company products for instance, there are complaints on the high sugar contents and carbonated products
- Control of very many brands; over 500 making quality maximization difficult
Opportunities
- Recent acquisition of a 15th billion dollar brand, Del Valle has given the company a significant opportunity in the market
- Fountain dispenser that the company has recently acquired attracts more customers who wait to have their cups and bottles filled with their favorite brands
- Extensive distribution network of the company allows the company to supply all its markets in time
- Acquisition or merger with Monster will enable the company to venture and have control of the fast growing energy-drink market
Threats
- Pressure from the giant competitor Pepsi Cola is recently penetrating the markets that have for long been enjoyed by Coca-Cola Company
- Efforts and resolutions by some states to help control obesity has led to imposition of taxes on some soft drinks and setting quotas on some brands
- Increasing prices of supplies that squeeze the profit margins of the company
- Currency fluctuations in most countries where Coca-Cola sells its products affect the company operations
Company Resources
Resources are the inputs that the company makes use of in order to create goods and services. Some resources may be tangible while others may be intangible. Coca-Cola Company has a range of physical and non-physical resources. Some of the intangible resources of Coca-Cola Company include the patents, trademarks, location and the knowledge experiences in production.
The company has a wide range of resources. Some of them include; qualified and motivated group of employees, advanced technology in the production and bottling, website for marketing and promoting the company products, various bottling branches, -
Core Competencies and Capabilities
Coca-Cola Company is very diverse in differentcountries in which it operates. The company sells a wide range of products in over 200 countries globally.In fact the brands have reached 3500. Diversity is a core competency of the company. The products in the United States alone comprise different soft drink brands, energy drinks, juices, sports drinks, water, coffee and tea. The company offers diverse product in different markets to keep itself in line with its competitors.
Business Level Strategies
The strategy that has worked for Coca-Cola Company is sustainability spirit. This business strategy is implemented by aligning the business model to the interest of the business, societal needs and environmental needs to achieve both long term and short term goals. Furthermore, the company offers its associates effective tools, training and planning to enhance their productivity, efficiency and affectivity. Moreover, the company also utilizes product differentiation strategy that enables it to produce products that are different from those that are offered by their competitors. In fact, the prices of their products are relatively higher but still the consumers are willing to buy and even pay more.
Strength and Weaknesses of the Current Strategy
Coca-Cola Company has been relying on business level strategy that is based on product differentiation. Coca-Cola Company produces unique products that are not provided by its competitors. However, this strategy has both its weaknesses and strengths.
Strengths
- Commands a higher price for adding functional and expressive value
- Enhances customer loyalty due to brand quality and uniqueness
- There may be increased unit sales because satisfied consumers are likely to repeat purchase for value added
Weaknesses
- It is rendered ineffective where consumers do not recognize product value and uniqueness. The sales are low in markets where consumers are not willing to pay the high prices
- It is difficult when the competitors have large budgets for innovative activity
- Most customers do not have unique tastes and preferences and can easily switch to the alternative products
- Low income earning consumers may not afford or unwilling to pay the high prices
- Sometimes, the appealing attributes may be copied by the competitors
Strategic Options for Coca-Cola Company
There are numerous strategic options available for companies. According to De Wit and Meyer (2010), strategic options range from the operational, functional and corporate to business levels.Using Ansoff’s matrix it is to possible develop a corporate level strategy for Coca Cola Company. The Ansoff’s matrix proposes that for Coca Cola Company to grow, it can develop different corporate level strategies which include development of the product and market, market penetration and diversification. Product development is a strategy that requires an organization to improve its product line.
Some companies use these strategic options in collaboration while others employ one at a time.Product development strategy can be compared to the business level strategy of product differentiation. However, the difference is that in product development, the existing products need to be improved in order to satisfy the changing needs of the consumer.
In order to implement product development strategy, Coca-Cola Company needs to do extensive research in order to understand the needs of the consumers. Moreover, the company has suffered negative sentiments and criticisms on its product quality due to high sugars and carbon dioxide in its products. Some Coca-Cola products are considered unhealthy particularly in some states in the U.S. Therefore, product development strategy is one of the available strategic options for the company. Notably, product development when combined with market development strategy may provide the company with a perfect march that offers competitive advantage to the company.
Major considerations
- Timing to offer faster delivery of innovative products to the market
- Planning to achieve cost effective production
- Realistic expectations of consumers
Strengths of product development strategy
- Successful combination with market development make the company a market leader
- Makes the company products recognizable in the market place through consumer exposure
- Regular customers makes the testing of the new products and identify developmental issues before the product is finally released to the
- There is effective control of internal resources
Weaknesses of product development
- It relies on input from the already existing customers
- Competitors are likely to release products that may take advantage of the shortcomings of the new products
- It is difficult to control the external resources
Product development strategy is one of the available corporate strategies that Coca-Cola Company may consider appropriate to gain competitive advantage.
At the business level, the Porters generic serve as most appropriate tool for modeling a strategic option for Coca Cola Company. The Porters generic strategies are beneficial as they will act as a reference point for determining how Coca Cola Company will compete in particular markets. The three generic strategies according to Porter include: cost differentiation, cost minimization and focus strategies. Differentiation strategy involves offering exceptional selling points, cost minimization strategy seeks to offer low priced products by lowering business costs and focus strategy entails specialized products or services. At the moment, Coca Cola Company is maximizing on the differentiation strategy.Since Coca Cola Company is a well-established company, the other two are highly endorsed as they are easily attainable.
Michael Porter’s Generic Strategies.
Cost minimization strategy is a more practicable strategy for an already established company like Coca-Cola. Coca-Cola Company is well established and enjoys economies of scale. This strategy involves the lowering of business cost in order to offer prices for its products to compete against its rival companies like Pepsi Cola.
Strengths of Cost Minimization Strategy
- Easy to attract consumers who care about what they pay for the products
- No much emphasis on product quality
- Makes the company to enjoy economies of scales
Weaknesses of cost minimization
- It is difficult to generate profits low prices
- Competitors may use product quality to gain advantage
- It easy to acquire low inputs due to the rising cost of production
Comparing the two strategies discussed, product development is a more effective strategy that may enable the company to increase its competitive advantage while keeping the companyrunning at high profit level.
References
Coca-Cola . (2012). Coca-Cola Company Annual Report . Atlanta: Coca-Cola Company.
Barney. (2010). Gaining and Sustaining Competitive Advantage (4th Edition ed.). ISBN 0132479060: Pearson Education.
Coca-Cola. (2013). Coca-Cola's Internal Environment. Atlanta: Coca-Cola Company.
De Wit, B. a. (2010). Strategy Process, Content, Context. An International Perspective.
Ingram, D. (2012, June 13). Generic Business-Level Strategies. Houston Chronicle.
L.Pellisier. (2012). The Effect of External Environment on Internal Management Strategy. International Journal Of Business & Management, 7(3), 194-205.
Porter, M. (1980). Porter's generic strategies.
Regassa, H. &. (2011). Determining the value of the coca cola company — a case analysis. . Journal Of The International Academy For Case Studies, 17(7), 105-110.
