Executive Summary
The beverage industry as a whole is changing in rapid fashion. More middle aged adults are becoming increasingly concerned with nutrition, and this includes a considerable portion of the baby boomer population in the United States and elsewhere. Many are becoming aware of the fact that beverage choices today do impact overall lifestyle and possibly life expectancy on the whole. As such, the non-alcoholic beverage sector continues to be impacted by this reality as the public opts for healthier drinks. Coca Cola continues to respond to this need. Rather than live in denial, the company has been actively working to revitalize its product lines, such as via more juice and flavored water options, to be more in line with the current tastes of consumers.
Background Information 4
External Environment Analysis 5
Industry Analysis 7
Internal Environment Analysis 8
Identification of Key Strategic Issues 8
Conclusions 10
Recommendations 11
References 12
Strategic Analysis of Coca Cola
Background Information
As one of the most recognized brands of any industry on the face of the planet, Coca Cola is multinational company, with its headquarters in the United States. The companies primary focus is within the beverage sector, and it has done extremely well in that regard for over a century and counting. Throughout its history to this point, the Coca Cola has abided by its primary mission, which simply stated is: “To refresh the world, to inspire moments of optimism and happiness, and to create value and make a difference”. This statement resonates throughout the globe, as Coca Cola truly is a global enterprise and has captured a sizeable share of the beverage market in almost every region of the world (Cheng & Wu, 2011). The mission that has been established is wide encompassing, and goes beyond just a pure profit objective. While the company certainly does have an obligation to its shareholders, and it prides itself on returning annual dividends on a consistent basis, the purpose and vision of the entire organization moves far beyond this. As there are relatively few people alive today who have not seen or heard an advertisement for Coca Cola, or been exposed to one its numerous beverage products, the company has demonstrated the positive impact that it can have around the world. This is why Coca Cola also takes its corporate social responsibility strategy quite seriously and is working to develop a more sustainable future moving forward (Gill, 2007).
Through the yeas, Coca Cola has demonstrated consistent and sustained growth. They have accomplished a measured expansion where they are now in almost every region of the globe, and have set up a network of bottling plants and distributors wherever they decide to open shop. It is important to note that this growth and expansion has been achieved even in light of increasing competition and changing consumer tastes. In fact, Coca Cola has consistently adapted to changing times, which has resulted in them retaining some of the most loyal customers of any brand on the face of the Earth. When consumers call out for a new product, such as is the case of the recent bottle water craze, Coca Cola delivers, such as acquiring Dasani Water. All in all, Coca Cola has only had minor hiccups along the way, and they continue to grow (Mingxia, 2015). This does not mean they do not face competition and difficult, but it means that the leadership strategy that has been put into place effectively deals with each issue as it arises. That reality will be reflected in this brief analytic report.
External Environment Analysis
Coca Cola has firmly positioned itself as the market leader in the beverage industry, which is arguably among the most competitive sectors of the global economy. That factor notwithstanding, however, the company must still engage in a regular and comprehensive analysis of the external environment in order to maintain that position. One of the primary ways that this objective can be accomplished is via a PESTEL Analysis.
For factors that Coca Cola in interested in consider the changing nature of the global beverage industry involve fluctuations in the political, economic, social, and technological aspect of the business environment. As Coca Cola is headquartered in the United States, it is largely consumed by regulations set forth by the Food and Drug Administration. Coca Cola products have long been classified within the food category due to the fact that its beverages are non-alcoholic. As such, Coca Cola must stay ever mindful of changes in the laws and regulations’ governing this industry, at it forms the core of their business (Morse, 2009). In the case of Coca Cola, this can include any potential changes in accounting standards, tax requirements in various countries, and environmental laws that might different from one country to the next.
Naturally, as Coca Cola has an obligation to its stockholders to be as profitable as possible, an external analysis of economic factors is necessary in order to get an accurate gauge of global expansion and growth options. This involves numerous components, interest and currency rate fluctuations among them. An example of this can be seen in the actions that the US government took almost immediately following the economic crisis of 2008. Interest rates were slashed in hopes that it would spur spending and ramp up the global economy. Coca Cola quickly took notice of this, availing themselves of low cost loans in order to further spur their global growth in the midst of the crisis (Dhar, Chavas, Cotterill, & Gould, 2005). This one of the primary reasons that Coca Cola has continued to expand in recent years in the face of less than ideal economic conditions, even when competitors have faltered.
There are various social factors that Coca Cola needs to consider moving forward as well. One aspect of this involves an increasing awareness globally that healthy beverages need to be preferred over those deemed to be less healthy. This is reflected not only in the United States, where obesity levels are at an all time high and continuing to increase, but around the world as well as society in general begins to strive towards living a more healthy lifestyle overall. In fact, sales of non-alcoholic beverages have been tremendously impacted as customers have begun to switch their taste preferences to bottled water and diet sodas. Coca Cola has responded swiftly to this change by heavily promoted their Coke Zero and Diet Coke products, in addition to acquiring and further developing their bottle business sector of the company worldwide (Cheng & Wu, 2011).
One other external factor worthy of analysis is technology, which is growing increasingly important in today’s modern and globally interconnected business world. Coca Cola has made great strides in recent years revamping their advertising and promotional campaigns to make better use of enhanced television, Internet, and Social Media options (Nilsarne & Petersen, 2012). This options continue to evolve, and Coca Cola will want to make sure that they continue to remain in front of such technological advances in order to continue to expand their brand recognition and notoriety around the globe.
Industry Analysis
The beverage industry as a whole is changing in rapid fashion. More middle aged adults are becoming increasingly concerned with nutrition, and this includes a considerable portion of the baby boomer population in the United States and elsewhere. Many are becoming aware of the fact that beverage choices today do impact overall lifestyle and possibly life expectancy on the whole. As such, the non-alcoholic beverage sector continues to be impacted by this reality as the public opts for healthier drinks. Coca Cola continues to respond to this need. Rather than live in denial, the company has been actively working to revitalize its product lines, such as via more juice and flavored water options, to be more in line with the current tastes of consumers.
It is also increasingly obvious that the global community is becoming conscious of time management. Coca Cola is viewed as one of the more readily accessible products on the face of the planet, and the company is actively engaged in initiatives the continually look for new ways of being more readily available to the consumer. In many countries, for example, vending machine technology has rapidly progressed (Annapruna, 2014). Coca Cola is now in major malls, airports, colleges and universities, and even many workplaces. The machines are technologically advanced, work seamlessly, and accept a mix of credit/debit cards and cash to be more convenient to the consumer. This is yet another way that the company is able to maintain its competitive advantage over others. Coca Cola has also established partnerships with many major fast food outlets, convenient stores, and event sporting stadiums to be the sole non-alcoholic beverage supplier. Not only does this continue to increase brand awareness of a product that is already almost universally known, but it has served to make the product readily available to nearly every consumer at all hours of the day and night.
Internal Environment Analysis
In conducting an in-depth value chain analysis, it is quickly determined that Coca Cola has many advantages working for it that has enabled the company to maintain its competitive edge in the industry for so many years. This is demonstrated in the simple fact that Coca Cola has paid dividends to its shareholders each and every year that it has been in operation as a publicly traded company. The relationships that the company has established with various trading partners around the world has further solidified its role as the industry leader in the beverage sector, and their core leadership generally remains in tact for years at a time (Vedwan, 2007). This level of consistency has enabled the company to maintain its core operating principles and to remain true to the vision and mission statement that were formed at the outset of the creation of this multinational company.
Identification of Key Strategic Issues
The strengths of Coca Cola are many. To begin with, they have brand recognition to fall back on. It is important, particularly in today’s increasingly competitive world, to get your message heard above all of the rest. As Coca Cola has evolved, their promotions and advertising campaigns are among the most global recognized on the face of the planet (U, 2014). Beyond that, their products have long since been in nearly every major market, and they continue to expand. This reality has enabled them to develop and firm up various types of relationships with suppliers and vendors around the globe. This type of logistical management has enabled the company to operate at a much lower cost than most major competitors.
Coca Cola does has a major weakness that it must deal with and this revolves around brand tiredness. As Coca Cola as not changed its flagship products in decades, the fear is that consumers could grow tired of the main beverage line. This has been dealt with in a positive manner on a number of different fronts. To begin with, Coca Cola has continue to develop a loyal consumer following through the years that keeps their core business in tact. In addition, the company has continue to acquire other types of beverage companies, such as Dasani Water, and develop new products in line with shifting consumer tastes (Raman, 2007).
In recent years, Coca Cola has also worked to upgrade its packaging design to better make use of new technology related to cans and plastic bottle. In addition, consumers respond favorably to new packaging being introduced from time to time, and this once again demonstrates the companies focus on remaining relevant and progressing with the times, while still hold true to their own traditional mission and values (Regassa & Corradino, 2011). Along this same line, in order to keep up with increasing production needs, Coca Cola is constantly introducing new equipment in order to further streamline their operations. Technology in this area is continuously and rapidly advancing. By implementing this new equipment within the scope of their global operations, the Coca Cola company has effectively been able to increase their production volume across all of its various product lines to stay up with demand. This has also enabled them to cut production costs whenever possible, which has enabled them to keep the pricing of their products at a relatively stable level.
As mentioned earlier, one of the major strengths of Coca Cola lies in the many regional factories and distribution networks they have long established around the world. As technology has advanced, so has the methodology and approach behind these factories. In the United Kingdom, for example, Coca Cola has recently introduced a plethora of new and modern technology into each of its six factories. This has served to not only increase the quality of their beverage products, but has also elevated the speed by which they are able to deliver those same products to the marketplace (Stakovic, 2013). Some factories around the world have now implemented new technology to such an extent that they are able to produce bottles and cans of their product at a fast rate than a machine gun can fire bullets.
Conclusions
While change is often necessary, it also can result in some growing pains and untended consequences. While organizations have the best of intentions when implementing a change to the way that they operate, how such change will actually impact existing modes of operation is not often known until the process is well under way (Vedwan, 2007). This is particularly true in our modern age that has brought with it constantly evolving technology. Slowly, organizations in many different fields have been replacing traditional means of conducting business with more technological and modern methods aimed at improving efficiency. During the implementation phase, however, such changes can often be met with numerous problems that were simply not anticipated.
Recommendations
Moving forward, it is important that Coca Cola continues to be on top of global changes in the beverage industry, in addition to being aware of changing consumer tastes. The company will want to continue to develop strong alliances and relationships with trading partners around the globe, and they will want to better develop strong working ideals with the respective governments of any country that they currently operate in. As Coca Cola has already developed in nearly every region of the world, the tendency will be for them to become stagnant and gradually unappealing to the buying public. In order to minimize this risk, Coca Cola will need to work to introduce new product lines and engage in measure expansion plans within the regions in which they currently operate.
References
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