Coca-Cola is the dominant market leader in the manufacture and distribution of refreshments and beverages. It produces over 4300 brands of sparkling, diet and still beverages. The company targets the market in seven key segments including Asia Pacific, Eurasia and Africa, North America, Europe, and Latin America. These market segments are designed to meet market-specific needs such as delivering broad-based products, developing consumer needs and implementing packaging strategies to respond to consumer needs, meeting affordability needs and enhancing market investment levels. According to the Forbes Magazine, Coca-Cola has a net-worth of $ 192.8 billion, return on equity of about 23.41% and a profit margin of about 15-18% annually. Further, an EBIT analysis of the gross margins shows that for the last three years, the margin grew by 6% indicating that the earnings before tax and interest were increasing significantly, more importantly, inventory turnover stands an average 63. 25 days indicating that on average it takes at least two months to produce, store/ ship and sell products. These financial health indicators present coca cola as a robust market leader. As such, the purpose of this research paper is to investigate the strategic management and strategic competitive factors that make it grow robustly and continue setting the pace for its competitors.
The coca cola marketing strategies have contributed heavily to its success in globalization efforts. More importantly, the company uses different advertising slogans and strong messages that appeal to the consumers around the world. Some of the renowned slogans are ‘’drink coca cola’’, ‘’good til the last drop’’, ‘’it’s the real thing’’, ‘’always coca cola’’, ‘’enjoy’’, ‘’life tastes good’’ among others (Coca- Cola Company, 2017). These slogans are used to advertise coca cola brands across the world, which helps consumers, possess a psychographic association with the products. Besides, robust advertising, coca cola uses product differentiation in its globalization vision, which enables the company to customize its products based on specific needs of a certain market. For instance, products such as Cherry coke, powerade and vanilla coke are meant to appeal to the youth, while diet coke, Odwalla and vitamin water appeal to the old age and those paying attention to healthy living. Moreover, packaging plays a significant role in informing adaptability of certain Coca-Cola products in different markets. In particular, functional packaging makes a variety of its products enter the market in different sizes and forms such as plastic and glass bottles, fountain dispensers, and aluminum cans. Notably, the company invests heavily in research and development to help it understand market specific needs of consumers. For that reason, the functional packaging is a well thought out concept to promote transportation through stacking and vendor machine dispensing especially in European, America, and Asian markets. On the other hand, technological advancement has been critical for the globalization of Coca-Cola. Beginning the 2Oth century, technological breakthroughs enhanced Coca Cola’s capacity to globalize by presenting cost effective and efficient logistical means for transporting products. In particular, the development of faster and large cargo ships, semi-trucks, trains and jet aircraft hastened the way the company moved products across markets and continents. In essence, due to these solutions, it became easier to manufacture and ship products quickly to far flung markets that were otherwise untenable before a breakthrough in logistical discoveries. Besides, a technological breakthrough has become the steering wheel behind the speed and ease at which information transcends geographical localities. Currently, warehouses and Coca-Cola distributors are able to track inventory from the warehouse while being shipped, which has resulted in reduced operational costs. What is more is that computerization and automation of manufacturing processes increase volumes and reduce cycle time. These advances in technology have enabled coca cola to become a market leader, acquire a competitive edge in the global market and position itself for sustainability.
However, these advantages due to influences of globalization and technological advancement do not go without negative impacts. Firstly, coca cola has been blamed for the increasing levels of obesity across the world. Statistical evidence indicates that obesity in the world has over doubled since 1980’s. The number of calories taken and energy intakes are the leading causes of obesity and Coca is challenged by civil society groups especially in Europe and America as the greatest player for contributing to obesity, cardiovascular diseases, and type II diabetes. These challenges pose a potential threat to coca cola’s profitability. Secondly, Coca-Cola is also blamed for excessive use of water for its production capacity leaving less for human consumption. It is estimated that the world has about 9.25 million trillion water gallons; however, less than 1% is believed to be available for consumption by at least 7billion people around the globe. Therefore, the stress on water resources is a threat to the continued production of coca cola products. Thirdly, workplace and humans rights challenges are a never-ending concern for multinational companies such as coca cola. As such, coca cola faces the challenge of meeting stringent workplace human rights based on UN Charters and regulations from host countries. Finally, Coca-Cola has to present itself as an organization that upholds equal opportunities for women even in multicultural host countries and regions that have little or no regard for women rights and equal opportunities (Foster, 2012).
In order to deal with the impacts above, Coca can employ the Industrial Organization model or the resource based model. In particular, the industrial organization (I/O) model views external forces as eminent in influencing a firm’s strategic actions. The I/O model can be applied in coca cola to earn it above average returns in the following ways. Firstly, the use of technology in today’s global marketplace is quintessential in attaining profitability. For this reason, Coca-Cola must continue investing heavily on technological research and development and device mechanisms for becoming more efficient and distinguished from competitors. It is therefore recommended that Coca-Cola has to deal with external technologies challenges and threats through direct investment into applied research in order to augment monitoring and evaluation of inventory, production processes, sales, and deliveries. Secondly, there are eminent competitive factors facing the company. Ideally, consumer preferences and tastes are dynamic. Today, consumers have a great focus on nutrition and health due to obesity, cardiac diseases, and diabetes. Due to the knowledge of these lifestyle diseases, many consumers are transforming their products choices and consumption behaviors. From the onset, this is an external threat to Coca-Cola aggravated by the fact that many competitors with preferable products are entering the market such as Pepsi, Unilever, Nestle, and Kraft foods. For this reason, Coca-Cola must devise robust marketing efforts, product development, and community investment in order to maintain its foothold in the market. Thirdly, different countries have different legal environments and new regulations on beverage and food products could potentially affect Coca-Cola Company. For this reason, it is recommended that the company maintains a larger overhead expenses portfolio and reduce the profit margins in order to offset the effects of uncertain legal environments. Finally, on I/O model, different economies face slowdowns in growth bringing forth unemployment, lower purchasing power, and inflation. In essence, weak economy breads profitability challenges for the company; therefore, the Coca-Cola should stay its agenda for helping developing economies grow and become stable (Levitt, 2013).
The resource-based model uses an internal view of the company to explain ways in which internal resources may become a source of above average earnings. According to this model, a firm’s internal resources and capabilities are more important for determining the necessary strategic actions for attainment of above average earnings. To begin with, the Coca-Cola must employ strong work ethics by treating employees with dignity and awarding them fairly for work completed. Besides, the company should institute mechanisms to help it excel in performance by developing employee skills and personal development. Secondly, Coca Cola’s greatest asset is their customers. For that reason, long-term customer loyalty is infallible in order to buttress its position in the market and sustainably grow its potential. Finally, Coca-Cola should continually institute mechanisms to streamline production procedure, develop effective communication channels and build stronger organizational culture. In addition, it is critical to monitor and manage the internal environment by conducting assessments of operations, which may delay effective operations (Dhar, et al., 2005).
Coca Cola’s mission statement is ‘’ to refresh the world in mind, body and spirit. To inspire moments of optimism and happiness through our brands and actions and to create value and make a difference’’ (Coca- Cola Company, 2017). Accordingly, the company’s mission statement posit the products as superior and creates a measure against which the actions and decisions of the company are to be weighed. The mission statement has three main components, the first being, to refresh the world, which is indeed the purpose for which most of its products seek to achieve. The second statement is philosophical in nature. This part of the statement fosters positive value for the company. Further, the third part eludes the company’s capability to develop business value and make a difference in the world. Nonetheless, there are a number of observations that need to be made regarding the mission statement. In the first instance, the mission statement does not clearly identify the company’s customers, products and how it creates financial and social value. Besides, the mission leaves out other important constituencies such as employees, competencies, and specificity. In essence, the statement lacks important components that are critical for strong mission statement (Rothaermel, 2015).
Besides, the mission statement the company also bears a comprehensive vision statement. The statement has six Ps including people, portfolio, partners, planet, profits, and productivity. The first P talks about the people. This means that Coca-Cola is built upon its people within and outside the company. The aspirations of coca cola are to become the greatest workplace as a resource to help it achieve performance targets. The second P signifies the diversity of the company’s products, while the third P talks of partnerships between the company, customers, partners and suppliers as a network for creating business value. The fourth P describes the planet and role of the company in preserving the environment. The last two P’s are concerned about operations and profitability. This is in-line with meeting shareholder value and attaining productivity. In comparison, the vision statement is superior to the mission due to the specificity and description of the six P’s (Levitt, 2013).
Besides, having an elaborate mission and vision statements, Coca-Cola drives its business in cohorts with various internal and external stakeholders. To begin with, bottling partners interact on a daily basis with the company to carry out joint business planning, projects, management of forums, environmental management, and strategic planning. The other stakeholders are the consumers, who form the greatest external stakeholder asset. Customers may contact the company through hotlines, plant tours, surveys, research, websites and/or local websites. The information provided by consumers is critical for developing products and distribution channels. The other type of stakeholders is the employees, who work on daily basis to achieve the company’s strategic goals. Further, the regulatory authorities and government are useful for formulating and implementing regulatory and legal frameworks. Their actions can influence the operations of the company. Finally, suppliers as external stakeholders participate in different value creation initiatives, offer sustainable resource sourcing and participate in the packaging of products (Rothaermel, 2015).
References
Coca-Cola Company, (2017). Coca-Cola. http://www.coca-colacompany.com/
Dhar, T., Chavas, J. P., Cotterill, R. W., & Gould, B. W. (2005). An Econometric Analysis of Brand‐Level Strategic Pricing Between Coca‐Cola Company and PepsiCo. Journal of Economics & Management Strategy, 14(4), 905-931.
Foster, R. J. (2012). Coca‐Globalization. John Wiley & Sons, Ltd.
Levitt, T. (2013). The globalization of markets. Readings in international business: a decision approach, 249.
Rothaermel, F. T. (2015). Strategic management. McGraw-Hill.
