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Coca Cola Strategic Business Analysis gopoco.us/Coca_Cola_Strategic_Business_Analysis/MjEwNw
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Coca Cola Strategic Business Analysis External Environment Analysis The external environment of Coca-Cola Company is much better than it’s competitive and rivals. There are two major areas when we talk about the external environment of Coca-Cola. The first one is macro environment and the second one is microenvironment. The factors that fall under the category of macro environment are mostly uncontrollable and they greatly influence the performance and decision making of the company. Some of the most important factors in this context are social, legal, political, technological, and political factors. All these factors have deep impacts on the decision-making, future policy making of Coca-Cola Company as it is a multi-national company, and it has to meet various legal and political codes and standards. The next important factor that plays the most important role in influencing the external environment of the company is demographic factors. The terms and conditions are changed demographically for Coca-Cola Company and it has to cope with all the challenges and limitations to remain competitive in the global market (Schurman, 2015). Corporate social responsibility is the next element in this regard and Coca-Cola Company is fulfilling its global corporate social responsibility perfectly. It is major sponsor of various sports event and in organizing various other cultural events. Moreover, it is also involved in supporting students and international scholars. It is
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offering them internships and jobs. It is also offering them international scholarships. Coke Studio and such events show interest of the company towards its social responsibility. The second type of external environment of the company is microenvironment of the company. There are certain elements or factors that fall under the category of microenvironment such as market trends, market size, suppliers, and customer needs. These elements also helps the company to change its policies for the future (Nyakang'i, 2017). Coca-Cola Company is enjoying best microenvironment, as it is one of the biggest selling brand in the world in beverage industry. It is fulfilling market needs and trends. Likewise, it is fulfilling customer needs and demands by introducing new products depending upon their taste and demand. Industry Environment Analysis The industry analysis of Coca-Cola Company is best possible in term of Porter’s five forces analysis model as shown in figure below
The major rival of Coca-Cola Company at international level is Pepsi however; global sales of Coca-Cola are far ahead of Pepsi. It has more bottling and distribution points than Pepsi. Similarly, it is offering its products and services in more nations than Pepsi. The next force in this regard is the bargaining power of the consumers. The consumers can easily buy its products from gas stations, retailer, super stores, fast food cafes, and from vending machines. The bargaining power of consumers is directly proportional to the availability of products of Coca-Cola Company. The ease of availability ensures that the company has high bargaining power as its demand and sale at stores is high (Swift, 2018). 3/6
Third force in this context is the bargaining power of the suppliers. The bargaining power of the suppliers is fragile and weaker than the bargaining power of the consumers as the raw material needed for production of soft drinks is very cheap such as flavors, allowed food colors, and sugar. The ease of availability of these raw materials has reduced the switching cost of the producers and they can easily change the suppliers. The fourth force in this regard is the threat to substitute. There are numerous beverages companies offering various products such as coffee, tea, juices, water, and various other items. The competition is high and these companies need extra and aggressive sort of marketing and advertisement strategies to excel the industry. Coca-Cola is well aware of this fact and it has diversified its product range by adding various juices and mineral water to its list (www.stock-analysis-on.net, 2018). However, it must be kept in mind that the switching cost of the consumers is less and they can easily switch to any other available substitute depending upon their taste and the product quality. The next important element in this context is perceived value that is very less in the beverage industry as the major difference is not in the products and services but it lies in the marketing and advertisement strategies. The last force in this context is the threat of new entrant or the threat of forward integration. The threat of new entrant is very less in this industry as the manufacturing and bottling plant is very expensive and suppliers cannot afford it. Competitor Analysis Coca-Cola is an international and a multi-national firm. It has various national competitors but this analysis is not based on local or national level competitors as they vary from nation to nation. However, the one of the biggest and the most significant competitor of Coca-Cola is Pepsi.co. It is also an international beverage firm and strong competitor of Coca-Cola. The comparison is based on the financial performance of both the companies. 1. Liquidity Ratio: The liquidity ratio of Coca-Cola is 1.2 while it is 1.24 2. Financial Leverage ratio: The financial leverage ratio of Coca-Cola from 2017 is 5.15 to 4.76. On the other hand, financial leverage ratio of Pepsi.co from 2017 5.60 to 2.63 3. Turnover ratio: The asset turnover ratio of Coca-Cola from 2017 is enhanced by 5 percent. On the other hand, the asset turnover ratio of Pepsi.co from 2017 is 0.80 4. Profitability Ratio: The profitability ratio of Coca-Cola from 2017 is increased by five percent. The profitability ratio of Coca-Cola from 2017 is enhanced by 7.56 percent.
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5. Market value ratio: The market value ratio of Coca-Cola from 2017 is 15.95. The market value ratio of Pepsi.co from 2017 is 10.9 (www.stock-analysison.net, 2018) Internal environment analysis The internal business environment is greatly influenced by the management of the company. Coca-Cola has innovative and advanced technological environment. The internal environment of Coca-Cola ensures that all its operations are effective there is perfect organization of communication skills and raw materials. Coca-Cola uses the method of internal assessment to refine its operations. The next important tool used by Coca-Cola to improve the quality of its products and services is customer feedback and their response (Schurman, 2015). Customer feedback is obtained using general survey questionnaire and various social media websites such as Facebook and Twitter. Coca-Cola is using six sigma and lean manufacturing method to improve its production and technical aspects. Likewise, it is also using Just-in-time (JIT) technique to overcome the issue of inventory management. Coca-Cola Company has its own its logistics and transport services to transport its goods and products. Recommendations The recommendations are based on the SWOT analysis to devise best strategies for the Coca-Coal Company in the future. Major strength of Coca-Cola is that it is the biggest brand in the world in beverage industry. It is currently operating in more than two hundred nations of the world. The company is enjoying best social, political, legal, and economic positons that are its primary strengths. Now if we talk about the weaknesses of the company then the major weakness of Coca-Cola is lack of diversity. It just deals in beverages while other companies like Pepsi.co is also investing in food snacks. It is the major reason that sale revenue of Coca-Cola is less than Pepsi.co. The next important thing in this context is that Coca-Cola has remained unable to make contracts with hotel chains and food industries to increase its sale (www.stock-analysis-on.net, 2018). There are various opportunities for Coca-Cola as the demand of organic and whole food is increasing across the globe. It has recently developed Truvia that is stevia based alternative of sugar for the diabetes patients and it uses it for diet beverages. This product is greatly accepted and appreciated by the public therefore, Coca-Cola must go for such other products. It can also invest in food industry like fast food, snack bars, and other beverages like tea and coffee to improve its venture. The biggest threat to Coca-Cola Company is the threat of replacement. The next important threat is its biggest rival Pepsi.co that comprises of 40 percent of the beverage market. It has various other ventures such as food snacks, coffee, tea, chocolates, and milk. All these items are improving its brand while coke is lagging 5/6
behind in this segment. One of the biggest threat is loss of potential customers that may switch to another beverage brand due to low cost and health effects, as the customers are not married to a product in beverage industry. (PayPerVids, 2016) I would recommend following strategies based on above analysis: 1. Coca-Cola needs diversity in its products to remain competitive in the market. 2. It must improve its marketing and advertisement strategies to attract more customers 3. It must sign contracts with renowned food chains such as KFC and McDonalds to improve its sale. 4. Coca-Cola Company needs to improve its management and it must invest more in research and development to find new paths of success. Read Essay provides a platform for UK students from all over the world to connect with experienced and professional writers. You can benefit from our custom writing solutions like we offer help with economics homework, business assignment help, and many other writing services.
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