Strategic Analysis of the Coca-Cola Company

Running title: Coca Cola Strategic Management

MGT599 Strategic Management

STRATEGIC MANAGEMENT PROCESS, MISSION, GOALS AND OBJECTIVES

Dr, Nanette Metz

Trident University

Constance E. St Julien-Mims

October 25, 2015

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Strategic Analysis of the Coca-Cola Company

Introduction:

This paper is a strategic analysis of The Coca-Cola Company Coca-Cola, a leader in the beverage industry. Coca-Cola, the world’s leading soft drink maker, operates in more than 200 countries and owns or licenses more than 400 brands of non-alcoholic beverages. The leading global beverage manufacturer is Coca cola.

It is significant to state that its operations are also marked with diverse strengths, weaknesses, opportunities and threats that will impact the general operations of this global entity. In the internal assessment of the company, the strengths that are in the personal relationships that have been established between the client base and the Coca-Cola brand globally. . This has been credited to its excellent internal and external operations that have raised the client base in the global arena The brand popularity of the product that has been attained in the target regions largely because due to the same factors. Coca Cola has continually raised it their customer loyalty that is held by the esteemed clients in the target region. The international trade operations of the company are extremely high boosting the profit margins of the company.

View of the Coca Cola Company vision and the mission:

The vision and the mission of the company were effectively placed and are to be used by the organization to meet the needs of the clients in the target market. The basic strategic choices that are used are altered at times to fit the targeted market since they contribute to the success of the company.

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Coca-Cola is all about tradition and blending all mission, vision, and set values together to achieve the company prospering and the success of all individual employees. If the employees

are happy, the customers will be too. It is in the stakeholders’ best interests that the company does everything in its power to make the company all it can be.

Some companies don’t have a mission at all, operating instead on a set of goals (Hammonds, 2007). This is not true with Coca-Cola. They have a mission and also act on the goals. They know if they don’t accommodate the customer, they could easily lose to the competition.

Mission Statement

Coca-Cola has mission and vision statements that serve the purpose as a company well. (Coca-Cola, 2011): The mission states the following as it’s goals.

To refresh the world.

To inspire moments of optimism and happiness.

To create value and make a difference.

The business strategy is guided by the company’s believe in certain beliefs which are that:

Consumers drive everything that Coca-Cola does.

The Brand of Coca-Cola is the core of the business.

We serve the consumer with the selection of non-alcoholic drinks.

We will be the best marketers in the world.

We think and act locally.

We will lead as a model corporate citizen.

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Vision Statement

The vision serves as a road map to be followed by Coca-Cola to continue to achieve a sustainable, quality growth (Coca-Cola, 2011): The vision expresses the following:

Strategic Analysis of Coca Cola Company:

• It is to be a great place to work where people are inspired to be the best
• Coca Cola wants to bring to the world quality beverage brands that satisfy people.
• Cultivate a network of customers and suppliers and together create a mutual value.
• Be a responsible company that makes a difference in the communities.
• Give back to the shareholders long-term with respect for overall responsibility.
• Be a highly effective and fast-moving company.

When doing an assessment of the operations of the Corporation, the strategies that have been used are suited well to the goals of the organization. The objectives and the goals of the company have been created are articulate in aiming towards a common end. The vision and the mission of the company is attainable for the company’s goals…

The SWOT of the Corporation:

The strong points of the company are the popularity status of the brands of the products in the company. The high level of consumer loyalty to the brands has given the corporation an upper hand in attaining a strong competitive advantage. It is quite often that a coke drinker will not like

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drinking a Pepsi product. Coca Cola has an excellent global presence of their product has

Boosted the financial position of the organization leading to the easy recognition of the marketing strategies used.

The weaknesses in the operations of the company is the reduced effects of the marketing strategies in use. Due to some of the products high sugar content it has been rejected by some health conscious consumers.

The lack of popularity of some of its brands has led to a reduced number of brand choices to the clients. The threat such as the legal issues strongly facing company has dented the image of the company. The stiff competition that is being experienced from companies such as Pepsi is making the company to have reduced levels of the client base. There are opportunities that are bound to keep the company high in the beverage industry such as the high rates of the successful brands acceptance in the global regional market. This gives the corporation a higher buy out competition that will raise the revenues of the company (SWOT Analysis, n.d)

Values

The culture of a company can make or break the progress and success of it. Coca-Cola has a winning attitude toward the morality and integrity of the company. It defines their attitudes and behaviors to make their future successful and a reality. Those set of values that Coca-Cola embraces are as follows Coca-Cola, 2011):

Goals and Objectives

• The leadership must have the ability to have courage to shape a better future.
• To use collaboration efforts of collective genius
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• Integrity of the company to be trust worthy.
• To assume the responsibility to hold Accountability for it actions
• Passionate commitment in heart and mind
  • To ensure diversity as inclusive as our brands
  • To guarantee the quality of what they produce

The objectives are to keep the customers happy with the products in order to keep their loyalty in purchasing Coca Cola products. By doing this there will be a continued increase in volume and profits which are goals for the company. It is important for Coca-Cola to keep listening to the consumer. It would increase sales to allow more discounts or coupons on certain products. Often packaged combo meals increase sale of both the food and vendors so it might even make sense for Coca-Cola to come up with ideas for discounts on places that serve pizza and Coca-Cola. Another option would be to get a free pizza with so many UPC Codes of Coca-Cola.

Coca-Cola should remain in strong competition with other soft drinks. Pepsi is of course the strongest competitor in this battle. Coca-Cola has the correct values and their strategy is to make the public understand they are concerned with communities and doing the right thing. The company knows to focus on the market, focus on the needs, and make sure not only customers are satisfied but the franchise partners.

Coca-Cola External Analysis

The Coca-Cola Company faces challenges in today’s market because of market changes, socio-economic changes and globalization. An external analysis of the soft drink industry is performed to understand the impact of environment. An internal analysis of Coca-Cola is performed to understand the internal capabilities. Opportunities – Coca-Cola Company states that “innovation is at the heart of everything they do (The Coca-Cola Company, 2011).” The company is environment friendly. They have been involved in creating healthy drinks and promoting their mineral water sales (Free, 2011).” The Coca-Cola Company is keeping a constant awareness of how to improve the communities and environments through getting the community residents to join in and become involved.

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Threats – The biggest cause of worry to Coca-Cola is the competitors. Pepsico, Inc. is one of the most important worries for them. Aside from the competition, especially those promoting healthy water drinks with fruit flavors, Coca-Cola has reduced production of their main brands and has started producing different cans to attract collectors of the product as well as people who don’t normally buy. Due to negative health effects (Free, 2011), many consumers are turning away from carbonated drinks with large sugar content. Some have taken to drinking Green Tea by Lipton which is also a Pepsico product. It has been doing great so it has had a bad effect on Coca-Cola.

Coca-Cola Internal Analysis

The strengths of the Coca-Cola Company are:

They are the world’s leading brand far above any competitor at this time.

They have a huge operational division.

Their revenue is certainly profitable even in recession times

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The weaknesses of the Coca-Cola Company are:

The competitors driving the healthier products

The change in purchasing habits of consumers buying in North America

Recession

Negative ads and publicity.

RBV Framework

The Coca-Cola Company has had revenues in excess of $25 billion dollars a year. They are the highest, profitable soft drink company at this time. Pepsico is second and working hard trying to become number one but have not overcome Coca Cola as yet. Coca-Cola owns and operates over 32 principal beverage concentrates and syrup plants throughout the world (The Coca-Cola Company, 2011).

The strength of this company is how self-sufficient it is and how well it is still doing in light of only relying on carbonated soft drinks. Its weaknesses – especially the publicity being negative – about the pesticides being used in their products. It did not seem to impede the sales of the products. The Coca-Cola Company has had a decline in cash operating activities but so has many other companies. This has reduced their investment abilities but has not affected the company’s profits.

The operations they run overseas has far made up for the decline in North America. The foreign sales are up even more than before. Dasani brand water by Coca-Cola is up. It is the third best-selling bottled water in the U.S. It has not made a move towards fruit flavored. It does have bottling and canning operations that are utilized for other products that make juice

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concentrates. So it would be very easy for Coca-Cola to start manufacturing at great abundance but low cost, flavored waters and other healthier products.

There are many cultural changes happening in the United States. The Hispanic population is growing and many drink Coca-Cola. It would be in the company’s best financial interests to pay attention to these cultural growths and take advantage of them. The economic

value of The Coca-Cola Company is high. It appears that the foreign market is doing well with the sales of their products.

If Coca-Cola could create an ad campaign to change the “carbonated” ideals they have to include healthier drinks, the public could change over from Pepsi products to Coca-Cola. This eliminate the need for the “taste test”. The Coca-Cola Company is in charge at this time and needs to watch carefully over the things they are not doing. It is important to change with the times.

Porter’s Five Force Analysis

The following is the analysis according to Porter’s Five Forces (Oxford University Press, 2011):

The New Entrant

The more difficult it is for a firm to enter the market the more likely it is that existing firms can keep a high profit.

Coca-Cola has been on top when it comes to the soda market, but times change and there is a possibility that this could end with the idea of healthy drinks and consumers demanding better.

This would be high on the scale of a problem for Coca-Cola.

The Power of the Buyers

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The stronger the buyer power – the more likely the price level could be driven down.

Consumers could buy the competitor’s product based on the idea that the ingredients are better for you health-wise. Additionally, the competitors are going after the consumers who want healthy drinks and the Coca-Cola Company has not made a move towards that market.

This would be high on the scale.

The Power of the Suppliers

Suppliers can determine the terms and conditions upon which the business will conduct itself. The Coca-Cola Company makes its own formula and product so depending on suppliers is not as crucial.

This would be low on the scale.

The Degree of Rivalry

Competition between firms depends on if one of the firms can generate high profits. This only comes if the consumers are willing to switch between brands quickly for a price reduction or a discounted sale. Most consumers who like the Coca-Cola products are not switching to Pepsi soda, but those who are changing their lifestyle to a healthier one, may switch to the Pepsico brand of Green Tea or other products that Pepsico is involved in.

This would be medium on the scale.

The Substitute Threat

The costs involved for Coca-Cola to generate other brands may be high and that may be why they are not doing it. The problem with this is the competitors are coming up with ways to make products that are healthier and Coca-Cola is not. It is difficult for

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those who have not started to make a “different and better” product to enter that market, but Pepsico is doing it by leaps and bounds whereas Coca-Cola is not.

This could be medium to high on the scale.

PEST Analysis

The PEST Analysis is as follows:

Changes in Accounting Standards, taxation requirements (tax rate changes, modified tax law interpretations, entrance of new tax laws), and environmental laws either in domestic or foreign authorities.

• Political Analysis
• Non-alcoholic beverages are considered food and fall under the FDA regulations. The government determines what the rules are. If a food does not meet the standards, the FDA can shut them down. Tax rate changes can also affect a company. The ability or non-ability to be able to get into markets that do not deal in the product can also be a factor in the company’s continued success.
• Changes in Laws and Regulations

Civil conflict, governmental changes and restrictions concerning the ability to relocate capital across borders.

• Political Conditions, specifically in international markets

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• Changes in Non-Alcoholic business era.

Competitive product and pricing policy pressures, ability to maintain or earn share of sales in worldwide market compared to rivals.

E) Ability to penetrate emerging and developing markets,

That also relies on economic and political conditions, and also their ability to form effectively strategic business alliances with local bottlers, and to enhance their production amenities, distribution networks, sales equipment, and technology.

The Company has six factories in Britain by using modern technology equipment so to ensure top product quality and quick delivery. In Wakefield, Yorkshire in 1990, CCE opened one of the Europe’s largest soft drinks factories. That factory has the ability to produce faster the cans of Coca-Cola even faster than bullets of a machine gun.

• Economic Analysis
• With the recession, all companies have lost a certain amount of gain. The foreign market has increased its sales of non-alcoholic drinks. Currently, because of global recession, Coca-Cola can borrow capital and invest in other products, because the interest rates are lowered. This has been an improvement for soft drink producers. In 2001, the recession influenced the company’s operations, but because of aggressive actions the US Economy estimated to have returned in positive growth in 2002. Also, it can borrow to advance its research of new products and technology. By researching for new products are cost effective, the company could sell its products at a lower price, so its customers would purchase more Coca-Cola products at a lower price.
• Social Analysis
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• Is it right to drink these soft drinks that really are not healthy? Some of the reduction in purchases has been due to this. That has strongly influenced the sales of non-alcoholic beverage sector, because many customers are switching to bottled water and diet colas like; Coca-Cola Light or Zero, instead of drinking beer or other beverages. Additionally, Consumers from the ages of 37 to 55 are also increasingly concerned with nutrition. There is a large population of the age range known as the baby boomers. Since many are reaching an older age in life they are becoming more concerned with increasing their longevity. This will continue to affect the non-alcoholic beverage industry by increasing the demand overall and in the healthier beverages.
• Technology Analysis
  • Advertising, going green, changing the wrapper, and deciding on the marketing and promotional programs all have an impact on a soft drink company’s future success. Some factors that affect the company’s actual results to vary essentially from the expected results, are the following:
  • Advertising Marketing and promotional programs, the new technology advances of television and internet that use incomparable effects for advertising through the use of media. Those advances make the products seem attractive. This supports the selling promotion of the products. Coca-Cola in media tends to use this technology so, to sell effectively its products.
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  • Continuously there has been entrance of new machineries’ equipment all the time. Because of that, Coca-Cola’s production volume has increased sharply compared to few years ago.
  • CCE-Coca-Cola Enterprises

Conclusion:

The visions and the mission of the company direct the general operations of the company. The strategies that have been placed will ensure that the set specific objectives and company goals have been attained. It is imperative to state that the act of the company addressing the strengths, weaknesses, opportunities and threats through excellent company strategies will promote further success in the operations of the organization (Mission, 2011).

Reference