Business Environment - Assignment Example

? 16th December Business Environment The stiff competition and the changing business environmenthave prayed a major role of determining the operations of local and international organizations. In order to be in line with the expectations of all the stakeholders, companies have emulated various strategies that are aimed at increasing the sales, maximizing the profits and increasing the shareholders returns. In addition, the current economic, political, social and environmental factors significantly determine the organizational structure as well as financial performance of businesses. In order to address the needs of all the supply chain partners including the producers, manufacturers, wholesalers, retailers, employees and customers among others, companies have embarked on creating an environment that enables the participation of all the stakeholders. This paper keenly analyzes how the current economic situations have shaped the operations of Coca-Cola and Body Shop Companies in the local and international markets. Coca-Cola Company Coca-Cola Company is an American based firm that is headquartered in Atlanta. Being the market leader in the soft drinks industry, Coca-Cola specializes in the production of wide range of non-alcoholic beverages. The company operates in more than 200 countries. In order to meet the demands of all its customers, Coca-Cola has wide range of products that include Coke, Nestea, Fanta, C2 Cola, Dasani water and Sprite among others. The purpose of Coca Cola is outlined in its mission that include creating customers value and making a difference, refreshing the world as well as generating moments of happiness and optimism in the contemporary world. In the same way, the company aims at involving its partners including the bottling companies in its global operations. Ownership of Coca-Cola Company Coca-Cola is a public limited company. This means that for an individual to own a share of the company he or she should buy the company’s stock. In its effort to strengthen its capital base, Coca-Cola shares are quoted in various stock exchanges that include New York Stock Exchange, Chicago, Philadelphia, Boston as well as Pacific (George 9). Responsibilities The responsibility of Coca-Cola is to instigate healthy living among its consumers and members of the public in general. In order to achieve its objectives, the company has undertaken various corporate social responsibilities including sponsoring of Olympic Games in Canada and Vancouver among other places. In addition, the company is focused at improving the environment through adoption of various initiatives such as the use of recyclable bottles and reduction of footprints within its premises and surrounding environment. Organizational structure In order to effectively serve its large number of customers, Coca-Cola has established various market segments which include Latin America Group, Far East and Middle Groups, North America Groups, Europe Groups, Minute Maid Company and the African Group (Aaker 26). The well experienced human resources under the leadership of Muhtar Kent, the company CEO has led to high sales and increased profitability in the international market. The corporate human resource is responsible for designing of procedures and policies that are followed by the company. On the other hand, the duty of local human resources department is to implement the various human resources systems that are put in place by the company. Shareholders and Shareholders objectives Being a limited company, Coca-Cola does not restrict members of the public from being its shareholder. As mentioned earlier, the company stocks are sold in various exchange markets thus allowing high number of investors to be part of the company ownership. The main objective of the Coca-Cola shareholders is to attain high returns on their investments. Similarly, the shareholders aim at increasing their quarterly dividend. In order to meet the objectives of the shareholders, Coca-Cola uses the services of Computershare Trust Company that assists the shareholders with information such as change of address, account information and direct registration among others. One of the indicators of the company success in achieving the shareholders objectives is the establishment of direct registration system. According to this system, owners are not issued with physical certificates. Instead, a statement that depicts the number of shares registered under the name of the shareholders is issued to the owners. In this way, the shareholders are saved from the problems associated with physical certificates such as loses of the certificate, cost of replacement and cost of delivering the certificates to the owners. Body Shop Company Body Shop International Company is a United Kingdom based company that was founded by Anita Roddick. With more than 2,400 stores in the world, the purpose of the company is to provide quality cosmetics that meet the need of its customers. In its effort to effectively serve it customers, the company in collaboration with other organizations such as Amnesty, seeks to efficiently conserve the environment. In the same way, Body Shop aims at eliminating animal testing in the cosmetics industry. Body Shop ownership After being established by Anita Roddick in 1976, Body Shop registered a significant growth that made it to effectively compete with O Boticario, a Brazilian based cosmetic firm. In 2006, Body Shop was acquired by L'Oreal Company (Booth 21). Responsibilities of Body shop One of the major responsibilities of Body Shop is to provide quality cosmetics that have no adverse effects on the consumers. For example, the company produces Nutriganics and various antiperspirant deodorants that have no aluminum salts. Through the Body Shop Foundation, the company duties also entail animal protection, advocating of human rights and conservation of environment. Organizational structure Body Shop operates in more than 52 countries. Based on its effective brand positioning, the company has attained a strong customer loyalty from various markets including Canada, US, Asia and Europe. In order to ensure effective distribution of its brands, the company adopts the services of franchisees that are based in UK and US. The company maintains a Trading Charter that covers on the ethical issues of its products and workers. Additionally the company established an ethical audit department whose role is to develop ethical policies as well as to undertake research. Shareholders and Shareholders objectives Body Shop is a limited company. This means that members of the public who purchases the companies share qualify to be the shareholders. Even though some shareholders resisted Body Shop acquisition by L’Oreal, majority of the shareholders considered the strategy as appropriate. The major objective of the Body Shop shareholders is to attain high dividends and high returns on their investment. To ensure the shareholders objectives are achieved, Body Shop has diversified its product line thus leading to high sales and sustainable profits. Implications of current market structures on Coca-Cola and Body Shop prices and output The pricing strategies adopted by Coca-Cola depend on the demand of its products in the market. Based on the high number of firms in the soft drink industry, Coca-Cola emulates various pricing strategies for example psychological pricing and promotional pricing. For example, the company prices in some market ends with a 9. In this way, the consumers are attracted to the digit 9 which depicts a low price. In order to curb the stiff competition from rival companies such as Pepsi and McDonald, the company lowers its prices for famous brands such as Coke in order to increase short-run sales. In its effort to meet the needs of its customers regardless of the age, the company uses price segmentation strategy. This involves offering different prices for the various sizes of bottles and cans. In this way, the company is able to generate high revenue since it considers the purchasing power of its customers. The economic conditions and the level of competition in various market served by Coca-Cola has led to adoption of international pricing strategy. For example, the price of Coke in China is different from that of US market. In order to meet the high demand from its customers, Coca-Cola has embarked on product diversification. With more than 200 brands in the market, Coca-Cola has largely benefited from high sales and sustainable profits. One of the countries that have led to an increase output is Japan. This is based on the high demand of bottled water in the country leading to establishment of more than 28 Coca-Cola plants. The steady growth of the cosmetics industry has resulted to establishment of many cosmetics companies in US, Japan, Italy and UK among other countries. In this regard, Body Shop has taken various pricing strategies to face off the stiff competition. Ethical branding is one of the major aspects that make Body Shop to emulate differentiated pricing strategies. In order to attract more customers in the industry that is characterized by stiff competition, the company regularly reduces its prices without compromising the quality of its products. For example, in 2009 Body Shop reduced the prices of more than 200 brands in the India market by 20%-30% (Laermeret al 37). This was undertaken so as to provide the customers with quality brands at a lower costs. The price reduction led to a stronger customer loyalty and a significant increase of the company output to meet the high demand. The emergence of strong competitors such as Procter & Gamble has led to an increase in the level of Body Shop output in order to attain a competitive position. Response of Body Shop and Coca-Cola to market forces The increased demand in the local and international market has instigated Body Shop to emulate various channels such as MTV to promote its brands. In addition, the company has improved the distribution of its products via online. In its effort to effectively serve customers in the existing market, Body Shop has embarked on selling its products in smaller packages. Another significant strategy that Body Shop has adopted is the introduction of wide range of ethics cosmetics. In this way, the company has effectively met the needs of its large customer base. In its endeavors to retain the loyalty of the existing customers and attract new customers, Body Shop has continued to introduce specific products in particular areas. For example, introduction of Sunscreens in India led to an increase of the company sales in the region. The high demand of the Body Shop products has also made the company to adopt online advertising, monthly periodicals and GQ Magazine to promote its products. The company also provides gifts to female customers as one of its initiatives to retain their loyalty and increase the company sales (Baker 17). The market demand of the Coca-Cola products has made the company to segments its market into various 5 segments that include North America, Latin America, Asia, Africa and Europe. In order to ensure that strong customer’s awareness in these markets is attained, Coca-Cola has undertaken extensive advertising strategies through the internet, magazines and via television stations. In its effort to meet the high demand and stiff competition in the beverage industry, Coca-Cola has widened its product portfolio. Some of the key products that the company has recently introduced in the market include Glaceau, Atkins Diet, C2 Cola and diet Coke. The establishment of bottling companies in the countries where Coca-Cola operates is another imperative strategy that the company has adopted. Impact of business and cultural environment on the behavior of Coca-Cola The introduction of Coca-Cola brands in new markets is mostly based on the cultural aspects of the consumers. While some customers especially in the cold regions prefer hot drinks, consumers in the hot regions are loyal towards Coca-Cola brands such as Fanta and Coke. In addition, the company is focused at improving the work place thus leading to higher employee’s motivation and productivity. The long-term sustainability of Coca-Cola has also been achieved due to the company’s wide range of operations in the world that is characterized by various cultures. Resolutions Resources program and education programs are equally important in the operations of Coca-Cola. Through such programs, employees and company associates are in a position to solve wide range of issues that affect the Coca-Cola Company. Conclusion Based on the above discussion it is clear that the operations of businesses are highly dependent on political, economic, cultural as well as environment factors. To ensure sustainable profits and high sales it is imperative for companies to undertake environment studies. In this way, firms will have adequate information regarding the needs of both its consumers and the general public. Other major determinant of company’s performance and behavior are the market forces that include supply and demand. Works Cited Aaker, D. Strategic Market Management. New York: Harper Collins, 2008. Baker, M. The Strategic Marketing Plan Audit. New York: Macmillan Publishers, 2008. Booth, R.Activists call Body Shop boycott. London: Sage, 2006. George, N. Colas called safe, but not at EU standards. The San Diego Union, 2006. Laermer, et al. Punk Marketing, New York: Harper Collins, 2007. Read More