Organisational Direction on Coca-Cola Company - Essay Example

? Organisational Direction: Coca-Cola Company Table of Contents Table of Contents 2 0Introduction 3 2.0Coca-Cola Company 3 3.0Strategic aims 4 3.1Strategic plan 5 3.2Factors affecting strategic plan 6 3.3SWOT analysis 7 3.4PESTEL analysis 7 4.0Strategic analysis tools 8 4.1Major stakeholders 10 4.2Evaluation of Coca-Cola Company’s strategic position 11 4.3Alternative strategic options to meet strategic aims and objectives 13 4.4Revised strategic position 15 5.0Conclusion 16 List of References 17 1.0 Introduction The paper analyses decision making process in Coca-Cola Company and how it puts down various strategies and implements them to enable it operates effectively in its competing. It analyses aims and objectives of the company, components of strategic planning that helps in planning process. In this paper consideration is placed on vision and mission statements. Also discussed are the various factors that affect planning of strategies for the company using SWOT and PESTEL analysis. The paper will also discuss various strategic analysis tools and how they are used to indicate the progress of aims and objectives set by coca cola Company. Major stakeholders are also discussed and how they influence organization strategy. Strategic position of the company is also analysed and several challenges facing Coca-Cola Company are also discussed. A range of alternative strategic options which meets strategic aims and objectives are also discussed in this paper. 2.0 Coca-Cola Company Coca-Cola Company is one of the largest producers of non-alcoholic beverages company in the world. It specializes in manufacturing different varieties of soft drinks used all over the world. It started its operations in Georgia, United States of America in 1886 and has grown into a multinational corporation with more than 200 countries in which it operates in. Opening up and operation of this several branches has enabled it satisfy their customers and globalize its market. It is a public company owned by several shareholders and is rated as one of the best company in stock exchange market. The company is majorly designed to produce several concentrates, syrup and beverage bases from its main branch. The manufactured concentrates are then distributed all over the world to more than three hundred bottling partners. The bottling partners are responsible for producing a wide range of Coca-Cola products and distributing them to the final consumers. The main Coca-Cola Company therefore remains to enjoy the name of the brand and it is liable to any problem arising from use of its products. It remains to be the largest and leading manufacturer, marketer and distributor of non-alcoholic beverages up-to-date. Coca-Cola Company has managed to employ over thirty thousand people around the world and greatly involves itself in corporate social responsibilities. They now boast to be the world best soft drink providers since their drink brands have become the world favourite soft drink. Its potential competitors include: Pepsi Company having twenty one percent of the global market, Cadbury Schweppes Company with eight percent while coca cola itself dominates with forty seven percent of the world soft drink market. The rest of percentage is shared among other small soft drink companies which are not a major threat to the company. They include; Cott and AmBev in Latin America. The company has indicated that for it to remain a global soft drink provider it needs to stay local and satisfy tastes and preferences of its customers. 3.0 Strategic aims Every organization has aims that it intends to see through during its operation. Coca cola company has several aims for conducting its business and this includes; inspiring moments of optimism through their brands and their various planned actions, creating value for their customers in different parts of the world by offering quality standardized products, making a difference from all refreshment brands offered and corporate social responsibilities that they get engaged in everywhere they are. They also intend to refresh the whole world in body, mind and spirit that is through their products, social programs, consumer awareness and ultimate leadership in quality delivery of products to consumers (Aaker, 1998, pp.45-56). Strategic objectives of Coca Cola Company are divided into corporate objectives- which are geared to general purpose of conducting the business activities-and the second is marketing objectives which are directed towards their customers and society at large. Corporate objectives consider maximizing profits for the companies’ shareowners (Unland & Kleiner, 1996, pp.5-9). This is done without inconveniencing product quality and overall responsibility they are entitled to perform. They also intend to inspire the employees by providing suitable working environment hence making people be the best they can be. They intend to bring to the world a portfolio of beverage brands that satisfy their customers through brand anticipation. Nurturing and building mutual loyalty between them and other partners is one of their objectives. They will also contribute globally in making a difference by being responsible global citizens towards the planet in conducting environmental friendly activities (Thompson & Strickland, 1999, pp.87-88). The company has developed several values to deal with their operations. The values serve as directions to various actions that they undertake. The value of leadership demands that the company develop appropriate courage to shape better future which can be imitated by other companies. They address issues of accountability to whatever they get involved in and take responsibilities of outcomes of their various activities. They also consider diversity where they develop products that meet need of all customers and operate in different countries without bias. They also consider producing high quality products that meet the safety standards throughout their manufacturing process. They ensure that all other processes that ensure distribution of their products to customers remain efficient. 3.1 Strategic plan A plan is a statement of intent which is written and it comprises explanations, justifications and relevant numerical and financial statistics. Strategic planning provides a framework of organization’s actions and decisions and is directed towards satisfying the customers. Coca cola derives its strategic plans from its mission statement and vision. Visions of the company guides it on what it needs to undertake and accomplish within a period of time. This helps in achieving sustainable and quality growth. They are regarded as the expectations of key stakeholders of the company. In making strategies Coca Cola Company addresses core competencies that they need to achieve. The company wishes to be a fast and leading organization hence increasing market share. This makes them create strategies that will enable them have a greater access to a wide market. They therefore develop strategies that will increase their skills in customer relation and general marketing of their products (Unland & Kleiner, 1996, pp.5-9). The company focuses on contributing to perceived customer benefits. In the need to satisfy the customer the company makes strategies that addresses reasons why customer will want to purchase other products instead of theirs. Their also compares amount of satisfaction derived from use of their products to that of other companies within same industry (Unland & Kleiner, 1996, pp.5-9). Mission declares purpose of the Coca-Cola Company. It’s the unit of gauging company’s activities and decisions. The company seeks to inspire moments of optimism and happiness. They intend to also create value and make a difference. Missions therefore indicate their reason for doing business. Mission statements are important since they enable the planners to maintain focus on purpose of the company conducting the business. 3.2 Factors affecting strategic plan Several factors affect strategic plan of the coca cola company. These factors are both from the internal environment and those from the internal environment. From the internal environment, matters concerning resources and other organization program affect the strategic planning process. They can be analysed using the SWOT analysis model and PESTEL model. 3.3 SWOT analysis This stands for strength, weakness, opportunity and threats. Planning requires different resources within the company and outside. This requires large financial support which increases the overhead costs of the company. Many activities need to be financed in the company hence priority is given to immediate cost like costs of factors of production. This slows collection of data required to make strategies (Ambrosini & Bowman, 2009, pp.29-49). Competitors are continually fighting for market information and current opportunities hence making it difficult to develop strategies that cannot be copied by competitors. Poor and un-updated strategies are created due to lack of proper information from the market. It is also faced by lack of expansion opportunities since best opportunities are grabbed first before they get incorporated into their strategy. Threats from external environment make the company to keep changing and developing new strategies to market its products appropriately. It is difficult to develop long term strategy since external environment is continually changing while substitute products are being developed. This makes the company to always be on the run to find the best way to adapt to the current market (Thompson & Strickland, 1999, pp.87-88). 3.4 PESTEL analysis It refers to analysis of factors affecting a company in the industry. These are political, economic, social cultural, technological, legal and natural environment. All strategies developed interact with these factors and are shaped to work within them since the company has no control over them. Different countries have different regulations and consumer protection rights. Understanding their influence on products price is important before making strategies. Other market segments have unstable government and general political instability hence making a strategy that conforms to such environment is difficult for the company. Fluctuations in economy make Coca-Cola Company change its strategy so that its product price fits with customers’ status while at the same time making profit from increased production costs (Ansoff, 1957, pp.87-112). Social cultural factor weighs much on all activities to be undertaken by the company since it focuses directly to its customers. Customers have different values and customs which directs on how they make purchases. It depicts how people use the products and their views about the company. Developing of strategies that fit with every ones culture is difficult and hence Coca Cola Company relies on producing general similar products in all its market segments (Ambrosini & Bowman, 2009, pp.29-49). Updating technology used is required at all levels since it translate to overall cost. Since strategic plan considers issues that reduce costs and maintain profit for the company, then technology chosen should be efficient and effective in terms of use and delivery. Physical environment affects the strategy plans made in that distribution and delivery may be affected if the infrastructure is poor. Market segments that are inaccessible reduces market share for the company and making strategy for such an environment requires detailed information. Strategic plan must put in mind the rules and regulations (Lynch, 2006, pp.24-34). Coca cola company therefore ensures that they understand different laws and regulations of different countries they operate in. this helps to avoid collision with the countries laws and regulations. 4.0 Strategic analysis tools Strategic analysis refers to all processes of conducting research on both internal and external environment of a business where it operates and using the information acquired to formulate appropriate strategies for the Company. Strategic analysts of Coca-Cola Company use several tools and techniques to choose the best for analysis (Thompson & Strickland, 1999, pp.87-88). SWOT analysis is considered as the best tool since it is simple to use and it’s cost effective. It focuses on the strength, weakness, opportunities and threats posed by the environment. The strategy has in mind the understanding of the objectives of the company and analyses environmental factors that can help in realizing them. The tool considers that strengths and weakness form the internal environment while opportunities and threats from the outside environment (Ansoff, 1957, pp.87-112). Company’s strength considers what the company is best at. That is what the company does better than other companies in the industry. The analysis considers what other companies perceive and know about the company’s strengths in the market. Consumer perception of the company’s market strength is also analysed. If the customers and the competitors view the company as strong and with capabilities of delivering quality products then the objectives of the company are being achieved (Alam & Khalifa, 2009, pp.463-474). Coca-Cola Company analyses the weaknesses of the company before making strategies. They consider what the business does better as per the historical reflection of its activities. It puts in mind all elements of the company which add little value or no value at all. Those that do not value in the business are eliminated and those that make value are incorporated into the strategy. When the company has several weak elements which affects its operation then the company is not on right direction of achieving its objectives (Thompson & Strickland, 1999, pp.87-88). Every organization has its opportunities in the market. Coca-Cola Company considers changes taking place that could favourable for its operation. These include political, economic, social cultural or changes in technology. When making the analysis it considers the innovations that the company can bring to the market which can be used effectively to provide a good market share. Ever increasing opportunities for the company in the market indicates that the company is increasing its market share and number of customers. Market expansion indicates acceptance of the company’s products and use by customers (Chapman, et al., 1997, pp.432-48). Threats in its environment may be from the competitors in the industry. Study of changes in political, social cultural, economic or technological are analysed to see how they unfavourable contribute to the operation of the company and ways found to correct them or cope up with them. Threats from the environment which have insignificant effects on the operation of the company is an indicator that the company is doing well (Lynch, 2006, pp.24-34). 4.1 Major stakeholders Coca-Cola Company has several stakeholders who have several roles they play in running of the business. Management board is responsible for controlling, coordinating and ensuring proper allocation of organizations resources. They ensure that all activities of the company work effectively to be able to meet the objectives of the company. They make overall decisions regarding operations of the company and how to appropriately implement planned strategies. They have the power to decide the actions to be undertaken in production. They ensure that the available resources are organized in a way that they work efficiently (Alam & Khalifa, 2009, pp.463-474). Shareholders of the company have equitable shareholder control. For this reason they are in a position to nominate board of directors and use their votes in electing directors. Every shareholder therefore has a vote that he or she uses in electing the candidates of the board of directors hence have a great influence on how the company is run. The government on the other side ensures that the company meets and maintains safety standards during processing of its products. Coca Cola Company therefore ensures that it follows all the applicable laws and legal reporting requirements. Planning of strategies considers that all legal requirements are considered and no strategy falls out of the limit of the laws (Hinterhuber, 1995, pp.63–73). Consumers are the end users of the company’s products. Coca-Cola Company ensures that it sets out goals that ensure customer satisfaction through quality goods. It has also set up goals in its operation to deal with the issue of corporate social responsibility towards the society. This has enable creation of benefiting relationships with the customers. The customers influenced strategy making process in a way that quality and value issues are to be addressed while making the strategy (Lynch, 2006, pp.24-34). 4.2 Evaluation of Coca-Cola Company’s strategic position Strategic positioning is an approach that integrates all the company’s strategies and organizational effectiveness so that the company way of conducting operations is different from competitors’ in industry. This enables a stable growth of the market and profits. Coca-Cola Company has strategically positioned itself well in the soft drink industry for a long period of time. They enjoy operating a market of over 200 countries and hence enjoy extensive economies of scale. Coca- cola company uses of porters five forces model has enabled the company thrive since it understands perfectly about every section of its environment and how it can adjust itself to either adapt or adopt to what is provided by the environment (Chapman, et al., 1997, pp.432-48). Business rivalry of Coca-Cola company at first was Pepsi and therefore it was easy for the company to develop strong strategies to counter those provide by Pepsi. Entrance of several new companies that have the potential and capability to produce and influence the market posed a big threat to Coca Cola Company. This made it to adopt market segmentation and penetration strategy. Market segmentation enabled the company to being in close contact with customers and understanding their changing tastes and preferences hence able to produce what they want. End result of this was production of a variety of soft drinks that match with the culture of people around the world. This eliminated the great threat that was posed by other companies (Unland & Kleiner, 1996, pp.5-9). Strength which the company has acquired in the market makes it difficult for new entrants to get started, develop and grow well since competition available is unfavourable for them. Brand loyalty by the customers has been extremely beneficial to growth of the company. The company has a long history of good reputation hence the consumers buying behaviour tends to be influenced positively. Customers have developed trust in the brands provide by the company and therefore opt to use them whenever occasion arises. The company itself has also majored itself in creating consumer awareness marketing programs which have encouraged and urged the consumers to continually use its products (Hinterhuber, 1995, pp.63–73). Bargaining power of their distributors is consider medium and manageable enough to make returns without affecting product prices. The outlets include the supermarkets, fountain sales, large scale retailers and various convenient stores that distribute the company’s products. The bargaining powers of the supplies remain low. This is because the sucrose and fructose required in the manufacturing the drinks is readily available. At times the cost of sugar rises high affecting the overall cost of production. In case of such a change the company considers using syrup in its manufacturing process to cut down production costs. Consumers of the products generally contribute to the way prices are set for the product. Since consumption of the drinks is for everybody and there is no targeted class then the company ensures that the price set can be met by everybody in the society. The only thing varied is the quantity of packaging used so that customers will be able to buy the best size preferred (Dess, et al., 2005, pp.90-111). Competition affects to a larger extent how the company’s strategies are formed. The company therefore strives to achieve competitive advantage in the industry always. The competitive advantage can only be achieved when what has been innovated cannot be copied by other competitors and is able to work effectively as expected. Competition from the industry has greatly been reduced by the massive campaigns and promotional activities that are conducted by Coca-Cola Company. Since the company is globally recognized it has a large market share and finances hence is able to venture into any new project that other competitors cannot venture into. It therefore continually develops and adopts various operational methods to maintain and keep its market shares to levels that cannot be affected by other competitors (Dess, et al., 2005, pp.90-111). Threats of substitutes does not greatly affect the company because it has a variety of brands that customers can choose from which are made locally based on the customers varied cultures. Therefore in case the customer is not pleased with one brand he can still substitute it with the next brand offered still by the company. This enables the company maintain its customers and direct their loyalty in consuming the company’s products (Buzzell & Gale, 1987, pp.145-156). 4.3 Alternative strategic options to meet strategic aims and objectives It should get involved in standardizing global marketing strategies. Coca-Cola Company should focus on the countries they have chosen to operate in one by one creating desired consumer products as per the needs of the country. It should not focus its attention specifically on the global market as a whole. It is important to understand that the corporate strategy of companies acts as a guide in performance of activities and allocation of resources. Global corporation strategic programs aim specifically standardizing products and reducing costs of operation. If the company concentrates on standardizing its products to suit every country then the market of its products will increase. Assumption made that customers from different countries possess the same tastes and preferences should not be considers rather they should be able to produce as per every country (Chapman, et al., 1997, pp.432-48). Differentiation of products increases the costs of products. This translates to the percentage of the profits generated from the same selling activity. Companies aim at keeping costs of production low at all times to increase profits. Addressing this point from geographical segmentation, it’s clear that customer’s perception of the company’s efforts to consider their culture in production is considered. This will increase purchases that will generate more profits for the business unlike when customers feel that their customs are not considered but are assumed within those of every majority (Buzzell & Gale, 1987, pp.145-156). After sale service is one issue that almost all developed companies’ address. This cuts down costs on the retailers’ side in terms of transportation. Therefore it gives them a chance to conduct business with assurance that they will be able to realize some substantial amount of profit. Coca-Cola Company should increase its level of after sale services (Dess, et al., 2005, pp.90-111). This will completely eliminate the burdens on their distributors to enable them and also attract others to distribute the products in every section of its market. This strategy is mainly aimed at increasing the numbers of distributors of the products in the countries they operate in. increase in distributors will enable customers to access the products easily and making purchases any time need arises. When customers are assured of finding the products any time they need they also develop some loyalty hence increasing purchases. Increase in general purchases in all the branches of Coca-Cola Company will result to an increase in amount of profit generated. Pricing strategy of the company should be adjusted so as to be in line with the current economic status of the countries they supply their products. Different countries are faced with different economic fluctuations and hence if the company standardizes its product price globally it may affect certain countries as others benefit. This difference in prices in different countries may be perceived wrongly in those whose country price is high. I would advocate that the strategies developed to address the product prices should put in mind the economic status of different countries. The company should be in a position to follow aggressive market strategies. Coca-Cola Company has several strategies which have worked successfully in the market. They have delivered as per the expectations and enabled the company in achieving objectives and aims of the company. The company should identify the strategies that have delivered effectively at low costs without jeopardizing the quality of their services and incorporate it into the current strategies. 4.4 Revised strategic position Standardizing global market strategies will be best for Coca-Cola Company. This strategy will enable expansion of the market in every country it operates in. also the consumers will feel that their cultural issues are being considered hence they will develop brand loyalty and make positive decisions while purchasing the products. The company should maintain focus on each country understanding that they possess different tastes and preferences. Also customers from different countries have different purchasing capabilities due to the differences in economic conditions in those countries (Buzzell & Gale, 1987, pp.145-156). 5.0 Conclusion Coca-Cola Company being a multinational company enjoys several benefits from such kind of massive efficient operations. Since every business has its challenges it is of vital that strategies be put in place to ensure that corrective measures are always available hence enabling achieving the organizational aims and objectives. As discussed above several components of the Coca-Cola Company are analysed based on several models. The models used are reflecting on the vision and mission statements of the company (Chapman, et al., 1997, pp.432-48). Every company develops aims and objectives of its operation to guide it in conducting all its activities. Failure to follow the strategies put in place will make the company to be unable to achieve the objectives. Company strives to increase the number of their customers and maintain the existing ones through creation of beneficial relationships. The relationships enable the customers develop brand loyalty and make positive purchases decisions towards the brands of the company. Every company in the industry has competitors and hence it is the responsibility of the company to find counter measures that will ensure that the competition does not affect operation of the business. This is done by developing and maintaining a high competitive advantage within the industry to assure the continuity of the business. Strategies which are effective need to be developed to sustain company’s operation. The strategies are formed by considering internal and external environmental factors that affect the business. This enables implementation of the strategies since they were created based of the capability of the company. List of References Aaker, D. A. (1998), Strategic Management, John Wiley and Sons Inc., 45-56 Alam GM & Khalifa MTB (2009). The impact of introducing a business marketing approach to education: A study on private HE in Bangladesh. Afr. J. Bus. Manage. 3(9): 463-474 Ambrosini V. & Bowman C. (2009). What are dynamic capabilities and are they a useful construct in strategic management? Int. J. Manag. Rev., 11(1): 29-49 Ansoff, I. (1957) Strategies for Diversification, Harvard Business Review, 87-112 Buzzell, R. & Gale, B. (1987), The PIMS Principles: Linking Strategy to Performance, Free Press, New York, 145-156 Chapman R, Murray P. & Mellor R (1997), "Strategic quality management and financial performance indicators", Int. J. Qual. Reliability Manage.14 (4): 432-48 Dess, G. G., Lumpkin G.T. & Marilyn L. T. (2005) Strategic Management. 2 ed. New York: McGraw-Hill Irwin, 90-111 Hinterhuber H. (1995). Business process management: the European approach, Bus. Change Reengineering. 2(4): 63–73 Lynch, R. (2006), Corporate Strategy (4th ed.) (Harlow: Personal Education Limited), 24-34 Thompson AA & Strickland AJ (1999). Strategic Management: Concepts and Cases. Boston: Irwin-McGraw-Hill Unland M. & Kleiner BH (1996). New developments in organizing around core competences. Work Stud., 45(2): 5-9 Website Coca-Cola: http://www.coca-cola.com/en/index.html Read More