External and Internal Environments - Essay Example

Download file to see previous pages The Company ranks 59 in the list of Fortune 500 companies. Total revenue earned by the company in the last year (2012) was 46,542 USD and profit was 8,572 USD (CNN, 2013). According to some reliable news reporting agency, the Coca Cola Company is one of the biggest public companies in the world at present (Forbes, 2013b). This paper aims at studying the environment in which the company operates, evaluating its core competencies. Recommendations have been made on the basis of the results obtained from the study. General environment The macro environment in which a company operates puts significant effect on the company’s management and its performance in the market. It is external to the company and refers to the forces that influence the organization from outside. External environment is of two types; specific environment and general environment. While specific environment is directly related to the goals and business objectives of the organization, general environment affects the organization on a broader aspect, such as its economic, political or legal, technical, socio-cultural points of view and the environmental or natural conditions that are related to the activities of the company (Daft, 2011, p. 71). Economic factors Economic factor is one of the most important factors that influence business enterprises. On one hand it affects business decisions, while, on the other hand it affects performance level of the company in the local and international market. The global economic slowdown has not left Coca Cola untouched. The developed market in the United States is recovering slowly. The company has followed positive pricing strategy in this scenario. This has lead to rise in revenue in the North American segment. However, due to appreciation of dollar, there has been fall in exports to the other international operating groups of the company, such as, Asia, Europe, Africa, Latin America and the Pacific region. It has cast a negative impact on the net operating revenue for the country (Coca-Cola Company, 2012a). In the last quarter of 2012 the company shares incurred loss of 2 percent (The value investor, 2012). Socio cultural aspects Sales and revenue is affected significantly by the socio cultural conditions prevailing in the society in which the product is sold. The lives of the people in the developed country like the United States is fast paced and hectic. Hence carbonated drinks, such as the Coca Cola products, are well accepted within the population in both the young population and the older generation. However, in recent times, health conscious of the common mass is rising. Sugar-sweetened drinks are considered to be the cause of health problems, such as obesity (Coca-Cola Company, 2012a). People, particularly, youngsters are becoming concerned of these issues, which is in turn affecting their consumption rate. Reduction in consumption is leading to drop in revenue. Forces of competition There are five forces of competition that helps in making industry analysis. The most important forces of competition that affect Coca Cola Company have been described below: Bargaining power of suppliers The basic ingredients used for the manufacturing of the beverages by the Coca Cola Company are sugar, water, caramel and fruit juice and essence. In the USA there are many suppliers of these raw materials. Hence the company can choose the best supplier for each product and make a tie up with that company. Bargaining power ...Download file to see next pagesRead More