External Environmental Analysis CS 2 - Essay Example

ecommended the company management that they should increase their corporate social responsibility activities so that the involvement of the local community increase and so the profit of the company. The strategic management process of a company involves the analysis of the internal environment of the company as well as the external environment. For analyzing the external environment of the company the business analyst need to do the analysis of the current scenario of the market which includes the economic analysis, political scenario analysis as well as the analysis of the contemporary technology.

This paper is an attempt to analyze the external environment of the Coca-Cola Company which is a soft drink manufacturer, and the NAICS code is 312111 (NAICS, 2011). For analyzing the external environment the researcher is going to use two frameworks, the porter five forces analysis and the PEST analysis. Using the tool an analyst can identify the forces that driving the competition in the industry (Stahl and Grigsby, 1997, p.145). There are five dimensions of the porter five forces model. The analysis of the company using the porter five forces tool is as follows.

Competition in the Industry: The competition among the industry is mainly between Coca-Cola and Pepsi. Only these two companies are present in about 200 countries of the world. Others are the small local or global competitors. Coca-Cola and Pepsi are holding major percentage of share in the beverage industry. So the competition in the industry is medium as per the analysis of the researcher. The threat of the substitute products: The threat of the substitute products is medium. Fashionable drinks like red bull and Belgian beer are the competitors and the promotional strategy of these companies are aggressive.

There are also some low pricing brands so the switching cost is lower. But due to the brand image of Coca-Cola the threat is low. Bargaining power of the customers: The bargaining power of the