Changing Business Environment of Coca-Cola Company - Assignment Example

The Coca Cola Company Executive Summary The Coca –Cola Company, was invented by a pharmacist John Stat Pemberton in 1886, operates as a franchised distribution system where it only produces the concentrate and syrup, which is then sold to various bottlers’ throughout the world who hold exclusive territories. It is one of the longest serving companies in the business market. It has endured political conditions in the international market such as civil conflict and limitations pertaining to relocation of capital across borders. It has suffered economic meltdown at various points in the business but has being able to survive. Its social environment has being clouded by the switching of consumers from the ordinary packaged soft drinks to the portable package method. Moreover, the advancement in technology has made it thrive in business environment. Coca-cola Company has pride in being one of the recognized companies in the world and enjoys a global presence in the business environment. It has opportunities in the business environment with tangible continuous growth. Nevertheless, there is a need to improve it marketing strategy to be able to handle the threats of other companies that produce similar products. Coca –cola has continued o invest in the modern production technology with the aim of reducing unit production cost and meeting the needs of potential consumers. Introduction Coca-cola market size, growth rate and overall profitability have been evaluated through the attractiveness of the soft drinks and competitiveness of various firms in the industry. The market size has being increasing due to introduction of new products in the market. Profitability and growth rates have solid with the company dominating more than half of the market while the rest of the market is occupied by Pepsi and Cadbury Schweppes. Hence, the Coca Cola Company has continuously stayed ahead in the market for more than none hundred years. Industrial Analysis The Coca- Cola Company fits in the business environment because it is capable of giving most of the global market non-alcoholic drinks, which are composed of two sections; soft drinks and fruit juices. The soft drinks are of various flavors, both carbonate and non carbonate. The products that fall under the food and beverage industry are what have made Coca-cola, multinational. PEST Analysis Political Environment States, governmental changes, and other special politically instigated groups affect customer purchasing power and confidence in both local and international markets thereby reducing demand. Political conditions especially in the international market such as civil conflict, changes in government and /or limitations that pertain to relocation of capital across boarders. For instance, the political unrest in Middle East adversely affected sales in the region. Moreover, the company’s ability to penetrate upcoming and existing markets relies squarely on the political and economic condition, which contributes to the formation of effective strategic business alliances with local bottlers, and to improve their production facilities, distributions system, sales equipment and technology. Economic Environment The Coca-Cola has recorded high sales with the brand significantly shifting from the expensive brands to cheaper brand. The Company has being able to borrow capital and has invested in other products and carry out research on new products because the interest rates have been lowered. In this regard, the company has been able to continuously hold its market even in the midst of recession and economic slowdown in the United States and major markets. Social Environment The American populace is concerned about health related issues that are associated with the consumption of soft drinks. This has been adversely mentioned in the Euro monitor, which indicates that the health and wellness segment is made up of 44%. This has further led to increase in sales on the Company’s products as consumers continuously switch to bottled water and diet colas such as Coca Cola Light or Zero drinks that have been the company’s most recent launched products in the market. Technological Trends Technology trends have greatly contributed to a wider market for the company. Technological advances in advertising, marketing and promotion programs have placed Cola-cola in a better position in the business environment as compared to yester years. The entrance of more portable packages for the soft drinks has also widened the market, and increased the sale volume. Modern equipments have ensured that there is top product quality and quick delivery making it easier it access the products from the consumers end ,hence, accumulating profit and market as a whole. SWOT Analysis SWOT analysis is important in determining the level at which the company is in the business environment. Through this analysis, Coca Cola Company has been able to determine its strengths, prospects, the possible weaknesses and pressure that the crucial in the company’s future endeavors. Strengths Being one of the world’s most recognized brands that enjoy a global presence in the industry, the company has thousands of reputable brands of high quality and market share. The products offered are spread over various categories of non –alcoholic beverages giving room for a wider customer base. The robust distribution has ensured that there is a steady flow of business for the company. Additionally, Coca Cola fosters sustainable communities through charity programs to create social and economic opportunities such as giving at least 1% of its annual income back to communities around the world. This has continually given customers confidence in the company. Weaknesses Coca-Cola Company has faced some weakness in its endeavor in the market. One major weakness is the lack of marketing approach in some countries to extent of having sale volumes declining, and other companies such as Dr Pepper Snapple having impressive growth in sales. This has contributed to insignificant growth in profit margins that have drastically reduced financial flexibility in the company. Opportunities The Coca Cola Company has various opportunities that will enable it to continually grow globally. Strategic transaction will enable the company to advance its operating scale and streamlining its cost structure. There are chances to expand the product portfolio and market share through the formation of strategic tie up with other top selling brands. In Europe, there has been a growing market for functional drinks that has slowly being boosting the CCE’s top line growth. The changing consumer tastes provides potential, and opportunity for new product innovations. The trend towards natural, healthy exotic flavors provide functional benefits, and are crucial in new product development. The emerging new markets in developing countries open up opportunities for soft drink sales. Threats Demand has declined for carbonate soft drinks, which became a threat to the company’s financial capacity. The increased consumptions of private labeled non-alcoholic beverages have further led to a shrink in the company’s revenue. Moreover, there has been concentrated competition from other soft drink producing companies that have greatly inflated the cost structure thereby decreasing its profit . Coca-Cola Company in the Past Decade In 2010, the company became the first to surpass the one billion sterling pound mark in terms of grocery sales. In essence, the company had spent a considerable amount in lobbying for favorable legislation with the lobbying expenses increasing to more than million United States dollars in the year 2009. Much of the lobbying was based on the high taxation that was placed on the soft drinks. The main inputs in the production process are the raw materials used in the beverages; the beverages contain different sweeteners depending on the type of concentrate. Water is also a permanent ingredient since it is in all the beverages. The company has operated for more than one hundred years hence it is one of the globally recognized brands. It has been successful in exploiting new markets since its incorporation in 1892. On the other hand, the management has continuously focused on the growth of the market territory and marketing of the brand especially in the past decade. It is about this time that Coca –cola has expanded its brands portfolio to include the energy drinks, juice fruits, sports drinks and water. According to the company’s objectives, its brand, financial resources, distribution network, and the management commitment to achieve the long term sustainable growth and market leadership. The Coca-Cola Company in the past decade has maintain a diversity of well qualified personnel in various capacities in all segments of the company. This has been made possible through human capital, an asset the company has been able to handle. Human capital is the greatest contributor to business environment as it makes sure that products are available in the market at the right time for consumer purchase. Needless to say, most of the top level managers have a global exposure hence, have a well rounded background and are able to solve problems from different perspectives. Another critical success factor that has been with the Coca cola Company is the continuous investment in research and development activities. It has realized the ever changing and varied needs of the company, hence has impacted on the decentralization of the research and development activities to the specific market of operations. Needless to mention, the company has divided the global market into regions such as North America, Latin America, Africa, Europe, Asia and Pacific. This has made it possible for the company to capture the consumers’ needs. This has acted as an inspiration to employees and a sense of pride to consumers. The general external environment in which the Company operates is stable and favorable. In precise, the mission of the company is driven with the focus of refreshing the mind. The rich history of the company compiles many stories that it has contributed to all over the world. For instance, the Coca –cola was one of the main sponsors of the 2010 World Cup that was held in South Africa, African continent . The brand Coca –cola is a well established and strong in the market and the business environment as a whole. The company has been instrumental in management of relationships with the major stake holders. Its chief technique is strategic alliances where it awards exclusive contracts to the bottling partners and distributors. Additionally, it has signed deals with major restaurants in the world to facilitate the exclusive supply of beverages. It has attracted customer loyalty due to its continuous capacity to satisfy its market/ customer needs . In return, the company had a bargaining power in pricing and attracting contracts of supplying beverages globally. It strategy especially in the past decade has being geared towards differentiation of its products. The strategy has paid up since in the previous experiment conducted, consumers prefer the coke brand over the other beverages when told to choose between two identical drinks. Previous research has shown that Coca Cola Company has the largest marketing budget in the world, with the marketing and promotion campaigns having being effective as demonstrated by the market share and sales volume. Of importance to note is that, the company has continuously innovated the marketing strategies by coming up with new market strategies every time they launch new brands. This has being facilitated by the aggressive marketing strategy that the company has adopted over the years. In selling and marketing, the company has continuously initiated modern interactive vending machines, which offers immerse experience to customers in the way they use video technology to purchase their products. This has further being enhanced by the company’s commitment to sustainable and climate-friendly refrigeration hence, vending equipments use a carbon dioxide refrigeration system that reduces the emissions of carbon by almost 100 per cent. For instance, a marketing campaign dubbed Crush eco, which was awarded as the best integrated strategy in Asia by Asia. Another instance is when the company launched the Gold peak variety tea dispenser, a self –service dispenser that offers the customer a choice of four different tea flavors. The minute maid two and four valve dispenser allows consumers to enjoy healthy beverages throughout the day. Conclusion The Coca-Cola Company expansion and success in the past one decade has not come without its challenges. For instance, in the year 2008 the company failed to acquire Huiyuan juice group in China after their deal was rejected by the Chinese regulators among other emerging markets. However, the Coca-Cola Company has built both internal and external structures to facilitate the delivery of its business goals. It has built on a culture of innovation, team work and strategic alliances. The regional structure and open communication channels have greatly supported the development and success of the company particularly in the last one decade. It has notable continuous investment in modern production technology with the endeavor to reduce the unit cost of production and meeting the varied customer needs. Currently, the company derives more than half of its profit from outside the North America due to aggressive diversity into new emerging markets. The organizational structure has allowed free communication hence the employees have exhibited the culture of the organization in their duties. Just like the American culture of hard work, the same culture is replicated by the management and employees at Coca-Cola Company. Bibliography: Rindell Anne and Strandvik Tore Corporate brand evolution: corporate brand images evolving in consumers’ everyday life, European Business Review, 22/3 (2009), 276-286 Kuo-Ming Chu. 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