Coca-Cola Product Descriptions - Term Paper Example

External and Internal Environment Analysis: The Coca-Cola Company Introduction The aim of this research is to analyse the external and internal analysis of the Coca-Cola Company, utilizing the most popular instruments for assessing the environment in which the businesses operate. These include: PESLE analysis, Porter’s five forces, SWOT analysis, and analysis of the core resources, capabilities, and competencies of the company. External Environment Analysis While analyzing the general external environment, it is possible to define two major segments that would rank the highest in their influence of the Coca-Cola’s business. The first segment is the socio-cultural segment. The issues related to this segment include obesity and health concerns and product quality concerns, including concerns related to the ingredients of the beverages (Coca-Cola Annual Report 2013). Another segment is the global segment, as the company operates globally, and is planning to expand its operations in developing and emerging markets. The company might fail its global growth strategy because of adverse economic and political conditions, different cultural attributes, limited purchasing power or inability to acquire local bottling companies (Coca-Cola Annual Report 2013). The Five Forces of Competition Analysis In the soft drink industry, fierce rivalry between dominant producers Coca-Cola and Pepsi Co and the threat of substitution are strong, while the threat of entry, the bargaining power of buyers and the power of suppliers are more benign. The Coca-Cola Company is facing fierce industry competition, and in order to keep its competitive advantage, the company has created and implemented integrated marketing programs, aimed to increase consumers’ awareness and raise appeal for the Coca-Cola’s brands (Coca-Cola Annual Report 2012). Moreover, in order to raise customer preference for Coca-Cola’s brands, the company has been undertaking some joint brand-building initiatives with the customers (Coca-Cola Annual Report 2012). As the threat of substitution is high in the soft drink industry as the popularity of tea, coffee and other non-alcoholic beverages is growing, the Coca-Cola has also diversified its brand portfolio with new products, substitutes for soft drinks, such as bottled waters (Dasani, Ciel), sport drinks (Powerrade), juices (Simply Orange, Del Valle), vitamin water and smartwater (Glacéau), tea (Fuze tea, organic bottled tea Honest Tea), etc. (Coca-Cola Company, n.d.). With the same two forces in mind, high industry rivalry and threat of substitution, it is possible to suggest that the Coca-Cola Company might introduce coffee drinks and more healthy (sugar free) drinks in order to retain the current customers and ensure that the products’ variety enables the company to satisfy changing consumers’ needs and tastes. Threats and Opportunities Threats Government Regulations aimed to restrict junk food consumption Because of concerns related to obesity and public health (especially children), governments of some countries may restrict junk food advertisement and impose new taxes on sugar-sweetened producers. The Coca-Cola’s products offer extensive choice of sugar-sweetened beverages and therefore the company may lose a significant segment in result of government regulations. Water scarcity and poor quality could impact production costs and capacity Coca-Cola being a beverage producing company depends heavily on water resource. Water shortages caused by the continued environmental pollution and rapid growth of population may threaten the Coca-Cola’s business. The major threats relate to the risk of capacity constraints as well as increased production costs (MarketingLine 2014). The threat of introduction of the government restrictions on selling sugar-sweetened beverages is more significant threat in the nearest future. That is why Coca-Cola should address this issue by developing healthy drinks for schoolchildren which will be good substitutes for sugar-sweetened drinks. The company can either invest in R&D, or acquire already existing company producing such products and further work on improvement of this product through innovation. Opportunities Growing demand for healthy and energy beverages During the recent time consumers became more health-conscious aware and their expectations from the food and drink products have changed significantly. Consumers increasingly tend to buy either healthy drinks (such as natural/organic drinks, juices, sugar-free drinks) or energy drinks (MarketingLine 2014). Thus, Coca-Cola has an opportunity to diversify its products by developing new healthy or energy drinks. Increased consumers’ awareness about environmental issues Consumer’s behavior has changed not only towards the food and drink characteristics but also to the sustainability issues. People become more concerned about the environmental issues and tend to prefer companies that have adopted environmentally-friendly practices. By taking environment-saving initiatives (recycling, sustainable packaging, etc.) as the most significant opportunity, the Coca-Cola Company will gain more consumer confidence and increase loyalty to its brand (MarketingLine 2014). Internal Environment Analysis Strengths and Weaknesses Strengths Coca-Cola is a global successful company, which has gained this position due to its internal strengths. Some of the greatest strengths of the corporation are discussed below. Strong world recognizable brand portfolio The company’s brand portfolio is comprised of 16 world-known brands, including: Coca-Cola, Diet Coke, Sprite and F anta, Coca Cola Zero, Aquarius, Powerade, Minute Maid, Dasani, Schweppes, Minute Maid Pulpy, Georgia, Simply, Ayataka, glaceau vitaminwater, I LOHAS, and Del Valle) (Marketing Line 2014). Significant market share in the soft drink beverages market As of 2010 the global market share of Coca-Cola was nearly 24 %) (MarketLine Case Study 2011, 6). Strong global presence The company’s products are sold in more than 200 countries (Marketing Line 2014). Strong bottling partnerships Coca-Cola produces and sells beverage bases, concentrates and syrups to its bottling partners, which further prepare the final branded beverages for sale taking into consideration the various consumer’s needs and local preferences. This system enables Coca-Cola be flexible and adjust its products and packages in a manner the most appropriate for specific consumers and channels. The company should utilize all its strengths and continue global expansion focusing even more on the emerging markets. By having strong recognizable brand and strong bottling partnerships Coca-Cola may expand further its business lines and focus on innovating new products to capture even greater market share. In order to further improve its bottling partnerships the company should actively seek new bottling companies for Merger & Acquisition purposes. Acquisition of the local bottling companies especially in emerging markets will enable the Coca-Cola Company to strengthen its local presence and avoid a problem with lack of local resources (MarketLine 2014). Weaknesses The company doesn’t have many significant weaknesses, however, the issues related to product quality and frequent recalls might weaken the company’s position significantly. During the recent years Coca-Cola has recalled many of its products because of potential problems with the quality. Thus, for example, in 2013 Coca-Cola recalled almost 20,000 cases of Minute Maid dairy drink in China because of the risk of contamination with botulism causing bacteria (MarketingLine 2014). Also, the company recalled Minute Maid Orange Juice because of the risk of products’ premature spoilage (MarketingLine 2014). These and other cases harm company’s reputation and image and have negative impact on the consumer’s confidence in the Coca-Cola’s products. The company should focus more on Quality Management in different countries and ensure the high quality of its products. For the cases when the company should either voluntary or non-voluntary recall its products it should give public apology or explanations through the media channels. In order to recover its reputation, the company should focus on brand building and consumer marketing activities (MarketLine Case Study 2011). Coca- Cola’s resources, capabilities, and core competencies Coca-Cola has both tangible and intangible resources, which enable the beverage corporation, be what it is nowadays. The major tangible resources can be divided into several categories, include: physical resources: real estate (buildings, offices, plants, etc); equipment; financial resources; and technological resources. The major non-tangible resources include: human resources, trademarks, goodwill, reputation resources, and bottler’s franchise rights (Stock Analysis on Net, 2013). Coca-Cola’s core capabilities include the following: commercial leadership; consumer marketing; bottling and distribution leadership; and franchise distribution leadership (Coca-Cola Annual Report 2010). Coca-Cola’s core competencies represent the strengths of the company, discussed above. Therefore, the major competencies include: strong brand portfolio and distribution network with bottling companies. In addition to these, unique formula of Coca-Cola drink also should be mentioned here as the company’s core competence. The Coca-Cola’s values chain is comprised of several key elements that work in the cycle. The scheme below provides a visual illustration of the company’s value chain. (Source: The Coca-Cola Company Website, n.d.) Thus, the Coca-Cola’s value chain is comprised of manufacturing and packaging, distribution, retailing, product consumption, recycling and recovery. The company has enough resources to improve its value chain on every stage. The Coca-Cola Company may focus on development of new products that are suitable for its target audiences in different countries and ensure that packaging for these products is attractive and explanatory enough for distinguishing the product among other substitutes. For this purpose the company will utilize its financial, technological and marketing and sales resources. The company’s core capabilities of consumer marketing also might be very helpful in developing relationships with retailers and bottling companies (buyers). Strong company’s brand and distribution network with bottling companies enable the Coca-Cola introduce new products to the market and ensure great launch of this product to the market. As it is seen from the value chain cycle, the company has adjusted its strategy to sustainable development and has initiated activities for sustainable agriculture, water stewardship, and responsibly sourced ingredients. Taking into consideration the Coca-Cola’s resources, capabilities and competences, there could be developed sustainable initiatives and projects throughout the whole value chain cycle. Conclusion The research above has provided an overview of the both external and internal environment of the Coca-Cola company, operating in the soft drink industry. The research has shown that despite the external challenges the company is facing, its core competencies and strong brand reputation enable the company to succeed on the market and continue its global expansion to the developing and emerging markets. References: MarketLine, (2011). Coca-Cola: The world’s most recognizable brand. MerketLine Case Study. MarketLine, (2014). The Coca-Cola Company. Company Profile. MarketLine Coca-Cola Annual Report (2010). Retrieved 27 July 2014, from http://www.coca-colacompany.com/investors/2010-annual-report-on-form-10-k Coca-Cola Annual Report (2013). Retrieved 27 July 2014, from http://www.google.com.ua/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CBsQFjAA&url=http%3A%2F%2Fwww.coca-colacompany.com%2Finvestors%2F2013-annual-report-on-form-10-k&ei=LQPVU6z5CMLZ0QWBsID4Aw&usg=AFQjCNFGjbWn-mAelIoaif6SaHCizNig-Q&sig2=m3qCqws7lIJvsXzgYHOOOg Coca-Cola Company (n.d.). Coca-Cola Product Descriptions. The Coca-Cola Company. Retrieved 27 July 2014, from http://www.coca-colacompany.com/brands/product-descriptions#dasani Coca-Cola Company (n.d.). Coca-Cola System and Value Chain. The Coca-Cola Company. Retrieved 27 July 2014, from http://www.coca-colacompany.com/sustainability/coca-cola-system-and-value-chain Stock Analysis on Net,. (2013). Coca-Cola Co. (KO) | Goodwill and Intangible Assets. Retrieved 26 July 2014, from http://www.stock-analysis-on.net/NYSE/Company/Coca-Cola-Co/Analysis/Goodwill-and-Intangible-Assets Read More