Business Analysis of Coca-Cola Company - Case Study Example

Business Analysis of Coca-Cola Company Introduction The Coca-Cola Company has gained a reputation as one of the largest companiesthat engages in production and retailing of nonalcoholic drinks globally. The company that was founded in Atlanta Georgia in the United States has developed exemplary popularity under the brand name of one its favorite blends coca cola hence the organizational name the Coca-Cola Company. The organizational mission statement is adversely drawn to cover manufacturing of soft drinks and satisfaction of customer’s loyalty. The organizational vision statement has been designed to inspire the whole world. Besides, it is meant to enhance moments of happiness and to make a difference by creating a holistic environment that gives customers across the world an equal opportunity for maximum satisfaction. As a global business, a mission statement has been publicity used to draw a good number of customers who feel that the organization is adhering to their demands (Lussier, 2012). The organizational vision is considered as a framework that determines and controls the business towards the realization of objectives. The Coca-Cola’s vision statement that reads “to be the best beverage sales and customer Service Company embraces people, portfolio, partners and the planet”, is aimed at achieving sustainability in anticipation of quality growth in the near future. Through the organizational mission, the company has been able to draw much attention that aims at making a difference to the society. As such, the organization focuses on strategic priorities thus sustaining long term delivery and consistent profit margin (Lussier, 2012). Ultimately, the company recognizes that it can only improve on the organizational value by building mutual relationship to stakeholders. Therefore, it listens and takes action that meets the demands of each and every stakeholder. Through engagement such as brand collaboration, international appointments and human rights conferences, the organization has created an image of inclusion and service to the community. Through the above strategy, the organization has gained more opportunity to outdo the rivals in the market by pooling together its resources. (5) Forces of competition and the impact to Coca-Cola Company The introduction of five potter’s model offers a good framework for the organizational analysis towards the realization of objectives in a competitive market environment (Ireland, Hoskisson & Hitt, 2012). While three parts of potters models concerns rivalry effects that are felt from the outside, all parts of the model offers a considerable impact to the company thus Coca-Cola Company is not exclusive. An illustration of the effects of potter’s five forces model to Coca-Cola Company is as shown. Threats of new entrants A soft drink organization that is venturing into the market for the first time requires a lot of money in sensitizing the customer about the presence of new products. Consequently, most organizations are not willing to spend huge sums of money without anticipation of proper returns. With very minimal entries of beverage products into the market, Coca-Cola Company receives medium pressure thus there is very low consumer switching cost, and the capital requirement is almost zero. As such, Coca-Cola loyal customers are less likely to try a new brand hence, the organization always receives a withstanding profit margin (Ireland, Hoskisson & Hitt, 2012). Threats of substitute products Despite being dominant in nonalcoholic beverage production, the company brands are faced by varied number of substitutes such as water, tea or coffee. However, to gain maximum popularity as Coca-Cola brands, rival companies such as Pepsi cannot counterattack the existing offensive diversity of Coca-Cola because their perceived price value is very low. There is minimal difference in the taste of the Coca-Cola products compared to products from the rival companies. Therefore, the organization has been constantly engaged in diversification of taste such as coke zero to safeguard the rivalry (Ireland, Hoskisson & Hitt, 2012). The bargaining power of buyers The Coca-Cola Company is experiencing low pressure on the part of buyers because it draws customers across the world that ranges from individuals to large retailers such as Wal-Mart. As such, the organizational revenues have since been maintained (Ireland, Hoskisson & Hitt, 2012). Bargaining power of suppliers The main vendors to Coca-Cola are companies that deal in raw products such caffeine, phosphoric acid and sweetener. Therefore, it enjoys low pressure and suppliers are never concentrated in one region neither can they be differentiated. Moreover, the organization big size gives it the best opportunity to accommodate a good number of suppliers. The above part is very important in achieving consistent production hence the realization of competitive edge (Ireland, Hoskisson & Hitt, 2012). Rivalry amongst existing firms Coca-Cola has got only one main competitor in the beverage industry known as Pepsi. As such, the industry is popularly known as a duopoly of coke and Pepsi. The presence of only two rivals in the market has resulted into higher profit margins hence, it never been affected by the international prices or global expansion (Ireland, Hoskisson & Hitt, 2012). SWOT analysis of the company According to Dobson (2004), Coca-Cola Company is vastly known across the whole world with the popularity as one of its greatest strengths that cannot be compared to any other organization in beverage production. Besides, the organization experiences very minimal weakness, but there is no guarantee that the company does not experience any hitches. Therefore, it has been forced to engage in a rigorous campaign by word of mouth. Below is a summary of the organizational SWOT analysis. SWOT analysis of the Coca-Cola Company Strengths Owns the biggest share in beverage industry Recognizes customers loyalty Engaged in corporate social responsibility Has the best customer outreach in terms of advertisement Weakness Experience competition with PepsiCo Does not produce health beverages Has got limited product diversification Opportunities Has enough capital to advertise non popular products Has a vast brand recognition Emergence in consumption of beverages Threats Competition from companies such as PepsiCo Scarcity of water due to global warming Legal threats Strategy to engage on strengths and opportunities The effects of Coca-Cola brands can be felt from different quarters of the world. With a variety of brands available in shops hotels and offices, the organization has put in place appropriate strengths that ensure it maintains popularity and consistency in supply to outdo the other competitors. Some of the Coca-Cola’s greatest strengths include Owning the biggest share in the beverage industry Almost 70 % of the global sales volume of carbonated drinks globally is distributed by Coca-Cola Company. Most industrial analysts have pointed out that Coca-Cola as an organization spends an enormous amount of capital on advertising campaigns so as to attract and retain a huge number of potential customers. Moreover, the organization has also diversified into distribution of non-sodas energy drinks such as Dasani water and minute maid juice. Therefore, the organization has continued to develop an effect in its revenue returns (Dobson, 2004). Recognition of customer’s loyalty Recognition of customer’s loyalty is another important strength of the Coca-Cola Company. Customer’s loyalty strategy has attributed to the fact that almost a quarter of the organizational earnings are a direct source from customer’s purchases. Research has showed that most customers have been constantly in contact with Coca-Cola products and it quite rare to find a home that has no traits of Coca-Cola products (Dobson, 2004). Moreover, customers will be constantly engaged in buying of the Coca-Cola products, and the culture is passed to offspring, which has continued to build the reputation of the Coca-Cola brands and the organization as a whole. Despite the above strengths that have led to the success and building of the reputation of the of the Coca-Cola company, it is advisable that the organization should address some of its weaknesses. For instance, it should engage in production of beverages that concerns health. Besides, the organization has been criticized for excessive consumption of water especially in areas where water is limited and the continued use of harmful ingredients to manufacture its products. Therefore, for the organization to avert negative publicity, it should be engaged in corporate social responsibility such as water management and distribution to the community (Dobson, 2004). Strategies to maximize its competitiveness and profitability Ellsworth (2002), supports that every organization must be competitive enough in order to sell their goods and services in a competitive marketplace. For that reason, it is important for Cocoa Company to determine whether the company prospers, barely achieves the objectives or fails. Moreover, it is vital for an organization to come up with the following strategies as a way to improve the organizational profitability Product differentiation Organizations can be unique from the rest by providing top quality products and services to the market. By adopting such a strategy, Coca-Cola Company would be able to command prices of non-alcoholic beverages in the market. While charging of low prices alone may not guarantee an increase in the organizational returns, quality is taking over as the best strategy to enable an organization to improve profit margins in a way it was never expected. Moreover, Coca-Cola can adopt differentiation because the price of beverages is less sensitive in the market, and customers are mostly interested in the quality of drinks (Ellsworth, 2002). Maintaining of the market share Coca-Cola should also consider maintaining of the market share as an important strategy that aims at achieving the organizational competitive edge. Through maintenance of the market share, the company will be able to improve the sales margin and sustain the profitability. For instance, from every unit of sales, Coca-Cola will be able to replace the unit cost of every product including the non-soda brands. Moreover, The Company will be able to incur full returns and achieve the breakeven of the sales volume (Ellsworth, 2002). Communication plans to achieve profitability Being a well-known organization, Coca-Cola Company must have a communication plan to send information related to a specific issue. Through such a plan, customers and the stakeholders will find it affordable to grasp the concept that is intended by the organization while the company itself will be in a better position to increase returns. 1. The organization should establish a goal for communication 2. Define the main audiences 3. Develop a tactical outreach plan (media, host or community outreach) 4. Come up with the required materials (articles journals) 5. Specify the communication time line 6. Communicate the results and make the amendments. Corporate governance mechanisms used by the company In his book titled leading with purpose, Ellsworth, (2002), explains that The Coca-Cola Company is fully committed to good corporate governance. As such, it promotes the long-term interest of the organization, impact more value to the board of management and ensuring that the organization remains accountable to everything that concerns the public interest. Some corporate governance mechanism used by the organization include Director orientation and continued education The organization implemented a policy that ensures all new directors undergoes through the organizational orientation program that often takes place immediately as long as the new director has been a pointed. Moreover, the orientation is characterized by exposure of the top executives to the new directors, an insight of the organizational strategic plan. Besides, every new director must be allowed properly to understand the organizational, financial plans, relevant books of a count and the organizational risks management issues. Ultimately, all the new directors are given liberty to participate in continued education that is also sponsored by the organization. However, it is based on the willingness of an individual (Ireland, caisson & Hitt, 2012). Annual performance evaluation The organization has put in place appropriate measure which ensures that all the board of directors undertake an evaluation annually to ascertain if the board is effectively functioning. After which, the results are discussed by the board of performance that are given recommendations and review of the performances. The above assessment mainly concerns the contribution of the board to the company, and recommendations are given on areas that require an improvement (Ireland, Hoskisson & Hitt, 2012). The effectiveness of leadership at Coca-Cola Company More similar to the popular saying that a great leader is always born and not made, there still a consistent debate about the above statement characterized by uncertainties. However, effective leadership can always be developed as in the case of the Coca-Cola Company. The Coca-Cola Company has continued to incubate effective leadership through self-assessment and evaluation that are carried both periodically and annually to determine personal strengths and shortcomings before taking appropriate actions to correct areas that may have experienced negative perceptions. For instance, the organization runs an initiative that focuses on cash. Through the above initiative, the organization has called for a leadership of philosophy characterized by constructiveness and content. Moreover, the Coca-Cola Company focuses on leadership style that with broad carrier experience that embraces diverse community and inclusion of different ethnic groups. (Ellsworth, 2002). Despite challenges that are associated with the company’s leadership, it has developed an in-house training program aimed at molding up of a special team. After which, they are assigned to different parts of the world so as to sustain the organizational reputation. However, it is recommended that the organization should consider innovation from new employees in contrast to the current organizational standards and guideline as will ensure the incorporation of new skills and ideas that are beneficial to the organization. The organizational corporate social responsibility Based on the company’s principle of citizenship, Coca-Cola Company should forge ahead with a continued relationship and build trust with the citizens. With the aid of the organizational corporate social responsibility, the company’s operation is meant to benefit all the organization members either directly or indirectly through shared values towards building of a stronger brand name. For instance, the organization should set up a corporate responsibility council that manages functions, identifies risk, opportunities and recommend strategies on relevant corrective measures (Ellsworth, 2002). The organization already has an initiative that carries out a mission to fund and sponsor educational programs. It is advisable for the company to come up healthcare programs that support the local community in areas where the organizational distribution outlets have been set. Conclusion Under contemporary globalization, an organization such as Coca-Cola Company has tremendously grown in size and scope leading to maximization of returns. Being ranked number one in beverage and nonalcoholic production, the company has gained a reputation through brand popularity and customer’s loyalty. The paper has clarified how the organization uses forces of competition to influence sustainability in the market. Moreover, the organizational SWOT and communication plan is a clear demonstration that Coca-Cola is committed to achieving profitability and maintaining the reputation across the whole world. References: Top of Form Top of Form Top of Form Top of Form Dobson, P. (2004). Strategic Management: Issues and Cases. Oxford: John Wiley & Sons. Ellsworth, R. R. (2002). Leading with purpose: The new corporate realities. Stanford: Stanford Business Books. Ireland, R., Hoskisson, R & Hitt, M. (2012). Understanding business strategy: Concepts plus. Mason, OH: South-Western Cengage Learning. Lussier, R. (2012). Management fundamentals: Concepts, applications, skill development. Mason, Ohio: South-Western. Bottom of Form Bottom of Form Bottom of Form Bottom of Form Read More