Business-Level and Corporate-Level Strategies - Assignment Example

BUS499 Business Administration Capstone Assignment 3: Business-Level and Corporate-Level Strategies Torri Kitchen Analyze the business-level strategies for the corporation you chose to determine the business-level strategy you think is most important to the long-term success of the firm and whether or not you judge this to be a good choice. Justify your opinion. Every organization tries to deliver customer satisfaction by taking into consideration their tastes and preferences and focuses their core competencies on achieving that. Business-level strategies of an organization help the company to achieve this end. The strategies take into account the position of competitors in the industry and help consolidate a firms position. There was also packaging inconsistency among the 1000 bottling plants that were there at that time. Hence it was decided that Coca-Cola needed a packaging that would distinguish it from the other similar drinks, leading to the distinct contoured bottle that has become a trademark for the company. The initial strategies adopted by the company to attain a competitive advantage over its competitors included distribution of coupons that facilitated free sampling of the drink, newspaper advertisements and distribution of promotional items bearing the name of Coca-Cola to pharmaceutical companies. The innovative strategies implemented have helped them plan and position the products, develop the packaging and also introduce new pricing strategies. The integrated cost leadership model or the differentiation strategy has been adopted by Coca-Cola very well. The company minimizes costs and sells goods at either market prices or prices lower than the prevailing market price. In order to make the company unique and set it apart from the competition, Coca-Cola also uses the differentiation strategy. Coke creates a product or service that is unique to the brand valued by the customers, by using the differentiation strategy. The company uses very unique marketing techniques and produces advertising campaigns that catches the eyes of the consumers. The customers are enticed into staying loyal to the brand by continuing to purchase coca-cola products as against those of the competitors. Coca-Cola has experimented with different bottle shapes and the shapes have caught the imagination of many artists all over the world, over a span of many years. Various research activities have shown that if the bottle is designed to be curvy and slim, the consumers feel less guilty about consuming the soft drinks and ignore the calorie contents as they themselves feel slimmer (Pendergrast, 2000). The company can also use the alcohol drinking culture to their advantage. For example, consumers order their drinks as a "Captain and Coke", "rum and Coke" or "whiskey and Coke". Collaboration with the alcohol companies such that they sell a Coke bottle along with their drinks, can also increase their market share greatly (The Coco-Cola Company, 2010). The other differentiation strategy that the company has used in the past is the introduction of the Coca-Cola Freestyle machine that allows the consumers to mix and match the classic Cola beverages with different flavors of lime, vanilla, coffee and such others. The company has long since established the brand and thus presently it limits its focus on building its image, increasing the quality and making its products affordable to the mass. The company is more focused on providing value for the goods to its customers. Coca-Cola has been continuously transforming its commercial models and has started focusing on a value-based segmentation approach that would help them capture the value potential of the industry. The distinct market clusters are targeted by using the multi-segmentation strategies. Hence according to my opinion Coca-Cola’s price differentiation strategy will provide the company an edge in the long run although there is a chance of a price war being set off between the company and its competitors. However it will still help the company to target the mass markets and increase the market shares. Coca-Cola’s packaging has also set the company apart as their bottle shapes are etched in the mind of its consumers and are easily recognizable. Business level strategies help an organization anticipate and deliver the needs of the customer, thereby giving the company a competitive advantage. A successful strategy creates greater revenues for the company by providing in-depth knowledge about customers and competitors. An innovative pricing strategy used by the company in boosting the sales is offering incentives to its middle men or retailers by way of providing them with free empty bottles and free samples. This strategy ensures that the middle men and retailers push Coca-Cola’s products in the market and hence increasing the visibility of the products in the market. Coca-Cola brand recognition all over the world is very strong with an approximate recognition of 90 per cent (Prahalad & Lieberthal, 1998). This recognition provides the company with a competitive edge over the other competitors. There have been numerous cases where changes in packaging have had negative effects on the sales of the products and have also adversely affected the company’s industry positioning. However, the strong brand recognition of Coca-Cola allows the company the luxury of experimenting with the packaging without adversely affecting the sales volume. 2. Analyze the corporate-level strategies for the corporation you chose to determine the corporate-level strategy you think is most important to the long-term success of the firm and whether or not you judge this to be a good choice. Justify your opinion. The strategic decisions of a company that affects the entire organization are considered to be corporate level strategies. Mergers and acquisitions, diversification, financial performance, distribution, promotions, allocation of resources and human resource management are part of corporate level strategies. Diversification is a corporate level strategy used by Coca-Cola. It tailors the products according to the customer’s needs. It has introduced new drink categories in the form of sports drinks such as Powerade, has added to the line of existing products such as Winnie the Pooh Roo Juice that was mainly targeted for toddlers. They have also brought into the markets new variants of existing products, for example, Fanta Icy Lemon and Fanta Apple. Coca-Cola is a company that conducts serious market research surveys in order to understand better the consumer preferences and purchasing trends. With the rising trend of nuclear families, Coca-Cola responded to the change by introducing smaller bottles of 1.25 liters and 1 liter. The 500ml bottles were introduced to service the customers who are on the move (Mangolds & Faulds, 2009). Coca-Cola, being an internationally positioned company in the beverage industry, has to its advantage the opportunity to command franchise leadership. Coca-Cola Company operates in about 200 countries in the world and has established the distribution channels through its bottling partners in these countries. Coca-Cola has improved on its economic system by way of contracting the bottling partners to introduce still or sparkling beverages in target markets so that the specific consumer needs could be met. Being a franchise leader also provides the company with an opportunity to build and expand its supply chain network. As compared to Pepsi, the company commands a greater market share in the non-alcoholic beverage industry, however there is still scope to increase the share. Apart from expanding the supply chain network the bottling franchises also enable the company to take advantage of the infinite opportunity of growth across the world and to cut in the market share of the competitors. The company has acquired Thumbs-up, a local brand of India and thus established a merger with Parle. This strategic alliance has helped Coca-Cola gain ground in the Indian market as Thumbs-up was a very strong name in the Indian beverage market. Thus according to my opinion the diversification and merger strategies of the company worked in the company’s favor the most and contributed to the sales volume to a large extent. Sales Strategy The beverage giant invests heavily in the sponsorships of different sports events or fests and hence they have tie-ups with numerous colleges and schools. In order to increase the market share, the company also persuades the schools or colleges into selling the company’s products in the cafes. Generally they position their freezers near the entrance of the stores so as to garner maximum attention. Booking shelves The renowned soft drink manufacturer purchases shelves in big departmental stores so as to display their products in those shelves. As there is a direct connection between selling and being seen they position their products in such a manner that the products are more clearly seen and the consumers find it more attractive (Pendergrast, 2000). Apart from the above strategies Coca-Cola is also involved in the advertising of their products in print media, billboards and hoardings, Television commercials. They have come up with innovative as well as consumer empowering television advertisements such as spreading the knowledge that a bottle’s correct price is printed on the bottle’s neck and that a consumer should be careful to check the price before purchasing, thus eradicating mal practices. They also offer various prizes that would be printed on the crown. Such schemes have boosted the sales of the company to a great extent. The advertising team of Coca-Cola started presenting the drink as a refreshing and delicious one and over the last 100 years the slogan had been repeatedly modified keeping the essence same, so much so that it has been embedded in the minds of the consumers. 3. Analyze the competitive environment to determine the corporations most significant competitor. Compare their strategies at each level (this is not covered, need to compare the business level and corporate level strategies of Coca Cola and Pepsi) and evaluate which company you think is most likely to be successful in the long term. Justify your choice. PepsiCo is the major competitor of the Coca-Cola Company and for years the two companies have engaged in a bitter battle over the global market share in the beverage industry. The Coca-Cola Company had made a major strategic mistake of failing to connect with the consumers in India as they did not push the Indian acquired brands and promoted only the US brands. They have however realized it and have started making aggressive campaigns to promote the Indian brands. PepsiCo had always taken advantage of local sentiments and use it to prepare their campaigns. Whereas Coca-Cola had developed their marketing strategies based on sponsoring big events like the World Cup and Olympics which failed to connect with people and Coca-Cola was fast losing market share to PepsiCo (Dhar, et al., 2005). Coca-Cola has also started targeting rural sections of various countries by introducing smaller bottles at lesser prices. PepsiCo on the other hand engages itself in the low-cost differentiation strategy by using economies of scale to its advantage. This price differentiation strategy is very important for penetrating new markets and would help it gain a competitive advantage over PepsiCo in the long run. Also the tailoring of advertisements keeping in mind the local sentiments will help the company, as per my consideration, capture greater number of customers. PepsiCo has diversified its product line to include FritoLay that is engaged in the production of wafers and potato chips. However Coca-Cola has failed to diversify much to other categories. The other competitors of Coca-Cola are Nestle which had recently launched the iced tea under the name Nestea. Nestea is a drink that is quite similar in taste to Coke. Pran, a Bangladesh based company, producing carbonated soft drinks, has a major market share in the country and also in the international markets. 4. Determine whether your choice from Question 3 would differ in slow-cycle and fast-cycle markets. The beverage industry displays qualities of a fast cycle market. In such markets a product reaches its maturity stage early and hence it is mandatory for the Coca-Cola Company to continue working hard at innovating and implementing various differentiation strategies to keep it separated from the competitors. According to my opinion in order to achieve this end Coca-Cola will have to keep on providing the customers with new beverages so that the customers are forced to maintain brand loyalty. The company has long suffered from closely imitated products that decrease the market share of the company. Also the price differentiation strategy is the correct choice for adapting to a fast cycle market. Had the beverage industry been a slow cycle market then the company could have reconsidered its present strategies and instead focused on increasing the profit margins as the product life cycle in such a market is much higher than that in fast cycle market. References Dhar, T., Chavas, J. P., Cotterill, R. W. & Gould, B. W. (2005). An Econometric Analysis of Brand‐Level Strategic Pricing Between Coca‐Cola Company and PepsiCo. Journal of Economics & Management Strategy, 14(4), 905-931. Mangold, W. G. & Faulds, D. J. (2009). Social media: The new hybrid element of the promotion mix. Business horizons, 52(4), 357-365. Pendergrast, M. (2000). For God, country and Coca-Cola: the definitive history of the great American soft drink and the company that makes it. New York. Basic Books. Prahalad, C. K. & Lieberthal, K. (1998). The end of corporate imperialism. Harvard Business Review, 76, 68-79. The Coco-Cola Company. (2010). Growth, Leadership, Sustainability. Retrieved from http://www.coca-colaindia.com/ourcompany/company.html Read More