Coca-Cola Company Current Situation - Case Study Example

Cola Wars Executive Summary It is true that the sales growth rate of the Coca Cola Company has reduced by 4 percent. On the other hand, being marketchallenger, PepsiCo has succeeded to grab the market share of the Coca Cola Company in global market place. The organization is losing its sales in US due to growing competition. In addition to this, the retailers and distributors are giving priority to other brands. The Wal-Mart has started to prefer Powered over Coke Bottlers. In addition to this, the organization is losing its image due to inadequate employee motivation aspect. It is highly important to introduce stakeholder engagement and decentralization in business operation process in order to overcome these issues. Some recommendations have been provided to overcome the problems and issues that may affect the business performance of the Coca Cola Company in near future. Current Situation The Coca-Cola Company can be considered as one of the leading organizations within the global soft-drink industry headquartered in United States of America. The organization started its business operation in the year 1886. Since then, the management of the organization has adopted and implemented several unique business level strategies in business operation process in order to gain potential competitive advantages over its competitors. The organization is operating in global market place as market leaders since its introduction phase. According to the survey by Interbrand, Coca Cola Company has become the best and most valuable brand in the year 2011 (Elliott, 2013, p.1). Day-by-day, the global business environment is becoming highly competitive as several organizations are adopting and implementing unique business operation strategies to increase core competencies. The management of the Coca Cola Company has effectively adopted product differentiation strategy and global business expansion strategy in order to increase its global market share. The product line of Coca Cola includes RC Cola, Cola Turka, Kola Real, Virgin Cola, Afri Cola, Minute Maid, Fanta, Sprite, Parsi Cola, Evoca Cola and many more. According to surveys, the consumers used to buy 1.8 billion products of Coca Cola on daily basis around the globe. It is quite impressive. This strong product portfolio has helped the Coca Cola Company to gain huge customer preference around the globe (Hess, 2010, p.134). Global business expansion strategy is another unique strategy that has been adopted and implemented by the Coca Cola Company in business operation process in order to gain potential competitive advantages. However, it is true that the organization has its presence in more than 200 countries which is highly impressive. In terms of global market presence, the Coca Cola Company is leading the global market place. Each and every leading multinational organization is trying to capitalize on the potential business operation opportunities that have been developed due to globalization and technological advancement. The management of the organization always tries to use advanced and efficient business operation resources in order to maintain its leading position in global market place. The soft drinks of coca cola brand are available in unique bottles and cans. Therefore, it can be stated that effective implementation of business level strategy and product packaging strategy has helped the organization to lead the global market place quite comprehensively (Baker & Hart, 2008, p.222). Corporate Governance Corporate governance can be considered as one of the important aspects that help an organization to gain valuable support from the external and internal stakeholders and shareholders. The Coca Cola Company is listed in New York Stock Exchange (Yahoo, 2014, p.1). The stocks of the Coca Cola Company can be valued as most expensive and valuable stock among the shareholders as the organization has constantly maintained its leading market position. In addition to this, the organization also has maintained its high brand image among the stakeholders and shareholders. These aspects motivate stakeholders and shareholders to take interest in the organization’s decision making process. Kathy Waller is the CFO and Executive Vice President of the Coca Cola Company. On the other hand, Muhtar Kent is the CEO and Board Chairman of the Coca Cola Company (Coca-Cola, 2014, p.1). There are several aspects that are affecting the corporate governance practices of the Coca Cola Company. Recently the organization has faced challenges due to the inadequate quality of the products. Presence of too much calories and pesticides in the soft drink products were affecting good health of consumers. Overweight and other diseases are the major consequences of consumption of these products. Inadequate production process affected the quality control aspect of the products. These issues have affected the brand image of the Coca Cola Company (Dibb, 2012, p.17). The organization has adopted and implemented centralization in its decision making process to keep control on each and every business operation process. This aspect has somehow affected the employee motivation and employee job satisfaction aspect. It is true that each and every organization is trying to motivate each and every employee in this competitive business environment as the employees are the real business growth drivers. Too much centralization and top-down organizational communication approach is affecting the skills and abilities of the employees. It is also affecting the self-confidence of the competent employees. Lack of stakeholder engagement and limited priority to the employees is affecting the collaborative workplace performance within the organization (Ferrell and Hartline, 2010, p.12). In terms of business operation process, the organization has developed its own supply chain and distribution channel in each and every operating country. It is known to all that the governments of each and every country are trying to introduce several environmental policies for the organizations in order to maintain environmental sustainability. Therefore, the management of the Coca Cola Company has tried to develop vision, mission, goals, objectives and organizational value based on these sustainability aspects. Water recycling and Zero solid waste in business operation process can be considered as one of the important aspects of maintaining environmental sustainability. The management of the organization has effectively tried to follow Triple Bottom Line approach in business operation process in order to maintain sustainability in business operation process (Grillo, 2012, p.22). Enhancement of water recycling and zero solid waste has ensured the organization’s environmental sustainability. But, inadequate product quality and demand for health soft drinks, energy drinks and fruit juices have affected the social sustainability aspect. In terms of economic sustainability, the organization tried to maintain its competitive pricing of products. But, recent financial crisis and global economic recession affected the purchasing power and disposable income of the consumers. The soft drinks of the Coca Cola Company can be considered as refreshing products (Jeannet, 2005, p.82). These products cannot be considered as necessary products. It is true that the people are trying to consume necessary products instead of refreshing or optional goods. This aspect has affected the sales growth rate of the organization. It is highly important for the management of the Coca Cola Company to consider these aspects before developing future strategies. It is highly important for the decision makers to make such decisions that may help the organizations to overcome current issues and maintain environmental, social and economic sustainability in the overall business operation process (Swallow, 2009, p.242). Pearce-Robinson 11 Steps Model Pearce-Robinson model can be applied and implement ted in this part of the report in order to determine the key components of the strategic management processes that are practiced by the Coca Cola Company. In terms of company’s mission, the management of Coca Cola Company always tries to refresh the consumers through high quality soft drinks. In terms of social responsibility, the organization always tries to recycle its water resources and maintain zero solid waste to enhance environmental sustainability. In terms of business ethics, recently the organization has faced some ethical issues regarding poor quality of products. In terms of external environment, inadequate economic environment, high market competition, social demand for healthy soft-drinks, saturated global market place, threat of substitute products and strict legal policies may affect the business performance of the organizations. In terms on internal analysis, strong workforce, high brand image and strong customer preferences can be considered major strengths. On the other hand, too much centralization and lack of stakeholder engagement approach are the major weaknesses of the Coca Cola Company (Lamb, 2010, p.47). The organization lost its customers to PepsiCo due to poor quality of the products and inadequate differentiations. (Pearce-Robinson, 2010, p.11). In terms of strategic analysis and choice, the organization should try to offer products and services considering its mission and values. The current external and internal environmental analysis will help the organization to overcome the current strategic issues that may affect the business performance of the Coca Cola Company in near future. In terms of long-term objectives, the management of the Coca Cola Company should try to focus on increase in profitability and revenue. It is clear from case study that the PepsiCo is trying to grab the market share of the Coca Cola Company. Therefore, the organizational management should try to cover the global market through R&D leadership and effective business diversification aspect (Ma, 2014, p.72). On the other hand, in terms of generic and grand strategies, the organization should try to focus on implementation of cost leadership strategy. It will help the organization to gain huge competitive advantages over its competitors. In terms of short-term objectives, the management of the Coca Cola Company should try to improve its functional activities. Adoption and integration of stakeholder engagement and decentralized decision making process will help to develop effective short-term objectives. In terms of action plan, the management of the organization should try to list down possible effective actions and required time frame for those actions. It will help the organization to move forward towards the developed objectives. In terms of functional tactics, it is clear that reposition and new product differentiation would be effective strategies (Marquardt, 2013, p.4). Significant promotional strategy will help the organization to create significant awareness of each product among target customers. In terms of policy implementation, the organization should focus on employment policies to increase the motivation level of each and every employee. After this, the organization should focus on restructuring, refocusing and reengineering. In this aspect, the organization should try to continue with effective strategies and should try to redevelop the strategies that are not fruitful. Last but not the least; the management of the organization should try to focus on effective strategic control and constant improvement by distributing job responsibility to each and every employee (Mccalley, 2002, p.21). Analysis considering theoretical frameworks This part of the assignment will analyze the case using theoretical frameworks. SWOT Analysis SWOT analysis can be considered as an important strategic marketing tool that helps an organization to determine its internal strengths, weaknesses and external opportunities, threats. Following is the SWOT analysis of the Coca Cola Company using the facts provided in the case study. Strengths The organization is leading the global soft drink market. Effective business expansion strategy has helped the Coca Cola Company to lead the global market place. In addition to this, significant product differentiation strategy also has helped the organization to increase its core competency in global market place (Krause, 2005, p.92)). Effective implementation of repositioning strategy has helped the Coca Cola Company to regain its brand value after sudden growth of PepsiCo in global soft drink industry. High brand image, strong brand port folio and large customer base is the major strength of the organization. Weaknesses Lack of stakeholder engagement in strategy development process is the major weakness of the Coca Cola Company. It is true that the taste of PepsiCo’s soft drink became highly preferable for the target customers. The Coca Cola Company is oldest and leading organization in this world. Despite this fact, PepsiCo has able to pose serious threat to the Coca Cola Company. In addition to this, lack of decentralization has affected the employee motivation and job satisfaction aspect. Use of havoc pesticide and calorie in the soft drink products affected the health of customers. These aspects have reduced the sales growth rate of the Coca Cola Company. Most importantly, major retailers like Wal-Mart are avoiding giving larger space to Coke due to inadequate administrative decision making process and in-adequate quality aspect of the products (Terhune, 2006, p.5). Opportunities It is clear from the case study that the management of the organization has faced several challenges since 1975. The emergence of PepsiCo and its high customer preference had affected the sales growth rate of the organization. Looking into this aspect, the management of the organization has introduced repositioning strategy by changing the taste of the product. The organization should continue with this developed strategy. In addition to this, the organization should also consider the effectiveness of social media and other types of promotional strategies in order to create significant brand awareness among the target customers (Michman, 2008, p.34). It is true that the global business environment is becoming highly competitive. Therefore, considering this aspect, the management of the Coca Cola Company should try to improve the quality of each and every product line in order to maintain its leading market position around the world. Threats Intense market competition and high market saturation can be considered as significant threat for the Coca Cola Company. For example, PepsiCo has changed the taste of its soft drinks in order to create some value in the minds of target customers (Kourdi, 2003, p.128). In addition to this, demand for healthy soft drinks and other healthy drinks is affecting the sales growth rate of the products of the Coca Cola Company. Limited purchasing power, low disposable income, threat of substitute goods and challenges from several legal policies is affecting the efficient business operation process of the Coca Cola Company. Conserving Resources: Recycling, Co-opting and Shielding It is important for the readers to know how the management of the Coca Cola Company is conserving its resources. In terms of recycling, the management of the organization is trying to recycle its business operation resources. This recycling process is actually helping the organization in two different ways. First of all, the organization has succeed to reduce overall business operation cost as recycling process helps an organization to avoid the sourcing of new raw materials and resources (Hamel & Prahalad, 1993, p.82). This aspect helps the management of the Coca Cola Company to reduce its overall business operation cost and time. In addition to this, maintaining zero solid waste is also helping the management of the organization to maintain environmental sustainability. It is true that government has developed and implemented several policies in order to maintain social and environmental sustainability. However, the organization has effectively followed its organizational values to maintain environmental sustainability. Consideration of water recycling and zero solid waste has helped the organization to bring efficiency in the manufacturing, supply chain and distribution management process. Co-option can be considered as an important aspect in converging resources. It is known to all that the Coca Cola Company is leading the global soft drink industry. However, the organization has effectively developed different unique strategies and has implemented those strategies in the business operation process in order to maintain its leading position in market place (Ruder, 2008, p.95). The management of the Coca Cola Company has developed several unique strategies that are also followed by the other competitors in the industry. This aspect can be considered as co-opting of resources. PepsiCo is the market challenger while the Coca Cola Company is the market leader. The Coca Cola Company is the first ever corporation that adopted and implemented enterprise resource planning system in the business operation process in order to manage its business operation resources quite significantly (NG, 2014, p.57). On the other hand, PepsiCo entered in this industry way after the introduction of the Coca Cola Company. But, the organization also has adopted Enterprise resource planning system similar to the Coca Cola Company to allocate and control resources efficiently. There are other skills too that have attracted the competitors of PepsiCo to follow those. It has been mentioned earlier that the recent financial crisis and economic slowdown affected the purchasing power of the consumers. It has automatically affected the sales growth rate of the Coca Cola Company in global market place. In terms of Shielding, Coca Cola failed to understand the blind spot of PepsiCo (Hamilton, 2013, p.29). For example, PepsiCo has effectively diversified its business in snack market. In addition to this, in some market places, the taste of PepsiCo can be considered as superior comparing to the taste of Coca Cola products. , PepsiCo started to gain huge popularity that created huge challenge for the Coca Cola Company to maintain its leading market position. It was highly important for the organization to maintain low-cost and low-risk business operation process during this era of competitive and saturated global business environment. Implication for the Middle Managers It is true that middle managers generally play an important role in maintaining business growth rate of an organization. It is true that global business environment is becoming highly competitive and competitors like PepsiCo is developing and implementing unique strategies. It is helping them to grab the global market share of the Coca Cola Company. First of all, the middle managers should try to maintain effective relationship with the employees. Employees can be regarded as the real growth drivers of an organization. Therefore, it is highly important to develop an effective communication approach between top level management and employees in order to develop an effective workplace environment and healthy organizational culture (Hill, 2013, p.52). In addition to this, it is also important for the middle managers to focus on the effectiveness of research and development team. It is clear from the case study that the Coca Cola Company is losing its customers to PepsiCo regarding same taste of the products since its early days (Leonard, 2012, p.19). The research and development team should try to focus on these aspects in order to maintain its customer base and high brand image among the target customers. Last but not the least; it is important to for the middle managers to focus on effective promotion of the newly introduced or repositioned products to create significant brand awareness in the mind of the target customers. It is also important to bring more efficiency in its own supply chain and distribution channel (Stapleton, 2008, p.104). It will help distributers to meet the market demand of the products quite significantly. Strategic Alternatives and Recommended Strategies It is clear from the above case analysis that the Coca Cola Company is facing huge market challenges due to growing market competition and high market saturation. Moreover, introduction of several business policies is posing real threat for the organization. Centralized decision making process, inadequate quality control and inadequate business diversification is affecting the sales growth rate of the organization. Following recommendation plans will help the management of the Coca Cola Company to overcome current strategic issues. First of all, the management of the Coca Cola Company should try to strengthen its research and development team. On the other hand, effective market research is also important for the organization to determine the real market demand. It is clear from the case analysis that the Coca Cola Company has failed to differentiate taste of the products from so many years. Therefore, the organization is losing its customers to other rivals (Pride and Ferrell, 2014, p.69). Effective quality control is another important aspect that needs to be considered by the organization. It is true that the organization has adopted and implemented product differentiation strategy. But, inadequate quality of the products has affected the brand image of the organization. Strong and efficient research and development team will help the organization to overcome these issues (Shavinia, 2003, p.38). Last but not the least; it is highly important for the organizations to consider decentralization and stakeholder engagement in its decision making process. These aspects will help the organization to enhance strategy development process and will also help the organizations to gain potential competitive advantages over its competitors (Lukes, 2004, p.48). This aspect will also help retailers and distributors to receive a transparent approach that will benefit the Coca Cola Company. References Baker, J. M., & Hart, S., 2008. The Marketing Book. London: Routledge. Coca-Cola. (2014). Our Company. [Online]. 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