External Environment Analysis: Coca-Cola Company Insert Grade Course Insert 5 December 2011 External Environment Analysis: Coca-Cola Company Since its creation, the Coca-Cola Company has remained to be the largest beverage company in the world…
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Besides developing its products, the company is also responsible for marketing them. Their mission is to refresh people, provide inspiration to moments of optimism, create value, and make a difference (SlideShare, 2008). However, as the company strives to achieve its goals and maintain its status quo, it is faced with a number of challenges, which it must overcome to stay at the top of the beverage industry. For example, the company faces stiff competition from its rivals, and thus, to stay at the top of the game, it must evaluate and improve its business strategies. Therefore, this paper provides an external analysis of the factors that affect the coca-cola company. The analysis is provided with reference to Porter’s five Forces model and PEST analysis. Porter’s Five Forces Analysis of Market Structure This model is often used to analyze the competitive structure of an industry. It analyses the attractiveness of a company or the ability of a company to make profits by considering five forces or factors within a market (Tutor2u, 2011). The five factors include: Threat of New Entrants New entrants to an industry often increase competition level and thus lowering the attractiveness of the industry. The danger of new entrants marjory depends on the barriers to entry (Tutor2u, 2011). In the soft drink industry where the Coca-Cola Company operates, new entrants are not a strong competitive pressure because the industry is completely saturated and growth is little (Deichert, 2006). The only companies that dominate the industry are the Coca-Cola Company and the Pepsi Co, which have strong brand names and enormous distribution channels. In addition, the high fixed costs for warehouses, labor, transport, and economies of scale bar new entrants into the industry. Therefore, with the high capital requirement and operation costs involved, companies find it very difficult to enter the soft drink industry (Gaudet, 2008). Threat of Substitute Products The availability of substitute products lowers a company’s attractiveness and profitability by limiting its price levels. For coca-cola company, the substitute products are those products that are produced by competitors who are not in the soft drink industry, for example bottled water, coffee, juice, sports drinks and tea (Gaudet, 2008). Consequently, with the growing health concerns, the risk of substitute products has become a very strong challenge for the coca-cola company (Deichert, 2006). People have become health conscious and have started drinking less of the products that contain empty calories but instead consume juice, bottled water and sports drinks which have health benefits. Subsequently, this has threatened the market position of coca-cola company and although it has tried to address this risk by coming up with healthier drinks such as bottled water and juices, it is yet to maximize on it. Bargaining Power of Suppliers The suppliers are the people or businesses that provide the industry with raw materials and other products. A company’s profitability depends on the bargaining power of suppliers (Tutor2u, 2011). The raw materials required for the production of Coca-Cola products are sugar and packaging. Sugar is readily available; therefore, the company has good bargaining power and can easily switch the suppliers of the product. The company also has greater bargaining power on its packaging supplier as it is the largest shareholder of Coca-Cola Enterprises
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According to the paper the changes contribute to the favorable financial pictures of Coca Cola. There are some similarities and differences between the production processes of the Coca Cola America bottling plants and the Coca Cola Mexico bottling plants. Indeed, Coca Cola’s strategic marketing and management processes add to the company’s firmly embedded financial leadership in the non-alcoholic beverage market segment.
Pemberton. It was produced as a tonic, which was modified by removing alcohol and adding vegetable essences. The name of the company was originally Coca-Cola Syrup and Extract but was shortened to Coca-Cola. It was registered in 1886 and since then it has been rapidly increasing its market share.
Coca-Cola Company satisfies billions of clients through its refreshment products that are found in over 200 countries across the world. Despite constant competition from Pepsi, Coca-Cola remains the favored market brands, more so when financial position of the company is analyzed as compared to the competitors.
The price of one glass of coke back then was five cents a glass and only 9 drinks per day were sold. Today, the company is more than 126 years old with a client base around the world in more than 200 countries from just one city in one country back then. The company currently estimates the average drink sales per day at about 1.8 billion
Similarly, there has been a remarkable result in Earnings per Share and the operating income that directly influences the net revenue of budgeting and marketing policies (Rich et al 2009). This will eventually help in the long-term projects such as market expansion and customer satisfaction.
The SWOT analysis of the Coca-cola explores its internal and external environment. It suggests that the main strengths of the company include its popularity as world leader around the globe, strong international trade, strong branding and
It provides an essential strategy as an element to scan the strategic management and conducting market research for the company. Some of the areas that are important in the value creation opportunities of a company and require analysis include the legal, social and economic environments.
During this time, little people would have thought that the company would grow to become one of the biggest and the most profitable global company it is today since at the time John only sold nine cups a day for that year. Frank
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