Internal Analysis and SWOT Analysis of the Coca-Cola Company - Research Paper Example

?Running head: Internal Analysis and SWOT Analysis of the Coca-Cola Company Internal Analysis and SWOT Analysis of the Coca-Cola Company Insert Insert Grade Course Insert Tutor’s Name 14 December 2011 Abstract This paper is intended to perform a strategic analysis or internal analysis and SWOT analysis of the Coca-Cola Company, the leading company in the beverage industry. Coca-Cola, the world’s leading soft drink maker, operates in more than 200 countries and owns or licenses 400 brands of nonalcoholic beverages. The company faces challenges in today’s marketplace due to market driven changes, regulatory changes as well as socio-economic changes. An internal analysis of Coca-Cola is performed to understand the internal capabilities. The content of this paper emphasizes that the company needs to reduce its dependence on carbonated beverage and diversify its product portfolio into the non-carbonated sector to remain competitive. It is argued that the best way to become a total beverage company is through addressing the key issues identified in this research and eventually moving towards a learning organization. Table of Contents Running head: Internal Analysis and SWOT Analysis of the Coca-Cola Company 1 Internal Analysis and SWOT Analysis of the Coca-Cola Company 1 Abstract 2 Table of Contents 3 Internal Analysis and SWOT Analysis of the Coca-Cola Company 4 1.0 Introduction 4 1.1 Company background 5 1.2 Strategic issues 5 2.0 Internal analysis of Coca-Cola Company 5 3.0 SWOT analysis of Coca-Cola Company 7 3.1 Internal factors 7 3.2 External factors 8 References 9 Internal Analysis and SWOT Analysis of the Coca-Cola Company 1.0 Introduction By exploring internal resources and capabilities and meeting the demanding standards of global competition, companies build value for customers. Value is measured by a product’s performance characteristics and by its attributes for which customers are willing to pay. The specific bundles of resources and capabilities that offer distinct advantages to the company are considered core competencies. Core competencies are resources and capabilities that serve as a source of a company’s competitive advantage over rivals. Core competencies differentiate a company competitively and reveal its qualities (Prahalad, and Hamel, 1990). Core competencies come up over time through an organizational process of amassing and learning how to organize diverse resources and abilities. As the capacity to take action, core competencies are ‘crown jewels of a company’, the activities the firm undertakes particularly well compared with competitors and through which the company adds distinct value to its goods or services over a long period. By drawing on internal analysis and emphasizing core competencies when formulating strategies, firms gain knowledge of competing primarily based on firm-specific differences, but they ought to be conscious of how things are varying as well. This paper is intended to discus the internal analysis as well as the SWOT analysis of the Coca-Cola Company. The essence of this paper is to evaluate the current situation of Coca-Cola and the industry, and assess the existing resources. A specific strategy will help to match strength and distinctive competence in such a manner that Coca-Cola enjoys a competitive advantage over immediate rivals in the industry (Helfat, & Raubitschek, 2000). 1.1 Company background The Coca-Cola Company manufactures, distributes, and markets non-alcoholic beverage concentrates and syrups. Coca-Cola owns or licenses more than 400 brands, together with diet and light beverages, waters, juice and juice drinks, teas, coffees, and sports as well as energy drinks. It has ownership interests in numerous bottling and canning operations. Coca-Cola sells finished beverage products bearing the Coca-Cola trademarks in more than 200 nations. The headquarters of the company are situated in Atlanta, Georgia and has around 139,600 employees. The company recorded revenues of $35,119 million during the financial year ended December 2010 (FY2010), an increase of 13.3% over 2009. The revenue growth was mainly because of the addition of more than one billion incremental unit cases of volume and a 5% growth in unit case volume (The Coca-Cola Company 2006). 1.2 Strategic issues Coca-cola is faced by a number of considerable strategic issues. The three main strategic issues are of importance. The first is the declining sales in the carbonated soft drink sector. The second is the current health trend and wellness trend sweeping across the beverage industry. The third issue is the threat of increased competition from PepsiCo. The other strategic issues the company is facing include increased conflict with the bottlers, lack of innovation and food safety and statutory regulatory compliance (Euro-monitor International 2005). 2.0 Internal analysis of Coca-Cola Company Operations: Coca-cola has shifted to a regional operating strategy with centralized concentrate production facilities that reduce manufacturing costs. Coke’s primary manufacturing activities relate to elaboration of syrup, which is then distributed to bottling companies. Sales and Marketing: generally, Coca-cola has sustained an overall domestic market share lead against Pepsi, with 41% versus 31%. Internationally, Coke is always ahead of Pepsi. Pepsi’s key strength is in the supermarket area, but Coke maintains a virtually equal portion of this market. Brand loyalty is another fundamental strength for Coca-cola (American Beverage Association 2005). Distribution: While both Pepsi and Coca-cola distribute their bottled soft drinks through a network of bottling companies, Coca-cola makes use of its own network of wholesalers for their fountain syrup distribution, and Pepsi distributes its fountain syrup via its bottlers. In general, Coke seeks total automation of distribution activities. Procurement: coca-cola has followed a strategy of increased ownership of bottling operations internationally as a method of making its operations more successful and to enhance product availability in addition to marketing focus. In a number of instances, investments stand for alternative shares in the bottling corporation, wherein Coca-Cola is able to help focus and advance sales and marketing plans, support in the expansion of efficient business and information systems, and provide operating capability. Situations where the current bottler is not aggressive with current opposition or structure wide sales standards, Coke often moves in to attain the license and speedily turn the circumstances around. Human resources: Concerning the human resource management, Coca-Cola Company has a very large workforce, minimal turnover, as well as a strong tendency of promoting from within. Generally, Coke provides attractive compensation; places a major emphasis on employee training and coaching into ‘the Coke way’ in order that workers globally share a similar understanding of and appreciation for what the product stands for and seeks to be in the consumer’s mind. Coke places a lot of weight on having its people ‘think globally, but act locally; act in response to daily competitive circumstances; serve clients and consumers with a passion’. 3.0 SWOT analysis of Coca-Cola Company 3.1 Internal factors Strengths: Coca Cola is among the leading companies in production of soft drinks and is an extremely recognizable company. It is know very well internationally. It’s branding is obvious and easily recognized. There is no any other company that compares to the Coca Cola’s social popularity status. Several people buy coke, not only due to its taste, but because it is widely accepted and they feel they are associated with a big and unique thing. Another strength that Coca Cola has is the sale of production or the amount of money that the company deals with. Coca Cola deals with massive amounts of money throughout the year. Coca Cola has another very significant strength of customer loyalty. Here, they apply the 80/20 rule, where 80% of their profit comes from 20% of their loyal customer. Many people are very loyal to Coca Cola. With Coca Cola’s ability to sell its products globally, customers will continue to buy what they know and what they like, the Coca Cola products. Weaknesses: While several people have goods things to say concerning Coca Cola, there are many people who are against the company, together with its products. Word of mouth unfortunately is something that is very hard to control. If some people can have a negative opinion concerning something, they have a tendency of swaying others towards their way of thinking. Thus if bad comments concerning Coca Cola are put out to people who have not yet tried Coca Cola products, then that can produce a lost customer, and thus word of mouth is a weakness. Another weakness is lack of popularity of some of its products. While Coke and Sprite are popular, other products of the overall 400 products are extremely not popular. 3.2 External factors Opportunities: Coca Cola has a number of opportunities in its business. It has several successful brands that it ought to continue to exploit and pursue. Coca Cola as well has the chance to advertise its less popular products. Since the company has a lot of money, it has the opportunity to put these other less popular products on the market. This would be very profitable if they can manage to sell these other products to the same extent that they do with their main products. Another opportunity that Coca cola has is the ability to buy out their competition. This opportunity rarely presents itself in the world of business. Nevertheless, with Coca Cola’s power and success, this cause of action is possible. Also, about 90% of the world knows about Coca Cola and now the company has a chance to approach the 100% popularity, a rare chance that is not available to any other company worldwide (Coca-Cola Company, Inc. 2008). Threats: despite the fact that Coca Cola dominates its markets, it still has to deal with several threats. Although Coca Cola and Pepsi control nearly 40% of the entire beverage market, the changing health-consciousness attitude of the market could have a serious consequence on Coca Cola. This has to be seen as a dominant threat that could change both the eating and drinking habits of people. Coca Cola has to be careful with lawsuits. Furthermore, a number of people might try to exploit the unhealthy side of Coca Cola’s products and could threaten the status and success of sales. Competition also poses another form of threat. Pepsi is the major competitor of Coca Cola, and sells very similar drinks (Smith 2005). References American Beverage Association. (2005). Soft Drinks Facts. Retrieved December 13, 2011, from http://www.ameribev.org/variety/facts.asp Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 19, 99–120. Coca-Cola Company, Inc. (2008). Presentation to Lehman Brothers Conference. Retrieved December 13, 2011, from http://seekingalpha.com/article/57111-coca-cola-enterprises-inc-2008-outlook-call-transcript. Euro-monitor International: Global Company Profile. (2005). Coca Cola Co. The soft drink World. Retrieved December 13, 2011, from www.euromonitor.com Helfat, C. E., & Raubitschek, R. S. (2000). Product sequencing: Co-evolution of knowledge, capabilities, and products. Strategic Management Journal, 21; 961–979. http://www.mendeley.com/research/product-sequencing-coevolution-of-knowledge-capabilities-and-products/. Prahalad, C. K., and Hamel, G. (1990). The core competence of the organization. Harvard Business Review, 90; 79–93 Smith, M. D. (2005). The hard truth about soft drinks. Natural Foods Merchandiser; Vol. 26 Issue 3, p 76-78. The Coca-Cola Company. (2006). 2006 Annual report. Retrieved December 13, 2011 from http://www.cocacola.com Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal, 5, 171–180. Read More