Strategic Choices for Coca-Cola Company - Research Paper Example

?Running head: Strategic Choices for Coca-Cola Company Strategic Choices for Coca-Cola Company Insert        Insert Grade Insert Name 31 December 2011  Strategic Choices for Coca-Cola Company Introduction Coca-Cola has been in existence since 1886 when it was established by (Coca-Cola p.1). From the period, it was established the company has progressively become popular and recognized brand in the global market. Today, Coca-Cola Company operates in about 200 countries under different brands (Coca-Cola p.1). Throughout the period that it has existed and operated in the world, Coca-Cola has experienced enormous growth, performed excellently in the market and subsequently increased shareholder value through increased profits in the company. However, the company has not operated alone in the market; it has received competition from other companies like Pepsi. In order to create an edge over its competitors, Coca-Cola has adopted differentiation strategy, which in many ways has proved successful for the company. Nevertheless, it is important to evaluate how this strategy has been successful for the company and the likely recommendations for modifications especially in line with its mission and vision. Strategic Choice of the Company Coca-Cola has for a long time favored the resource-based concept, which has become the main avenue of its strategic goals (Pearce and Robinson, p.1). The company perceives its success in the market to rest on effective use of its fundamental resources such as the brands, systems, capital, and the people. The goals of the company have been drawn and implemented based largely on these fundamental resources. At the same time, the attempts of the company have largely been geared towards creating competitive advantage by utilizing its resources to the maximum. The most characteristic of the company has been reflected in its increased use of resources to promote its brands around the globe through increased advertisement and promotion (Pearce and Robinson p.2). As a result, the company has been successful in creating strong brands in the market. Effectiveness of the Company’s strategy In order to successful carry out its strategic goals and objectives, Coca-Cola has widely adopted the differentiation strategy, and this strategic method has enabled the company to strengthen and foster its position in the wider global market (Knol Beta p.1). Differentiation strategy according to Porter aims to make company’s products or services unique when compared to its competitors (Stonehouse and Campbell p.177). The ultimate aim of this strategy is to create customer loyalty that exhibit little price elasticity of demand due to perceived unique aspects of the products or services as compared to competitors (Stonehouse and Campbell p.177). Effective of this strategy for the Coca-Cola can be linked to its increased and ever growing advertisement and promotion activities, which have enabled the company to create a unique market position as compared to competitors. At the same time, differentiation strategy has proved successful given Coca-Cola’s established customer loyalty base, which has built over a long period. More so, refreshment and beverages market is increasingly becoming saturated and differentiation strategy has enabled Coca-Cola to stay apt and address the needs of its customers satisfactorily (Knol Beta p.1). Weaknesses of the company have been witnessed in negative publicity, increasing health concerns, unpopularity of some brands, and poor performance in some markets (Knol Beta p.1). As a result, differentiation strategy seems to address the concerns by responding to the unique nature of concerns in each market in the areas the company operates. On the same grounds, as the competition in the market continue to increase especially in localized areas that Coca-Cola operates, the differentiation strategy seems to give the company upper hand in terms of penetrating markets and establishing loyal and satisfied consumer base. Lastly, as health concerns and legal issues especially in developing societies become of great concerns, Coca-Cola’s differentiation strategy is perceived to have the ability to address the issues in more productive and profitable way hence, be able to remain relevance in the market. The strategy’s sustained competitive advantages One question that needs to be asked is whether Coca-Cola’s strategy has enabled creation of sustained competitive advantages. First, through differentiation strategy Coca-Cola has succeeded in creating a global brand that resonate passionately among consumers and give competitors hard task of finding counter-measures. In this way, Coca-Cola enjoy superior brand even as the market continue to saturate in many regions. The company brand is respected in the wider global market and its popularity cannot be disputed or doubted. It is always clear that names that have strong brands are associated with strong competitive advantages, which in turn enable the company to command premium valuation in the market (Ahmed et al. p.17). Coca-Cola spends enormous resources in creating its superior brand names through advertisement and promotion, which in turn have resulted in creation of strong and loyal customer base in different markets. Furthermore, having strong brand names in the market, a company is likely to gain significantly in terms of economic benefits. Hence, Coca-Cola’s strong and superior brand name in the market can be evidenced in the increased sales the company continue to make and the subsequent increased profits (Ahmed et al. p.21). For around 50 years, the company has been having increased dividends (Coca-Cola p.1). Moreover, the brand equity of the company has enabled the company to venture and exploit new markets more easily and establish loyal customer base for future business opportunities. In all these, the company’s strategy has led Coca-Cola to establish and facilitate sustained competitive advantages in the market as compared to the competitors. Undressed threats and opportunities Coca-Cola and Pepsi Cola remain the dominant market players although efforts of small-localized players cannot be ignored. As a result, in order to sufficiently address its threats and exploit on its opportunities more productively, Coca-Cola should adopt a more focused generic differentiation approach and subsequently increase efforts of communicating the approach to customers. At the same time, as some markets remain poorly performed, the company has to remain focused and selectively choose the markets in which it will maximize profits. This should see the company target only the markets that are potentially productive and increase concentration in such markets until it achieve the objectives then strategize on expanding the target base. When the moment present for the company to expand target base, it should develop a more broad differentiation strategy in order to have easy penetration experiences and create loyal customer base more easily. What the Company should do Coca-Cola’s mission and vision remain the bedrock upon which the company can progress and achieve its strategic goals and objectives. The values of the company as entailed in the mission and vision is largely premised on growth, partnership, leadership, profitability, customer satisfaction, and on (Coca-Cola p.1). However, to effectively facilitate the differentiation strategy, the company needs to re-design its mission and vision so that it captures the dynamic nature of market in the global context. In doing so, the company has to rely prominently on extensive strategic market research and consumer insights reports (Morris p.1). This will ensure mission and vision created capture and address the target market in the most precise way as compared to competitors. Conclusion Overall business environment is becoming dynamic and more uncertainty and long-time companies like Coca-Cola should not leave any chance unattended to. Strategic management should remain at the core of the company’s operation (Chevalier-Roignant, Trigeorgis and Avinash p.47). Through strategic management, the company has the ability to address its business environment situation in terms of strengths, weaknesses, opportunities, and threats. Therefore, this requires, Coca-Cola to constantly carry out environmental scanning. Nevertheless, the company’s strategic approach of differentiation need more research in order to be effective especially in emerging markets and as the market continue to saturate in most traditional areas of operations. Works Cited Ahmed, F., et al. A Report on strategic management case of Coca-Cola. MBA Dissertation Report, 2007. 31 December 2011. http://www.scribd.com/doc/13886348/Coca-Cola-Report-on-Strategic-Management-case-2007. Chevalier-Roignant, Benoit, Trigeorgis, Lenos & Avinash, Dixit. Competitive Strategy: Options and Games. MA: MIT Press, 2011. Coca-Cola. ‘Growth, leadership, sustainability’. The Coca-Cola Company, 2011. 31 December 2011. http://www.thecoca-colacompany.com/ourcompany/index.html Knol Beta. The Coca-Cola Company. 2008. 31 December 2011. http://knol.google.com/k/the-coca-cola-company# Morris, Betsy. ‘The real story how did Coca-Cola’s management go from first-rate to farcical in six short years? Tommy the barber knows’. Fortune Magazine, May 31, 2004. 31 December 2011. http://money.cnn.com/magazines/fortune/fortune_archive/2004/05/31/370696/index.htm. Pearce, John. A & Robinson, Richard. B. Strategic Management: Strategy formulation, implementation, and control. NY: McGraw Hill/Irwin, 2009. Stonehouse, George & Campbell, David. Global and transnational business: strategy and management. MA: John Wiley & Sons, 2004. Read More