Social and Economical Factors Affecting Coca-Cola - Case Study Example

Name xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Social and economical factors affecting organizations Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Coca Cola case analysis Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Course xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Course Instructor Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Date Submitted Analysis of organizational social and economical factor Part 1 Organizations which are known to involve in the analizing of macro-envroment usually get definable opportunities in identifying factors such as economic or social. Due to the nature of the business environment, it is very important that these factors are widely evaluated. The said factors are usually categorized into two namely; internal and external factors. This study will widely focus on external factors putting emphasis on both economical and social factors within an organizational environment. These factors widely influence a business thus making the environment to be either dynamic or stable. A stable environment is one which ensures that customers are highly satisfied and this is constant for a long duration of time whereas in a dynamic environment, customers’ desire constantly changes over certain duration of time (Ronald, 2009). The study will use Coca-Cola Company as our case study so as to understand both key economical factors and social factors and their impact towards the organization. In coca-cola company, it is evident that they have widely affected the profitability and success of this company. The effects within coca-cola company have been since widely to impact cost, capital availability and the way demand is made by customers on the company goods and services. In Coca-Cola Company, economical factors widely describe and reflect on global financial conditions. These factors are namely; interests rates, unemployment rates, gross national product and exchange rates. Clearly, when countries where Coca-cola company has branches are undergoing structural change or it’s expecting to undergo one in a near future, it creates an economic strain within the company environment. Further, there are certain countries where Coca-Cola Company operates in have foreign currencies restrictions which have widely impact on the company operation and performance. In Coca-Cola Company, social factors locally, internationally, nationally or even regionally have a profound influence on the company normal operations that usually impact on the firm performance and outcome. For instance, in Coca-Cola Company, indigenous culture usually coupled with ethnicity and organization are inter related to one another. Just as language is a social factor that is renowned across the globe, it is a serious factor within Coca-Cola Company since the company has established branches globally. Ronald (2009) asserts that, the extent to which most organizational personnel within Coca Cola participate in a discourse of most scientific languages determine the kind of research likely to be produced by this particular company both in regional and global perspectives. The company has realized that understanding different global socio factors provides a wider insight to the kind of research and its nature and how it will be valued. Evidently, arriving at major decision within internal and external organizational systems involved understanding and focusing on social based factors. Increased level of education is another of Coca-Cola social factor that impact the company performance and operation. Higher level in education allows more people to earn high income that it could be possibly be. Increased income has enabled the company to create opportunities that allow individuals purchase more goods and services (Ward & Peppard 2002). The dimension of social factors is very essential in Coca-Cola since it determines values of goods, standards and services. It is essential to note that within Coca-Cola Company social factor are divided into two those connected to demographics and values. Demographics is used to measures various traits of socio groups and people who are considered to make up a society. It analyzes gender, age and income are most common example used when it come s to characterization of demographics. Ward & Peppard (2002) asserts that, values refer to various beliefs and behaviors within Coca-Cola that impact on product demand. Changes in societal values are known to affect how the company operates. In Coca-Cola Company, inflation is measured widely by use of annual percentage increase in the general customer price. Due to the current recession, coca-cola has been affected by declining value of money forcing the company to skyrocket their products and services. From this, the higher rates of inflation have resulted to low sales as people are foregoing their products since they are termed to be luxurious. This is because the company will experience high cost when strategizing on economical issue or while borrowing so as to implement the stipulated strategies (Pan, 1999). Based on interests rates, high interests’ rate have made Coca-Cola to borrow less forcing the organization to work on its outputs as opposed to bank loans. Similarly, if there were low interests rates Coca Cola Company would have borrowed more so as to improve its business performance. Due coca cola having a lot of branches across the globe, strong foreign currencies automatically make exporting of commodities more difficult making the company to raise the prices of their beverages so as to accommodate high exporting prices. Pan (1999) asserts that, recent global inflation that started in the United States provoked the company employees to demand for high wages so that they can be able to meet up raised commodity increased prices. Higher national income is known to create an organizational environment which more likely may boost demand for Coca Cola products. Finally, reduction of labor force results to increased unemployment which has negative influence on countries revenue and also the tax base of both local and national economy. Favorable economical climate, within Coca Cola there is a great representation of growth in opportunities. This can be in the form of identifying of new markets, meeting of new target groups, increased sales of company new and old products (David & Thomas 2011). Based on the issue of ageing population, it is evident that health services and pension schemes are increasing since young generation do not take position within the organization. This has made Coca-Cola Company incur high cost since the old generation usually asks for sick leave often. These kind of changes within the UK do not only affect Coca-Cola profits in terms of workforce but also in the way customers are known to spend since the older generation get other choices as they do not consume light and sugary beverages. Coca Cola has taken the obligation of defining social responsibility among its staff so as to create a proper learning environment. By so doing the social welfare of individuals within the company and community is improved as well as protecting organizational interests. It is evident that within the company, social factors relates on the decision likely to be implemented that usually affects both shareholder and employee interests (David & Thomas 2011). Low birth rates are known to impact Coca-Cola Company, since the young generations who are known to consume beverage are minimal in numbers. This factor is seen to cause dramatic sales reduction within the company thus loss of confidence within the company business environment which results to focusing widely on the older population. In addition, migration is another social factor that affects the company. Diversity brought about by immigration has shifted customers need. Part 2 Based on the above factors discussed above, it is important that both positive and negative impacts and how they affect the company operation and strategy. Evidently, strategizing acts as a business direction and scope and usually serves long term tenure with the current changing business environment. The outlined social and economic factors have created an opportunity whereby it requires Coca-Cola Company embark on strategy that will improve on their sales through increasing customer demand. Coca Cola have to make adjustments in their favor. This is very important in expanding customers demand by way of focusing on their segmentation strategies. Within the organization, these factors are very important components which highly influences the ability displayed in obtaining required resources for production of goods and services. Coca Cola Company should always be at the fore front of understanding changes in population demographics (David & Thomas 2011). By so doing the company will be able to come up with ideas which are very useful in understanding demand shift. The company should focus on improving their operation especially those aimed at supporting the designed strategies in order to deliver effective services. Increased educational levels have made Coca-Cola company realized the entire need of increasing expectation of its workers thus stabilizing on its job mobility. This is a very important strategy since it increases on the company performance ensuring it maintains its overall position across the globe. Another strategy that is very effective in promoting increased educational level is that of providing workers with opportunities to learn more which can be achieved through training and holding seminars. By so doing, coca-cola company will realized that there are fewer demand operation confronts within the company due to increased educated workforce (David & Thomas 2011). Evidently, different individuals from different ethnical groups pose different lifestyle within organizations which is a very key issue in dealing with social factor. For instance, coca-cola company way of approach to ethical differences has made this firm to reevaluate the true concept of quality. Customers demand shifts according as ethical standards shifts. This implies that a particular customer tends to purchase a certain good or service if that particular firm has a well balanced ethical background (Scholasticus 2010). Coca-cola Company has incorporated the need of establishing stronger marketing and production strategies so as to have a wide respond towards the changes in customers’ expectations. Lastly, social factors forces organizations to acquire a certain social responsibility of improving the standards of a society. Coca-Cola has been in the fore front of supporting various charitable organizations across the globe, holding of various sporting activities and promoting education across its member’s nation. By so doing the company is able to ensure that its customers are familiarized with its product while maintain the company good image. Due to both social and economic factors coca cola have focused on providing effective customer services. Today, the company is employing more people perceived to be skillful as a way of managing proper customer services within the organization. Conclusively, it is important the social and economic factors have really affected the way Coca Cola is been operating .This is either in a positive or negative way they have readjusted their business strategy and operation so that they could remain in this marketing environment. This would not have been possible if there was no analysis made that can enable them to be pro-active rather than reactive. Coca cola should always be at the forefront in understanding and knowing its country wealth. A country wealth is measured by nominal per capital gross domestic product (GDP) which is defined by the value of services and goods produced by each individual in a country. By so doing, an organization such like the Coca-Cola will be able to determine local customer ability in buying imported commodities, cost widely determined by large measures of local markets and a country purchasing power. It is obvious that when a nation is perceived to be wealthy there is a more likelihood of a new product or service being introduced and accepted satisfactorily (Becker & Ulrich 2001). In conclusion, Coca Cola Company should work hand in hand with policies markers to always ensure that the country’s economy is always booming. It is quite evidence that a booming economy result to low unemployment levels, high spending factor and high confidence in an organizational stakeholders. An organization will be termed to be successful if it widely responds to economic conditions and its stakeholders behaviors (Pearce & Robinson 2002). Organizations need to constantly to review on impacts displayed by economical conditions so as to have a larger competitive advantage to their competitors. A true global player always ensures that he is widely verse in his environmental economical conditions across all defined borders through establishing strategies which will promotes its operation in any kind of economical condition. References Becker, B, & Ulrich, D. 2001. The hr Scorecard: Linking people, strategy, and performance. Boston: Harvard Business School Press. David, H & Thomas, L. 2011. Essentials of Strategic Management. Retrieved on 2nd may 2011 from http://www.hrfolks.com/Articles/Strategic HRM/Essentials of Strategic Management.pdf Pan, Y. 1999. "Financial Performance and Survival of Multinational Corporations in China." Strategic Management Journal 20 : 359–374. Pearce, J., & Robinson, R. 2002. Strategic management. Boston: McGraw-Hill. Ronald, M. 2009. External Factors in Business Affecting Success. Retrieved on 2nd May 2011fromhttp://www.associatedcontent.com/article/2155491/external_factors_in_business_affecting_pg4.html?cat=3 Scholasticus, K. 2010. Economic Factors Affecting Business. Retrieved from 30th April 30, 2011 http://www.buzzle.com/articles/economic-factors-affecting-business.html Ward, J. & Peppard, J. 2002. Situation Analysis. In Strategic Planning for information systems. England: John Wiley & Sons Ward, J. & Peppard, J. 2002.The Strategic Framework. In Strategic Planning for information systems.England: John Wiley & Sons. Read More