Coca-Cola and Pepsi SWOT Analysis - Term Paper Example

? Company Analysis The consumption of soft drinks, especially among the youth, has become a popular culture in the contemporary society. The soft drinks in the market vary in taste and color depending on the manufacturer. Indeed, soft drinks control over half of the beverage market. Soft drinks may further de categorized under carbonated drinks and non-carbonated drinks (Daft, 2010). The major players in the soft drinks industry are Coca Cola and Pepsi, which virtually command more than half of the market. In essence, the products from the two companies occupy large shelf space, often covering more space than real food products like meat and dairy. This paper seeks to compare and contrast the elements of business adapted by the two soft drinks giants, including PEST and SWOT analyses (Elsbach, 2006). Additionally, the paper analyzes the business culture, performance, and other organizational elements of the two giant organizations. Coca Cola and Pepsi share a similar history: an insignificant business from a simple idea that grows to a multi-billion dollar company after a century. Currently, Coca Cola sales in more than 160 countries to over 6 billion people speaking more than eighty different languages. Similarly, Pepsi is a recognized brand in the whole world, operating in numerous countries and actively competing with Coca Cola for market share. Both organization use mass-marketing strategies, focusing on the entire market rather than particular segments. Moreover, both companies offer similar product line to the same industry, thus propagating stiff competition. Both companies are very innovative as far as product packaging is concerned. Coca Cola introduced the airtight bottle concept, a major revolution of in the packaging and bottling industry. Similarly, Pepsi followed suit and introduced different sizes of returnable bottles (Fernando, 2006). The concept of non-returnable bottles, frosted bottles, and cans is attributable to both the giants. SWOT Analysis of Coca Cola and Pepsi Strengths Both Pepsi and Coke have long history of the world culture for quite some time. The products from the two companies represent over-romanticism and fun, an image that majority of people take deeply at heart. In addition, the brands are well recognized throughout the world, a major strong point. This enables them to operate on the global market while maintaining a local approach. Independent business people with authority to sell and distribute Coke and Pepsi products operate and own majority of the local bottling companies. Indeed, Pepsi and Coke have among the largest distribution networks in the world, which is among the strengths of the two companies (Fernando, 2006). Weaknesses Similar to any other businesses, Coke and Pepsi have their own weaknesses. For instance, the cola drinks from the two companies have experienced a significant saturation and subsequent decline in the past few years. This is attributable to the increasing awareness on the contents of the drinks. Nowadays, consumers are more attracted to healthy drinks than carbonated soft drinks, as addiction to cola drinks has an adverse effect on the human body (Czinkota, Ronkainen, and Moffett, 2009). Opportunities One of the factors affecting the competitive positions of Pepsi and Coke is brand recognition. About 94% of the world populations are aware of the two brands. Despite the saturation in North America, the two brands have enormous potential to expand and operate in non-North American market. For instance, per head consumption of Coke in India is only six bottles per head compared to 700 bottles in the United States. Therefore, the two companies have potential for expansion (Oppong, 2011). Threats Being the industry leaders, the two companies face significant threats from emerging companies in the industry. Moreover, the companies are facing serious threats of substitute. Consumers are more attracted to healthier drinks, including coffee, tea, milk, hot chocolate, and milk. Nonetheless, the two giants control over 40% of the beverage market (Czinkota, Ronkainen, and Moffett, 2009). The companies already have a diverse market, but the substitutes remain a significant threat. In other words, the consumer purchasing power is a major threat to both Pepsi and Coke. Other important factors affecting the marketing and organizational strategies of the two companies include the legal and political environment. For instance, Coca Cola faced serious opposition from the Indian government concerning the syrup and formula of the products. The company opted to withdraw from the Indian market. Pepsi and Coke are the largest soft drink in the world, though Coke leads the global beverage market share (Fernando, 2006). Political Both Pepsi and Coke are non-alcoholic beverages and thus subject to regulations by the FDA. In essence, the companies must adhere to the regulations set out y the FDA. Nonetheless, the companies operate internationally and thus must observe the various regulations as stipulated by the different regulatory bodies in which they operate. Moreover, the political environment is also very important as political and civil arrests may affect the market through inflation and other economic-related issues (Oppong, 2011). Most importantly, the companies must operate in accordance with the policies set by the countries. Economic Similar to all other business ventures, both Coke and Pepsi suffer from global economic downturns, including the recent Euro debt crisis and the Great Recession of 2009. Economic crises result to significant restructuring of markets and sales. Moreover, they result to diminishing profits and downsizing. Financial problems are the most influential aspect that affects the business, regardless the industry of operation. It goes without saying how damaging the financial crisis of 2009 was to the business world (Daft, 2010). Social Both Pepsi and Coke sell non-alcoholic products. Nonetheless, their products must remain in line with the thousands of different cultures and beliefs in the world. Moreover, the two companies must communicate their image as global brands, without emphasizing or discriminating against any particular culture. The trickiest part is designing marketing promotions with limited social implications. For instance, the companies must consider the content of their promotional advertisement (Fernando, 2006). Technological The world is advancing technologically, thus all organizations must integrate technology into their marketing strategies. The most notable current trend used by the two companies is the use of social networks to advertise their products and reach out a considerable market of the soft drink industry. Indeed, organizations perceive technology as an element contributing to competitive advantage (Daft, 2010). Despite the numerous similarities between Pepsi and Coca Cola, they have significant differences in communication styles, management, financial performance, and the entire operation framework. The two companies have different strategies for countering the effects of external environment. These external factors include changing customer values and attitudes, economic fluctuations, demographic patterns (Oppong, 2011). References Czinkota, M,. Ronkainen, I., and Moffett, M. (2009). Fundamentals of International Business. New York: Wessex. Daft, R. (2010). Management. Mason, OH: South-Western Cengage Learning. Elsbach, K. (2006). Organizational Perception Management. Abingdon: Lawrence Erlbaum Associates. Fernando, A. (2006). Business Ethics and Corporate Governance. New Delhi: Dorling Kindersley. Oppong, S. (2011). Organizational Management. Berlin: VDM Verlag Dr. Mueller e.K. Read More