Coca-Cola Strategic Management - Essay Example

Coca-Cola Strategic Management Analysis s Submitted by s: Introduction As a global leader, Coca Cola produces numerous brands of soft drinks and functional sport drinks along with a variety of other products among them the famous Coke, which is one of its conventional brands that continues to make significant contributions to the company’s avenues and profitability (Guinness, 2011, p. 164). Through the belief that demand from the consumers drives all the activities of the company, the company has employed a mass marketing strategy along with an competent supply chain to ensure the delivery of this strategic promise. The Coca Cola Company along with its bottling companies form a formidable production and distribution system in the globe with the system being designed in such a manner that fosters dedication in the employees so that they can consider the objectives of the company as their main priority. This company’s products are considered highly among consumers especially those who do not take alcoholic beverages all over the globe for more than a century since the company was established. One of the main goals of Coca-Cola is increasing the value of its market share, which was initially gained through operations with associated while seeking to satisfy and increase the value of the customers while at the same time safeguarding the assets of the company and minimizing risks to the business. Market environment analysis PESTEL analysis of Coca-Cola Company Political A big international company like Coca-Cola has to adhere to stringent regulations and laws not only in the UK but also all over the globe where it has a considerable influence on the international market (Gillespie and Hennessey, 2011, p. 175). Coca-Cola as a company has to be aware of numerous laws including VAT and corporation taxes, ensure that employees are compensated for their services all over the globe and abide by the international laws of all the nations it operates in including waste disposal and carbon tax. Furthermore, in most countries, the law forbids companies from having monopolies of power in the market sectors within which they operate, and this has been a pressing issue for the Coca-Cola Company. In 2000, a federal judge in the US dismissed an antitrust court case that had been filed by PepsiCo, which accused Coca-Cola of market monopoly of soft drinks that were fountain-dispensed in the US. Environmental Coca-Cola has continued to make sustained efforts towards meeting the demands of its consumers in order to become a brand that is friendly to the environment. Through the development of a Seven-Point list of objectives together with the world wide fund for nature that are supposed to be achieved by 2020, the company is allowing the brand to be considered as being in touch with the expectations of its customers from an ethical perspective. The seven-point plan varies from making bottles, cardboard and cans become more recyclable while addressing aspects like decrease in carbon emissions so that it can have a less adverse impact on the environmental wellbeing of animals and the environment that surrounds them through its production line. The company makes its environmental endeavours abundantly clear and accessible for its customers to understand through dedicating a detailed section of its website to its greener approach and creating awareness of its impact on the environment. This creates a market opportunity for Coca-Cola to establish itself as a brand that has the interests of the planet in mind and therefore become attractive to the consumers who have concerns about the environment (Ferrell, 2014, p. 56). Nonetheless, it can be considered that the regardless of these attempts to be viewed as environmentally conscious, the reputation of Coca-Cola among the customers and the manner in which it are viewed by the media creates a negative brand in regards to its effect on the environment. The problems that Coca-Cola has faced in India indicating a negative relationship with the environment are clear since the company has an adverse impact on the wellbeing of the local and underdeveloped community in India especially peasant farmers through its production methods. Coca-Cola depends predominantly on the consumption of water as its main ingredient and this is polluting and at the same time wasteful. The threats associated with the brand through these problems in India are increasing concerns all over the globe. Rivals and competitors can use dynamics like these as a means of threatening the success of the company. Social The key social changes that are likely to affect Coca-Cola in the UK include shifting tastes and income of the customers along with increasing health concerns, influence of the celebrities and technological advancements that affect the manner in which the consumers relate to brands like Coca-Cola (Rogan and Rogan, 2011, p. 143). The identified social factors drive businesses in the soft drink industry to diversify their variety of products in order to cater for a broader and more assorted demographic. For instance, Coca-Cola is able to achieve differentiation through the production of Coke Zero, the original Coke as well as Coke Diet that appeals to the customers who consider themselves health conscious and seek low calories alternatives. Economic The economic aspects that affect Coca-Cola are mainly associated with China since a large chunk of the company’s operations is located there. Therefore, in the event that the economy of China deteriorates, then the Coca-Cola Company would be greatly affected. The company is a big international business that has operations in the entire globe making it a source of employment for numerous people. For instance, it may be concluded that every job at Coca-Cola is able to create ten more jobs in other industries particularly in terms of supply, transport and retail. This makes it clear that Coca-Cola has an enormous effect globally as it influences the whole world through its advertisements and its assorted variety of communications. This has created numerous job opportunities in the developing nations while at the same time providing a social network for nations since the company donates one percent of its operating profits to social initiatives (Ryan and Jones, 2011, p. 43). Further, the company invests about forty million Euros with the aim of securing competitiveness in Europe and Austria as a long-term business location. Technology The Coca-Cola Company maximizes the benefit of technology with the high degree of technology in the company being used to maintain freshness and relevance of the brand. Its advertising approaches continually evolve depending on seasons, situations and the targeted market segments in order to suit the exact communities they operate in (Brigham and Ehrhardt, 2014, p. 11). Establishment and advancement of social networking like Twitter and Facebook has made it simpler for the company to maintain a close connection with its consumers and attain more control over the manner in which the public perceives Coca Cola’s products. The company also reaches customers directly through promotions. As a consequence of development in technology, Coca-Cola has the capacity to meet the needs of its market segment that has environmental awareness and in 2009; Coca-Cola started the use of greener bottles and packaging for its products. Coca-Cola also employed technological advancements in designing its free style dispensers that enable its consumers to create their own drinks while providing the company with the market research data that will be instrumental in developing new products. Legal The key legal factors that affect Coca-Cola are the changes in laws and regulations in the UK and global soft drinks market as well as different pressure groups that lobby for ethically appropriate and environmentally friendly practices (Van Bael, 2005, p. 897). For instance, activists have been seeking more government control over the labelling of products as well as advertising standards while stating that the company should be legally responsible for displaying the ingredients of its products in its packaging in a clear and honest manner. Resources and capabilities analysis Coca Cola’s resources can be categorized into three classes: human, tangible and intangible and so that an overview of the company’s resources and strategies can be achieved, it is important to dwell on these three classifications of resources. Human resource The engagement of workers is a significant aspect to Coca-Cola as the success of the company is dependent on the motivation of its employees. Thus, the company usually organizes tests that seek to know the level of satisfaction and engagement of the workers with the working environment after which is comes up with practical solutions in case the workers are not satisfied. Moreover, it also endeavours to develop an ideal workplace through providing amenities such as gyms, giving free fruits as well as allowing flexible working hours in addition to the training and development programs it provides. Coca-Cola motivates its talented staff through paying them attractive salaries as well as developing new and exciting job opportunities for the employees being recruited into the company. Coca-Cola is a company with global operations with employees who originate from various nations with differing socio-economic backgrounds and diverse cultures. Hence, the company recruited human resource personnel from all over the world to manage employees in their respective countries. In addition, the company organizes international training courses in order to develop an international management team and at the same time find talent managers who will be recruited into senior positions. Tangible resources The tangible resources include financial and physical resources of the Coca-Cola Company and the company earned a profit of more than eight billion dollars with the market value being estimated as almost one hundred and sixty billion dollars in 2013 (Peterson Drake and Fabozzi, 2012). The financial resources of the Coca-Cola Company remain strong and sustainable and it uses these financial resources to invest billions in its key markets including India, Russia, China as well as a few potential markets like Vietnam. Investment funds are utilized in building the brand, developing close partnerships and infrastructure with the aim of expanding distribution networks. Coca Cola’s state of the art head office is divided into four sections that include sales, marketing, Human Resource and ICT. Every department is provided with the suitable facilities that make the work of the department smooth and effective. Furthermore, the company’s factory is comprised of two sections namely ICT and production where the ICT department solely checks the quality of the products that are produced in the department where the company has invested in modern machinery. Intangible resources Coca Cola’s reputations along with its technical resources that are comprised of modern technologies are considered as the company’s intangible resources. All the stages in the production process is almost completely automated and the company has an ability of accelerating the production process in order to keep the quality of the product stable and securing a working environment. Furthermore, Coca-Cola continues expanding its fleet of hybrid engine trucks that assists the company to save on fuel costs and at the same time decrease the harmful emissions that may pollute the environment. The Plant Bottle, which is its greenest bottle, was researched and produced by Coca-Cola, as an eco-friendly solution with high degree of decomposition and capacity to be recycled. In regards to reputation, the company has been in existence for more than a century and has developed to be among the three most valuable brands in the globe. Additionally, its products remain popular and broadly consumed in almost all the countries on earth making Coke the most consumed soft-drink on earth with ninety four percent of the world’s population being familiar with the Coca-Cola logo. Coca Cola’s capabilities Through its financial strengths, Coca-Cola can develop a large-scale market in most of the nations in the globe through using the money to develop infrastructure and training staff in the development of its distribution networks (Browne, 2001, p. 216). The financial strengths of the company has allowed it to bear losses for a prolonged time through investments in potential markets, for instance, Coca-Cola has continued to post losses for more than a decade in Vietnam. Nonetheless, the company announced an additional investment of three hundred million dollars in Vietnam for three years begin 2013. In addition, it can utilize its financial resources towards the implementation of various strategies through television advertisements, magazines, newspapers and posters with the advertising budget of the company in 2011 surpassing three billion dollars. Further, Coca-Cola is associated with efficient organizational capabilities as it can run more than one hundred thousand employees while offering the accumulation of more than five hundred soft drink brands in almost two hundred nations all over the world. Coca Cola’s products are stocked in majority of the restaurants, cinemas and supermarkets among other places as a demonstration of its ability to shorten the distance between its commodities and its customers. The company is among the three most valuable brands in the world and boasts of a brand reputation that has been built for more than one hundred years (De Kluyver, 2010, p. 108). Its brand value can be viewed as the company’s main competency and this is what attracts most of its loyal customers. This means that the company is able to earn stable profits from the loyal customers that can be used for the development of the company. In addition, the brand name awareness of the company is higher compared to that of its competitors, as customers usually prefer familiar products. Hence, founded in its reputation, Coca-Cola has been able to develop a clear competitive advantage in the beverage industry. Coca-Cola creates positive and free working environments that allow workers to share ideas along with honest comments and this assists it to come up with new business ideas and talents. Conversely, the honest feedbacks of Coca Cola’s workers assist the company to ensure that any problems are solved allowing Coca-Cola to be more creative and deal with issues early. Besides, the company holds a huge number of talented workers all over the world since it employs its strategy of talent localization in an effective manner. Every time the company enters a new market, it recruits numerous local people so that it can be able to increase its capacity to understand the new markets making the capability to penetrate newer markets extraordinarily fast. Strategic fit analysis Coca Cola remains one of the largest companies in the globe with operations in most of the countries and this allows it to work together with other entities towards the development of advanced joint business models that will enable it to continue its exploration and participation in new lines of beverage. Through the development of partnerships, the company can have shared incentives that will enable capturing of significant growth opportunities in fast growing and under-developed markets. This will assist the company to develop and expand its beverage portfolio through strategic acquisitions and innovation as well as agreements that will acquire more companies. Through its broad and powerful portfolio of beverages that it an offer to its customers, Coca-Cola continues to make explorations into promising beverage categories with the aim of capturing growth in the various markets it operates. In order to get closer to the customers and assist them to satisfy their ever-increasing needs, the company can create a one-stop shop for its retailers through offering complete beverage portfolios that include carbonated drinks, energy drinks and bottled water among other products. Coca Cola as a company, persistently seeks to deepen its connections with its customers and the company works in close collaboration with its largest clients to foster stronger and multi-faceted relationships. It should seek to tailor its broad portfolio of products for various markets founded on the socio-economic demographics of the local markets as well as appropriate consumption occasions and distinctive store characteristics. It should further collaborate with its customers on various fronts including management of knowledge and development capacity to make sure that trips by the shoppers to where its commodities retail count. So that it can provide more specialized and dynamic marketing of its products, it should adopt an approach that categorizes markets while developing targeted efforts towards every customer segment and channel of distribution. Its key channels are the retailers, supermarkets and other distributors where the existence of these channels involves a detailed analysis of the buying patterns and predilections of various groups of consumers in every location or distribution channel. It should additionally implement a multi-segmentation strategy in most of its markets that will entail the implementing different product, package and price portfolios based on market clusters or groups. These clusters are identified on the basis of occasions for consumption, competitive intensity as well as social economic levels instead of mere distribution channels. Coca-Cola has been transforming its commercial models to focus on the value potentials of its customers through value-based approaches to segmentation with the aim of capturing the potential of the industry. It constantly evaluates its distribution models so that it can fit with the local dynamic forces of the marketplace and consider the manner in which it goes to the market, identifying various needs of its customers while seeking efficient distribution models. Coca-Cola uses a number of sales and distribution models subject to geographic and market conditions as well as the profiles of the customer base. Through the pre-sale system, it can separate the sales and delivery functions allowing trucks to be loaded with various products that have been offered previously by retailers and thus increasing efficiency of distribution and sales. On the other hand, the conventional truck route system is an approach whereby the individual responsible for the delivery makes instantaneous sales from the inventory that is carried in the truck. The hybrid system is where the same truck transports the products that are available for immediate sale as well as those that had been ordered via the pre-sale approach. Other approaches to distribution include the telemarketing approach as well as sales via third party wholesalers. Bibliography Brigham, E. and Ehrhardt, M. 2014, Financial management, South-Western, Mason, Ohio. Browne, D. 2001, Heinemann business studies for AS level, Heinemann, Oxford. De Kluyver, C. 2010, Fundamentals of global strategy, Business Expert Press, [New York, N.Y.] (222 East 46th Street, New York, NY 10017). Ferrell, O. 2014, Marketing. South Western Cengage Learning, Australia ; Mason, OH. Gillespie, K. and Hennessey, H. 2011, Global marketing, South-Western Cengage Learning, Australia. 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