Internal and External Environment of Coca-Cola Company - Essay Example

Coca-Cola Company is a company that produces and sells soft drinks to its s. It's the largest manufacturer and marketer of the non-alcoholic drinks concentrates and syrups in the world. Its headquarters are in Atlanta Georgia. The Chief Executive Officer is known as Mr. Muhtar Kent. The stocks of the company are listed in the New York Stock Exchange .The Company is rated as one of the largest companies in United States of America. It has been in operation for the last 130 years producing over 400 different kinds of brands for its customers. The products range from diet, caffeine free to the vanilla -flavored type of products. The mission of the company has been that of refreshing the body, mind and spirit; to inspire the moments of optimisms through the brands and actions of the employees and also to create value through making a difference whenever the persons are involved in their business activities. 1.The internal and external environment of the coca cola company The internal factors that have been affecting the operations of the company include; research and development, operations and logistics, human resources and information systems. The management of the company has constantly been involved in carrying out research work that is aimed at developing unique and innovative products into the market .The company has over 2600 products but it intends to produce more products to meet the needs of the customers within a specified period of time. The products that are being researched on are those that have lower calories and are healthier for the consumption by human beings .For instance the coke diet that consists of vitamins is suitable for diabetics due its low levels of sugar. The operations and logistics of the company involve the chain of distribution to ensure that their products reach their designated customers. It involves the production of syrup concentrates that it packs and later on sells to the franchised bottling plants such as the Coca Cola enterprises. The distributors later on distribute the products to well known manufacturing companies that combine the syrup with the carbonated water to make products which are availed to the customers within the stipulated period of time. The distributors then deliver the product to retail stores, vending machines companies and restaurants as well as the food service providers. The importance of undertaking this task is to ensure that the individual distributors get the right ingredients of the final product that can suit the needs of the customers and also suit to the tastes and preferences of the customers. The employees of the company are charged with different responsibilities of ensuring that the company achieves its goals and objectives so as to enhance its growth and development. The company has employed a human resource strategy that aims at motivating, maintaining and also attracting the best employees. The strategy of maintaining and retaining the employee's enables it to remain stable and to continue its operations into the foreseeable future. The management has realized that labor turnover can be very expensive for the company in terms of training thus they try to motivate them. It has been noted in last few years there has been a high rate of turnover and improper lines of communication that have contributed to a decline in the sales revenue of the organization. The employees have found it difficult to air their views about how the operations of the company should be carried out and that has contributed to disagreements on how the operations of the company should be undertaken .Some mechanisms have been put in place that are aimed at eliminating the communication differences that have constantly been eminent within the organizations. The human resource department has continued to perform employees' performance appraisals and evaluations which are undertaken three times a year for each of the employees so as to retain and maintaining and reduce the rate of labor turnover. The managers and the employees constantly engage in dialogue to discuss the issues that may be affecting them in order to promote effective delivery of services to the customers and that employees perform at their most efficient levels. The interrelationship between the internal and the external factors of the major environments of the organization is that the internal factors are not mostly affected as the external factors since external factors determine how well the companies goals and objectives will be achieved within a stipulated period of time. An organization cannot perform its activities effectively if it doesn't integrate both the internal and external factors since they enhance the growth and development of an organization. 2. The various concepts of strategy their formulations and implementation in both the profit and non- profit making organizations The profit and non-profit making organizations face similar problems and challenges therefore different measures should be applied in order to ensure that the company attains its goals and objectives that have been set and thereafter foster growth. These two types of organizations consist of visions that are developed on the basis of their missions and goals and the population in which they offer their services Strategic management is an approach that covers different issues that relate to the development and establishment of the organization. Such issues include development of strategic management plans and the integration into the organization with the issues such as operative marketing, finance, personnel and marketing functions. Strategic management refers to the process of conducting, implementing and evaluating the decisions that can enable an organization to achieve its goals and objectives within a stipulated period of time. It also involves the activity of evaluating, controlling the activities of a business, assessing the activities of its competitors and setting out the goals and objectives of the organizations. The major process in strategic management involves strategic formulation, implementation and evaluation. In strategic formulation the factors that are addressed involve performing the situation analysis for an organization, evaluating the organizations activities and carrying out a competitors' analysis in order to determine how well an organization can achieve its goals and objectives within a stipulated period of time. The macro and micro environmental factors are also addressed at this stage since they influence how the activities of a company should be undertaken .The establishment of the objectives that are parallel to the timeline of an organization are also addressed in this process. The organization's mission statement, vision, overall corporate objectives, corporate culture and the strategic business units are carried and by the management of the organizations at this stage (Cranfield University, 2009) Strategy implementation is the process that involves allocating and managing the organizations resources that enable the organization to meet its objectives within the stipulated period of time. The other issues that are addressed here involve establishing a chain of command, a structure of an organization and implementing the specific programs that lead to increasing the sales revenue within an organization. The other process in strategy management involves; strategy evaluation. This process is carried out through measuring how effective an organizations strategy is .The SWOT analysis activity is carried out and it involves determining the strengths and weakneses, opportunities and threats that may either hinder a company from achieving its goals or determining those activities that serve as driving forces towards the growth of the organization. In this analysis it serves to minimize on the threats and risks posed to the organization while maximizing on the opportunities and strengths. Successful implementation of strategies within an organization leads to increased returns on the investments done for an organization. For these issues to be accomplished the company should establish clear lines of communication and discipline on the part of the employees in order to undertake the tasks that have been assigned to the employees. Coca cola company's major strategy has been to "think local act local strategy" that has enabled the management of the company to be focused on enhancing growth and development within their organizations. The other form of strategy that has been implemented within the organization involves that of producing different kinds of products that can meet the needs and preferences of the people within a stipulated period of time. The reasons why it has diversified its investments is that the management has noted that one product can not generate greater returns just like the other product in different parts of the world therefore the reason for diversifying their rate of investment. The other reason is that of having many different products that meet the tastes and preferences of the customers based on age differences, weather and seasons of a country. 3. Organizations resources using strategic models through identifying different ratios and recommendations of the strategic options that are supportable. SWOT Analysis strategic model This is a tool that is used by the managers in viewing its internal and external environment. It stands for the strengths, wekneses, threats and opportunities of an organization. The tool helps an organization in determining its current condition and position within the industry as compared to its competitors. The strengths and weaknesses are the internal factors that influence the way the operations of an organization should be carried out while the opportunities and threats are the external factors that influence the way operations of an organization should be conducted within a specified period of time.A good plan should be prepared in order to ensure that activities of an organization are undertaken in the right way. In most cases the internal factors do not necessarily change but the external factors change because these are factors that are beyond the control of the company (Robert, and Thunderbird, 2000). Strengths refer to the advantages that an organization has over that of its competitors. It also said to be factor that enables a company to have a higher and greater competitive advantage over that of its competitors in the industry. The strengths of Coca-Cola Company are based on their strong advertising campaign that has enabled it to have a wider customer base and to increase the sale revenue for their organization. It also consists of trademarks and catchy slogans that are recognized worldwide by its customers. The packaging of the companys products are in different forms and therefore the company can deliver the products as per the needs and wants of their customers within a stipulated period of time and also depending on the region and age of their targeted customers . The company's high caffeine level and distinctive taste as well as brand image has contributed to the robust growth and stability of the thus enabling the company to achieve its goals and objectives over time. Weaknesses are the internal factors that hinder an organization from accomplishing its objectives. Examples of weaknesses within an organization involves; lack of clear vision on how to carry out activities within an organization, use of obsolete facilities that can process goods and services that cannot meet the needs of their customers within a stipulated period of time. It also involves a poor track record of performance of an organization. Coca cola company weaknesses have led to the decline of its profits due to competition from competitors such as Pepsi Company (Robert, and Thunderbird, 2000). An opportunity refers to the factors that shape and basically linked to external environment that can lead to increase of output of an organization. It deals with utilizing the underutilized resources and making proper use of it. Examples of opportunities involve market shares, financial strengths, having skilled personnel, having low cost of production and having favorable economies of scale. The major opportunities of the Coca-Cola company involves its expansion program into other countries in the developing world to sell its products .It has been competing with the manufacturers of lucozade to produce healthy drinks for its customers. Threats are the factors that impede an organization from achieving its objectives .The examples of threats to an organization involves; firms competitors,government,unions,stakeholders as well as people within the community who may put pressure on people to carry out activities that are not within their scope and line of duty. The example of these factors involves issues such as a business being vulnerable to recession and business cycles, having adverse demographic change, having a low bargaining power over that of their competitors or the suppliers of goods and services to an organization. The Coca-Cola Company has been facing major threats from the Middle East countries and thus leading to a decline on its sales since the customers do not purchase their brands in the United States. There has been another threat whereby there is entry of new products into the market that has led to the decline in the performance of the activities of the organization (Robert, and Thunderbird, 2000). PESTEL Analysis refers to the tool that is used by the management of the organizations in understanding the external factors that influence the way operations of an organization should be carried out. It consists of factors such as social, technological, legal, and environmental factor that influence the operations of an organization. Political factor involves issues that relate to the regulation of the operations of n organization. The government plays a crucial role in ensuring that the manufacturing company adheres to the rule and regulation that pertain to processing and manufacturing of products within their organizations. For instance within the political environment the issues that are addressed involves competitiveness of a product, pricing pressures as well as its ability to gain or maintain its shares in the global market (Cary forth, and Neild, 2004). Economic factors such as recession and depression affect the performance of an organization. In cases where there is recession the rate of return of an organization is low.A 40 year rate of interest was issued to the company so as to reduce its cost of production and this contributed to high sales revenue and reduced the costs of operating their business .Social analysis is another factor that involves taking into account issue that relate to the welfare of its citizens.Cocacola company has been in a position to market its products and been in a position to convince its customers to consume their healthy products. It has also been involved in activities that are community based so as to help the less privileged in the society. Technological factors are factors contribute to product innovation and development. The introduction of the internet has enabled the management of the company to advertise its products hence to increase its sales revenue. Due to marketing on the internet they have been able to reach a wider market and also reduce their costs of advertisement (Cary forth, and Neild, 2004). A critical success factor is another strategic model that assists the management of the organizations in identifying the areas in which their businesses should be undertaken. It enables an organization in establishing the best mechanisms that can succeed in its operations and attaining its objectives. The management of the company has played a crucial role in ensuring that the people within the communities are in a position to read books at home, schools and the community in order to reduce the rate of illiteracy within their organizations is reduced significantly. Other critical f actors been undertaken within the organization involve scenario planning. This is a factor that involves building of different plausible views that can determine how well the activities of an organization can be achieved within a specified period of time. The porters' five forces are the factors that influence the way the markets and the business are developed.These factors involves; potential entrants into a business, existing competitors, buyers, suppliers and the alternatives goods and services that are availed into the market for the consumers. The ratio refers to the expression that is used to compare the characteristics and quantities of two items. The financial ratios are the ratios that are used to determine the firms' performance and its financial position. They are calculated through using the information that is found in the financial statements. The management of organizations analyzes the trends and compares its finances to other firms in the organization. The financial ratios are classified into; liquidity, asset turnover, financial leverage, profitability and the dividend policy ratios. Liquidity ratios are the ratios that are used to provide information that can determine how a company can be in position to meet its shorter financial obligations. They are classified into current ratio and quick ratio. The asset turnover ratio is a ratio that shows how well a firm utilizes its assets in order to generate its output. The management o the company has effectively utilized its resources and has lead to increased output for their organization. Financial leverage ratio is another ratio that involves measuring the amount of debt that is utilized within an organization to achieve its objectives within a stipulated period of time. Coca-Cola has had a strong financial base due to its infrastructure therefore has been borrowing money from financial institutions to run the operations of the company in the right way. Profitability ratios refer to the ratios that determine how a firm can be in a position to generate profits. They are classified into gross profit margin, return on assets and return on the equity. Coca Cola Company recorded commendable improvement in its performance through having an increase its profits. For instance it's operating profit increased by 15% over 2006 to 2007 financial year while the net profit also increased by 17.7 % over the 2006 to 2007 financial years. Dividend policy ratios are the ratios that are used to determine how a successful a firm is and how the firm can share some of its profits to the shareholders who are the owners of the firm. 4 .The importance of the power relationships, culture and the concept of culture in the development of the business policies. The workplaces are the places where the power relations are practiced and the workers are faced by different asymmetrical relations .The workers consists of different cultural ,religious and ethical backgrounds that leads to diversity at the workplace. These differences if not well handled can lead to poor performance amongst the employees thus affecting the delivery of products to the customers. Culture refers to a community's way off life. A culture of a person or a community is identified through determining its economic, moral, religious, legal and aesthetic characteristics and activities. Business policies refer to the rules that govern the way operations of an organization should be undertaken by a group of people within the stores. The people within the store define the businesses proceses, industry practices, scope and the characteristics that define the operations of their organizations.They are the central stores and the reference templates that are allowed and practiced by the employees of an organization. The parameters that are used to influence the business policy practices involves the contract terms and conditions that are in reference to the business policy, business policy definitions and the business policy command itself. The business policies of the Coca cola company involves the signing agreements with other interested parties .For example in Kenya the Coca cola has signed contracts with the Kenyan Football teams concerning sponsoring the 2016 Africa National Cup Final's that will be held in the country's football stadiums. The aim of this objective is to ensure that the Kenyan team gets a competitive game and that the company will enable them to win in all events that will be held within the stadiums. It has been involved in a number of football tournaments where it has sponsored various football teams in events that have contributed to the fame of the game in the world. The advantage of sponsoring the football events in different countries is that it will be in a position to brand its products and also market its name in the major sections of the stadiums such as the main stadium, indoor arena, handball court and the aquatic complex sections as a global brand. It will also be in a position to advertise its products, supply its beverages to the customers at a convenient time and place as well as being in a position to sell some of tickets to the audience which will turn increase in sales revenue for the organization. The other business policies that have been implemented within the organization involve ensuring that the activities of the organization are conducted in the right way. The power relations within the Coca-Cola company has enabled it's to pull its resources together in order to increase the sales revenue for their organizations. It has also reduced the rate of labor turnover that would have reduced its rate of productivity. The culture of the company of producing goods and services that are commensurate to the needs of the customers has made the company's products to be recognized all over the world by their customers. The power relations and culture has contributed to proper implementation of business policies that are beneficial for their organizations. . References ABC-CLIO. (2009) Strategic Management in Non-Profit Organizations. An Administrator's Handbook .Website retrieved on April 30 2009. http://209.85.129.132/searchq=cache:0CDh22mNwX0J:www.greenwood.com/catalog/HSJ%25252f.aspx+concepts+of+strategy,+their+formulation+and+their+implementation+in+profit-making+and+non+profit-making+organisation&cd=3&hl=en&ct=clnk&gl=ke Cary forth, C and Neild, C (2004) BTEC First Business. United States of America: Heinemann. Cranfield University. (2009) Review Your Business Performance, Models for Your Strategic Analysis. Website retrieved on April 30 2009. 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Website retrieved on April 30 2009 http://72.14.235.132/searchq=cache:xUnCBE-pvPQJ:www.netmba.com/finance/financial/ratios/+what+are+ratios&cd=6&hl=en&ct=clnk&gl=ke Kenyan Premier League. (2008) Sport Five Brim with Happy Experience at Coca Cola Stadium Posted Monday, March 30, 2009 at 15: 19 .Website retrieved on April 30 2009. Micheni, M. (2007) Coca-Cola Braves Global Criticism To Support Olympics Torch Relay .Nation Media Group. Website retrieved on April 30 2009. Robert, E and Thunderbird, G.( 2000) Thunderbird On Global Business Strategy. United States of America: John Wiley and Sons, Read More