Coca Cola Strategic Situation: Current and Future - Essay Example

Topic: COCA COLA STRATEGIC SITUATION- CURRENT & FUTURE Insert Insert Insert Contents Executive Summary_________________________________________ 3 Market Share ____________________________________________ 4 Product ____________________________________________4 Brands __________________________________________ 4 Strategic Planning ___________________________________________4 -Formulation and implementation of strategies by C.C_____________ 4 STRATEGIES FOR ALLOCATION OF RESOURCES IN BEST POSSIBLE WAY______________________________________________5 - Strategy to increase sales .____________________________________6 -Strategies for Quality ________________________________________8 Strategies of Earning High Profits _______________________________8 Strategy for Marketing________________________________________9 Strategy for promotional_______________________________________9 Strategies for budgets________________________________________10 Threats & opportunities______________________________________11 Expectations from coming year_______________________________11 Conclusion___________________________________________12 Recommendation______________________________________12 Refrences_______________________________________________13 Executive Summary: Coca Cola, born in Georgia on May 8 1886, has given the best taste in the world. Coca Cola Company is the world's top non alcoholic beverage concentrates & syrups producer, seller, & distributor. The company has a license of more than 400 brands including coffee, juices, water, energy drinks soft drinks etc. In more than 200 countries, the company runs its business successfully. Coca Cola has executed a inclusive business strategy which creates value among their customers. To expand the volume and share of sales of non alcoholic beverages throughout the world, maximization of cash flow, and increase in the profit are the ultimate objectives of their business strategy. Coca Cola has around 16 million clients all over the world. The management concentrates more on enhancing the values for their clientele and aiding their beverages business to grow. Moreover the management is working hard to understand their cliental needs whether the customer is classy retailer in industrial market or a risk owner in rising markets. The basic key or strategy is that they place right product in right market at right time. MARKET SHARE: Coca cola being the leading industry in soft drinks market has market share of 59% of total market share. This indicates that geographically company's market is vast & the management has huge control on its market. As carbonated drinks are the highly productive segment so the company emphasis more in its production and promotion as it brings larger portion of their revenue from overall sales PRODUCTS: The Coca Cola Company currently has different brands in the market worlds wide. The company not only a big manufactures of carbonated drinks but also manufacture juices, water and other drinks. The key for launching any new brand in the market is the culture of the country. MAJOR BRANDS OF COCA COLA Coke Sprite Fanta Diet coke Coke classic Among them sprite & coke are the most flourishing and highest popular brands along with the major brand of Coca Cola and Diet Coke. In many major markets, in order to satisfy different demands of the consumer, the company has manufactured their brands in different packaging sizes. STRATEGIC PLANNING: Strategic Planning is the tool which a management used to considerate it future course of action. In any business strategic planning is the tool of giving the right directions to the management .the management emphasis on how to apply different strategies in order to expand the business, which policies suits best in all the areas of the business and what are the potentials and how to use them. FORMULATION AND IMPLEMENTATION OF STRATEGIES BY COCA COLA: The formulation and implementation of a strategy has various steps. The formulation of strategy means to prepare a strategy to execute different activities of business. The management at the time of strategy formulation considers the targets, strengthens and weaknesses, threats and opportunities available for the company. During the formulation of a policy the management also has to consider how to allocate the resources, how to target foreign markets and how to enter into joint ventures. After strategy formulation, the process of implementation starts. The implementation process includes setting up new objectives, polices, motivating the employees and allocation of resources. The implementation of strategy includes preparation of budgets, redirecting marketing efforts and linking employee's compensation with organization performance. The Coca Cola Company gains tremendous benefits from strategy formulation and implementation. It includes increase in sales, productivity, and profitability. Other benefits Coca Cola Company gained are awareness of threats, better avoidance of problems, increases the productivity of employees and more understanding of competitor's strategies. The Coca Cola Company has also gain a great success as their strategy worked and it makes the company the highest ranking company in soft drinks industry. The company accomplished from its strategy. Its North American business is growing solidly which results in 8% growth in volume which results in international growth of 15%. STRATEGIES TO ALLOCATE RESOURCES IN BEST POSSIBLE WAY BY COCA COLA: Further more every company's strengthens are its recourses and potentials. It is observed that company which utilizes its limited resources in best possible way earns high yield for the company. The resources of the company are its capital, manpower, its assets, and its good repute. The come can be more potential if its resources are enough to meet the targets. Coca enjoys a wide range of its resources. Which includes huge capital structure, good repute in the market, and excellent management team all over the world and a high cash reserves These resources of Coca Cola help the management to attain the desirable targets. All the strategies developed every year for Coca Cola are simply depends upon its available resource and how to allocate them best. The strategies of marketing, pricing and others purely depend upon Coca Cola's resources. Following are the suggested strategies the company has to follow to utilize its resources in a best possible way. The strategies of coca cola companies are as follows: Strategies to increase sales Strategies to improve qualities Strategies to earn high profits. Strategy for marketing Strategy for promotions Strategy for preparation of budgets. STRATEGIES TO INCREASE SALES: TARGET MARKETS: The base of the Coca Cola Company is younger generations so it is their target markets. The motto of the management is to target with youth and energy but their co targets are older generation as well. The factors which effect sales are The sales of the coke are affected by some many factors. But few majors are: Per capita income Competitors Weather. 1. PER CAPITA INCOME: As the inflation rate is increasing day be day, it results in low purchasing power of the people. People spends larger portion of their income on necessities and then spend on luxuries. 2. COMPETITORS: Coke major competitor is PEPSI as there is no other soft drink company other than PEPSI produce large variety of soft drinks, juices and water. 3. WEATHER: Weather is another factor for decline in the sales. It reduces the sales of coke in winters .It is an underdeveloped market and in summer the sales is 60% and in winters its 40%. TARGETS NEEDS TO BE ACHIEVED: The basic theme to run business is to earn maximum profit. Coca cola can earn maximum profits by different ways: The first option is overnight profits. By increasing the sales volume of coke, the profit can be increased overnight. Second option is windfall profits. When consumption expands, the coke can earn extra profits. EXPANDING TARGET MARKETS: In last few years the brand coke has come back into the market aggressively. This could be because of that consumer get choice. The consumer knows the name of another big brand PEPSI. The word COKE is secondly popular word after ok. The consumer now differentiates brands easily. STRATEGIES FOR QUALITY: In order to have a better understanding and connection with the consumers following are the key points which must be observed: 1. When people watch cricket match. 2. Boosting competition moments 3. By fun 4. By commercialization. STRATEGIES OF EARNING HIGH PROFITS: The last strategy the company will adopt to increase its profit its through increase in price. But there are some other strategies as well through which the company earns more profit. These are: 1. Expansion of volume 2. Increasing the options for customers in the same brand 3. Be a part of festivals 1. Expansion of volume: In order to attract the customers, the coke company can increase its volume by expanding its industry. They can do so by advertisement, or by offering different things to the customers 2. Increase the options for customers: In order to retain the interest of the customers, the company can bring new flavors in the same brand. Just like fanta, it has come into market now with different flavors. By offering different flavors and tastes to the consumers, the coke can attract new consumers and can earn more profits. 3. Participate actively in Festivals: By participating in different festivals in different regions the consumption of the coke can be increased. Like wise in Pakistan, coke actively being a part of Basant festival and can earn huge profit from there. MARKETING STRATEGY: The market strategy of coke is globally the same. The strategy is to provide health, wellness, education, and life in all communities all over the world. What people want in their drinks is their identity, their life style, the way they relax and recharge. No matter where their consumers are, whether it's a student in USA enjoying a Cola or a couple in Australia having a juice, or a child in Italy wants fanta or a lady in Japan wants to drink water. Coke strives to be a good neighbor and it is consistently reshaping their business policies to improve the quality of life. PROMOTIONAL STRATEGY: In order to attract the customers, the coke company should get bigger shelves in big departmental store in a stylish way. The freezers and they products of Coca Cola Company should be kept at eye catching position so that customer can catch it up easily. In order to get the share from school & colleges, the coca cola company often gives up sponsor ship to different festivals. The company sales can be boost up in this way. Another promotional technique is billboards and TV commercials. STRATEGY TO PREPARE BUDGET FOR THE UP COMING YEAR: Coca Cola Company determines its yearly budget by the following factors: Sales Volume. Profitability Target Volume. Sales Volume: The first and foremost factor which is important in preparing Budgets is its company sales. If the company has high sales turnover, then they focus more on increasing the production and sales volume. If the company's sales are bad then they focus more on old strategies. Profitability: Another important factor which needs to be determined is its profitability. If the company currently maintaining high yield, then definitely they have to maintain the standard. To earn profit is the first and foremost strategy for the up coming year. Target Volume: Every company has certain targets for the upcoming year for its growth. The management tries to achieve those targets in the given period so that they can focus more on new targets. Same as the Coke company's management tries best to achieve the given targets in the same period so that they can earn more in the proceeding year. THREATS & OPPROTUNITIES: After paying all the government taxes the company has to pay for utilities and to the distributors. As a result the consumer has to pay for tariff because the company profit margin curtailed. In this way the Coca Cola Company can increase its price and profit margins. THREATS FROM COMPETITORS: The major threat to the coke is price threats. Whether price of the coke increases or decreases it effects the sales of the coke. If the price increases the people choose substitution of coke and purchase Pepsi. If its price decreases people get curious about its quality. So it is very important to retain the price of coke. The major threat to the coke is price threats. Whether price of the coke increases or decreases it effects the sales of the coke. If the price increases the people choose substitution of coke and purchase Pepsi. If its price decreases people get curious about its quality. So it is very important to retain the price of coke. EXPECTATIONS FROM COMING YEAR: Their future strategy is very straight forward. The marketing strategy would be: In order to attain profitable growth, the company has to broaden the brand family. Increase the growth of carbonate soft drink. In collaboration with bottling partners, emphasis should be on the growth of system profitability and capabilities. High investments on those areas of market which has more potential yield. In order to satisfy the precious clientele, serve them creativity and efficiently. Enhancement of cost effectiveness and increase production efficiency. Clients are the key persons whom the whole game of business revolves. And the basic key to attract the clients is to spend money on advertisement and reduce the prices. The key strategy of the coca cola company for the upcoming year is the will spend heavily on the advertisement. It takes almost 10% of the upcoming profit. And when we take about this figure globally it would be around & $ 1 billion. In future or the up coming year the Coca Cola Company faces real challenges. The management has to think how much production they really need in the up coming year and how much they have to spend on the advertisement. In order to gain the required amount of profit, the company must possess the following features like: .For the success of company in the up coming year, loyal customers will prove to be assets. The workers should be focus more on the brand rather than promotion campaigns. The workers should have known how to make an advertisement campaign successful. CONCLUSION: After a thorough and detailed analysis we are of the opinion that Coca Cola Company is current strategic position is quiet strong. The strategy for different things including production, marketing and price, promotion are very appropriate which helps Coca Cola to achieve the given targets and brings high yields for its stake holders. Coca Cola company is strong enough financial and strengthening day by day by expanding globally. The net profit of the companies increases every year it means the company liquidity ratio is high as well. The cash flows are generated high because of high net profits. For the upcoming year the company has certain strategic plans which can again brings high yields for the company. The strategic position of company is currently and will be in future very strong. RECOMMENDATIONS: After a detailed analysis we concluded that the company besides its strategy should consider the following recommendation to boost up its sales. Coca Cola Company should try to focus more on provision of infrastructure in the market which ultimately gives benefit to their valuable customer. The marketing team ensures the availability of the products to every remote area of the company. The company's target should be older and babies as well as younger generation. The company should try to produce their product according to the tastes and culture of the specific country. REFRENCES: Bradford. L. Charles. Editor. (2004). Simplified Strategic Planning in Action. Published by Center for Simplified Strategic Planning. Knutson, Joan. (1987). Strategic Planning. Published by Amacom Books. Hamel, Gary & Prahalad,C.K. (1899). Competing for the Future: With a New Preface by the Aurthors. Published by Harvard Business Press. Stack Jack & Burlingham, Bo. (1994). The great game of business. Contributor Bo Burlingham. Published by Currency Doubleday. Goodstein. D. Leonard,Nolan, M. Timothy & Pfeiffer, W.(1992). Applied Strategic Planning: An Introduction. Edition: abridged, illustrated. Published by John Wiley & Sons. The Chronicle of Coca Cola. (2009). http://www.thecoca-colacompany.com/ [24th April 2009] Read More