International Organisation the Coca-Cola Company - Essay Example

INTERNATIONAL ORGANISATION THE COCA-COLA COMPANY Submitted Submitted By: Candi Number: 4th August 2008 INTRODUCTION TO THE COCA-COLA COMPANY: Contemporary corporate industry contains countless business units in its vast fold; some of the organisations in the corporate world are working as limited local or regional trade unit, while few of the companies serve as multinational organisations, which have expanded their trade in almost all parts and regions of the globe at large. These organisations include Microsoft Corporation, Honda Car, Marlboro Tobaccos, Virgin Atlantic, Nokia, Proctor & Gambles, Red Hat, Hitachi Luminars and others. The mighty Coca-Cola Company is also among the multinational global business organisations. The Coca-Cola is one of the most celebrated brands among all the world-class products and industries. The title, trademark and logo of this giant organisation are thought to be the symbol of reliance and confidence. Introduced in May 1886 in Atlanta, Georgia, Coca-Cola company has become very much popular among the people of various age groups and socioeconomic classes all over the globe. Right now, it is at the top in respect of sales among the soft drinks, mineral water and food products of the globe. During the last many decades, the organisation has been the sponsor of mega events and grand ceremonies including Olympic Games, World Cups, G-8 conferences and other domestic, national and international ceremonies. Advantages of being an International Organisation: An international organisation makes its plans and devises its strategy for the people of the whole world without discrimination; so it always maintains a universal thoughtfulness and a global vision while manufacturing and selling its products. The products of a multinational organisation are welcomed and well-known at divergent parts of the world, which enhances its popularity and unconditionally supports the company in respect of its sales volume and sound reputation. A global product always paves the way towards innovative ideas in manufacturing and marketing, which is also beneficial for the local brands to improve their quality and present their products to the customers in a refined way. An international brand contains its offices, outlets and factories everywhere on the Earth, where it hires the services of the people as its employees in every country, which is highly supportive in respect of introducing new products and presenting novel ideas in a refined way.. The multinational brand has wide range of its consumers, which not only results in the manufacturing of new tastes, but the brilliant brains existing everywhere as the employees of the company do not let the rival brands beat their company. A multinational organisation can seek the support from different regions at the hour of the need. For example, if the product undergoes failure in one region, the losses can be covered from other markets within international arena. Moreover, it can obtain the orders of great volume particularly during the mega events and conferences, while a local company is limited merely to its local customers. Disadvantages of being an International Organisation: An international organisation contains the highest number of the customers, and it becomes very hard to keep the demanding people of divergent areas satisfied and contented. The international company has to keep all factors in mind while determining its sales policies on the one hand, and introducing a new product on the other. Since an international brand wins the hearts of millions of people around the world, it is also criticised and censured on even trivial mistake or slight error. An international brand has to make separate policies for its product according to the environment as well as business culture of the country, where it aims to sell the product. Sometimes, one single event can jeopardise the very sale of an international company simultaneously in many states of the world. Similarly, change in governments does not affect the soft drink market to a significant way, yet overall critical political situation may disturb the commercial activities at large. MODEL APPLIED FOR EXTERNAL ENVIRONMENT ANALYSIS: External environment refers to the analysis of strengths, weaknesses, opportunities and threats faced by the company (SWOT Analysis), as well as the factors that serve as the supportive or hurdles on the way of the company (PESTLE Analysis). The model applied for the analysis of the external environment in the present paper is PESTLE Analyses, which is as under: PESTLE ANALYSIS OF COCA-COLA Political Analysis: Political factors including wars, invasions, unsteady and rapidly changing prices of communication resources, commodities and instability of governments leave negative affect in the expansion of an organisation. The same is the case with the Coke, which had to undergo a lot during wars and aggressions and its sale got a crucial set back. Coca-Cola witnesses almost the same situation in Afghanistan and Iraq in the contemporary times. The political policies of the motherland of this soft drink terribly reduced its sale in the war afflicted zones. It is estimated that Coca-Cola sales in Germany dropped 16 percent from the similar period last year and the company is writing off $392 million to reflect impaired business assets. Economic Analysis: Economic factors also encompass both optimistic and pessimistic approaches on the promotion of a product; the same is the case with Coca-Cola. Economic factors include increase in interest rate, currency exchange rate as well as inflation rate may alter the sales volume of Coca-Cola. During the 1970s, rate of inflation increased to a dangerous extent in England and it also influenced the soft drink industry. Similarly, decline of US economy and its currency left indelible impacts on the sales volume of Coca-Cola too. The Coca Cola underwent low-cost competition in comparison with the cocktails of other countries; consequently, it had to revise its price in different states without making any compromise on its quality because it was the matter of survival in the situation of perfect competition. Social Analysis: Social factors are perhaps the most dominating ones to decide acceptance or rejection of merchandise. People are deeply concerned regarding their health and consult medical specialists even for the use of some specific commodity especially in case of edibles. Soft drinks have long been suspected of leading to lower calcium level and higher phosphate levels in the blood. When phosphate levels are high and calcium levels are low, calcium is pulled out of the bones. The phosphate content of soft drinks like Coca-Cola and Pepsi is very high, and they contain virtually no calcium. According to surveys, black-coloured soft drinks i.e. cola and toxicity involved in it, are thought to be highly dangerous for the health of kidney and stomach. Technological Analysis: Technological advancement has brought a significant change in media campaign and has opened new dimensions to the soft drink industry. “Technological change”, Johnson & Scholes view, “reduces the length of the product life cycle and therefore the time to recoup investment.”(1993, p 80) Investment cost can also be increased as the number of technologies in a product is increased. Keeping in view this factor, the Coca-Cola has engrossed modern machinery, latest freezers, beautiful packing and innovative shapes of bottling according to some special mega event being held in the world. “Coca Cola’s ‘Thums-Up Cola’ outsells Coke by a four-to-one margin in India. In Turkey, Coke sells a pear-flavoured drink, while in Germany it offers a berry drink. Now, Coke is developing soft drinks for tastes around the world.” (Lamb et al, 2005 p 90) It is essential to present the product in novelty to enhance attraction regarding sales. It also fascinates the children folk, who especially welcome the commodity that offers prize schemes or distinguished presentation. The Coca-Cola Company introduced new bottles resembling soccer during the Football World Cup 2006 that became highly popular during the event. Legal Analysis: Legal factors include changes in the laws and government policies regarding some specific industry. Sometimes, it so happens that the rival company is selected as the official drink of the government, which leaves no space for other drinks. In the same way, wars and political rivalries also force the government change their policies towards a specific product, as invasion of US-led forces in Iraq and Afghanistan, created hatred for the American products, which really left indelible affects in their sales volume. The governments of many Muslim states promoted local brands as well as the products introduced by and imported from the friendly nations and countries. Change in the political policy is one of the essential parts of PESTLE analysis and the person having command over the strategic analysis will brief the participants how new strategic plan would be devised according to the new policy announced by the government. Environmental/Cultural Analysis: “Central to every society”, Lamb et al submit, “is the common set of values shared by its citizens that determine what is socially acceptable.” (2005, p 72) Cultural and religious factors may change the market strategy of various companies. Culture includes family, religious beliefs, social set up and patriotism. As after the drawing of blasphemous caricatures instigated the emotions of the Muslim community all over the world and they boycotted a long list of commodities of daily use that were imported from Denmark, the state where the condemnable caricatures were published. Though, change in governments does not affect the soft drink market to a significant way, yet overall critical political situation may disturb the commercial activities at large. Coca Cola had to undergo nefarious propaganda designed by the rival Pepsi Cola particularly in Germany, China, Pakistan, India, Iran, the Middle East and other countries which contain ethnic, religious, racial or commercial rivalry with the USA, in order to deteriorate the sales of the Coca-Cola. The authorities must have to launch a comprehensive advertising campaign to combat such infamous plans drawn out by its rival brands. Age group is also one of the important social factors of the soft drink sale. According to the sociological analyses, children and young are the strata to welcome fashionable products related to wearing and eating. The strategic analyses can be made keeping in mind the growth rate of different countries, and launching of some specific commodity, as KFC and McDonalds did in most of the Asian and African countries. They exercised their methods by involving children in the advertisement campaigns. “The Coca-Cola Company will set specific water efficiency targets for global operations by 2008 to be the most efficient user of water within peer companies.” (thecoca-colacompany.com) SWOT ANALYSIS OF THE COCA-COLA COMPANY SWOT analysis of an organisation focuses upon internal and as external factors that regulate the corporate stratagem of the organisation. The business strategy is developed while conducting a comprehensive comparison of an organization’s success factors on the one hand, and competitive resource requirements and the firms internal capabilities and resources on the other. Similar to the PESTLE analysis, SWOT analysis is also one of the most recommended methods implemented and exercised for investigating a company. SWOT (i.e. strengths, weaknesses, threats and opportunities) reveal all the advantages and disadvantages regarding market position of the organisation under study. STRENGTHS: Looking into the plus points of the Coca-Cola Company, it becomes evident that its brilliant administration, intelligent and highly qualified managers, exceedingly committed employees, experienced staff members, innovative schemes, successful infiltration into international markets, dedicated customers, reliable partners and joint ventures with multinational products and companies, tangible and intangible assets and intellectual property are among the strengths of the industry. Its fast growing products, wide range of consumers, long list of retailers, shareholders, management, policy formulation, inventory, innovation and unique formulae are among the bright aspects of the company that keep the Coca-Cola industry at the premier position in the world. WEAKNESSES: Estimating the weakness the industry faces include concerns of public regarding health and fitness. Cola drinks create troubles for stomach, liver and kidneys and toxic as an essential ingredient of the formulae disturbs body functions in man. Whereas rival beverages including Pepsi Cola and RC Cola as well as local beverage brands of Asian and European countries raise challenge before it. Besides, its formulae are thought to be dangerous for health, and it creates different types of diseases in human body. Growing awareness about cola drinks among masses is a sure threat for its sale for the future days to come. In the same way, Indian population has arranged demonstrations against its bottling plants because its filling and refilling, according to them, is polluting drinking water. Opportunities: Coca Cola should make agreements with international sports companies so that in every mega event, they take it as the official drink. Coke’s ideal presentation on special world events, sterilized bottling, tin packs, soccer shaped packing, ownership of Fanta and Sprite beverages, collaboration with sports management and teams, and agreement with states as official drink, vast range of land ownership all over the world, many thousands employees in different departments including sales, management, quality control and public relations. Threats: The trend of fresh juices as well as use of company juices is increasing in hotels and gatherings. Therefore, Coke should also take necessary measures in this regard. The management can overcome this threat by introducing juice flavours along with cola drinks in future. CHANGING TECHNOLOGY, GOVERNMENT POLICIES & COCA COLA The Coco-Colas learning approach exposes its vision and sharpness on the one hand and its command over the changing scenario on the other. Whenever any new technological invention is introduced in the market, the company arranges an introductory seminar as well as meeting of the management, in which the entire advantages and disadvantages of the invention are discussed. The employees participate in the discussion and elaborate their views and opinions. As soon as the speeches and debates of the employees are over, senior managers and directors come forward to disclose the hidden difficulties due to the inclusion of new invention. After that they brief the staff regarding the utility of the new product and inform them how to take maximum benefits out of it. Moreover, the management trains the staff in respect of evading the drawbacks of the new invention. Not only the case is with a new invention, but also same is the case with the new policy announced by the government as well as new socioeconomic change entered the market. The Coca-Cola Industry moulds its strategies, revises prices of the products, develops schemes and applies techniques to meet the growing requirements. It is by dint of the foresight and vision of the management that the industry is accomplishing all the targets in a devastating way. COCA-COLA---COMPETITORS ANALYSIS Coca-Cola faces threats by its vital rival Pepsi Cola beverage company, which offers all its products at almost the same price, same packing and same flavours as offered by the Coca-Cola. Pepsi Cola keeps 37% of the total market share in the beverage industry of the world and its products have been launched in 190 countries. Pepsi Cola is always extremely conscious in making its entry in a new market in an appropriate way and it is therefore comprehensive strategic analysis is made before starting its operations in any new land. Pepsi Cola is highly committed with its quality control programme and its QC department performs surprise raids to examine the quality. Since Pepsi Cola has its markets in almost all international corporate sectors, it has become a serious challenge for the sales of Coca Cola. The main threats and dark aspects include the rival company’s imitation in all fields. Furthermore, the competitor company Pepsi Cola has made penetration in the market by entering into contract with the sports boards of national and international level. It has drawn an imperative crack into the monopoly of the Coca-Cola Company. Moreover, Pepsi Cola always adopts negative methods to get popularity in the hearts of the consumers. Further, Coca-Cola also faces the threat from the local drinks within various countries, which are also introducing their products reducing the sale of the Coca-Cola soft drink products. The most drastic thing the company undergoes is the people’s concern regarding health problems. The medical specialists do not recommend cola soft drinks to people especially suffering from diseases related to throat, stomach, liver, kidneys and bladder. REFERENCES 1. Ball, Donald A. & McCulloch, Wendell H. (1999) International Business: The Challenge of Global Competition. 7th Edition. IRWIN/McGraw Press INC. p 643. 2. Gates, Bill. (1999). Business at the Speed of Thought. The Warner Book Company New York p 1 3. Johnson, Gerry & Scholes, Kevan. (1993). Exploring Corporate Strategy. Text and Cases. Third Edition. Prentice Hall New York pp 88-100 4. Lamb, Charles W, Hair, Joseph F & McDaniel, Carl. (2005). Essentials of Marketing South-Western College Pub; 8 edition. pp 72-90 5. Porter, M. E. (1980) Contemporary Strategies 6. Schunk, Dr. Donald, and Woodward, Dr. Douglas. (2005) Local Fiscal Impacts of the Proposed Watson Hill Development Moore School of Business at the University of South Carolina in Columbia, SC p 7 7. Warnerfelt, B. (1984) A resource-based view of the firm. Strategic Management Journal, volume 5, no. 2. UK p. 173 8. Worrall, Prof. Les. (1998) Strategic Analysis: A Scientific Art Wolverhampton Science Park 27th May 1998 p 4 9. Coca-Cola Reduces Profit Targets (November 12, 2004) (Quoted in http://www.indiaresource.org/news/2004/1053.html) 10. Health bolt Journal. (12.08.2006). “What Happens To Your Body If You Drink A Coke Right Now?”http://www.organicconsumers.org/school/cocacola021605.cfm Read More