International Strategy Report: Coca-Cola Company

International Strategy Report: Coca-Cola Company

Coca-Cola Company is a multinational business organisation with headquarters at Atlanta, Georgia, United States (US). The company is listed at the New York Stock Exchange (NYSE); Coca-Cola Company specialises in non-alcoholic beverages syrups and concentrates. The organisation dates back to 1886 after John Stith Pemberton, a pharmacist who discovered the Coca-Cola formula, which was later, developed into a brand in 1889; incorporation of the Coca-Cola Company dates back to 1892. It is worth noting that Coca-Cola Company offers other brands numbering to more than five hundred and distributed to over two hundred nations in the world. It is estimated that Coca-Cola Company serves more than one point seven billion each and every day (Coca-Cola Company, 2011 p. 9).

1. Business environment

Micro-environment

Micro-environment affecting Coca-Cola Company identifies with the company, suppliers, marketing intermediaries, customers, competitors and the public. Operations of the Coca-Cola Company depend on the target nation since business environment varies with diverse dynamics within the business environment. The board of directors with the inclusion of commercial managers, country manager and the human resources manager have the responsibility of overseeing the operations of Coca-Cola Company within the target nation. It has been noted that the board of directors have the responsibility of setting general policies and goals of the company within the boundaries of the nation. The supply chain managers are under the board of directors and accorded the responsibility of the providing the Coca-Cola products and services in a timely manner. Financial managers have the responsibilities of managing financial assets within the nation in developing the marketing plan, in which the marketers engage the plan in instituting the budgets. Regional managers are responsible for the subdivided regions within a nation. Public Affairs and Communications manager has the sole responsibility of enhancing business relationships among the partners and stakeholders and in making sure those connections with the global community is at the required standards (Pendergrast, 2013 p. 130).

Suppliers are organisations or individuals who enhance input to the organisation within a nation. Marketing management within the nation of operation has the responsibility of making sure that all the materials needed are in place and that accurate assessment is made depending on the changing business environment. Marketing intermediaries are businesses and individuals supporting the consumption, distribution and promotion of the services and products offered by the Coca-Cola Company. Marketing intermediaries within a nation identifies with commercial brokers, circulation of goods brokers, brokers of financial and credit institutions and the broker marketing services among others depending on the nation of operations.

The customers of Coca-Cola Company in the nation of operations are classified as the consumer market, reseller markets, business market, international markets and the government markets (Saylor.com, 2012 p. 3). Coca-Cola Company is sensitive on the perception of the customers on the brand, since the customer is the consumer of the products and services. Meeting the demands of the target customers is critical for satisfaction and sustenance.

Competitors of Coca-Cola Company depends on the nations of operations; there are a number of organisations in the beverage market. Taking a look at the United States, the major competitor is Pepsi among others. Each and every nation of operation has a diversity of customers and the segments targeted by the products in the market. Coca-Cola Company engages promotions in the media within the jurisdictions, in making sure that the company maintains a significant market share.

The image of Coca-Cola Company to the general public is very critical; the public has the capability of affecting the products and services in a negative or in a positive manner. Taking wrong actions in diverse of ways that affect organisations in a negative pattern. Public relations in Coca-Cola Company with the jurisdiction ensure that the right brand image is enhanced.

Macro-environment

Macro-environment affecting Coca-Cola Company identify with economic environment, natural environment, technological environment, political environment and cultural environment. Economic environment in the world has been unpredictable basing on the global changes encouraged by socialisation and modernisation. Recession and growth has influenced the demand and supply of Coca-Cola products and services (Isdell & Beasley, 2009 p. 107). Recession and supply in the global market shape the consumer purchasing power. It has been noted that the purchasing on the other hand influence the consumer price index and the inflation index among others. United States experienced recession in 2008 that influenced the demand and supply of the Coca-Cola products and services.

Natural environment identifies with the problems experienced by Coca-Cola Company which are cultivated by the natural environment. Industrial waste and emissions discharged by industries to the waterways has been of interest in protecting the natural environment. Organisations have been encouraged to conserve and create friendly natural environment, in which Coca-Cola Company has been on the forefront in enhancing a ‘green’ industry and environment (Scott, 2013 p. 171). The energy prices are ever rising, Coca-Cola Company has been sensitive in creating alternative sources of energy that are renewable. Material resources has been scarce, a model that has led to overexploitation of the natural resources, Coca-Cola Company has been committed in searching for new materials in the line of production and in making sure that the bottles used in packaging the products are recyclable.

Technological environment has been changing with time; Coca-Cola Company has been committed in research and design as a way of developing a competitive edge over the rivals. Coca-Cola Company has been committed in developing efficient processes in production and also in packaging (Pendergrast, 2000 p. 498). The organisation has constantly redesigned its bottles in ways that they take advantage of the available technology, and in conforming to the environment. An example is the plant bottle that is developed from plastic and molasses 30%. The new bottles are recyclable, an indication that they conserve the environment by 30% in reducing the carbon dioxide emissions in the atmosphere. Coca-Cola Company is doing away with PET bottles with time, as a way of changing with technology and environment.

Political environment in the globe varies with the nations of operations, it has been noted that Coca-Cola Company makes its decisions in accordance with the political environment as per the nations of operations. Political environment influence the legal factors with the jurisdictions; which includes the policies, local authority, governments, corporate law, civil law, customer legislation, investment law and tax laws among others (Saylor.com, 2012 p. 2). Regulations in advertising, product quality, copyright protection and issues of food safety among others, political environment also influence the laws that protect the benefits of the consumers. The political environment has the capability of creating a threat or a benefit to the operations of Coca-Cola Company.

Cultural environment varies with nations of operations, it has been noted that cultures influence product comparison with others in the market, an indication that the practice has the capability of creating a competitive edge or threat to the products and services of Coca-Cola Company. There are cultures holding Coca-Cola products on issues of health among other aspects. Coca-Cola Company builds confidence of the consumers by enhancing safety and quality of its products.

PESTLE (Political, Economic, Sociological, Technological, Legal, and Environmental) analysis has been critical in the operations of Coca-Cola Company. In the earlier segment of this paper, the factors have been discussed in relations to the operations of Coca-Cola Company in the global context. PESTLE has been influential in shaping the business environment in Coca-Cola Company that is useful in strategic decision making models. The world is facing diverse changes, an indication that Coca-Cola Company has to develop mechanisms of adapting to the changes in developing a competitive edge (Pendergrast, 2013 p. 322); which is critical in comprehending the bigger picture of the organisation and the environments in different nations.

SWOT analyses on Coca-Cola Company reflected on the Strengths, Weakness, Opportunities and Threats of the organisation. Strengths pegged on Coca-Cola Company identify with that Coca-Cola is a recognised brand in the world having a worth of $77,838 billion United States dollars. Coca-Cola Company has the widest beverage market share, Coca-Cola Company engage in vigorous advertising and marketing, Coca-Cola Company has extensive distribution channels of the beverage products, Coca-Cola Company has developed customer loyalty in the world, Coca-Cola Company has developed mechanisms offering supplier bargaining powers and that Coca-Cola Company has enhanced an all inclusive Corporate Social Responsibility (Pendergrast, 2000 p. 583).

Weaknesses associated with Coca-Cola Company identify with the fact that the organisation has excessive focus on drinks that are carbonated, the product portfolio of Coca-Cola Company is undiversified, Coca-Cola Company has high debt values basing on acquisitions, Coca-Cola Company in the recent decades has experienced high levels of bad publicity basing on health issues related to the products and that Coca-Cola Company has developed a number of brands that has failed over the years.

Opportunities in Coca-Cola Company has seen a rise in the need of bottled water, which has encouraged the organisation to develop Dasani, another opportunity is pegged on the increased demand in packed foods and beverages, emerging markets are offering fast growing market share for the Coca-Cola Company and Coca-Cola products and that the organisation has an opportunity in growth facilitated by acquisitions (Isdell & Beasley, 2009 p. 267).

Threats facing Coca-Cola Company are changes in the preferences of the consumers, scarcity in the supply of clean water, strong dollar, intense legal battles that are forcing the organisation to disclose to the public the side effects of its products, decreasing net profits and gross profits due to high operational costs, high competition in the target markets and saturation of drinks that are carbonated in the target markets.

1. History of Coca-Cola Company

Coca-Cola Company specialises in beverages in the world, with the headquarters being based in the United States. The current Chief Executive Officer (CEO) is known as Muhtar Kent with an employee base of one hundred and forty six thousand two hundred individuals who are directly employed. Coca-Cola Company supports diverse human capital indirectly with the nations of operations. Revenue as at 2012 was standing at $48.01 billion and the profits as at 2012 were standing at $9.01 billion. The major competitors in the beverage industry identify with PepsiCo Inc., Unilever, Dr Pepper Snapple Group Inc., Groupe Danone, Nestle S. A., and Kraft Foods Inc. among others.

Globalisation has been taken serious by the Coca-Cola Company, the brand has managed to gain substantial support from the target market; a move that has encouraged Coca-Cola Company to gain growth, momentum and capitalization in the ever expanding markets (Scott, 2013 p. 100). Coca-Cola Company has been ranked as the largest organisation dealing with beverages. The organisations has been pushing for expansions in the world, the current nations of operations are more than two hundred, with suppliers exceeding eight four thousand mark.

Surveys have indicated that more than seventy percent of the sales originate from outside the United States markets; this has made Coca-Cola Company to be one of the largest organisations in the world worth multi billions of dollars. Entry mode in different nations is not a one model approach; there are a number of factors that influence the entry mode in the target company. Different jurisdictions in the world has supported Coca-Cola Company in operating within their markets, while there are hostile markets that has discouraged Coca-Cola Company to operate within their markets (Isdell & Beasley, 2011 p. 171). Coca-Cola products have been banned in a number of nations citing threat to the public health and that Coca-Cola product encourages cases of obesity.

Coca-Cola Company has faced a number of labour suits with accusations of discrimination associated to benefits of health care to the human capital and child labour sweatshops. The target markets have been flooded with alternatives, who are the competitors. The obstacles faced by Coca-Cola Company has not discouraged Coca-Cola Company in providing refreshing, quality and products that are satisfying in the target market (Allen, 2005 p. 313). Coca-Cola Company has managed in making sure that all the Coca-Cola products have the same taste, the recipes for making Coca-Cola has been a big secret to the organisation, prompting tight controls at the facilities used in the manufacturing of the recipe.

Globalisation of Coca-Cola Company started in the 1900s; the first bottling plants outside United States were erected in Panama and Cuba; which was inline expansions of the military in the United States. The plants were largely successful, a model that made Coca-Cola Company to bypass delivery and shipping costs. This led to opening of other bottling plants in Philippines, Hawaii and Puerto Rico. Testing of the foreign markets was critical in making strategic decisions on the beverage product (Blanding, 2010 p. 76).

Coca-Cola Company created a centre for global relations that facilitated establishing plants and foreign relationships in the globe, by 1926, it was noted that Coca-Cola Company had expanded to diverse nations. Coca-Cola Company over the decades has been involved in rapid expansion and mass production, which generated local partnerships and local branches in different nations of operations. Cold war and World War II did not stop the expansion of the Coca-Cola Company, and the Coca-Cola brand grew stronger and stronger. Coca-Cola Company has been recognised for its global expansion and efficiency.

Porter’s five forces focus on threats associated with new entrants, threats associated with substitute products, threats associated with bargaining powers of the target market, threats of bargaining powers associated with the suppliers and finally on the threat associated with competitive rivalry in the firms that are existing (Isdell & Beasley, 2011 p. 100). In Coca-Cola Company, threats associated with potential competitors or new entrants are of medium pressure in that entry barriers are low and by the fact that Coca-Cola has been considered both as a brand and as a beverage.

Threat of substitute products is rated as medium to high pressure in the sense that the global market in the twenty first century has a number of substitute beverages, ranging from energy drinks, juice products and sodas among others. Threats of bargaining powers from the target market have low pressure. This an indication that individual buyers have pressure associated by the brand. Coca-Cola Company has already gained brand loyalty among the target market. Bargaining power from the suppliers is rated as low pressure. Coca-Cola Company’s suppliers are not differentiated or concentrated in regards to the ingredients used in the production of the Coca-Cola products (Saylor.com, 2012 p. 4). Coca-Cola Company has the largest supplier network of the products. Rivalry among the existing firms is rated at high pressure. It has been noted that the closest competitor is Pepsi, which has competing brands. Pepsi and Coca-Cola Company support outdoor activities and events as a marketing model. Other brands in the market have not gained the success experienced by Coca-Cola Company and Pepsi.

BCG matrix Coca-Cola Company reflects on the stars, cash, question mark and dogs. Stars in Coca-Cola Company show high business growth although the environment of operations is highly competitive. Cash in Coca-Cola Company indicates low growth business with high points relating to shares. Question marks in Coca-Cola Company are an indication of low point share in the business, although characterised with a high growth rate. Dogs in Coca-Cola Company indicate businesses characterised with low expected growth rate and low relative share, an indication of sustainability (Blanding, 2010 p. 184). Coca-Cola Company shows high stars, an indication of high business growth rate, question marks in Coca-Cola Company are few which indicates devastation, cash cows are low on the vertical axis and high on the horizontal axis indicating business growth rate is low and market share is high. Dogs in Coca-Cola Company indicated low market share, indicating a need for liquidation.

Porter’s Generic Strategies reflects on competitive advantage and competitive scope of Coca-Cola Company, mainly in cost leadership, differentiation, cost focus and differentiation focus in regards to Coca-Cola Company. Branding in Coca-Cola products has been influential in differentiation of the products from others in the target market. Examples of brilliant logos used by the Coca-Cola Company identify with the swoosh of Nike and the brand Coca-Cola that is handwritten, which is critical in setting the right tone for differentiation focus strategy. Coca-Cola Company on the other hand offers quality products at affordable costs, a move that has encouraged differentiation in the target market (Coca-Cola Company, 2011 p. 17).

Ansoff matrix in Coca-Cola Company is critical in expressing market penetration, development of the product, development of the market and diversification. Ansoff’s matrix is used in exploiting the product range within Coca-Cola Company. It has been noted that some of the common products associated with Coca-Cola Company are Diet coke, Coca-Cola Vanilla, Fanta Icy Lemon, Coca Cola share size, winnie the pooh Roo Juice and Powerade among others.

1. Corporate Social Responsibilities (CRS)

Coca-Cola Company has developed a respected brand in the world. It has been noted that building of the brand has been possible through an all inclusive corporate social responsibility. The main products of Coca-Cola Company are five major brands that are non alcoholic. CRS has been essential in dealing with ethical and moral issues both in the domestic markets and in the international market. Coca-Cola Company has developed one of largest distribution channels spanning in almost all nations of the world (Allen, 2005 p. 207).

Conflicts between ethical and social responsibilities and corporate strategy are added through enhancing effective investor relations among the diverse stakeholders depending on jurisdiction.  Coca-Cola Company has developed effective mechanisms of dealing with waste water and water management plans, which is critical in enhancing sustainability. Initiatives in energy conservation, recycling activities and programmes relating to community development have been critical in the conservation of the environment. Corporate social responsibility in Coca-Cola Company has enabled the organisation to operate in different guidance, legislation and regulations in building a competitive edge.

Corporate social responsibility in Coca-Cola Company has engaged corporate self regulation within the system. It has been noted that CSR policy has been functioning as a business model. Self regulating mechanism in Coca-Cola Company has been useful in active compliance and in monitoring the progress of organisation. Coca-Cola Company has enhanced global ethical standards, spirit of law and in dealing with international norms (Kent, 2011 p. 130). CSR within Coca-Cola Company had been engaging and being in compliance in building social good. Interests of Coca-Cola Company are shared among the stakeholders of the organisation, in ways that the vision and the mission of Coca-Cola Company have been influential in setting the right consumers, environment, communities and employees.

Coca-Cola Company was influential in building public sphere in building the brand image. CSR has been influential in building strategic management models that are critical in sustaining the product in the environment. Coca-Cola Company has been among the fortune 500 companies in the United States. Coca-Cola Company has managed to overcome the challenges that organisation has faced in the global environment (Kent, 2011 p. 77).

List of References

Allen, F (2005). Secret Formula: How Brilliant Marketing and Relentless Salesmanship Made Coca-Cola the Best-Known Product in the World. 4th ed. New York: Harper Paperbacks. 200-322.

Blanding, M (2010). The Coke Machine: The Dirty Truth Behind the World’s Favourite Soft Drink. 3rd ed. London: Avery Press. 34-200.

Coca-Cola Company. (2011). 125 Years of Sharing Happiness. Coca-Cola Company. 1 (1), 3-19.

Isdell, N. & Beasley, D (2009). Inside Coca-Cola: A CEO’s Life Story of Building the World’s Most Popular Brand. 2th ed. London: Pan Macmillan-St. Martin’s Press. 12-299.

Isdell, N. & Beasley, D (2011). Inside Coca-Cola: A CEO’s Life Story of Building the World’s Most Popular Brand. 3rd ed. London: Pan Macmillan-St. Martin’s Press. 78-201.

Kent, M (2011). Coca-Cola: 125th Anniversary. 2nd ed. New York: Editions Assouline. 45-139.

Pendergrast, M (2000). Coca-Cola Company. 2nd ed. New York: Basic Books. 105-653.

Pendergrast, M (2013). For God, Country, and Coca-Cola: The Definitive History of the Great American Soft Drink and the Company That Makes It. 3rd ed. New York: Basic Books. 128-348.

Saylor.com. (2012). Globalization and the Coca-Cola Company. The Saylor Foundation. 2 (4), 1-4.

Scott, R (2013). Coca Cola Slipcase Set of 3: Film, Music, Sports. 3rd ed. New York: Assouline. 105-187.

 

 

 

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