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Coca Cola Strategic Business Analysisgopoco.us/Coca_Cola_Strategic_Business_Analysis/MjEwNw

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Coca Cola Strategic Business Analysis

External Environment Analysis

The external environment of Coca-Cola Company is much better than it’s

competitive and rivals. There are two major areas when we talk about the external

environment of Coca-Cola. The first one is macro environment and the second one

is microenvironment. The factors that fall under the category of macro

environment are mostly uncontrollable and they greatly influence the performance

and decision making of the company. Some of the most important factors in this

context are social, legal, political, technological, and political factors.

All these factors have deep impacts on the decision-making, future policy making

of Coca-Cola Company as it is a multi-national company, and it has to meet various

legal and political codes and standards. The next important factor that plays the

most important role in influencing the external environment of the company is

demographic factors. The terms and conditions are changed demographically for

Coca-Cola Company and it has to cope with all the challenges and limitations to

remain competitive in the global market (Schurman, 2015).

Corporate social responsibility is the next element in this regard and Coca-Cola

Company is fulfilling its global corporate social responsibility perfectly. It is major

sponsor of various sports event and in organizing various other cultural events.

Moreover, it is also involved in supporting students and international scholars. It is

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offering them internships and jobs. It is also offering them international

scholarships. Coke Studio and such events show interest of the company towards

its social responsibility.

The second type of external environment of the company is microenvironment of

the company. There are certain elements or factors that fall under the category of

microenvironment such as market trends, market size, suppliers, and customer

needs. These elements also helps the company to change its policies for the future

(Nyakang'i, 2017).

Coca-Cola Company is enjoying best microenvironment, as it is one of the biggest

selling brand in the world in beverage industry. It is fulfilling market needs and

trends. Likewise, it is fulfilling customer needs and demands by introducing new

products depending upon their taste and demand.

Industry Environment Analysis

The industry analysis of Coca-Cola Company is best possible in term of Porter’s five

forces analysis model as shown in figure below

The major rival of Coca-Cola Company at international level is Pepsi however;

global sales of Coca-Cola are far ahead of Pepsi. It has more bottling and

distribution points than Pepsi. Similarly, it is offering its products and services in

more nations than Pepsi.

The next force in this regard is the bargaining power of the consumers. The

consumers can easily buy its products from gas stations, retailer, super stores, fast

food cafes, and from vending machines. The bargaining power of consumers is

directly proportional to the availability of products of Coca-Cola Company. The

ease of availability ensures that the company has high bargaining power as its

demand and sale at stores is high (Swift, 2018).

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Third force in this context is the bargaining power of the suppliers. The bargaining

power of the suppliers is fragile and weaker than the bargaining power of the

consumers as the raw material needed for production of soft drinks is very cheap

such as flavors, allowed food colors, and sugar. The ease of availability of these raw

materials has reduced the switching cost of the producers and they can easily

change the suppliers.

The fourth force in this regard is the threat to substitute. There are numerous

beverages companies offering various products such as coffee, tea, juices, water,

and various other items. The competition is high and these companies need extra

and aggressive sort of marketing and advertisement strategies to excel the

industry. Coca-Cola is well aware of this fact and it has diversified its product range

by adding various juices and mineral water to its list (www.stock-analysis-on.net,

2018).

However, it must be kept in mind that the switching cost of the consumers is less

and they can easily switch to any other available substitute depending upon their

taste and the product quality. The next important element in this context is

perceived value that is very less in the beverage industry as the major difference is

not in the products and services but it lies in the marketing and advertisement

strategies.

The last force in this context is the threat of new entrant or the threat of forward

integration. The threat of new entrant is very less in this industry as the

manufacturing and bottling plant is very expensive and suppliers cannot afford it.

Competitor Analysis

Coca-Cola is an international and a multi-national firm. It has various national

competitors but this analysis is not based on local or national level competitors as

they vary from nation to nation. However, the one of the biggest and the most

significant competitor of Coca-Cola is Pepsi.co. It is also an international beverage

firm and strong competitor of Coca-Cola. The comparison is based on the financial

performance of both the companies.

1. Liquidity Ratio: The liquidity ratio of Coca-Cola is 1.2 while it is 1.24

2. Financial Leverage ratio: The financial leverage ratio of Coca-Cola from 2017

is 5.15 to 4.76. On the other hand, financial leverage ratio of Pepsi.co from

2017 5.60 to 2.63

3. Turnover ratio: The asset turnover ratio of Coca-Cola from 2017 is enhanced

by 5 percent. On the other hand, the asset turnover ratio of Pepsi.co from

2017 is 0.80

4. Profitability Ratio: The profitability ratio of Coca-Cola from 2017 is increased

by five percent. The profitability ratio of Coca-Cola from 2017 is enhanced by

7.56 percent.

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5. Market value ratio: The market value ratio of Coca-Cola from 2017 is 15.95.

The market value ratio of Pepsi.co from 2017 is 10.9 (www.stock-analysis-

on.net, 2018)

Internal environment analysis

The internal business environment is greatly influenced by the management of the

company. Coca-Cola has innovative and advanced technological environment. The

internal environment of Coca-Cola ensures that all its operations are effective there

is perfect organization of communication skills and raw materials. Coca-Cola uses

the method of internal assessment to refine its operations. The next important tool

used by Coca-Cola to improve the quality of its products and services is customer

feedback and their response (Schurman, 2015).

Customer feedback is obtained using general survey questionnaire and various

social media websites such as Facebook and Twitter. Coca-Cola is using six sigma

and lean manufacturing method to improve its production and technical aspects.

Likewise, it is also using Just-in-time (JIT) technique to overcome the issue of

inventory management. Coca-Cola Company has its own its logistics and transport

services to transport its goods and products.

Recommendations

The recommendations are based on the SWOT analysis to devise best strategies for

the Coca-Coal Company in the future.

Major strength of Coca-Cola is that it is the biggest brand in the world in beverage

industry. It is currently operating in more than two hundred nations of the world.

The company is enjoying best social, political, legal, and economic positons that are

its primary strengths.

Now if we talk about the weaknesses of the company then the major weakness of

Coca-Cola is lack of diversity. It just deals in beverages while other companies like

Pepsi.co is also investing in food snacks. It is the major reason that sale revenue of

Coca-Cola is less than Pepsi.co. The next important thing in this context is that

Coca-Cola has remained unable to make contracts with hotel chains and food

industries to increase its sale (www.stock-analysis-on.net, 2018).

There are various opportunities for Coca-Cola as the demand of organic and whole

food is increasing across the globe. It has recently developed Truvia that is stevia

based alternative of sugar for the diabetes patients and it uses it for diet beverages.

This product is greatly accepted and appreciated by the public therefore, Coca-Cola

must go for such other products. It can also invest in food industry like fast food,

snack bars, and other beverages like tea and coffee to improve its venture.

The biggest threat to Coca-Cola Company is the threat of replacement. The next

important threat is its biggest rival Pepsi.co that comprises of 40 percent of the

beverage market. It has various other ventures such as food snacks, coffee, tea,

chocolates, and milk. All these items are improving its brand while coke is lagging

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behind in this segment. One of the biggest threat is loss of potential customers that

may switch to another beverage brand due to low cost and health effects, as the

customers are not married to a product in beverage industry. (PayPerVids, 2016)

I would recommend following strategies based on above analysis:

1. Coca-Cola needs diversity in its products to remain competitive in the

market.

2. It must improve its marketing and advertisement strategies to attract more

customers

3. It must sign contracts with renowned food chains such as KFC and

McDonalds to improve its sale.

4. Coca-Cola Company needs to improve its management and it must invest

more in research and development to find new paths of success.

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