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Coca-Cola Company’s Strategic Choice and Analysis

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Coca-Cola Company’s Strategic Choice and Analysis

Outline

Firms such as Coca-Cola are increasingly faced with many challenges as a result of changing business environments which have brought about competition among various firms. This paper will emphasize the following issues basing on the Coca Cola company that:

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  • In order for firms such as Coca Cola to cope with such competition brought as a result of rivalry in the market,
  • The respective management has to formulate suitable strategies that will enhance their survival and continuity in their businesses.
  • The paper will investigate the current business strategies used by the company in its attempts to meet its objectives

Introduction

For any firm to succeed in its operations the compliance to industry norms is very important that is it must adhere to the rules of competition for market share within a particular industry, this always avoids unfair competition between firms in the same industry. However, sometimes a firm may break the industry competition norms through its policies of a strategic choice to increase its market share and maintain its survival and growth in the industry. (Anthony, 1998)

Discussion

This study significantly looks at the analysis of internal and external influences in modern business and with particular regards to Coca-Cola Company which is based in the United States since every organization aims to be a market leader in a particular industry. (The coca company 2009)

Company Description

From the research conducted by the Coca Company (2009) we find that the company is a large multinational corporation founded in the year 1919, whereby it operated under the laws and regulations of the Delaware State, this company is globally recognized as the leading producer and seller of soft drinks and syrups that are non-alcoholic which are marketed as finished products. Grant, (2005, Pp 28-40) indicates that the company has its syrup products sold to bottling and canning operations which are said to be owned and managed independently, wholesalers and even the retailer’s products sold to retailers, wholesalers while the finished products are sold most of its distributors. Coca-Cola is believed to have acquired a license for over four hundred brands of its products which include the diet and light beverages, water and those waters that are enhanced, energy and sports drinks. It is obvious that Coca-Cola Company has achieved tremendous growth over its rivals in terms of attaining a larger market share. (The coca company 2009)

Internal Environmental Analysis

Anthony, (1998, Pp 15-32) defines internal environment as an aspect of business environment analysis that discloses the strengths and weaknesses that may be encountered during business transactions, it comprises of strengths and weaknesses. According to his research, we find strength is said to be a particular ability or distinguishing proficiency that a company has and can utilize it to perform better than its competitors and hence attainment of its strategic goals effectively without much difficulty. (Grant, 2005) One of the strengths of the Coca-Cola Company is that it has a strong brand name of its products which helps the company to have a competitive advantage over its competitors like Pepsi inc., Nestle, Kraft Foods, and Unilever. It is reported that this company has many outlets nearly all over the world Coca Cola Company has over two hundred thousand employees worldwide in its all investments. The company has diversified much because of the best marketing strategies that the company uses. For example, the Coca Company (2009) study indicates that the company has around hundred thousand employees in the sales department that have enabled the company to do well globally, these employees are said to be competent enough to perform their marketing responsibilities, for example, the sales staff are constantly trained to adapt to changes brought about by globalization. (The coca company 2009)

Lovelock (2006, pp 20-43), states a weakness as any feature of the company which may deter the firm from achieving its objectives or goals. Coca Cola Company’s set of laws, measures, and policies are said to be unworkable in some markets, a reason which has seen the company’s performance deteriorate in some of its markets, for example in African countries, Coca Cola products have performed poorly in the market due to lack of vigorous advertisements by responsible departments. (Porter, 1985)

Coca-Cola Company has also been associated with the weakness of lack of commitment on the side of its employees. According to research conducted among the employees, it was evidenced that there was a habit of reluctance by employees on fulfilling their duties and they are reported to be contented with the latest results and thus lack future initiative.

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External Environment Analysis

Anthony (1998, Pp 15-32,) comments that external environment analysis reveals the organization’s opportunities and threats which are either current or potential to the organization. He states that external factors may include; economic, technological, competition, political/legal, and social-cultural factors. However, the external environment of a company may be explicitly explained when opportunities and threats of the firm are considered. (Lovelock, 2006)

There are many opportunities that exist for Coca-Cola Company in relation to drinks up-and-coming markets all over the world. Because of successful exploration of new markets for example in Africa and Australia, America among other nations the company has an opportunity to diverse to these markets without much difficulty. The products especially the drinks offered by this company are on demand and are widely known and the company has taken the advantage by increasing their production. The Coca Cola Company has an established financial base as compared to its competitors because of its large market share therefore the company has used its surplus funds in building new markets and thus they have experienced an opportunity for higher profit returns. Coca Cola Company has fully utilized this opportunity, because to be realistic enough the company has increased its market dominance by serving many nations through opening subsidiaries in the respective host countries. (Grant, 2005)

The company also enjoys a good political/legal relationship in its various markets with the host governments, this is because the company has fully complied with licensing activities and its products have been approved by the respective bureau of standards in those countries this opportunity has presented the company with a chance of diversification within those markets and thus it has witnessed significant increase in company’s revenues.

Lovelock (2006, pp 20-43) defines a threat as an existing environmental feature which will cause problems which are likely to deter the accomplishment of managerial objectives. Threats can manifest themselves in the form of, stiff competition, escalating interest rates, government laws and rules related to business, decreasing real income among others. Coca Cola Company is now facing stiff competition from its main rivals like the Pepsi inc. Unilever, Kraft foods and Nestle, which has seen the company drop some of its markets in order to concentrate on some other markets which the company does not encounter stiff competition. (Lovelock, 2006)

Coca Cola Strategic Intent

The Coca Company (2009) research indicates that this organisation has a well stated strategic intent which is based on the Porter’s Generic Strategies by the famous Michael Porter. Michael Porter is a well-known American academician who focused on issues of management in economics and more specifically the need to build competitive strategy and competitive advantage in firms such as the Coca Company. He is credited for outlining the fives forces of strategic analysis; strategic groups, value chain, generic strategies, marketing positioning and product differentiation. He summed these forces to three main generic strategic orientations which the coca cola company, plans to utilize in order to succeed. The first one is the growth strategy that includes the integrative growth, expansive growth and intensive growth all of which are aimed at penetrating the market that may be saturated with competition. (Grant, 2005)

The second is the product market strategies that enable the firm to develop products that will satisfy the needs of the customers. It also includes the development of the markets and products alike. In fact, Porter explains that there is need to expand capacity of a firm through product-market development strategy. The third one is the integrating and diversification strategy that involves the combination of the first two strategies in order to come up with a competitive strategy for the firm.

Porter, (1985, pp 12-56) states that although these strategies have a distinguishing feature that combines the need to answer the question of why, how and when there is an opportunity for the company, they have some differences. The product market development strategy focuses mainly on the risks that the coca cola company can take to develop the market and the product in general. (Lovelock, 2006)The diversifications strategy entails the growth of opportunities, which are outside the current company competence. Vertical integration strategy allows for the gain in operation economies such as low cost production and controlling the supply in demand in order to assimilate all sections of the company such as management, innovation and productivity. (Porter, 1985) One of the main reasons for market penetration strategies by the Coca Cola Company is to dominate the market by all costs and standards given the right mixture for production. However, it should be noted that the three strategic orientations described by Porter are very broad and varied even though all should be aimed at improving the productivity, efficiency and development of the Coca Cola Company

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Conclusion

According to Porter, (1985, pp 12-56) we find that it is stated that the main objective of any business is to maximize profits in order to give the best feasible proceeds to owners for their funds they have invested in the company. Therefore business organizations including Coca Cola Company depends on its internal and external aspects or components for efficient and effective operations. (Porter, 1985) According to Anthony, 1998 an organization should critically manage and monitor the key external and internal elements which includes; physical facilities and equipment, financial stability, human resources, production and operations, and market capability. Research show that there are many things a company does but it should always focus on what it can produce best. (Lovelock, 2006)

References

Anthony, C. 1998. SWOT Analysis; An explanation of the S.W.O.T. Analysis process; New York; Macmillan Press, Pp 15-32

Grant, R. 2005. Contemporary Strategy Analysis: Oxford, Blackwell Publishing Ltd pp 28-40

Lovelock J. 2006 Services Marketing, People, Technology, and Strategy, New York, Prentice Hall, pp 20-43

Porter, M. 1985. Competitive Advantage:-Techniques for Analyzing Industries and Competitors., New York, the Free Press pp 12-56

The coca company 2009, Web.

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