Analysis of Strategic Management in Coca Cola
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Published: Mon, 5 Dec 2016
In this project I will do a detail study of Coca Cola Company. I will study about the market value of Coca Cola and how sustainable the Coca Cola Company is for the people. I will highlight the issues which are faced by Coca Cola and describe the business cycle of the company. I will mention all the strength and capabilities of Coca Cola in coming years.
history with business cycles and internal strengths of the Coca Cola Company
May 8th 1886 Coca Cola was created by John S. and served at Jacobs’ Pharmacy (Coca Cola Company, 2008). At start the company had a rough start and it was named “Coca Cola” by company’s accountant Frank. In 1887 the promotion method was coupons, and John S. registered Coca Cola Syrup and Extract to US patent office (Coca Cola Company, 2008). In 1915 the Coca Cola Company designs a bottle by Alexander Samuelson which became standard bottle for Coca Cola. In 2008 Coca Cola sponsored the big games and Coca Cola Facebook page which is made by two fans has over twenty two million fans worldwide. In 2009 Coca Cola became a billion dollar brand, and in 2010 Coca Cola Company obtain the whole North American bottling business. By 2011 Coca Cola Company celebrates its 125 years (Coca Cola Company, 2008).
Coca Cola is largest company in the world which sells beverages. Coca Cola has large product brands which are more than five hundred. Its products include popular names such as Coca Cola Classic, Fanta, Sprite, and Minute Maid. Coca Cola besides being number one company is the most valued company in the world. Coca Cola has a long history of being sustainable company in profit and also for protecting communities and their environment (The Coca-Cola Company, 2010).
Vision, mission, and objectives of Coca Cola
Mission of Coca Cola
In the mission statement of Coca Cola its purpose as a company is to serve in standard terms. It also takes good account about each and every action and decision made by Coca Cola. The aim of mission is to make the world refresh, inspire people, bring happiness, and to make difference by value of its products (Coca Cola Company, 2011).
Vision of Coca Cola
Coca Cola vision is the framework roadmap for every aspect of Coca Cola’s business (Coca Cola Company, 2011). Coca Cola’s vision is to achieve sustainable growth by applying the principle described below:
People: Bring inspiration into people’s life while working in Coca Cola.
Partners: Creating a winning network of suppliers and customers.
Portfolio: Bring portfolio of quality into the world.
Productivity: Making Coca Cola effective company.
Profit: Make profit while heedful of responsibilities.
Planet: Becoming responsible citizen and supporting sustainable communities.
(Coca Cola Company, 2011)
Objective of Coca Cola
Objectives are drive from vision and mission of the company and it serve as action of Coca Cola how to behave in the world (Coca Cola Company, 2011).
Headship: Having courage for better future.
Group effort: Believe in collative genius.
Integrity: Be genuine.
Passion: Having hard time mind committed.
Accountability: To be accountable to the people.
Diversity: Broad as Coca Cola’s brand.
Quality: Produce best products.
SWOT Coca Cola
Coca Cola’s strengths
Coca Cola is widely known to the world, and its popularity is its strength. Coca Cola is known to people by its color, logos, and marketing. Coca Cola has status in beverage industry which is not challenged by any other company. People who drink Coca Cola are loyal to Coca Cola for example 80% of revenue of Coca Cola come from its 20% loyal consumers. Coca Cola has ability to sell and make products around the world which is unique to Coca Cola.
Coca Cola’s weakness
Coca Cola Company has few weaknesses. There is no effect from Coca Cola to answer the question people pose about harm’s of Coca Cola’s drinks. People think that Coca Cola’s products are not good for health.
Coca Cola’s opportunities
Coca Cola has many opportunities which it can take advantage of for its success. Coca Cola can actively market its products which are less popular. Coca Cola is know to 90% population of the world and it can bring this to 100%. Coca Cola can increase the gap between itself and its competitors.
Coca Cola’s external Threats
Coca Cola has been very successful company but yet to deal with some threats. Coca Cola need to settle its lawsuits. It also needs to change people’s negative view about Coca Cola Company.
Figure 1: SWOT of Coca Cola
A lot of funding
Unpopularity of some of the brands of Coca Cola
Pursuing successful brand
Marketing less popular product
Recognition of more brand
Pepsi main competitor
Shifting health consciousness thoughts
Challenges faced by Coca Cola
Coca Cola worldwide market shares in flavored carbonated and soft drinks are forty seven percent (Coca Cola Company, 2011). In USA Coca Cola has this share to forty two percent and globally fifty percent. Coca Cola is world largest manufactures, distributer and marketer of beverage industry which brings many challenges for Coca Cola (Coca Cola Company, 2011). Canning and bottling is done in many countries, in 1995 change in organization of Coca Cola lead to five regional group headed by group president and it also resulted in spinning of canning and bottling operations into independent companies.
The other challenges are faced by coca cola are related to different things. There is frequent change of Chief Executive Officer and there was also financial crisis in Russia which hit Coca Cola (Coca Cola Company, 2011). Coca Cola is also facing the problem of weak global economy. Coca Cola has to deal with price due to local competitions, and there is also problem of foreign exchange which leads to low profit due to fragile currency. There was also challenge for expanding Coca Cola which resulted failure of purchase of Cadbury. Coca Cola also has challenge of being poor quality.
Challenges which are ahead of Coca Cola are related to many spectrums. Coca Cola lacks creativity in marketing and advertising (Coca Cola Company, 2011). It has poor relationship with some bottlers. There are some issues related to management of Coca Cola by over controlling board of directors. There is unwillingness in Coca Cola to change according to industry demands. Pepsi diversification into snacks and non beverage industry is challenge for Coca Cola (Coca Cola Company, 2011).
Opportunities in given challenges for Coca Cola
Brand recognition is very important factor affecting Coca Cola’s competitive place. Coca Cola’s brand title is famous to ninety percent of the world. The primary cause over the past few years is to get this brand title to even better well-known. Packaging changes affect Coca Cola’s sales and industry spot but in overall the people are tending not to be effective by new product.
Coca Cola bottling system allow it to take advantage of never-ending growth opportunities around the world. This strategy of Coca Cola gives opportunity to serve in large and different geographic areas. Coca Cola has been good performer in stock market below graph shows comparison of Coca Cola to peer group in which includes companies like Tyson Foods, Philip Morris International Inc., PepsiCo Inc., and Coca Cola is doing more good than all so this opportunity of finance stability should keep Coca Cola rising.
Levels of strategies of Coca Cola
Coca sticks to different strategies related to different things. For instance in 2009 the Coca Cola marketing and media spend strategies positively obstructed the operating margin in the widely held of Coca Cola operating segments, the shift was noted as inferences from revenues instead of marketing expenses. In respect to foreign exchange Coca Cola screens operations in each nation and pursue to adopt suitable strategies that are receptive to fluctuating economic and political environments. In relation to investment strategy Coca Cola has four principles:
Improve the long-term return on strategy assets at an satisfactory level of risk
uphold a broad divergence
preserve careful control of the risk level of each asset class
have long term objective returns
Building Competitive Advantage Though Business-Level Strategy
In a business model which is successful we need to have business level strategy which give a company competitive advantage over its rivals (Hill & Jones, 2007). They must decide 1) customer needs and how they are satisfied 2) customer groups and how they need to be satisfied 3) distinctive competencies of how customers needs to be satisfied(Hill & Jones, 2007).
Business-Level Strategy and the Industry Environment
In bitty industries composed of large total of small and medium size businesses in the principle form of competitive strategy are chaining, horizontal merger, franchising, and using internet. In growth industries the strategies is determined by market demand (Hill & Jones, 2007). Companies need to identify from growth to maturity by choosing investment strategy that helps or supports there business model. There are four main strategies which a company can have if the demand is falling:
Strategy in High-Technology Industries
Technical values are very important in many high tech industries, and they guarantee compatibility, reduce confusion in consumers, allow mass production by lower past and reduce risk with supply complementary products (Hill & Jones, 2007). A technological model shift occur when new technology come and revolutionize the structure of industry, dramatically change nature of competition, and require for the company to adapt to new strategies for surviving (Hill & Jones, 2007).
Strategy in the Global Environment
For some companies international expansions means a way to earn greater returns by transferring skills and products contribution derived from their distinguishing competencies to market where home-grown competitor lacks these skills. Companies also purse localization strategy customaries their product offering, business strategy to country condition and marketing strategy. The most attractive foreign tend to be found in politically steady and progressive countries (Hill & Jones, 2007). There are five ways to enter into foreign market:
Wholly owned subsidiary
Figure2: Changes over Time
Source: From Charles W. L. Hill & Gareth R. Jones, “Strategy in the Global Environment,” Strategic Management 7th Edition, Houghton Mifflin Company 2007, p.284.
Corporate-Level Strategy: horizontal Integration, Vertical Integration, and Strategic Outsourcing
Corporate strategy should permit a company or its unit to perform in one or more value creation function at lower cost in a way which allows for differentiation or premium price (Hill & Jones, 2007).
Horizontal Integration can be understood as a method of increasing the profitability of the company by:
Replication of business model
Managing the rivalry within the industry
Increase bargaining over buyer and supplier
Horizontal integration has two drawbacks 1) numerous pitfalls related to merger and acquisition 2) and the fact that the strategy can bring company in conflict with antitrust authorities (Hill & Jones, 2007).
Vertical Integration can enable a company to accomplish competitive advantage by building barrier to entry, facilitating investment, product quality protection, and helping advance schedule between head-to-head stages in value chain. The drawback is bureaucratic cost for the company and lack of flexibility when the technology is changing fast (Hill & Jones, 2007).
Strategic Outsourcing of noncore is significance creation activities may allow a company to subordinate its cost, differentiate its product, respond to rapid changing of market condition and to make better views of scarce resources(Hill & Jones, 2007).
Corporate-Level Strategy: Formulating and Implementing Related and Unrelated Diversification
Diversification is considered by managers when a company is generating free cash flows which are financial resources in excess to need for maintaining competitive advantage in company’s original business (Hill & Jones, 2007). Diversify company can create value by:
Transferring competencies within businesses
Leveraging competencies for new businesses
Sharing resource for economic scope
Using diversification to manage rivalry
Exploit organizational competencies to increase performance
Related diversification is strategy of establishing a business unit into new industry related to company’s current business unit by some form of linkage or commonality between one or more compound of each business unit value chain.
Unrelated diversification’s aim is to enhance profit by embedment general organization capabilities in new business units and possibly to capture benefit of multipoint competition (Hill & Jones, 2007).
The Coca Cola strategy is to make Coca Cola more than a soft drink. It position itself to contribute to make life better, fun times, little lighter and more enjoyable. The corporate strategy of Coca Cola is based upon opportunities. Coca Cola knows that they are in beverage industry and they sell one billion cokes a day and they know that people drink forty eight billion serving of beverages each day around the globe. So in term of global opportunity Coca Cola has to have only two share of beverage industry so they need to design business system or strategy to take advantage of this opportunity. Coca Cola is at keystone of its strategy because it is instance recognized and allows Coca Cola to build critical mass by day one. Coca Cola should capitalize on its brand as the brand make certain promises, such as promise quality, promise value, promise propriety, promise jobs, promise retail margin, promise make living by selling Coca Cola. Procter & Gamble is a very triumphant company but nobody knows what Gamble & Procter is but in case of Coca Cola we know instantly. Coca Cola uses DOMINANT Corporate-Level Strategy in its business model to be very successful.
Changes in global environment
Strategic decision of the company which is operating in global marketing place is becoming increasingly complex. In such company manager can’t know global operations as set of independent decisions (Pearce & Robinson, 2007). Hence they are faced by trade off decision in which different products, environments, resource sourcing, and strategic options must be considered (Pearce & Robinson, 2007). In such companies two important things also play important role one is stockholder activism which is demand place on global company by the stock holders in the environments in which it operates. Second thing is multi-domestic industry which is an industry in which competition is segmented from country to country (Pearce & Robinson, 2007). A global environment brings many challenges for the companies which are mention below (Pearce & Robinson, 2007):
It increase global management task
It increase globalization of the company
Increase in global competition
Speedy development of technology
Strategic management planning raise managerial confidence
Figure3: International Strategy Option
Source: From Michael E. Porter, “Changing Patterns of International Competition,” California Management Review, Winter 1986, p.18.
In my opinion there are many things which a company can do to survive in challenging environment of global environment. A company should be having a strategic planning for each and every company for develop very successfully. A company should adapt to changes which occur in global environment. A company like Coca Cola works in country to country basis because of its bottling department which operates in many countries hence giving Coca Cola a advantage in global environment.
Coca-Cola Strategic Management
Coca Cola brand is world’s most popular brand. Therefore, Coca Cola Strategic Management is to the continued achievement of its famed brand. Warren Buffett is key investor in Coca Cola and believes that no sensible observe questions that Coca Cola will lead in its field worldwide for an investment of lifetime, and certainly the supremacy will possibly strengthen. Coca Cola brand is strong but few at management at Coca Cola think that there is danger of public will get bored with brand, so they led Coca-Cola through great change in management structure.
Coca Cola business is at global scale but it operates on a local scale. Coca Cola creates business with local focus. Coca Cola vends, production, distillates syrups and beverage bases to bottling operations but owns the brand. Coca Cola is responsible for customer brand marketing initiatives. Coca Cola operates in big geographies below graph shows how much Coca Cola do business in different parts of the world, and to be successful it should continue to grow in respected areas.
Recommend new strategy
Coca Cola’s strategy should be aggressive in terms of marketing and advertisement. Coca Cola should also improve the relationship between Coca Cola and bottle manufactures. Coca Cola needs to change itself according to beverage industry demand worldwide. The Coca Cola should conduct socially interactions.
In conclusion Coca Cola should implement work place safety, inclusive workplace, replenishing of water and reforestation. Coca Cola should collaborate with bottling companies’ partners to be safer for working environment prevent injuries or illness and to have safe behavior. Coca Cola should also careful use water because it is used by Coca Cola in many drinks and scarce of water can be a big problem in future.
Coca Cola has a hilarious history and it is present in every corner of the world. In my study I suggest that Coca Cola should pursue an aggressive strategy to be successful. Coca Cola has strong competitive position, and it also has proven market rapid growth. Coca Cola needs to develop and use inner strength to progress market permeation, and to market development strategy. Coca Cola should also focus on products like juices, water, and other healthy products. Coca Cola should start of different coke flavors and maintaining classic coke flavor. Coca Cola should integrate with other companies and buy other profitable businesses. Novelty in branding and belligerent strategic management is the way forward for Coca Cola. Coca Cola can be more successful if takes into account human resources, increase its sales potential, and adopt to new technologies.
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