Examination Of Coca Colas Business Environment


Coca-Cola is a carbonated soft drink in the stores, restaurant, and so on. As we know that Coca-Cola started in early years 1886, it was invented by Doctor John Pemberton a Pharmacist from Atlanta, Georgia (Mary, n.d,; Allsand, n.d.). John Pemberton came up with a drink consisting of carbonated water, cane sugar syrup, caffeine, kola nut and cola leaves extracts (Allsand, n.d.). The resulting drink was found to be nutritious and refreshing (Allsand, n.d.). The name of Coca-Cola was a suggestion given by John Pemberton's bookkeeper Frank Robison (Mary, n.d.).

Today, Coca-Cola Company is the number one maker of soft drinks in the world and their selling was 1.3 billion beverage servings every day (Anonymous, n.d.). Besides that, Coca-Cola is available in more than 200 countries around the globe (Angelfire, n.d.). It is one of the most recognizable logos in the world (Angelfire, n.d.).

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The macro environment analysis of the Coca-Cola

Simply to explain definition of macro environment analysis, it is major external and uncontrollable factors that influence an organization's decision making, and affect its performance and strategies (Business Dictionary, n.d.). The purpose of the Macro Environment Analysis is to identify possible opportunities and threats to business as a whole that are outside the control of that business (Site, n.d.). In analyzing the macro-environment, it is important to identify the factors that might in turn affect number of vital variables that are likely to influence the organization's supply and demand level and its costs (Kotter and Schlesinger, 1991: Johnson and Scholes, 1993). A PEST analysis is one of them that are merely a framework that categorizes environmental influence as political, social and technological forces. PEST analysis is useful when a company decides to enter its business operations into new countries and also helps to breaks free of unconscious assumptions and to effectively adapt to the realities of the new environment.

there are many factors in the macro-environment that will effect the decisions of the managers of any organisation. Tax changes, new laws, trade barriers, demographic change and government policy changes are all examples of macro change. To help analyse these factors managers can categorise them using the PESTEL model. This classification distinguishes between:

2.1 Parent Company of Coca-Cola

Parent company of Coca-Cola is Coca-Cola Enterprise Incorporation, and called as CCE. Located of Coca-Cola Enterprise is in North American. As we know that CCE is the world's largest marketer, producer and distributor of Coca-Cola products (Antenna, n.d.). Besides that, CCE also is the world's largest bottler of non-alcoholic beverages by volume. Financial report in second-quarter 2006, CCE reported that net income of $229million or 71 cents per diluted share (Anonymous, n.d.).

2.2 Political Analysis for Coca-Cola Enterprise

Political analysis is refers to government policy such as the degree of intervention in the economy (Oxford, 2007). However, Coca-Cola is a very popular cola. It is a carbonated soft drink with non-alcoholic. So that, Coca-cola beverages was fall within the food category under Food and Drug Administration, also called as FDA or USFDA. The Food and Drug Administration is an agency of the United Stated Department of Health and Human Services, it also enforces other laws. In 2008 year, FDA had sent warning letter to Coca-Cola Company, the subject of the Coca-Cola Company is misleading that nutrition for Food Safety and Applied Nutrition. Therefore, the government is play important role in manufacturing on product in terms of regulations, such as potential fines to punish that companies do not meet a standard of laws.

Political conditions for in international markets, including civil unrest, government charges and restriction on the ability. Sometimes they need to changes in law and regulations, such as changes in accounting standards, taxation requirements and environmental laws in domestic for foreign jurisdictions. Besides that, Coca-Cola Company also ability to penetrate developing and emerging markets, which also depends on economic and political conditions and how well they able to acquire or form strategic business alliances with local bottlers and make necessary infrastructure enhancements to production facilities, distribution networks, sales equipment and technology.

2.3 Economic Analysis for Coca-Cola Enterprise

Economic analysis included interest rates, taxation changes, economic growth, inflation and exchange rate (Oxford, 2007). In 2010 year, American has largest and most technological powerful economy in the world, with a per capital GDP of $46,900 (Geographical, 2010). However things changed. Most economists loosely define a recession as two consecutive quarters of contraction, or negative GDP growth (Rex, 2001).

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When interest rates are lower, Coca- Cola can borrow money for investing in other product or technology. As researching for new product would cost less the Coca-Cola Company will sell its products for less and the people will spend as they would get cheap products from Coca-Cola.

2.3 Social Analysis for Coca-Cola Enterprise

It includes the demographic and cultural aspects of the external marco environment. Changes in social trends can impact on the demand for a firms' product and the availability and willingness to buy (Oxford, 2007). These factors affect customer need and the size of the potential market. In American, many citizens are practicing healthier lifestyle. Consumers from the age of 37 to 55 are increasingly concerned with nutrition. There is a large population of the range know as the baby boomers. It will continue to affect the non-alcoholic beverage industry by increasing the demand overall and in the healthier beverages.

2.4 Technological Analysis for Coca-Cola Enterprise

Technology factors can reduce costs, improve quality with reduce minimum efficient production level and lead innovation to influence outsourcing decisions (Oxford, 2007). For Coca-Cola companies to effective the advertising, marketing and promotional programs. They make some products look attractive, such as cans and plastic bottles have increased sales for Coca-Cola as these are easier to carry and you can bin them once they are used. This helps in selling of the products.

The international consideration

At the company Coca-cola Company, all people are their competitive advantages to differentiate them in the marketplace (Caree, n.d.). They represent and help Coca-Cola Company build the world's greatest brands and became well-known brands in the international market and business (Caree, n.d.).

Recently, Coca-Cola Company has involves many activities in the international business. As we know that in November 16, 2010, Coca-cola India launches "Nestea". Coca-cola India announced the launch of the globally successful ready-to-drink iced tea brand "Nestea" in the country. Simply to define Nestea, Nestea is a brand of ice tea manufactured by Nestle and distributed by Nestle company's beverage department in the United States (Mahalo, 2010). Incidentally, Nestea is brand licensed to Beverage Partners Worldwide (BPW) (Shilpa, 2010). The 50:50 joint ventures leverages the products manufactured by Nestle and the marketing initiatives of Coca-cola (Shilpa, 2010). In India, Nestea will be bottled in a plant in Andhra Pradesh (Shilpa, 2010).

When Coca-Cola India joint ventures with Nestle, they consider quality of the product and also their future. According to Mr. Ricardo Fort, Vice President Marketing, Coca-Cola India, "as a beverage company, our aim to be able to offer a beverage for every lifestyle and occasion, which also aids long term, sustainable business growth (IIFL, 2010). We are therefore constantly working on high-quality additions to our portfolio (IILF, 2010). Our entry into ready-to-drink Iced tea segment with the globally successful NESTEA now provides the consumers with a convenient on-the-go option which is in keeping with evolving consumer lifestyle (IIFL, 2010).

In the journey of the joint ventures and expansion the brand of Nestea across the globe will face some problem in international business. One of the problems is relating to brand name. Brand plays an important role in the international business and also market. Cause a brand is the identity of a specific product, service or business. Concept of the brand is the personality that identifies a product, service or company and how to key constituencies. The Coca-cola logo is an example of widely-recognized trademark representing a global brand. When Coca-Cola Company acquired Nestle in India, the brand was well-known in the country. But the problem with the brand name acquisition is the likely fall in goodwill even, through there is local goodwill where the brand is used (Aswathappa, 2008). So the firm should consider the image they wish to create for their products to local or foreign (Aswathappa, 2008). Countries with higher levels of economic development tend to have a higher quality image for their Nestea then do less developed countries (Aswathappa, 2008). But image can change. In addition, there are always legal or cultural factors that force to alter the brand names under which it sells its product. Simply to define it, different places have different cultures. Firstly need to understand about cultural of other countries. Such as cultural is China is "guan xi". So Indian cultural is defined by relatively strict social hierarchy. That they need to do the packaging, image and so on to attractive them with right cultural cause to make sure that Nestea is suitable for them and the global consumers.

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The growth of business

Coca-Cola Company is a well-known company and also famous brand in the global. But they still require to establish to growth strategies based on their current performance in the industry and also and they want to development their soft drinks will be located in everywhere in the each country become more successful. As we know that the Coca-Cola Company is the world's leading seller of soft drink, the best seller especially is coca-cola. It sells a range of product to meet a broad range of consumer needs. Once the company identifies there is need, Coca-Cola has to decide how it is going to meet this demand.

Coca-Cola Company requires using that Adsoff's Product -Market Matrix. Firstly, we need to understand about Adsoff Matrix Product. The Adsoff Product/Market Matrix is a tool that helps businesses decides their product and market growth strategy (Rabidbi, 2008). Adsoff Product/Market Matrix suggests that a business' attempts to grow depend or whether it markets new or existing products in new or existing markets (Rabidbi, 2008). There are four main categories for selection; there are market penetration, market development, product development and business diversification (Rabidbi, 2008). Below table is after do analysis on the Coca-Cola Company:

Existing product

New product

Existing market

Market penetration

Diet coke

Product development

Coca-cola Vanila

Fanta Icy Lemon

New market

Market development

Coca-cola share size 1.25 litre Bottle


Winnie the Pooh Roo Juice


Market penetration

Market penetration is the name given to a growth strategy where the business focuses on selling existing products into existing markets. This means increasing their revenue by, for example, promoting the product, repositioning the brand, and so on (Marketing Teacher, 2010). However, the product is not altered and we do not seek any new customers (Marketing Teacher, 2010). This is the objective of higher market share in existing markets and also to secure dominance of growth markets.

In Coca-Cola Company, situation of Diet Coke is under market penetration. Since being introduced in 1982 as a result of growing trend towards dieting and healthier living, Diet Coke has been a highly successful product for the Coca-Cola Company, selling millions of unit per year (Anonymous, n.d.). Throughout this time, Coca-Cola has constantly adapted aspects of the marketing mix for Diet Coke in order to continually match customer trends and fashions.

Market Development

Market development is the name given to a growth strategy where the business seeks to sell its existing products into new markets. This means that the product remains the same, but it is marketed to a new audience (Marketing Teacher, 2010). Exporting the product, or marketing it in a new region, there are examples of market development (Marketing Teacher, 2010).

Two types soft drinks of Coca-Cola is under market development, there are Coca Cola Vanilla and Fanta Icy Lemon. Coca Cola Vanilla had successful launch in American, especially in Great Britain, this is because it is new Vanilla flavored version of the Coca-Cola Company (Anonymous, n.d.). Prior to doing so, Coca Cola carried out taste tests and developed the graphical 'look' of the Diet Coke Brand. When they did this, they took great care to incorporate aspects of the Coca Cola brand, but still differentiating it so consumers would see it as an alternative to Coke. While Fanta Icy Lemon is a new flavor sparkling drink by Coca-Cola was a direct result of listening to consumers who called the company's Careline telephone service (Anonymous, n.d.). This business conducted taste tests prior to launch 2001 launch (Anonymous, n.d.).

Product Development

Product development is a new product into existing markets. This strategy may require the development of new competencies and requires the business to develop modified product which can appeal to existing markets. This often happens with the auto markets where existing models updated or replaced and then marketed to existing customers (Marketing Teacher, 2010).

Coca Cola Share Size 1.5l Bottle is new product for the Coca-Cola Company. Desk research showed Coca Cola that a growing number of households contained 1-2 people, which led them to believe that a smaller version of the 2 litre family sized bottle would sell well to these groups (Anonymous, n.d.). In launching this product including simply sell existing brands such as Coca Cola, Diet Coke and others, Coke did need to alter the product itself, merely different aspects of the marketing mix (Anonymous, n.d.). Besides that, Coca-Cola has been developed to have vanilla,lime, cherry and diet varieties in the soft drinks market.


Diversification is the name given to the growth strategy where a business markets new product in new markets. There are two types of diversification, namely related and unrelated diversification (Marketing Teacher, 2010). Related diversification means that they remain in a market or industry with we are familiar, while unrelated diversification is where they have no previous industry nor market experience (Marketing Teacher, 2010).

Winnie the Pooh Roo Juice and Powerade are new product into new market. Winnie the Pooh Roo Juice is target parents of children aged 2-5 years with a juice drink that was packaged in a fun and colorful manner (Anonymous, n.d.). They chose the characters from Winnie the Pooh for their universal appeal to children and made the product appeal to both children and their parents (Anonymous, n.d.). Brand of Powerade, Coca-Coal developed the energy drink 'Powerade' in response to growth in the sport drink market (Anonymous, n.d.). Much research was carried out into potential competitors within this segment prior o the drink development and launch (Anonymous, n.d.).

New venture

Coca-Cola is currently in discussion with potential development partners to assist in pursuing some of these opportunities to further strengthen the model. The company's goal is to double the program and its impact by 2010

References List

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Accessed at: 1 November 2010

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Accessed at: 1 November 2010

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Accessed at: 17 November 2010

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