Key Micro Environment Factors Commerce Essay

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Coca- cola, the product that has given the world its best known taste was born in Atlanta, Georgia, on May 8,1886.Coca-cola company is the worlds leading manufacturer, marketer and distributor of non-alcoholic beverage concentrates and syrups. The company’s products comprises of bottled and canned soft drinks. In addition it also produce sports drinks, tea and coffee. Thecoca-cola company began building its global network in the 1920s. It is operated in more than 200 countries and produce nearly 400 brands. The company aim is to increase it shareowner value over the time.

2.0 PESTEL Analysis:

Pestle stand for :

It is a tool that helps the organizations for making strategies and to know the external environment in which the organization is working and it is going to work in future.

Coca- cola, which is the leading manufacturers and distributors of drinks also need to undergo this pestel analysis to know about the external environment especially their competitors, and the opportunities available in order to keep pace with the fast growing economy.

2.1 Political analysis:

Political factors include government intervenes in the operations of the company. The political factors may include:

Tax policy

Trade restriction

Amount of permitted good by government

Laws imposed on the recruiting labour

Globally coca- cola beverages are non-alcoholic and fall under FDA(food and drug administration). It is an agency in US. Department of Health and Human Services. The job of FDA is to check the ingrediance used while manufacturing the also consider the regulation imposed by FDA on plastic bottles. It also include tax and accounting standards. The accounting standard used by company change from time to time. The company is also subjected to income tax policies, import and excise duties for distribution.

2.2 Economic analysis:

The economic factors analyzes the possible areas where the firm can grow and expand. It includes the economic growth of the country, interest and exchange rate, inflation rates, wage rates and unemployment in the country.

The company first examines the condition of the country in which they are selling or launching its product. When there is an economic growth in the country, the purchasing power among people increases. It gives good chance to market the product. The net operating profit for the company outside US stands around 72%. Coca- cola uses derivative financial instrument to cope up with the fluctuating interest rate. Inflation and wage rate go hand in hand, when there is an increase in the inflation, the employee demand for a higher wage rate to cope up with the cost of living.

2.3 social analysis:

Social factor is mainly the culture aspects and attitude, health consciousness among people, population growth with age distribution, emphasis on safety. The company cannot change the social factors but the company has to adjust itself to the changing society.

Coca cola which is a B2C company, is directly related to the customer, so social changes are important to consider. Coca cola has about 3300 products but it introduces minimum number of products according to the culture of the country and the attitude of the people. The main problem of the soft drink is that it cause obesity, so it produces diet coke and zero calorie soft drink.

Population growth rate and the age distribution is another social factor to consider. It is important because non alcoholic markets have most of its shares from children and youngsters. The age distribution of the country becomes important for the success of product in the country.

2.4 Technological analysis:

Technology plays a vital role in the soft drink industries. Technology contributions are most important in packaging. The company relay on their bottling partners for a significant portions of their business.

The advancement in the technology in the company has led to introduce new ways for the availability of coca cola, it also introduces vending machines all over the world. In product it led to the development of new products like cherry coke, diet coke etc. the technical advancement in the bottling industries include introduction of recyclable and non-refillable bottle.

2.5 Legal analysis:

It includes discrimination law, custom law, antitrust law, employment law and health and safety law. In coca cola the business is subjected to various laws and regulations in the numerous countries.

In the US the products are subjected to various acts like federal food, drug and cosmetic act, the federal trade commission act, health act, the production, distribution and advertising all products are subjected various law. Changes in these laws could result in increased cost and capital expenditure, which affects the company profitability and also the production and distribution of the product.

2.6 Environmental analysis:

These factors include the environment such as the weather conditions and the seasons in which people prefer to buy cool beverages. Also the company must follow the environment issue related to the product manufacturing, packing and distributing in various countries. Usage of renewal plastic in the pet bottles is followed by the company strictly.


The data has clearly indicated that coca cola products are more popular because of it taste, brand, name, innovation and availability. It keeps each and every factor in mind while launching its product anywhere in the world.It have the ability to cope up with changing situation.