Business Analysis of Coca Cola International Company - Case Study Example

? Business Capstone Introduction: Coca Cola International is a United s company which started operating in 1833 and is a soft drink giant. Coca-Cola, most commonly known as Coke, is a carbonated soft drink which was invented by John S. Pemberton. It was produced as a tonic, which was modified by removing alcohol and adding vegetable essences. The name of the company was originally Coca-Cola Syrup and Extract but was shortened to Coca-Cola. It was registered in 1886 and since then it has been rapidly increasing its market share. By 1896, Coca-Cola successfully spread across the American border to Canada, Hawaii and Mexico. It is a multi-billion dollar company which is operating in more than 200 countries and offering more than 3,500 beverages. It is recognized as the world`s best known brand and has the world`s largest distribution network. Its products are the most widely known and most commonly used in the entire world. It has such a widespread network that the consumers enjoy Coca-Cola’s products at a rate of more than 300 million servings per day. It has subsidiaries and franchises in every country where it is operating. Coca-Cola is also the leading cola drink in the beverage industry throughout the world (Coca-Cola Company, n.d.). The mission of Coca-Cola is to create value for all the shareholders, customers and stakeholder by creating superior value and making profitable relations with the customers as well. Their mission is to “To refresh the world...to inspire moments of optimism and happiness... and to create value and make a difference.” They try to refresh the world by using the advantage that they have as being the world’s largest beverage company. Coca-Cola develops high quality beverages, which itself creates value for the company and helps strengthen its image, contributing to its overall success. Their vision is to work on every aspect of their company in order to achieve sustainable growth. The primary stakeholders of Coca-Cola include employees, customers, partners, society, shareholders and the company itself. They believe that in order to be successful, they must look ahead and plan for the future, using the resources in the most efficient way. Its product, satisfied customers, excellent leadership and, most importantly, a strong brand name further contribute to the overall success of this company (“Mission, Vision & Values”, n.d.) Porter`s five forces are a set of forces formulated by Michael E. Porter who proposed that strategies of any company are formulated based on the threat of potential entrants and substitute products, the bargaining power of both buyers and sellers prevailing in the market, as well as the level of rivalry among competitors (Daft & Lane, 2009, p. 196). The amount of capital required by any soft drink company is really high, which acts as a barrier to entry for new entrants. Also, Coca-Cola has such a strong brand name with a huge amount spent on selling and promotion. In order to maintain its market share, Coca-Cola will have to spend a huge amount on advertising to ensure that its message is being carried forward to its customers all over the world. This is also one of the ways through which this company can compete with its rival companies, especially Pepsi. Coca-Cola and Pepsi dominate the soft drink industry and therefore, Coco-Cola will have to come up with new ideas in order to compete effectively and maintain its position in the market. The pricing done by this company will also depend on the type of market, whether it is customer oriented or seller oriented. SWOT Analysis: Strengths: The biggest strength that Coca-Cola has is its Coke itself. It has been able to maintain its original taste for years and this is the reason why its customers are always loyal. It has the strongest brand across the globe with a brand equity of over $50 billion. The quality and taste are the major strengths of Coca-Cola and one of the reasons for its overall success. In order to maintain its market share, one of the strategies that Coco-Cola can adopt is to use such promotion tactics involving “the original cola” as it is the reason of this company`s success. This will certainly attract a lot of customers. Rather than concentrating on the product itself, it can emphasize the benefits or the satisfied feelings customers get while using this product. Weaknesses: One of the greatest weaknesses that Coco-Cola has is the fact that soft drinks are often associated with ill health. According to a study, women who consume more than one soft drink are twice as likely to develop diabetes as women who drink less than one per month (Meyers, 2005). These factors go against the product and the company itself. Another weakness is negative publicity or bad word of mouth. There have been a lot of cases against this company on issues of labor rights, employment rights etc. All these create negative publicity and might affect the sales and even the success of a company. A good strategy that Coco-Cola can adopt is to make the people aware that these products are not harmful and do not carry any health issues. Through effective advertisements and focus groups, Coca-Cola can avoid this negative publicity and health-related issues. Opportunities: One of the opportunities that Coco-Cola has is to use its resources efficiently in order to cater to the needs of new markets either by introducing a new product or developing its existing products. Another opportunity is to improve its distribution networks and make them more available than they already are. The best strategy is to improve its supply chain network in order to capture a greater market share and provide superior value products to its customers. Another opportunity comes from the target market which is the younger generation. Coca-Cola can open up new markets in countries with a high birth rate which will increase the target customers of the company. For this, they need to survey such markets before making any decisions. Threats: A major threat to Coco-Cola is its rival Pepsi. Coca-Cola should adopt such a strategy that makes sure that its market share is not taken away by Pepsi. They should think of creative ideas in order to compete efficiently and attract more customers than its rivals. Another major threat includes companies that produce juices, coffee, milk etc. Due to the health effects of soft drinks, these companies can attract more people by focusing on the benefits these products give to their customers. This can pose a serious threat to Coca-Cola, so efficient strategies should be adopted. In order to maintain its competitive edge and profitability, Coca-Cola needs to implement competitive strategies including differentiation, focus, cost leadership etc. The best strategy is to adopt differentiation by distinguishing its product from Pepsi or any other soft drink. It can do this by using creative advertising in order to attract its target market which is the younger generation. One way is to sponsor concerts or popular brands in order to connect with the younger generation. Another way is to improve the quality further to retain its existing customers. The company should do the best it can and should not give any chance to its competitors. This is also a way to fight off potential new entrants and substitute products as the customers are loyal to the company. Another competitive strategy – cost leadership – is to produce the product at its lowest cost possible without compromising quality. Coco-Cola can make such arrangements with its suppliers and retailers in order to sell their products at the lowest price possible. This will also act as a barrier to entry and will attract more customers due to its lower price. With the focus strategy, Coca-Cola Company can concentrate on one market segment or a specific customer group. Through this, it can make profitable and direct relationships with its valued customers. Coca-Cola can also use strategies such as innovation through which the company can be more effective by using its current resources efficiently. Other levels of strategies involve acquiring new businesses, plants, units, etc. It should also use a high level of research and development in order to be aware of the changing consumer needs and wants. In order to maintain its competitive edge and increase its profitability, Coco-Cola needs to implement these strategies effectively (Daft & Lane, 2009, pp.198–199). Implementation and execution are an extremely important step of any process. Therefore, Coca-Cola should come up with such a communication plan that helps the company achieve its goals in order to remain profitable and competitive. For this, the company needs to evaluate its environment so as to direct resources towards the goals as efficiently as possible. The most important part of any strategy execution or implementation depends on the ability of its leaders: how well they can motivate their employees to align with their strategies and goals. Therefore, the leadership of this company needs to motivate and persuade their employees to work effectively. They also need to make sure that all their employees understand the strategies and what they have to do in order to achieve it. The leaders should make clear strategies and goals to make it easier for employees to understand and comprehend. For successful implementation, leaders also need to make clear simple game plans to make the employees aware of their responsibilities. These plans should include resource allocation and everything else required for this process. This may require changes in the organizational design and structure. The managers and employees could also be divided into teams for effective results. In order to motivate employees, rewards or incentives should be tied to their work and responsibilities. This will make sure that nothing interferes with the implementation of the company`s strategies. The shareholders should be made aware of this entire process or just what the company hopes to achieve through this course of action (Daft & Lane, 2009, pp. 203–205). Corporate governance is a method through which the actions and decisions of a company are controlled. It is the involvement of all the stakeholders including shareholders, board members, managers, etc. The Coca-Cola Company follows a set of principles of corporate governance. One of these is the “director`s access to employees, officers and employees” (“By-laws,” n.d.). Under this mechanism, the directors have full access to the records of the company at any time and they may call up meetings through the CEO or secretary as well. This is an excellent way to control managerial actions as the managers know that they need to be task-oriented and should not fall behind their schedules as they might be called by the director and then they will have to answer their questions and provide explanations. Weak managers might even lose their jobs if the director thinks that they are not capable of fulfilling their responsibilities. So the managers need to be responsible and on their toes all the time. Another mechanism used by the Coca-Cola Company is the succession of management. Under this, in case of any unforeseen circumstances or emergency due to which the CEO resigns, the board will follow its policies and choose someone from the senior management positions to take the post of CEO. This can prove to be highly effective as the managers know that the board is keeping an eye on their commitment and ability. If they are fulfilling their responsibilities and are achieving the set goals, then they have a chance to get a higher position in the company. This acts as a motivational tool not only for the senior management but also for managers at the lower levels of the company. Leadership is simply the ability to influence employees toward the attainment of goals. It promotes creativity, change and innovation (Daft and Lane, 2009, p. 410). Leadership is one of the few assets of a company which contributes to the success of a company, and one such example is the powerful and internationally spread leadership of Coca-Cola in the soft drink industry. According to the group HR director of Coca-Cola, Stevens J. Sainte-Rose, “The uniqueness of Coca-Cola is in engaging consumers with the brand, so marketing talent is key. Without the right people, we can’t deliver the winning formula” (“Seven steps,” 2012, p. 17). So they developed this plan through which they not only emphasized the current leaders or “marketing stars” but also wanted to make sure that they have creative thinkers in their company who would take the positions of leadership in the future. One of the recommendations is to provide training opportunities to the current workforce so that in future, when they are the leading managers, they can continue the success of the company and provide inspiration to their fellow workers. In this world of rapid globalization, companies are not only concerned with how much profits they make but also if they benefitting the corporate environment as well. Why is this important? This is because the companies have to maintain ethical as well as profitable relationships with its stakeholders – even its competitors. The main belief is that all companies are based on the exchange concept which states if you expect something, then you have to give something in return as well. The Coca-Cola Company has developed a program that is known as The Coca-Cola Foundation, which consists of several sub-programs related to health, education, water, etc. They are trying to provide support to communities through these programs. This program is highly effective in strengthening the brand image of Coca-Cola as they are giving different scholarships to needy students, providing awareness of clean water usage etc (The Coca-Cola Foundation, n.d.). They even help out disaster-struck areas and have contributed millions for these causes. This foundation is also working on issues such as HIV/AIDS, working in areas such as Egypt, Ethiopia, Kenya, South Africa and Tanzania. This shows that Coca-Cola is a responsible, ethical corporate citizen. They also need to provide rights to their employees even in third-world countries such as India and Pakistan (“HIV/AIDS programs & initiatives,” n.d.). They provide jobs as they are operating in more than 200 countries. They are involved in other corporate activities as well and have developed trusted relationships with both their suppliers and customers. As a result, the reputation of Coca-Cola Company has improved along with increasing employee motivation and commitment. It also works as a positive promotion resulting in more loyal customers, and the company can also attract government support. It influences the overall picture of the company by putting it in a favorable light, and the financial statements of the company might also improve. References Coca-Cola Company information: The Coca-Cola Company. (n.d.). Coca-Cola: The Coca-Cola Company. Retrieved September 10, 2012 from http://www.thecoca-colacompany.com/ourcompany/index.html. Mission, statement & vision: The Coca-Cola Company. (n.d.). Coca-Cola: The Coca-Cola Company. Retrieved September 10, 2012 from http://www.thecoca-colacompany.com/ourcompany. Daft, R. L., & Lane, P. (2009). Management (9th ed.). Nashville: Western Educational Publishing. Soft drinks reportedly linked to health problems. (n.d.). newsmax. Retrieved September 10, 2012 from http://archive.newsmax.com/archives/articles/2005/12/8/142651.shtml. By-laws. (n.d.). Coca-Cola - Investors - Corporate Governance - Corporate Governance Guidelines. Coca-Cola: The Coca-Cola Company. Retrieved September 10, 2012, from http://www.thecoca-colacompany.com/investors/governance/guidelines.html. Seven steps for effective leadership development. (2012, June). Oracle White Paper. Retrieved September10, 2012 http://www.oracle.com/us/media1/steps-effective-leadership-dev-1657106.pdf. Coca-Cola - Sustainability - Supporting Communities - Foundations - Global. (n.d.). Coca-Cola: The Coca-Cola Company. Retrieved September 10, 2012 from http://www.thecoca-colacompany.com/citizenship/foundation_coke.html. AIDS programs & initiatives: The Coca-Cola Company. (n.d.). Coca-Cola: The Coca-Cola Company. Retrieved September 10, 2012 from http://www.thecoca-colacompany.com/citizenship/local_hivaids_initiatives.html. Read More