Coca Cola: Growth and Company Overview and Analysis - Essay Example

 Coca Cola: Growth and Company Overview and Analysis The Coca Cola Company is one of the largest and most recognizable firms in existence within the global market today. As such, the estimated brand value of Coca Cola is in excess of 75 billion USD. Since its inception in 1886, the global market has been one in which Coca Cola has dominated while at the same time buying integral competitors and adding them to their total product range and offerings within given regions. As a function of this, the Coca Cola Company is represented in nearly every nation on earth and total drinks consumed per day are in excess of 1.7 billion. Due to the sheer size, dominance, and market share that Coca Cola represents, the company is an interesting and peculiar case to understand from a business perspective of growth, performance, key factors of success, and future impact. By analyzing and seeking to draw a level of inference upon these key factors, this brief analysis will seek to integrate an understanding of each of these through the analysis of historical information as well as current and past trends within the marketplace. Furthermore, an understanding of the key means by which the firm has leveraged a level of integration and dominance within global markets will also be discussed as a means of drawing inference upon the way that successful market penetration and dominance has taken place. Growth: Naturally, one of the most profound and interesting aspects of Coca Cola is the way in which the company has grown over the past decades. Starting from a humble cocktail of headache medicine intended to be a type of pharmacological panacea, the brand has dominated the beverage industry for the better part of the past 65 years. Although its growth prior to this point cannot be fully ignored, for purposes of this analysis, the international and domestic growth of Coca Cola will only be measured after the year 1946; a point in time in which this author believes that the brand fully came into its own and developed a well coordinated global market scope. Naturally, one of the most effective ways to determine the level of growth that the firm has experienced within the past 65 years is to examine the share price of its stock over the time interval up for analysis. Although all firms can expect their stock to grow over time, assuming that the company is viable and at least nominally expanding, the level to which Coca Cola stock has grown over the time period in question is further evidence of the wildly successful international market penetration and range of growth that the firm has experienced (Ignatius 2011, p. 94). Figure 1.0 aptly demonstrates this rise in stock prices as a function of time. Figure 1.0 Although a modest growth rate of around 10-15% per decade would not be unheard of, the growth rates that the company has realized, as exhibited in the figure above, are indicative of a firm that has experienced a wildly successful rate of market penetration and customer appreciation within the markets and consumers engaged (Coca Cola Company Spotlight 2012, p. 55). With the exception of but a few brief periods in time, the general trend for the firm from year to year has been highly positive. However, as one might assume, the level of success that the brand has experienced over the past 10 years is surprisingly low as compared to what has been experienced in the past. One of the most blatant and obvious reasons for this is the fact that the global economic meltdown has effected markets and consumers the world over who, in times of difficulty, have often opted to forego these beverages as a means of retaining a larger portion of income for themselves. One should of course understand that such a level of growth does not come by itself. Consequent levels of supply chain growth, marketing efforts, and the gamut of other operations were necessitated to go hand in glove with this level of growth, popularity increase, and subsequent share price increase that this analysis has thus far indicated. In this way, the actual share growth rates that have been illustrated underlie basic growth mechanisms that have seen the firm become one of the most successful and rapidly growing industries that the21st century has seen. One of the means that Coca Cola has attempted to weather the storm with relation to market downturn is by attempting to buy products and product lines that represent a more health conscious approach. To this end, various fruit juice brands around the world have been purchased by Coca Cola. Although this can be seen as a type of market differentiation with respect to the level of exposure that Coca Cola currently represents within the beverage industry, there is also another reason for this taking place. Due to the fact that a larger and larger focus has been placed upon the health effects of diets dominated by a large intake of sweetened beverages, the brand itself has faced a sudden and severe threat from the nutritional value side of their product lines (Belpoggi et al 2006, p. 740). As a function of seeking to ameliorate this exposure, the brand has opted to expand within the given market. As a means of growth within such a difficult economic period, Coca Cola has focused upon emerging markets as opposed to pouring money and effort into strengthening its already strong positions in the markets it currently competes within. Specifically, this plan has called for a large amount of resources to be expended on market penetration within former Soviet countries of Eastern Europe as well as developing markets of Africa (Murkherjee 2008, p. 41). Furthermore, as an approach to integrating the product within some of the poorer regions within India and elsewhere, the firm has developed new product lines that offer smaller yet still affordable portions of the beverages to the affected populations that are trying to be engaged with (Choueke 2011, p. 21). Performance: As has been discussed, the level to which Coca Cola has developed over the past decade has been rocky to say the least. Although this has not meant that the firm has suspended marketing or market penetration efforts in under-represented markets or otherwise sought to cut costs as a means of absorbing these losses, the fact of the matter is that the years immediately following the global economic crash has seen Coca Cola’s profits plummet. However, due to an undeniably effective growth strategy as well as a focus on emerging markets the world over, the firm has been able to offset the economic externalities to such a favorable extent that the firm has since recovered from the losses that it experienced during the worldwide economic collapse of 2007/2008. As a function of the slowdown, Coke’s overall stock prices went down to approximately $37.00 per share (Moraru 2010, p. 49). However, as has been stated, the market growth and deep market penetration that the firm enjoyed from its overseas markets meant that by the end of 2012 the stock prices were back at record highs; approximately $80.00 per share. Although this increase may seem as something inconsequential to the laymen, the fact of the matter is that such a rise in stock prices approximately equivalent to 150% increase in the firm’s value (Kent 2010, p. 118). The ability to affect such an increase rise over such a short period of time is directly attributable to the key factors of growth and market penetration which will be discussed within the following section. Figure 2.0 below illustrates the preceding discussion of share prices. Figure 2.0 Key Factors: The key factors in Coca Cola’s environment are of course multiple. Due to the fact that the firm has operations and a market presence in almost every country in the world, seeking to condense the environmental factors that the firm faces would require a dissertation length response (Gager 2012, p. 19). However, for purposes of clarity and brevity, it is the belief of this author that many of the most important environmental factors that the firm faces around the world can be condensed into the following: risks associated with economic downturns, legal and environmental factors, and scientific/health discoveries. With respect to the first of these environmental factors, this analysis has already noted how the crash of 2007/2008 has affected the overall profitability and stock valuation that the firm could project (Madhavan 2012, p. 97). In much the same manner, any future slowdowns to the global economy will necessarily also be represented in decreases the firm’s overall stock prices and profitability scores. Similarly, with respect to the actual environmental factors that could affect the firm, Coca Cola will need to be presently aware of the fact that further unethical behavior such as has been noted and catalogued in South America and bottling locations in India must immediately cease. Due to the negative blowback that the firm has received in both of these markets, valuable market share has been lost to the likes of Pepsi Co. and the outlook for the firm within these regions has been harmed as a function of public brand image (Walsh & Dowding 2012, p. 109). Finally, as the recent news has indicated, any further develops on the health front with relation to discoveries involving highly sweetened beverages, the effects of corn syrup, or the harmful and prolonged exposure to highly caffeinated beverages could intimately and directly affect the health and wellbeing of the brand. With respect to the level that these key forces will play with regards to Coca Cola’s viability within the future, one can only surmise that the brand will only be able to correct its public relations image and environmental impacts by seeking to build a better and more ethical firm that rapidly reacts to such environmental threats as have been described. Moreover, technological advancement is another factor which will be key in helping the firm to maintain a level of viability if and when many of the prime ingredients are ever noted to cause lasting health concerns for those that imbibe large quantities of the beverage. In this way, the firm can and should expend the necessary money that is required to seek to develop new ways in which the product can be marketed that will not have the possible negative health consequences of what exists within current offerings. In short, the brand growth and development, penetration, and recovery that the Coca Cola company has exhibited over the past 10 years is astounding. From a standpoint of understanding the ways in which the firm integrates with the global system, invests, and seeks to minimize its own risk factors, the reader can come to a greater and more full and complete understanding for why Coca Cola has been so wildly successful for so many years and bears a high likelihood of continuing this level of success far into the future; providing that it is able to weather the unique key environmental factors that have been listed. 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