Challenges of Coca-Cola Company in Global Business Environment - Research Paper Example

Coca-Cola Company Coca-Cola Company Coca-cola is a company that produces a wide range of beverages. The most famous product produced by the company is the coke drink. However, the company produces hundreds of other brands of beverages. For a long time, the coca-cola company has come under scrutiny for producing unhealthy products. There have been longtime claims that the products produced by the company are harmful to human beings and the environment. There have been claims that the preservatives and colorings used in the drinks contain harmful chemicals that are responsible for many health problems experienced in the world. Despite the fact that there have been many accusations against the company, coca-cola has always denied it saying that the drinks it produces do not have any harmful chemicals and that the drinks are consumer friendly. The company has always maintained that the accusations leveled against its products are false and unfounded. Such a response by such a big company is careless, irresponsible, and dangerous. For a company of its stature and standing, coca-cola should not deny such claims but investigate and ascertain the truth, then make the necessary rectifications. Denying the absence of harmful chemicals in the drinks is dangerous in the sense that such a statement jeopardizes the health of many people. Billions of people worldwide use the coca-cola products. This means that if the drinks have harmful chemicals, then the lives of so many people are in danger. The coca-cola company should take responsibility of its products and make sure that healthy products are sold to the people. According to Laufer and Coombs (2006), companies are not supposed to underestimate the necessity of properly handling the product harm crises as documented to affect negatively the market share, stock prices, purchase intentions, sales of recalled products, and sales of other companies’ products among others. Concentrating on making huge profits at the expense of the health of consumers is an irresponsible and selfish act on the part of the company. This means that the company should stop denying the claims and start looking for ways to make its products safer. This marketing plan for the giant soft drink company Coca-Cola Company is based on thorough research of the internal and external environment of the company. Being the largest soft drink industry in the world, coca-cola enjoys large market share. Coca-cola Company dominates over 50% of the world market. It has witnessed tremendous growth because of carbonated soft drink business. The main purpose as to why coca-cola controls the market is that soft drinks are the largest growth segment in the non-alcoholic ready to drink beverage. This has motivated them to accelerate the pace of production of carbonated soft drinks because they are ware that it is crucial for their continued success. Driven by innovation and new beverages, coca-cola has attained volume growth of over 20% in 2011. The company is focusing more in this area and is trying to come up with a strategy, which can increase consumption of coca-cola products. Customer satisfaction is the core purpose for the progress of this company in that the company projects to increase volume internationally by 7% with strong worldwide growth of 8% by 2013. It focuses on increasing its customer base by giving customers more than just drinks. Coca-cola Company has always aimed to maintain its strong brand. Through this brand, people develop faith in the products offered by the company. In order for a company to exceed its sales and profits, it has to create strong marketing strategy and bring in innovation each time. This company has been able to generate a cash flow of $14 million up from $10 million in 2011 a clear show of its financial strength. This tremendous increase is attributed to the company’s changing marketing strategy in that they have focused sales in Africa and Asia where they face less competition from companies like Pepsi. According to their annual report in 2005, the company sells carbonated beverages in over 200 countries. In addition, beverage comprising the image brand coca-cola accounts to approximately 1.5 billion. Of these drinks bearing the brand or trademark, coca-cola or coke accounted for over 70% of company’s beverage gallon sales. Coca cola segments differ to feature people of different income through its packaging. For its promotion strategies, coca cola introduces different prizes on top cover of its products, therefore, they segment people by benefit incurred for instance by giving them gifts and prizes. In addition, coca cola always shows its vibrancy via activities where people get together to have fun with coca cola brand. Coca cola aims to promote its products through sponsoring events. The company focuses on serving cold drinks to its customers, which shows that it has focuses on hot areas of the world. The market needs of coca cola vary with time and they aim to introduce their products over time such as Novida and coke cherry. Coca cola and stiff competition from Pepsi For a very long time since the establishment of Coca cola and Pepsi, these companies have been involved in cut-throat competitions in a bid to make and consolidate their market shares in the United States and other countries. It is believed that these wars were intense in the estimated $74 billion CSD (Carbonated soft Drinks) industry in the United States. This was a carefully waged struggle that is said to have begun in 1974, moving all thaw way to the 1990s. As competition in the CSD industry intensified, these two companies registered tremendous growth in their revenue (Rybolt, 2004). This was after a tremendous growth in the consumption of these products was realized, not just in the United States market alone, but also internationally. It is important to realize that the wars between Coke and Pepsi have been essential in influencing the CSD industry. In a bid to manage the competition from Pepsi, Coke had at one time forced to cut down on the prices of its products to attract a client base. This was a good move for the consumers of the soft drinks, who ended up benefiting. Overall, the quality of the products has also improved tremendously, something appreciated by consumers worldwide. Human resource functions These two companies have invested heavily in human resource development functions, considering the need for a multicultural work environment. The global growth and expansion in these companies has meant that they rely on employees from different countries they are joining. This is because; these employees are knowledgeable with the business environment in their countries, something that can be exploited for their competitive advantages. The companies have had to develop proper human resource development functions in order to reduce staff turnover. The companies have various benefit packages they offer to their human resources in order to enhance their confidence and dedication to the achievement of goals and objectives in the company. Strategic Management Since the inception of these companies, they have managed to build their brands around strategic leadership and management, which has been instrumental in devising strategies and approaches to navigate the CSD industry in the United States (Steen, 2006). It is their strategic management and leadership that has been responsible for creating counter-competitive strategies to make the companies effective in their practices. For instance, the strategic management functions at these two companies has been essential in negotiating for mergers in order to help them enjoy economies of scale from their functions. Pepsi is said to have prompted the merger with Pizza Hut and Taco Bell in 1978 and 1986 respectively as soon as it launched in the fast food industry. Following this move, Coke also negotiated with other competing chains to make a merger, this saw Burger King and Wendy with to start dealing with Coke (Yglesias, 2013). This is something that perpetuated the wars between these two companies, something that is deemed to continue even in the future. Financial involvement Another important attribute of the wars in these two companies has been the extent of their financial involvements. Coke and Pepsi have been in extensive growth and expansion processes in a bid to create and extend their market share (Depilis, 2014). Part of their financial involvement has seen the two companies create several mergers and sustain them in the process of consolidating their market share. In 1974, the wars in Pepsi and Coke saw the launch of the Pepsi Challenge, something that seemed critical to Coke. This was after Pepsi registered an increase in sales that year, showing that most of the clients actually preferred Pepsi to Coke (Yofie 2011). In a response strategy, Coke introduced price cuts for its products to get back its client base. It also carried out a series of advertisements to rebrand its products and retain its influence on consumers in its original client base. Marketing campaigns Marketing activities these two companies have been strategies and enormous, considering their effect in influencing the clients who for a long time, have had to make their choices in the CSD industry between these two major companies (Yofie 2011). At some point in these wars, Pepsi introduced a marketing campaign dubbed “Pepsi Generation.” This strategy was aimed at the youth; those that were young at heart. This strategy was very effective because it managed to reduce the market share initially held by Coke. Coke on the on the other can started introducing some non-flavored drinks to diversify their beverage products. Additionally, the introduced different packaging options, bringing in the take-away bottles; this marketing strategy was very essential. Pepsi responded the same by selling its products in similar cans. It is important to note that these two companies have had to keep devising new marketing strategies and approaches to consolidate their markets. References Depilis L. (2014).Coke or Pepsi? As soda sales crash, Pepsi’s a better bet. Retrieved from. http://www.washingtonpost.com/blogs/wonkblog/wp/2014/02/20/coke-or-pepsi-as-soda-sales-crash-pepsis-a-better-bet/ Laufer, D., & Coombs, W. T. (2006). How should a company respond to a product harm crisis? The role of corporate reputation and consumer-based cues. Business Horizons 49, 379- 385. Rybolt, T. (2004). Soda pop science projects: Experiments with carbonated soft drinks. Berkeley Heights, NJ: Enslow. Steen, D. (2006). Carbonated soft drinks: Formulation and manufacture. Oxford: Blackwell Pub. Yglesias M. (2013). Sweet Sorrow: Coke won the cola wars because great taste takes more than a single sip. Retrieved from, Yofie D. B. (2011). Cola Wars Continue: Coke and Pepsi in 2010. Harvard Business School. 9(1), 1-22 Read More