Organization Summary
The Coca-Cola Company is a multinational beverage corporation in America with its headquarters in Georgia, Atlanta. The interest of the Company is retailing, manufacturing, and marketing non- alcoholic, syrups, concentrates, and beverages. The Coca-Cola Company produces Coca-Cola that was invented around 1886 by John Stith Pemberton, a pharmacist. Later in 1889, the brand and the formula of the Company were sold to Asa Griggs Candler for $2, 300 which led to the incorporation of the Company. The Coca-Cola company in 1892 in Delaware, Atlanta. The operating income of the Coca-Cola company stands at around US$8.70 billion, according to 2019 statistics. Its net income is not less than Us$6 billion and total equity of Us$15.98 billion according to the 2018 financial year. Furthermore, The Coca-Cola company owns Anchor bottler, a Coca-Cola Refreshments in North America whose stock is part of the S&P 500 and DJIA indexes. It is one of the largest plastic waste producers worldwide, producing more than 3 million tons of related packaging after the end of every year.
The primary market of the Company is in the United Kingdom, although it has acquired other companies in other countries, for example. It received Minute Maid in 1961 and 1981. It has other markets Australia, Indonesia, and New Zealand operating Coca-Cola Amatil and Coca-Cola Femsa in Mexico. The main products and services of the Company entail manufactures of brands such as Coca-Cola.
Zero, Diet Coke, Minute Maid, Gold Peak, Simply, Fanta, Sprite, Powerade, and Dasani. The main competitors of the Coca-Cola company include Pepsi, Red Bull, Nestle, and Parle, an Indian Brand producing nonalcoholic beverages and syrups. The market segments of the Company entail the youth or the youngster. According to statistics, it is evident that both genders like the Coca-Cola company product. Significantly, the Company considers every customer as a potential and a target consumer.
QUESTION 1
Strategic Approach
For a business organization to remain profitable and survive in the competitive market, the firm should remain aggressive in development and search for strategies that offer competitive advantages in their process of stepping up a defensive approach to protect and secure the competitive advantages. With the new entrants and increased awareness of the consumer’s healthier products, it has led to a reduced market share of the Coca-Cola beverages industry. The Company has adopted various strategies such as embarking and revamping its manufacturing on beverages and embarking on multiple campaigns and marketing for its brand products. The Company has developed other long-term plans, such as expanding the existing capacity to meet the consumers’ ever-growing needs. The Company has modernized its equipment to increase the efficiency and production of the nonalcoholic beverage. Moreover, the company partners with vegetable and fruit farmers across the globe in its quest to maximize its presence in the manufacture of juice and other nonalcoholic concentrates.
The Coca-Cola Company is under pressure to improve the quality and productivity of its products and speed. The managers of the Company across the globe have embraced Total Quality management tools, reengineering, and benchmarking, although the strategies have rarely led to sustainable profitability. The significance and strategic essence have chosen a valuable and unique position rooted in its activities and systems that could be somewhat difficult to match. The competitive and sustainable advantage has been prolonged merit of implementing exceptional value and developing a strategy that combines the capabilities and the internal sources of the organization that would not be replicated by other nonalcoholic and beverage competitors across the globe.
Porters Generic Strategies
The Coca-Cola Company has adopted the porter’s generic strategies to maintain and achieve a competitive advantage. The Company defines the procedures along with strategic strength, scope, and dimensions. The strategic scope identifies the composition, size, and powers of the Company looking at the differentiation, its leadership, and the market segment. The Coca-Cola company cost leadership strategy entails the winning market share of the firm where it appeals to price-sensitive and cost-conscious customers. The Company achieves the plan by adopting the lowest price of its product in the target market segment. Therefore, the Company has strategized on attaining the highest asset turnover to achieve an indirect and direct cost of operations, or control the procurement and the supply chains, and enhance low prices. However, thy could use other strategies since the porter’s Generic strategies, particularly the cost leadership strategy, have reduced customer loyalty since the price-sensitive customers tend to switch to other products and brands when they ere is a more inferior priced brand substitute in the market.
Moreover, as a cost leader, it may result in a low-quality reputation, making it hard for the Coca-Cola company to rebrand is products and itself, for instance, if it chooses to adopt the differentiation strategy. Alternatively, the Coca-Cola company could meet the needs of its consumers by mainly focusing on efforts relating to marketing, particularly to the narrow market segments. Also, it could tailor its marketing mix to the specialized nonalcoholic markets to earn more than the average return on investment.
Product -market strategies
The product market strategies used by the Coca-Cola company focuses on the potential and the present customers, the market, and the product. The Company uses the four product-market combinations. These strategies entail market development, market penetration, diversification, and product development. In the Company’s policy of market penetration, Coca-Cola seeks to achieve growth through the use of the already existing products in the market segments to increase the market share. The Company develops the products that are targeted to the already existing market segments through product marketing strategies. On the other hand, the diversification strategy enhances the firm’s diversification into a new enterprise by manufacturing and developing new market products.
The Company uses a market penetration strategy that leverages the existing capabilities and resources of the firm. Maintenance of market share, especially in a growing market, would result in growth. There could be current opportunities to maximize the market share, especially when the competitors reach the capacity limits. Conversely, the market penetration strategy has its limit in that at the time when the Company enters a point of saturation, there is a need for pursuing another approach for the Company to grow. It means that the Company could use an alternative strategy such as a market development strategy since the strengths of the Coca-Cola company relates to its consumers and not a specific product.BY using the plan as an alternative, it could be able to leverage its strengths by adopting a new product to the target consumers. In essence, the latest development strategy is riskier than merely increasing the market share, similar to the modern market development strategy.
QUESTION 2
Developments
The Coca-Cola company has made various developments impacting the Company’s strategies, increasing productivity. The Company has identified features offered by other nonalcoholic beverage competitors across the globe.
Generally, a company has a competitive advantage, especially when it tends to be successful compared to its rivals in customers’ attraction and minimizing the competitive forces. The Coca-Cola company has now developed sources of competitive advantages such as delivering of better and superior services to its consumers, generating the best -made market products, accelerating the experience curve achieving reduced and lower cost compared to the rivals, proprietary technology, convenient location of its branches, styling, and features that attracts the consumers, product innovation increasing the efficiencies and effectiveness of its processes, increasing the reputation and brand name offering its consumers more value for money. For the Company to achieve its strategies and succeeded in building a competitive and advantageous competition, the Company provides the consumers with superior value. The Company has, therefore, made the following developments, among others, positively impacting the organization’s strategies.
Technology and innovation
Technology and innovation refer to the procedural and deliberate licensing of skills, the products, intellectual property rights, and the process of institutions for product manufacturing. Technology in these cases tends to delineate technological transfer as system transfer incorporating the software and hardware, procedures, and skills. In the Coca-Cola company, particularly in the African countries, the Company has lowered its operating costs improving its production standards, encouraging the emergence of other investors to invest in these countries. Coca-Cola Company has developed industrialization and manufacturing sectors. Although the development comes with its costs, it leads to increased productivity and minimized competition, positively impacting the Company’s organization strategy.
Sources of competitive advantage
If a company has a competitive advantage, it can highly charge its products, enjoying superior sales. These kinds of organizations may alternatively produce their products at lower costs compared to other business organizations such that the competition may drop out of the market. The Coca-Cola company has made these types of development focusing on pricing, return on investment, cost, margins, sustainability, reputation, and brand. Generally, people are the most influential and driving forces behind the competitive advantage. The workers at the Coca-Cola company are better at producing, creating, and establishing various relationships to achieve a competitive advantage. Besides the structure and the organization’s culture is another development that has been adopted by the Coca-Cola
company. It focuses on the abilities and energies of the people, thus producing significant results. The Coca-Cola Company has adopted superior practices and processes of creating, resulting in competitive advantages. They are now using preferred methods that are difficult for their competitors to replicate. For example, they have taken out the patent to enhance the mass production of nonalcoholic beverages. The process has reduced the creation of the Company making the firm increase the ales at the end of its trading period.
Accelerating the Experience Curve
The market composition and size are the primary determinants of attractiveness, making it the first variable examined by the marketing analysts. The small market size of business firms has been the limiting factor, especially for enterprises that produce mass consumer goods that mostly rely on the economies of scale in marketing and production for competitive advantage. The Coca-Cola company’s primary role is ascribed to the industrial growth of its exports, acting as the primary determinant of its external surplus. The Company has increased the market share succeeding in making all demanded beverage products in the UK and the continental markets. The Company has allowed direct profit repatriation and import content, making a significant net contribution to the company balance of payment. The development has led to increased profits and productivity impacting the organization’s strategic plans.
Product Styling and Features
The brand equity and value of an organizational product is a permanent asset for a company. The Coca-Cola Company has adopted the brand extension strategy and development to ensure that the other product under similar brand umbrella and name have a similar quality level and provide the same type of satisfaction. The managers and the administrations of the Company are knowledgeable in pre-testing the extension of the brand to augment the product’s value or the brand even further. The Coca-Cola brand and products are now distinguished from other similar nonalcoholic products. The features of the brand create a particular customer expectation and need leading to their fulfillment. Furthermore, the Coca-Cola product styles predict the buying behavior, leveraging the brand to gain access to the best distribution channels. The new techniques and features in the Coca-Cola brand and the products have increased sales and consumer demands, therefore, impacting the strategic plan of the organizations that relate to increased profits and produced the quality product to satisfy the consumers.
Corporate Reputation
The most significant and remarkable achievement of the Coca-Cola company is its improvement and development, making it one of the 60 companies ranked highly due to its definition of emotional appeal, financial performance, social responsibility, services and products, leadership, and vision. According to the survey, the soda company has earned a reputable status for the last 15 years. It has achieved an aggregated score (RQ) for the past five years. The Company has been investing its brand in a manner that satisfies their consumers. It produced a seriously declining volume level, the diet soda, but the Company still resonates with highly demanding consumers globally. The superb marketing performed by the company “Share a Coke,” “Taste the Feeling,” has encouraged the social sharing of the nonalcoholic beverage and helping the impoverished employees and consumes connects with their loved ones. Coca-Cola financially remains ever sturdy. It has been paying its dividends to the investors, increasing annual payout more than a 15% clip. The Coca-Cola dividend yields at 2.7% and a payout ratio of 60%, although there is plenty of room for the Company’s sustainable growth. The Company has also been around for not less than 100 years generating warm fuzzies for investors and consumers nostalgic commercials and yearly performances. The Coca-Cola company has had a sterling reputation that could not be tarnished, making it the best nonalcoholic beverage company across the globe, impacting its strategic objectives.
QUESTION 3
Theoretical Strategy Framework
The Coca-Cola company has been successful for the past years due to the utilization of the strategies, making it one of the leading companies globally. It has accomplished its strategic crust as the earning grew to almost 82% while the return on common equity increased to nearly 40 percent. Moreover, the Company has adopted the current strategies to enhance increased productivity and financial benefit in the future.
The Current strategy
The leading quality, quantity, and the Coca-Cola brand reflect the company leadership and the laid down strategies for the Company. The Company has been giving incentives to the retailers and intermediaries, offering them free bottles and samples, enabling these traders to push in the market. The strategy has enhanced the Availability of Coca-Cola products in the markets across the globe. Also, the Company has been changing the prices of their product seasonally. For example, in the summer, it is always the best season for the Pakistan beverage industry. Therefore, during the winter season, the Coca-Cola company reduces the price of sodas to maintain profit and sales. The Company has been purchasing shelves in supermarkets and the departmental stores displaying their products in tractive features and styles attracting consumers across the world. They position the product and the freezers in eye-catching positions, especially at the entrance of the stores. Moreover, the Company has been doing sponsorship with different schools and colleges sponsoring sports events to increase their market share.
Currently, the Company has adopted the brand development strategy, which is far-reaching, remaining in the limelight from the time the Company took it. The Company has recognized that brand loyalty could be essential in the maintenance of the Company’s reputation. The Coca-Cola company brand development strategy consists of redesigning brand development policies and techniques to maintain the changing consumer mindset. Before the adoption of the plan, the Company believed in Availability, affordability, and acceptability but later realized the preference, the price value, and pervasive penetration produced more profits at the end of the Company’s financial year. The Company has been working on the brand building in that it wants the accessibility of its consumers to be “within an arm’s reach of desire.” The Company has therefore been testing the attributes of its 20 brands after every month involving more than 3000 consumers. According to the current survey for the past three months, the brand development strategy seems to be useful since it’s now capable of constructing, maintaining, and managing brand image from the day the plan was adopted.
Furthermore, the brand has gained unanimous and increased acceptance across the globe since its ability to connect with the consumers, implying the brand loyalty. The strategy has been instrumental, especially in maintaining the Coca-Cola company image, making its leadership believe in shelling out the quality and the best in that the consumers retain their default. The technique of brand building also enhances the purchase frequency investing in the advertisement campaigns that engage celebrities’ services from every corner of the world. Also, the Company has currently introduced the diet coke, the Coca Cola classic, and the Coca Cola zero, retaining its consumers and increasing profits.
Potential Risks
Strategic planning takes resources, hard work, and time distracted from the urgency of managing the day to day business operations. There are huge benefits of adopting the brand building strategy compared to other strategic risks that the Coca Cola company would adopt. The brand-building approach enhances tracking and creates progress against operation plans. The different strategies do not involve the prospects of the Company, thus risking its future profits and financial incomes. The approach of the brand-building highlights the previous year’s operations and the future objectives of the Company. Without the prospects of the Coca Cola company, then the results tend to be less proactive.
The other strategic plans do not highlight the weaknesses and strengths of the business enterprise. The fact risks the organization’s future in that it does not highlight its competitive advantage and the various plans for closing the capability goal in the business firm. The brand-building strategy creates high-quality awareness providing a more significant focus on the successful operations of the Coca Cola company. Moreover, the other types of strategic plans risk the business environment of the enterprise. There is a need to identify the business’s external environment that impacts its performance either positively or negatively. The brand-building strategy analysis the potential shifts of the industry or the market, providing opportunities for taking actions when such variations happen. A strategic plan is all about effective choices about the market and services as parts of the future and what the Company should avoid in ensuring success in the future. The other strategies risk the critical decisions that provide limited resources to the promising opportunities that offer a substantial financial return.
QUESTION 4
Decision-Making Tools
Business leaders and managers make a hundred decisions each day, most of which influence business success. Typically, the process of choice for making involves the definition of the problem, identifying the alternatives, gathering information, and monitoring or reviewing the results. In the global market, the Coca Cola company have raised a trend to delegate decision for implementation of the strategies and policies especially to the managers and the senior employees in control and management of the beverage firm. With the Coca Cola products available in more than 210 countries, the Company needs to make wise decisions to avoid dilemmas. The managers use different techniques that are effective in choosing the best alternative for decision making. The following are the four decision-making tools that might be used by the Coca Cola company for decision making.
Marginal Analysis
The marginal analysis decision-making tool weighs the input benefit against the costs. The strategy helps the managers of the Company decide whether an input or an activity provides maximum return on investment (ROI). The marginal analysis is a crucial decision-making tool since it takes the resources, the information constraints, and preferences into account in that the leaders and the managers of a company can make more optional decisions basing on the information on the marginal analysis. The Coca Cola company could use the minimal analysis decision-making tool by changing the input quantities and the output volume. After the identification of the variable, they should determine the total benefit increase considered as the marginal benefit. If the marginal benefit tends to outweigh the cost of margin, it means that there is a “net benefit” calling for the addition of “marginal unit.”
SWOT Analysis
When making plans for a change in a business enterprise, the SWOT analysis diagram could help break down the strengths, weaknesses, opportunities, and threats. The Coca Cola company would help the firm identify the various sources that influence action, strategy, or initiative. The information gained could guide the managers and the leaders in supporting the decision of the Company. The listing of the strengths, weaknesses, opportunities, and threats enhances the spotting of the patterns, the trends, and the connections that relate to the quadrants. The tool could help the Coca Cola company increase sale at the end of the trading period.
Decision Matrix
When the managers are dealing with the multiple variables and choices, the decision matrix clears the disarray. The decision matrix highlights the advantages and disadvantages of allowing the managers to place a level of importance in every situation. The Coca Cola enterprise should use the decision matrix to accurately weigh various options against each other for effective decision making.
Pareto Analysis
The Pareto Principle enhances the identification of changes that are most significant and effective for the business company. The principle postulates that more than 20% of the business elements contribute to more than 80% of the Company’s growth. The Coca Cola managers should leverage the Pareto Principle by explicitly identifying the 20% characteristics and finding the other 20 % of the consumers with similar features. The small change would make a certain percentage of impact effective in prioritizing the highest influential decision allowing the managers to dedicate the resources of the Company and the energy to increase sales and move the needle for the Company.
The marginal decision-making tool could be the most appropriate for the Company. The tool measures the additional costs and benefits of other economic operations within the firm. The margin theory of analysis holds that when the benefits exceed the costs, the managers in a firm could increase business activities to achieve the net profit. Furthermore, the fixed costs, sunk costs, and the average cost have a positive benefit to the marginal analysis, therefore making it the best tool for making decisions.
Conclusion
The Coca Cola Company sells carbonated soft drinks in restaurants, stores, and vending machines in more than 100 countries across the world. The Company uses various development strategies such as the brand development technique to keep up with the competition and the consumer’s mindset. The brand-building approach also enhances purchase frequency. The Company believes that every consumer should benefit where they induce them to uphold their values, increasing recognition, success, and loyalty in the global economies.