Coca Cola Strategic Analysis
Strategic analysis of coca cola.
Coca Cola is one of the two leading beverages brands of the world which owns or licenses and markets more than 500 non alcoholic beverages brands. The beverages sold by Coca Cola can be grouped into the following categories - sparkling soft drinks; water, enhanced water and sports drinks; juice, dairy and plant-based beverages; tea and coffee; and energy drinks. Coca Cola also owns and markets world’s top five sparkling beverage drinks including Coca-Cola, Diet Coke, Fanta and Sprite. Coca Cola products are sold in US since 1886 and now the brand has spread over 200 countries. In the recent years the soda industry is seeing heavy competition and apart from that the sweeping health trends and other changes are also affecting the industry. Coca Cola also invests a lot in marketing and product innovation. It brought several new products to the market during the last few years. The brand’s global presence and sales in 200 countries is supported by a large and global supply chain and distribution network. However, in 2017 the net Operating revenues of the brand have declined and there was large impact of acquisition and divestitures of its bottling investments on its net operating revenues.
External Analysis of the beverages industry
There are several factors and many kinds of forces affecting the global beverages industry . Apart from changing health trends, lifestyle changes and changing demographics of the global population are also affecting the soda industry. People are switching to healthier drinks due to rising health consciousness. It is the most important factor that has led to growth in sales of bottled water and energy drinks during the recent years. According to various reports 2017 proved a profitable year for the soda industry. Bottled water segment registered the highest growth last year, a report by beverage digest highlighted.
A 2018 report published by beverage digest showed American consumers spent 2 billion dollars more on the non alcoholic beverages in 2017 than in 2016. Pepsi and Coca Cola have continued to focus on product innovation and bring new products to the market for faster growth. In 2017, the bottled water category saw the highest growth of all beverages apart from soft drinks including energy drinks. Beverage digest reports published in the last two years show that bottled water has acquired much popularity in these years as American people are now taking to healthy ways to satisfy their thirst. Last year the industry registered total sales of 135.7 Billion dollars. Both bottled water and soft drinks added a billion each to the entire sales across the beverages industry. According to the beverage digest report for 2017, value growth in each category was as follows:
Carbonated soft drinks (+1.3%);
water (+3.8%);
RTD teas (+1.5%);
and RTD coffees/dairy-based and other (+11.7%)
juice/juice drinks (-0.9%)
and sports drinks (-1.8%)
In 2016 the bottled water brands posted very healthy growth. Aquafina and Poland Spring led the category with highest sales followed by Dasani. In this way, while the soda industry has achieved impressive growth during the recent years in US, it is the bottled waters and soft drinks including energy drinks which have been at the helm of the growth story.
SWOT Analysis of Coca Cola 2018:
- Brand image: Coca Cola has managed an excellent brand image globally as an ethical and customer friendly brand. The brand’s image is mainly connected with the youth.
- Global presence: Coca Cola started selling in US in 1886 and since then its business has spread worldwide to more than 200 countries. Today it is a global brand with very high level of popularity.
- Supply chain and distribution network:
Coca Cola has managed a global supply chain and distribution network. This is one of the primary strengths of the brand. It depends on a very large number of suppliers from several corners of the world, primarily for the supply of agricultural raw materials. In the recent years, it has focused a lot on the optimisation of its global supply chain. An efficient supply chain and distribution network has helped the brand reduce its manufacturing costs as well as serve its customers more effectively.
- Marketing capabilities: Coca Cola is also an excellent marketer and spends a large sum on marketing and promotions of its brand and products. It has also invested a lot in digital marketing and advertising. In 2017, its marketing expenditure was 3.9 billion dollars. Its focus on customer engagement using digital channels has also grown.
- Large product portfolio:
Coca Cola has a very large product portfolio. It notes in its 2017 annual report “We are committed to meeting their needs and to generating new growth through our portfolio of more than 500 brands and more than 4,100 beverage products, including nearly 1,300 low- and no-calorie products, new product offerings, innovative packaging and ingredient education efforts. We are also committed to continuing to expand the variety of choices we provide to consumers to meet their ever-changing needs, desires and lifestyles”. (Coca Cola Annual Report 2017)
- Large & Loyal customer base:
Coca Cola’s business is spread over 200 countries where it has a very large and loyal customer base. Customer loyalty is a very important factor driving business growth in the 21st century. However, Coca Cola also invests a lot in building customer loyalty and keeping customers engaged.
Weaknesses:
- Water related issues: Coca Cola has been facing a lot of flak over water management related issues. In the past, it has born severe criticism in this area. While these issues have continued, the brand is still dealing with water management related issues and investing in water conservation and other things to deal with the water crisis.
- Declining revenue:
For the past five years, its net operating revenues have declined steadily. Gross profits of the brand have also declined steadily. Net Operating Revenues declined to 35.4 Billion dollars in 2017 from 41.9 Billion dollars in 2016. Apart from that its gross profits fell to 22.15 Billion dollars in 2017 from 25.4 Billion dollars in 2016.
Opportunities:
- Marketing opportunities: Marketing opportunities have grown in the 21st century with the arrival of new technologies including digital and AI. Pepsi seems to be getting ahead in the race. Coca Cola can use these resources and technologies for better marketing as well as higher customer engagement.
- Digitisation of supply chain : Digitising the supply chain can also help the brand manage its productivity better and reduce the manufacturing costs. A digital supply chain will increase efficiency and productivity.
- Market expansion through partnerships: The brand has excellent opportunities of market growth through new partnerships. Partnering with fast food or food brands can help it grow its market share and better market its brands.
- Healthy products:
Product innovation also offers major opportunities of growth since the new generation is highly health conscious. To cater to its taste and choices, Coca Cola must include more of health friendly products. This will also help create a better image and help with marketing.
- Heavy competition in the soda industry: The competition in the soda industry has grown intense. While the last few years have brought some growth, still all the brands are highly aggressive about maintaining their market share. These brands invest aggressively in marketing and customer engagement as well as research and development.
- Increased costs of raw material and labor:
The costs of raw material and labor have increased. Coupled with water scarcity globally, these factors are leading to higher manufacturing costs. This has led to increased cost related pressures for Coca Cola brand.
- legal and regulatory threats:
the legal and regulatory threats have increased over time and the soda industry is also taking some flak. Apart from environmental conservation, food quality and labor related laws are also making growth difficult for the soda beverages brands. Non compliance can always be very costly.
PESTEL Analysis of Coca Cola:
Coca Cola is a global company and does business in several markets and regions. there are several challenges to global operations and while operating internationally a brand can come across hurdles that can be political, economic or even legal in nature. A PESTEL analysis helps understand these threats and challenges. PESTEL is an acronym for Political, Economic, Sociocultural, Technological, Environmental and legal.
Political factors have acquired enormous importance in the 21st century and globally the government oversight and political regulation of businesses has grown. The growing importance of political factors can also be understood from the fact that in the recent period, EU has passed several policies that are very strict in terms of business and focus on protection of the consumers’ rights. Apart from trade policies the government’s role in the industry has grown in several other areas too. Worldwide businesses are subject to stiffer regulations that can hurt business growth. Moreover, political stability is related to economic and financial growth. Economic growth is not possible without political stability. Unstable political environments or political chaos can hurt businesses and their supply chains. Coca Cola’s supply chain is located globally in several countries and political disruptions an cause the disruption of its supply chain and distribution network. Moreover, the condition of trade relationships of US with other countries also affect its business and sales.
Economic factors are of utmost importance in the 21st century. The world has been through a bitter recession just some years ago and during that period the world economy saw declining activity, falling employment and retarded growth. All of this resulted in declining consumer spending and less sales for international brands. Once the recession was over, sales of the brands have again increased due to higher employment and increased consumer spending. As economic activity returned the level of employment rose leading to higher dispensable income in the hands of the consumers. With this people’s spending on food and beverages products has increased. Overall economic factors play a major role in the growth of business and in the overall business environment worldwide.
Sociocultural:
Sociocultural factors have also acquired much importance in the context of business globally. Their importance has grown due to several reasons. Changing social trends worldwide are affecting businesses and their social image. Sociocultural factors are affecting the business and marketing strategies of global brands. The demographic composition of the global population has also changed and businesses have to alter their marketing strategies and customer service practices in order to better cater to the needs and choices of the millennial generation. Moreover, studying sociocultural factors and using them to form local marketing strategies can also affect how well businesses connect with their customers and engage them. The importance of the cultural connection in marketing has grown multiple times.
Technological:
The technological factors have now grown central to doing businesses profitably. Technology is everywhere from marketing to manufacturing and supply chain. The importance of digital technology in the global business environment has increased immensely and brands are in a race to stay ahead of their rivals in terms of technology. However, technological growth has also proved good for international businesses in several other ways. From marketing to supply chain management as well as manufacturing and distribution, everywhere being technologically advanced is important for fast growth of businesses. Coca Cola has made significant investments in technology in various areas from marketing to supply chain and distribution. One another important area where investing in technology has proved profitable for businesses is customer engagement.
Environmental:
Environmental factors are now an important consideration in the context of large and global businesses. Brands are not just focusing on environmental conservation and low carbon footprint but it is now more important than ever for them to comply with the environmental laws. Coca Cola has faced sever criticism over its water consumption. Water is an important raw material for Coca Cola and it has to use it in very large quantities. However, in the recent years it has focused a lot on water conservation and water management. It also invests in environmental protection through its sustainability and CSR efforts.
Legal factors are also highly important now in the context of international business. It is because the legal net has kept tightening and creating difficulties for international businesses. Law and compliance have grown very important due to which organisations have special compliance teams dedicated to legal issues. These compliance teams take care of all the compliance issues in various markets. Local laws vary across the various regions of the world and organisations have to focus on it especially in order to avoid fines and resulting financial losses. From labor to product quality as well as several other areas, there are so many laws while EU has also kept tightening the legal net on big brands.
Five Forces Analysis of Coca Cola
Bargaining power of suppliers:
The bargaining power of Coca Cola’s suppliers is low which is because of their smaller size and their being globally scattered. Due to their small size, these suppliers do not hold significant bargaining strength. Moreover, they are scattered all over the globe and Coca Cola always has many more options to choose from. It is why Coca Cola can impose rules and regulations on its suppliers regarding quality, labor and sustainability practices. There are more factors too that reduce the bargaining power of the suppliers including Coca Cola’s brand image, financial strength and large size.
Bargaining power of customers:
The bargaining power of the customers has risen manifold in the 21st century which is because the control now is in the hands of the customers. Customers are more aware and equipped with information to make their choices. Moreover, their tastes have changed and they have too many options to choose from. Apart from Coca Cola and Pepsi, there are other local and international brands too in the market that are competing for market share and trying to attract customers using new strategies. Overall, customers are in a very strong position. Some factors that can moderate their bargaining power are brand image and equity as well as the marketing efforts of coca cola and its competitive pricing strategy. The overall bargaining power of the customers gets to be moderately high.
Threat from substitute products:
The threat from substitute products mainly comes from the products made by the rival brands including beverages, fruit juices and energy drinks. Apart from Coca Cola, there are pepsi, Nestle, Red Bull and more brands in the market that offer similar and competing products.
Threat from new entrants:
The threat from new entrants for Coca Cola is moderately low. New players cannot get to enter the market easily. Even if they can start on a smaller and local level growing into an international brand is not easy. While there is a very large level of investment involved in infrastructure development as well as marketing and human resource management. There are legal barriers also to entry in market as legal and regulatory barriers make it difficult for new brands to launch their business. Moreover, for a new brand to grow into a large brand like Coca Cola it will have to spend several billions.
Intensity of competitive rivalry in the industry:
The intensity of competitive rivalry in the industry has grown very high in the recent years. It is because brands are now competing aggressively to get ahead of the others. They are spending a lot on marketing and customer engagement. Apart from Pepsi and Dr Pepper Snapple, there are several other big and small brands also competing for market share locally and internationally. Proliferation of digital technology has also intensified the competition in the soda beverages industry.
Value chain analysis of Coca Cola:
Coca Cola is among the most globally recognizable brands. The brand is known for its strong image and global presence. It has several billion dollar brands in its portfolio. However, to establish a large and successful brand requires successful management of the value chain. A value chain includes several activities right from obtaining raw materials from various sources to the sales of the product and after sales customer service. There are several activities in the middle also which are an important part of the value chain. The value chain analysis concept was given by Professor Michael E Porter of Harvard Business School. Managers can get a better picture of how each stage of the value chain adds value to the product. Accordingly the managers can optimize the value chain for getting better results. Optimization of the value chain brings efficiency and can generate new sources of competitive advantage. Here is a detailed value chain analysis of Coca Cola. There are both primary and support activities in the value chain that have been discussed below:
Primary activities:
Inbound logistics:
Coca Cola has managed a very large supply chain that has tens of thousands of farmers and suppliers. It treats its suppliers as business partners. These business partners provide raw material including ingredients, packaging and machinery as well as goods and services to Coca Cola’s manufacturing system. However, the brand has set guiding principles for its suppliers that they are required to follow. At least the Coca Cola suppliers are required to comply with all the applicable laws and regulations. In its guidelines Coca cola also lays emphasis on responsible environmental and workplace policies and practices. The brand has also managed excellent relationship with it suppliers. This has helped the brand maintain a continuous and uninterrupted flow of raw material.
Operations:
The operations function of Coca Cola includes concentrate development and all the administrative functions at its headquarters. Coca Cola is a global brand operating at a local scale in every community where it operates. The Coca cola system operates using several local channels. However, the brand does not own or control all of its bottling facilities several of which are owned by its bottling partners. The company manufactures and sells beverage bases and syrups to the bottling operations. Coca Cola owns the brand and does its marketing to its consumers.
Outbound logistics:
This part of Coca Cola’s Value chain includes its bottling partners and distributors. The bottling partners of Coca Cola manufacture, package, merchandise and distribute the final product to the customers and vending partners. These vending partners then sell the product to the customers. The customers of Coca Cola range from grocery stores, restaurants, street vendors, convenience stores and movie theatres to amusement parks. The bottling partners of Coca Cola work with its customers for implementing localized strategies they develop in partnership with Coca Cola company.
Marketing and sales:
Coca Cola is a well recognized and global brand. However, it has invested a lot in marketing to acquire global popularity. The coca cola logo is among the most recognizable logos of the world. Apart from that Coca Cola is known for spending heavily in marketing. It uses digital channels, social media, in combination with print media and outdoor marketing for promotion of its brand and products. It runs excellent marketing campaigns from time to time to attract new customers as well as engage the existing ones. During recent years, it brought a major shift in its marketing strategy. Now instead of promoting its brands separately, Coca Cola promotes the entire brand together. Coca Cola products are sold in more than 200 countries worldwide. From retail stores to restaurants and theatres, Coca Cola products can be seen everywhere in the market.
Support Activities:
Technology:
Coca Cola has continued to maintain its heavy focus and investment in technology and research and development. From production to distribution and sales, everywhere the brand has invested in advanced technology. Apart from that it invests in technological innovation through R&D activities. There are six Coca Cola R&D centers around the world. These centers are connected to the external technology and assessment hubs that connect it with partners, tech start ups and university researchers. The company collaborates with partners in the other industries also for innovation across products, packaging, equipment and the other things. In this way, Coca Cola is continuously investing in innovation for the brand’s growth.
Human Resource Management:
HRM is an important area of Coca Cola’s value chain. The company focuses on hiring and grooming talent. It has also created an environment of learning and growth inside its organization. Apart from comparatively better salaries it complements the payments with financial and non financial rewards. Coca cola has focused on employee motivation and engagement. Performance management policies and procedures are used to provide the employees with opportunities of career growth.
Procurement:
Coca Cola procures from several thousands of farmers and suppliers worldwide. To make the entire process easier and efficient, it has used advanced technologies. The brand has maintained excellent relationships with its suppliers. It has provided them with guidelines in various areas that they are required to follow.
Firm Infrastructure:
The role of a firm’s infrastructure is critical to its success. Coca Cola has managed a very large infrastructure that includes its management, human resources, financial and technological infrastructure. It is training and educating its suppliers for better performance. The focus is also on innovation through its R&D centres.
Coca Cola Business Strategy & Competitive Advantage
Coca Cola is a truly global brand selling across more than 200 countries with a large and varied product portfolio and obviously an excellent presence in the world of marketing. However, the world of soda is also marked by intense competition. Apart from Pepsi there are more small and big brands selling soda and other drinks which are adding to the intensity of competition. To win in an intensely competitive market, requires high level of popularity which cannot be achieved without a great business strategy . Coca Cola has traditionally relied on competitive pricing and heavy investment in marketing for the growth and success of its business. However, the market has come far from where it was 5-10 years ago and now not just the taste but the expectations of the customers have also undergone a vast change. Not just this, technology has also altered marketing and customer service standards. Faster growth can be achieved only through higher customer focus and through greater focus on sustainability. These are some areas where Coca Cola has focused upon in the recent years. Apart from investing in water conservation and supplier empowerment, the brand has also grown more cautious about its marketing strategy and reputation management. This is the era of health consciousness when people are growing more and more health conscious. This is a very important part of Coca Cola’s revised business strategy where it has focused on bringing more healthy products as well as better packaging to appeal to the new generation of customers. All these things are now an important part of its business strategy and its long term focus on sustainable growth.
The sources of Coca Cola’s competitive advantage are as follows:
- Brand image/equity - a highly popular brand with excellent level of consumer trust
- Global presence: Sells in more than 200 countries
- large product portfolio : consisting of soda and healthy products
- customer loyalty
- Competitive pricing
While some of these sources have resulted in long term sustainable competitive advantage and some in temporary advantage that can be further strengthened through product innovation and marketing. Apart from these things, the brand is also investing in sustainability and healthier products as well as superior HR management for better long term results. HR is a critical area driving the growth of brands in the 21st century and Coca Cola is investing in its HR through several initiatives for the career growth and development of its employees.
VRIO Analysis of Coca Cola:
Important Resources & Capabilities o f Coca Cola :
Brand image & Equity:
The brand has maintained an excellent image a san ethical and customer friendly image. It has also maintained an excellent level of trust among its customers.
Global presence:
The brand is present globally and its products sell in more than 200 countries.
Supply chain and distribution network:
Coca Cola has managed an excellent supply chain and distribution network. It sources raw material from around the world from several thousands suppliers and farmers. It distributes its products from its warehouses and distribution centres located at key points globally.
Customer loyalty:
The brand has managed to grab a large market share and has also maintained an excellent level of customer loyalty.
Marketing capabilities:
Coca Cola is known as an excellent marketer and its ads are known to be highly engaging. Its excellent marketing capabilities also set it apart from the large crowd of brands.
HRM & Organisational culture:
Coca Cola has also maintained excellent focus on Human resource management. Apart from paying attractive salaries to its employees it also pays them financial and non financial rewards. the brand has implemented several training and redevelopment programs that are for career development of the employees.
Financial Analysis of Coca Cola:
The Net operating revenues of Coca Cola have continuously declined for the past few years. the Net operating revenues of Coca Cola in 2015 stood at 44.3 Billion dollars which fell to 41.9 billion dollars in 2016 and then 35.4 Billion dollars in 2017. Gross Profit and operating income have also declined steadily over the years. The pros profits of the brand fell from 26.8 Billion dollars in 2015 to 25.4 Billion dollars in 2016 to 22.15 Billion dollars in 2017. Operating income of Coca Cola also saw a decline from 8.7 Billion in 2015 to 8.6 Billion in 2016 to 7.5 Billion dollars in 2017. The 15% decline in net revenue of the brand was mainly an impact of refranchising of its bottling operations. Cash from operations for the entire year was 7 billion dollars a decline of 20%. Full year cash flow was 5.3 billion dollars, a decline of 19 percent.
Suggestions:
- Coca Cola must focus on increasing the appeal of its healthy products portfolio . While bottled waters are seeing increasing sales, the health friendly products can also generate higher sales and help it grow faster.
- Focusing on digitisation and packaging innovation can help it find superior growth.
- Apart from developing a customer centric portfolio the brand must also stay focused on customer engagement.
- Focusing on sustainability to minimise wastage will help it get rid of some of the flak it has been facing over waste generation and water management.
- Research and development is another important focus area for faster growth of brand ,and to bring new and innovative products that better suit the demand of the new generation.
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Coca-Cola Business Strategy
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Coca-Cola, as the market leader in the soft drink industry, has a wide portfolio and operates in global markets. As a household name, its active corporate and marketing activities are worth studying. Let's have a look at Coca-Cola's international corporate strategy and marketing activities including its branding and pricing strategies.
Coca-Cola Company case study
The first Coca-Cola was sold in 1886 at a pharmacy in Atlanta, but now globalisation and diversification of the product range have changed its original brand image significantly.
Globalisation is one of the most distinctive features of Coca-Cola. The products are not just produced and bottled in its home town in the U.S., but in other countries as well.
Besides, as mentioned above, Coca-Cola uses a standardised brand image around the world.
Coca-Cola is one of the biggest global soft drink companies. It has a wide portfolio with brands in multiple soft drink categories including carbonated drinks, energy drinks, juices, and coffee. Its overall portfolio is diversified and more importantly, there are some products that are sold as region-specific, making up part of their strategy.
A corporate strategy is a medium-to-long-term plan for a business to reach its corporate objectives. It includes the activities that should be carried out, the time in which the tasks should be done, and the person who is responsible for the tasks to achieve corporate objectives.
Merging with or acquiring competitors, re-branding, or expanding the market from domestic to international are all examples of corporate strategies.
F unctional strategy of the Coca-Cola Company
Functional strategies are specific goals set out for different divisions of an organisation to reach its functional objectives.
The divisions usually include Marketing, Finance, Operations, and Human Resources . However, for multinational conglomerates like Coca-Cola, there could be more specific teams under each division. For instance, the operations division may include the IT department, Logistics, and Customer Service.
In terms of operational strategy, bottling partnerships have helped Coca-Cola seize growth opportunities via vertical acquisitions. Global partnerships help Coca-Cola with cost control by reducing transportation costs and reaching economies of scale. This is an example of a functional objective for the operations division.
C oca -C ola marketing strategy
Effective and active marketing activities around the world are strong contributors to Coca-Cola’s revenue and market shares. Market and human insights are used heavily as indicators in Coca-Cola’s marketing activities. This means that Coca-Cola can target specific consumer segments well by understanding their profiles, including age, gender, and lifestyles. Hence, instead of individual products, brands under the conglomerate can be wrapped within different brand images to match their target demographics.
Sprite is a brand under The Coca-Cola Company marketed as a brand for younger generations, specifically Gen Z, as their focus is on promoting the ideas of current affairs, pop culture, and some popular consumer lifestyles such as the wider use of all things digital.
Many multinational conglomerates, such as Pepsi Co, choose to localise their brand images and adapt to the local markets, which result in different brand images around the world. Coca-Cola chooses to use a universal or standardised image around the world regardless of the location they operate in.
The advantage of this lack of segmentation strategy is consistency. Consistency in the brand image could bring travellers a sense of belonging, which trigger the consumers’ impulse to purchase the same product in other geographical locations.
The disadvantage of this strategy is related to reputation. A bad reputation would leave an impact regardless of the location. The same brand image might not suit different cultures.
Some brand images may be universally accepted or create a common effect. For example, Coca-Cola uses family gatherings and festive celebrations for its marketing in different markets. This works because most cultures share the same feelings of happiness for gatherings.
From the perspective of the marketing mix , Coca-Cola diversifies its portfolio to target many niche needs such as Coke Zero, Diet Coke, Coca Cola Life, Glaceau Vitaminwater, and Glaceau Smartwater.
For place , it distributes globally, while region-specific products are also developed to target local consumers. In addition, its distribution channel and strategy of utilising bottling partnerships have enabled it to distribute products efficiently. The most prominent point in regard to place is ease of access. Products of Coca-Cola can be found in convenient shops, supermarkets, vending machines, restaurants and bars.
In terms of promotion , Coca-Cola invests a considerable amount of money in advertisements. It uses a mix of digital and physical channels including TV commercials, sports sponsorships, social media advertisements, and a series of ongoing campaigns.
For its pricing strategy, it offers competitive prices to prevent consumers from switching to other brands, as there are plenty of alternatives, such as Pepsi, available in the market. Besides, psychology pricing is one common pricing tactic it uses. It also tends to use discounts on bulk purchases to stimulate sales.
C oca -C ola expansion strategy
Although Coca-Cola is operating in most parts of the world, it has different market shares and products depending on the market. Coca-Cola has a high dependency on its bottling partners around the world. Hence, first of all, to expand, it has to improve its logistics and bottling systems.
Secondly, it is planning to reach a balanced combination of global, regional and local brands so its consumer base can grow gradually and sustainably. Also, it has a rather diversified portfolio and is planning to make use of the wide range of products to acquire customers with different interests. This means that Coca-Cola will not only continue its focus on soft carbonated drinks but will also put more effort into products such as nutritional drinks and coffee.
Thirdly, by joining social networks and participating in popular culture-related activities such as using TikTok and making YouTube videos for its promotion, it connects effectively with consumers, shortens the distance between the brand and consumers and benefits from the knowledge of the latest consumer trends.
S trategic goals of the Coca-Cola Company
Table. 1 Objectives of Coca-Cola (source: Coca-Cola investor overview presentation, 2021)
In order to achieve the long-term corporate objectives, businesses tend to set up some short-term strategic goals to make sure they are on track. In this case, Coca-Cola tends to develop goals for different functional areas depending on its long-term objectives.
Moreover, its overall main objective is claimed to be growing the company, the industry, and crafting brands and drinks that people love . In 2021, Coca-Cola set up a pipeline to assess its level of innovation. The goals of the pipeline included gaining new drinkers. This number was assessed weekly, significantly increasing frequent users from its existing customer base and increasing the value of each transaction significantly.
In general, the corporate goals of Coca-Cola can be summed up as gaining new customers, gaining market share, improving stakeholder impact, and ensuring the ability of the organisation to remain a market leader. Coca-Cola achieves this by pursuing a wide range of global strategies.
Coca-Cola Business Strategy - Key takeaways
- Coca-Cola is a market leader in the carbonated soft drink industry worldwide
- The strategy of franchising to its global bottling partners has enabled it to grow quickly.
- By partnering with local small bottlers in under-developed markets, it is able to strategically merge or acquire these small local businesses to expand the local markets.
- The marketing activities and strategy of using a standardised brand image around the world are contributing to its stable status as a household name worldwide as well.
- Marketing mix of Coca-Cola: Product: a wide portfolio including classic Coke, Zero, Fanta and so on; Place: operates in global market, can be found in shops, restaurants and vending machines; Promotion: across different media and communication channels, using a series of campaigns; Price: competitive pricing at the market level.
Investors Coca-Cola, https://investors.coca-colacompany.com/about/presentations
Marketing91, https://www.marketing91.com/marketing-strategy-of-coca-cola/
Investopedia, https://www.investopedia.com/articles/markets/112515/how-does-cocacola-actually-make-money.asp
Frequently Asked Questions about Coca-Cola Business Strategy
--> which market coverage strategy is employed by coca-cola.
The market coverage strategy employed by coca-cola is as follows:
- The strategy of franchising to its global bottling partners has enabled it to grow quickly.
- By partnering with local small bottlers in under-developed markets, it is able to strategically merge or acquire these small local businesses to expand the local markets.
--> What business strategy does Coca-Cola use?
Cocacola uses a functional strategy to run its business.
Functional strategies are specific goals set out for different divisions of an organisation to reach its functional objectives. The divisions usually include Marketing, Finance, Operations, and Human Resources.
--> Which segmentation strategy does Coca-Cola use?
Coca-Cola can target specific consumer segments well by understanding their profiles, including age, gender, and lifestyles. Hence, instead of individual products, brands under the conglomerate can be wrapped within different brand images to match their target demographics. For example, Sprite is a brand under The Coca-Cola Company marketed as a brand for younger generations, specifically Gen Z.
--> What is Coca-Cola's growth strategy?
Coca-Cola implements two growth strategies.
1. Bottling partnerships have helped Coca-Cola seize growth opportunities via vertical acquisitions.
2. Global partnerships help Coca-Cola with cost control by reducing transportation costs and reaching economies of scale.
--> What is Coca-Cola's price strategy?
For its pricing strategy, it offers competitive prices to prevent consumers from switching to other brands available in the market. Besides, psychology pricing is one common pricing tactic it uses. It also tends to use discounts on bulk purchases to stimulate sales.
Final Coca-Cola Business Strategy Quiz
What is the market coverage strategy of Coca Cola ?
Show answer
Undifferentiated mass marketing.
Show question
What business strategy does Coca-Cola use?
Outsourcing bottling partners
Does Coca Cola offer products targeting niche markets?
What kind of needs are the niche products based on?
Dietary needs.
Which segmentation strategy does Coca-Cola use?
Coca Cola does not segment the market by demographic features but it tends to create product to meet niche demands.
What is Coca-Cola's growth strategy?
Franchising trademark and syrup to tis global bottling partnership for expanding under-developed markets.
What is Coca-Cola price strategy?
Competitive pricing, with a combination of psychological pricing when on promotion.
Instead of segmenting demographic groups for product marketing, what does Coca-Cola do?
Marketing brands under the company in different images to match the taste of its target segments.
What does Coca-Cola do for its products in the market mix?
Creating products for niche dietary needs. Product examples including Coke Zero, and Glaceau Vitamin Water Zero
What does Coca-Cola do for the factor of place in its marketing mix?
It operates worldwide, and provides easy access to customers as conveniently as to be found in any supermarkets, restaurants, or even vending machines.
What does Coca-Cola do for the factor of promotion in its marketing mix?
Mainly based on above-the-line marketing for mass marketing purpose, but it also uses a mixture of media including both online and offline advertising.
What does Coca-Cola do for the factor of price in its marketing mix?
It adopts competitive pricing strategy and psychology pricing.
What are some of the goals of Coca-Cola?
Gaining new customers
What is a corporate strategy?
A corporate strategy is a medium-to-long-term plan for a business to reach its corporate objectives. It includes the activities that should be carried out, the time in which the tasks should be done and the person who is responsible for the tasks to achieve corporate objectives.
What is a functional strategy?
- Nature of Business
- Introduction to Business
- Strategic Analysis
- Business Case Studies
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A balanced focus on brands while responding to emerging consumer trends.
Long-Term Growth Potential
There is a significant long-term growth opportunity for both the industry and our company. In terms of markets, commercial beverages represent approximately 70 percent of beverage consumption in the developed world, and we have a 14 percent volume share across cold and hot nonalcoholic beverages with a very small position in flavored alcohol beverages today.
In the developing and emerging world, only about 30 percent of beverage consumption is commercialized and our volume share position within that is about half of what it is in the developed world. The developing and emerging world represents 80 percent of the world’s population, with over 6 billion people.
As another way to think about it…
The world has billions of people living in it, and that population continues to grow, but only a small percentage of those people are consuming our beverages today. Even if we doubled the number of drinkers of our beverages over the next decade, there would still be plenty of headroom to grow for years to come.
Therefore, we believe there is compelling long-term growth potential across the world through growing the overall industry and continuing to gain share.
Note: Data on slide represents Top 40 countries Source: GlobalData and internal estimates Each person represents ~10 million people. TCCC Consumer metrics based on Weekly+ Drinkers
Loved Brands
Diversified and Optimized Brand Portfolio
We have the platforms to take advantage of this long-term growth opportunity through our diversified portfolio of beverages and brands. Our streamlined portfolio consists of a broad selection of organic brands, acquired brands, and partnerships, and presents a strong platform for innovation that will drive interest and consumption for both new and existing consumers.
Strong Global Value Share - #1 Position in 4 out of 5 Categories
We are always in pursuit of becoming an increasingly consumer-centric, total beverage company and we are building on solid foundations from the past. Today, we have a strong global position in all category clusters in nonalcoholic ready-to-drink (NARTD) beverages. However, outside of sparkling, our strong global position is primarily due to a solid presence in only a handful of markets. Therefore, we have a long runway in the majority of markets to gain leadership positions outside of sparkling.
Source for value share positions: Euromonitor
Focused on the Core + Experimenting in Adjacencies
It all starts with a strong core, and we remain laser-focused on strengthening that core through our advanced capabilities in marketing, innovation, revenue growth management and execution. But that does not limit our ability to intelligently experiment through thoughtful innovation, and purposeful shifts into adjacent categories. For example, we have made great progress with the expansion of Costa – now available in 40+ markets and 90+ market combinations – and Topo Chico Hard Seltzer, now available in 20+ markets, and holds the #5 spot in hard seltzer in North America. We continue to refine our “test and learn” approach as a company, always striving to remain consumer and customer-centric.
Pervasive Distribution
Our franchise business model has enabled us to develop a strong global footprint with a local touch in markets around the world. Today, we have approximately 225 bottling partners across more than 200 countries and territories and sell our brands in more than 20 channels within approximately 30 million customer outlets globally.
~$7 Billion System Capex
* Data points are for 2019
> 20 Channels
~30M Customer Outlets
~16M Cold-Drink Assets
Our purpose, refresh the world. make a difference..
Our company started in 1886 and grew with a purpose to refresh the world. This became refreshment not just in a physical sense but also in spirit, and not just to refresh people but also communities.
Today, we are a total beverage company. We’re present in almost every beverage category, and we have approximately 200 master brands. Over 700,000 people in our system help deliver those brands to customers and consumers every day. The Coca‑Cola Company’s purpose remains clear: To refresh the world and make a difference.
View The Purpose
Total Beverage Company
Our vision is to craft the brands and choice of drinks that people love, to refresh them in body and spirit. And done in ways that create a more sustainable business and better shared future that makes a difference in people’s lives, communities and our planet.
Growth Strategy
Pursuing enhanced topline growth.
As we continue our journey as a total beverage company, disciplined portfolio growth plays an integral role in that journey. This disciplined portfolio growth is reinforced through a constant focus on innovation, revenue growth management and improved execution – all supported by integrated brand-building. We believe executing and improving upon these initiatives forms the foundation to deliver strong results both today, and in the years ahead.
Sustainability
Doing business the right way and making a difference through esg.
At The Coca-Cola Company, we strive to use our leadership to be part of the solution to achieve positive change in the world and to build a more sustainable future for our planet. We act in ways to create a more sustainable and better shared future. To make a difference in people’s lives, communities and our planet by doing business the right way. Our ESG agenda and initiatives are integrated into every part of our dual flywheel strategy, helping to drive growth while achieving our purpose as a company: to refresh the world and make a difference.
Investing with Purpose and Agility to Create Value
In order to continue raising the performance bar within our organization, we are focused on investing in our people and our capabilities in order to leverage accelerating topline growth across four key pillars of financial performance: Resource Allocation, Margin Expansion, Asset Optimization, and Cash Flow Generation.
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The Coca-Cola Company’s Strategic Analysis Report (Assessment)
This paper will discuss three external factors of industry shifting that seriously affect on the profitability level of Coca-Cola the giant of the beverages industry; it will focus on strategic alignment of this company to generate competitive advantage over rivals, marketing mix, and one of the strength, opportunity, weakness and threat that could influence the future success of Coca Cola. Based on the given case study, the strategic analysis of the Coca-Cola illustrated that the beverage industry has been going through challenging time because economic meltdown, changes of customer’s preference, and shifting suppliers have seriously impacted the profitability of the company; however, this company has endeavoured to encounter the situation through its internal capabilities and product diversification strategy.
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Three External Industry Changes
Adeoye & Elegunde (2012) sated that modern organizations are eager to engage their business operation within the more dynamic environment where the external factors have rapid and unpredictable influence on the regular operation integrating with the complex changes and shifting economic variables that necessitates for addressing appropriate strategy to sustain sales revenue and profitability.
The most momentous influence on the organizational strategy is the external industry changes and such strategy would deliberately design to attain definite goals and objectives to overcome the negative impact of the situations that carried out by the external factors and carried out internal changes to encounter with the shifting dynamics (Gamble & Thompson, 2012). Today’s beverage industry operates in a greater environment of the global market and its current business environment has experienced with ever hardly complexities, serious turbulence as well as rapid in change where the industry players must have to pay greater attention on the external environments in order to formulating sustainable strategies for future operation (Gamble & Thompson, 2012). The given case has presented three external industry changes mentioned as follows–
Economic Meltdown
The global financial crisis and its consequential recessionary impact has seriously impacted on the beverage industry; however, it was projected that the industry would reach at US$1.58 trillion by 2009 and would attain a sales revenue of US$1.78 trillion by 2014 due to global expansion of market and introduction of new products and product diversification. However, economic meltdown has presented a serious influence on the projected profitability by hampering steady market growth, reducing purchasing power of customers in both developed, and developing countries; although, the price of all varieties of beverages were higher in the developed countries in relation to the developing countries.
For instance, the case has strongly presented the data that in 2008, the market maturity along with bankrupt economic conditions in the USA has thrown the U.S. beverage industry to turn down at least 2.1 %; however, in 2009, the industry had fallen 3.1% of the overall market globally. At the same time, the sales reduction of the carbonated soft drinks have recorded 2.3% at the measures of sales revenue, it has added that within last five years the customers of the US market has consumed less soft drinks than the previous years, simultaneously, the sales of sports drinks, energy drinks, fruit juices, and even drinking water has reduced.
Changes of Consumer’s Taste and Preference
According to the given case, the changes of consumer taste and preference is another vital external industry changes that have affected the profitability of the companies within the beverages industry and the shifting dynamics of the customer taste and preference has drawn the attention of the market analyst and the managers engaged to identify right strategy fit for the situation. During 2010, the consumer’s taste and preference have shifted to the alternative beverages such as energy drinks, sports drinks as well as vitamin-enhanced drinks (Ki, Yin & Wai 2011; McWhorter, Chasteen & Davis 2012; Coca-Cola 2013, and Norden, Koch and Pronk 2008; Adeoye & Elegunde 2012 and Banutu-Gomez 2012).
However, such diversified drinks were priced fifty to four hundred percent higher than the carbonated soft drinks, the customers in the US marker did not bother to consume (Gamble & Thompson, 2012; Ki, Yin & Wai 2011; McWhorter, Chasteen & Davis 2012; Coca-Cola 2013, Adeoye & Elegunde 2012; and Norden, Koch and Pronk 2008; and Banutu-Gomez 2012). The dramatic shifts in the consumer’s taste and preference have evidenced with a surprising attributes due to the market raise of alternative drinks and generated new opportunities for the industry players, but the meltdown economy seriously influenced the market with a direct reduction of 12.5% of the sales revenue.
Shifting Alternative Suppliers
From the existing suppliers, to move the alternative suppliers for raw materials is another fundamental external industry change that would affect the profitability of companies within the industry; however, the most prevailing difficulty for beverage distributors is to refill vending machines as well as to offer alternative drinks for special events that Coca-Cola would competent to control over the channels.
The assortment of suppliers of alternative resources for newly diversified product line, such as, colour, flavour, glucose, sugar, and nutritional supplements have essentially engaged in bilateral cooperation to establish a long-term business relationship with the alternative suppliers for steady and sustainable growth. Moreover, for the packaging of new products, there would be an assortment of new suppliers to address the existing and upcoming demand for bottling; ; however, the necessity to establish a strong base of potential suppliers who are able to provide secondary packaging materials in accordance with the specification of Coca-Cola and to practice from the present time.
Strategy of Coca Cola to create competitive advantage over rivals:
From the given case, it has illustrated that the Coca Cola has engaged to follow market driven strategies to create competitive advantage over rivals by engaging its internal resources and innovation where product diversification strategy and new product development strategy have simultaneously engaged to conquer the competition and to ensure sustainable growth. During 2010, the customers of the US market has shifted their preference to the energy drinks and alternative beverages rather than carbonated soft drinks, to address this gap, Coca-Cola developed many new products such as sports and energy drinks and at the same time, the company has diversified its carbonated soft drinks with various colours and flavours.
Such new product development and diversification has evidenced as gigantic success for the company by resolving uncertainty rose from the shifting market dynamics and contributed the company with remarkable competitive advantages; as the new products were essential to overcome the situation, Coca-Cola has engaged to ensure its right use of internal resources without wasting time, and efforts.
The Marketing Mix Elements
Key products of coca cola.
- According to the report of Banutu-Gomez (2012) and Norden, Koch and Pronk (2008, p.15), this company highly concentrated on the beverages segment, for instance, near 40% of its products linked with carbonated soft drinks whereas only 20% of the products connected with juices.
- It has already started product differentiation by taste (Ki, Yin & Wai 2011; McWhorter, Chasteen & Davis 2012; (Coca-Cola 2013, and Banutu-Gomez 2012).
- Coca-Cola offers over 3,000 products though it started with only a soft drink made of syrup and carbonated water (Ki, Yin & Wai 2011; McWhorter, Chasteen & Davis 2012; Coca-Cola 2013, and Banutu-Gomez 2012).
- Valuable non-alcoholic beverage brands includes Sprite, Fanta, Coca-Cola Zero, Diet Coke/ Coca-Cola Light, Coca-Cola Minute Maid, Powerade, Georgia, Glac´eau Vitamin water (Coca-Cola 2013, and Banutu-Gomez 2012).
Price of the products
- The profitability of this company come under threat due to increasing the price of raw materials.
- It introduces effective pricing strategies for different operational zone; however, it asks competitive market price for the soft drinks (Coca-Cola 2013 and Norden, Koch and Pronk 2008).
- To keep the sales rate up, it decreases product prices (Ki, Yin & Wai 2011; McWhorter, Chasteen & Davis 2012; Coca-Cola 2013, and Banutu-Gomez 2012).
- According to the given case, consumer preferences shifted during the 2000s for which this company intended to offer higher price for the alternative beverages, for instance, price of sports drinks and vitamin-enhanced beverages is 50% to 75% higher than its soft drinks.
- Coca-Cola (2013, p.3) stated that finished beverage products are now sold in more than 200 nations; however, it develops the world’s largest beverage distribution system.
- It has already developed strong distribution system to make available its products to its customers (Ki, Yin & Wai 2011; McWhorter, Chasteen & Davis 2012; Coca-Cola 2013, and Banutu-Gomez 2012).
Promotion of Coca Cola
- To conducting own independent advertising and marketing activities, this company provides sufficient funds to bottlers under the terms of agreement on a discretionary basis in most cases (Coca-Cola 2013); According to the annual report 2013 of this company, total budget for promotional and marketing programs was $6.9 billion in 2013 (Coca-Cola 2013).
- In addition, it allocates large investment for sponsoring physical and nutritional education worldwide (Ki, Yin & Wai 2011; McWhorter, Chasteen & Davis 2012; Coca-Cola 2013, and Banutu-Gomez 2012).
- However, it concentrates on the development of physical-activity based clubs, and health camps; moreover, it provides fund to initiate sports activities in many countries.
- This company has enlarged its budgets for the promotional activities for example family events, sports events, trade deals, bonus packs as well as in-store display.
- It creates and implements integrated marketing programs in order to increase sales.
A strength that could help Coca Cola to achieve better performance in the future has discussed below
Supply Chain Management and Distribution Channel
According to this case study, consumers could like to purchase most alternative beverages from convenient stores such as supermarkets, restaurants, hotels, food stores, vending machines, wholesale markets and many other places; however, it is significant to state that consumer used convenient place to buy 75% of the energy drinks sale in 2010. As a market leader of soft drinks industry, it becomes easy for the Coca-Cola Company to introduce alternative beverages and make available these products in the present distribution centres for example, food stores, retail markets, wholesale clubs, and convenience stores (Ki, Yin & Wai 2011; McWhorter, Chasteen & Davis 2012 and Banutu-Gomez 2012).
At the same time, top management and the marketers of this company would successfully able to influence the customers to buy the products of this company by ensuring prompt supply chain management (Ki, Yin & Wai 2011; McWhorter, Chasteen & Davis 2012; Banutu-Gomez 2012 and Norden, Koch and Pronk 2008, p.15). On the other hand, smaller producers typically used third parties to overcome the difficulty for food service distributors and to distribute products in the convenience stores and restaurants (Ki, Yin & Wai 2011; McWhorter, Chasteen & Davis 2012 and Banutu-Gomez 2012).
In addition, Coca-Cola Company was able to dominate such channels and beverage distribution systems to deliver sports drinks, carbonated soft drinks and vitamin-enhanced drinks; therefore, from the fact of this case, it can be said that strong supply chain management system and distribution channel is one of the most significant success factors and strength for this company.
Opportunity
An opportunity that could help this company to attain better performance in the future has discussed below
Product Diversification
The entire beverage industry had faced worse condition in the recessionary period in 2009, for instance, sales volume was down in the US market for sports and vitamin-enhanced drinks; however, alternative beverage industry experienced gradual growth in the worldwide market. According to this case study, product innovation had been among the most imperative competitive features of the alternative beverage industry; therefore, this Company could gain competitive advantages over other market players by diversifying existing product line. From the fact of this case, it can be said that consumer behaviour had already changed, as they are more interested to purchase alternative beverage items; therefore, it would be great opportunity for this company to be market leader in the alternative beverage industry.
A weakness that could help this company achieve better performance in the future has discussed below
Health Concern
Long addiction of soft and energy drinks of this company could adversely affect on the public health, such as, it can raise number of diabetes patient and damage our teeth (Ki, Yin & Wai 2011; McWhorter, Chasteen & Davis 2012 and Banutu-Gomez 2012 and Curd 2010, p.3). According to this case, the US Food and Drug Administration has not controlled caffeine content of energy shots and energy drinks, but health professionals researched on the effect of the high caffeine content of energy drinks and identified that the most important health troubles linked to large caffeine consumption are ‘heart arrhythmia’ and ‘insomnia’. Nowadays, consumers, administration or health officials become more concerned about the public health issues; therefore, Coca-Cola needs to invest more funds to control quality of products, such as, ensure pure water, reduce effects of HFCS and so on.
A threat that could help this company achieve better performance in the future has discussed below
Competitors
PepsiCo is one of the major primary competitors of Coca-Cola; however, other important competitors are Nestl´e, DPSG, Groupe Danone, Kraft, Unilever and many other companies (Coca-Cola 2013; Norden, Koch and Pronk 2008; Ki, Yin & Wai 2011; McWhorter, Chasteen & Davis 2012; Banutu-Gomez 2012 and Curd 2010, p.3). In addition, it has to compete against many regional and local companies or private label beverage brands (Coca-Cola 2013; Ki, Yin & Wai 2011; McWhorter, Chasteen & Davis 2012; Norden, Koch and Pronk 2008; Banutu-Gomez 2012 and Curd 2010, p.3).
Reference List
Adeoye, O. & Elegunde, A. (2012). Impacts of External Business Environment on Organisational Performance in the Food and Beverage Industry in Nigeria. Web.
Banutu-Gomez, M. B. (2012). COCA-COLA: International Business Strategy for Globalization . Web.
Coca-Cola. (2013). Annual report 2013 of Coca-Cola Company . Web.
Gamble, J. E. & Thompson, A. A. (2012). Essentials of Strategic Management – The Quest of Competitive Advantage . New York, The USA: McGraw-Hill. Web.
Ki, T. H. Yin, C. H. & Wai, F. (2011). The Coca-Cola Company. Web.
McWhorter, C. Chasteen, w. & Davis, C. (2012). Marketing Study of the Coca-Cola Company. Web.
Norden, L. Koch, C. & Pronk, S. (2008). Marketing Management . Web.
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Strategic analysis of the coca-cola company
- strategic analysis
- External analysis
- Internal analysis
- Noncarbonated
Coca-Cola Company’s Strategic Analysis and Management
The development of many modern and well-known brands depends largely on how effectively the principle of managing all the areas of work is organized. In various corporations, directors pay specific attention to those spheres that they consider the most significant – interaction with consumers, building partnerships, attracting sponsors, and other aspects. All these factors form a certain image of the company and influence its success in the market. Using some of the aforementioned criteria as a basis for evaluation, it is possible to determine how effective this or that type of management is and which leadership methods are the most beneficial. As a background, the world-famous Coca-Cola brand will be used. To consider the quality of the ongoing management work in this corporation comprehensively, such criteria will be used as threats, opportunities, strengths, and weaknesses. The analysis of these factors makes it possible to identify the central areas that deserve particular attention and conclusions regarding the effectiveness of the measures applied to the company’s internal and external policies.
Assessment of Coca-Cola’s External Environment
The assessment of Coca-Cola’s external environment is based on the analysis of threats and opportunities. To identify the key features of these areas, it is possible to apply the relevant theory of Porter’s five sources. According to Eskandari, Miri, Gholami, Reza, and Nia (2015), this concept provides the evaluation of business enterprises’ activities based on five specific components. They include the level of competition, buyers’ power, suppliers’ capacity, “threat of entry of new competitors and the threat of the substitute products” (Eskandari et al., 2015, p. 186). Each of these categories of Coca-Cola should be analyzed separately to compile a comprehensive picture of the corporation’s external environment.
Competition Level
Since the Coca-Cola brand is one of the most famous and expensive in the world, competition does not play a significant role for this corporation. As Eskandari et al. (2015) argue, Coca-Cola has “higher sales than other competitors” due to its global frame. This organization producing soft drinks is unlikely to face the failure caused by rivalry. Therefore, this category does is not associated with crucial problems.
Buyers’ Power
The marketing policy of the company in question is strong enough to ensure stable consumer demand and interest. Also, according to Banks (2016), the supply chains and logistics of Coca-Cola are successful, and there are no interruptions in the delivery of goods to target markets. Thus, the power of buyers is the indicator that opens up broad opportunities for the development of the corporation’s business.
Suppliers’ Capacity
Because the Coca-Cola Company is one of the leaders in its sales area, a sufficient number of partners and sponsors are ready to offer the organization their services for the delivery of raw materials. The corporation cooperates with other enterprises successfully and, besides its target activity, it is involved in the work “of distributing medicine and supplies to remote communities” (Banks, 2016, p. 458). Therefore, judging by such charitable activities, the company does not experience difficulties with the introduction of target products.
Threat of Entry
The threat of new entrants to the market is not a significant danger for Coca-Cola’s business. Although such a perspective is “a metaphorical punch in the face” for many organizations, the corporation in question has managed to achieve almost sole leadership in the field of sales of target products. Any potential competitors are unlikely to achieve the advantage that Coca-Cola has secured for itself for more than 140 years of its existence (“Mastering strategic management,” 2015, p. 9). Therefore, this category of analysis does not carry any threat.
Availability of Substitutes
Although Coca-Cola is the sole leader in its field, the company has competitors. In particular, Eskandari et al. (2015) give the example of Pepsi and argue that organizations like this one “can expand the existing capabilities and use the new cash flows to increase competition” (p. 191). Pepsi’s leadership certainly seeks to build capacity and also pursues a successful domestic and foreign policy. However, the threat of complete replacement of Coca-Cola with another brand is absent.
Assessment of Coca-Cola’s Internal Environment
To assess the internal environment of Coca-Cola, an analysis of several important categories is necessary. Based on this work, it is possible to determine the strengths and weaknesses of the corporation in the context of its work in the market and evaluate the success of its internal policy. Assessment factors include such criteria as financial activities, marketing, human resources, operations management, technology, and logistics.
Accounting/Finance
The company’s coverage ratio allows it to fulfill its intended goals effectively and implement planned business strategies. This parameter indicates the correct activity regarding the distribution of available resources (Drake, n.d.). Coca-Cola’s return ratio determines the degree of its profit, and when taking into account that the brand is one of the world leaders, its share of income is significant. Also, a turnover ratio deserves attention, and this parameter characterizes the company’s high ability to transform resources and distribute profits by the current needs.
As Banks (2016) remarks, Coca-Cola’s well-thought-out marketing policy allows the company to form “a deep understanding of real human needs, desires, and behavior” (p. 461). Focusing on a specific target audience helps the corporation to have a stable demand for products constantly. As a result, revenues always multiply due to implementing relevant strategies, and successful advertising moves bring significant dividends to the owners of the organization.
Human Resources
Stimulating staff activity and encouraging the achievement of the company’s visions through the effective performance of work responsibilities is the component of Coca-Cola’s work. According to Irefin and Mechanic (2014), in this corporation, human resources practices are aimed at motivating the organization’s employees and retaining them. A corporate policy allows optimally selecting performers and assigning responsibilities, which is evidence of a successful personnel management strategy.
Operations Management
Coca-Cola’s policy about operational management pursues the interests of attracting the audience through inventive and high-quality proposals. As Banks (2016) remarks, investing in the youth is the feature of the corporation’s business strategy. The emphasis on meeting the needs of the target audience through constant product updates and new offers allows maintaining stable consumer interest and opens up great prospects for increasing demand.
Because the Coca-Cola brand is represented in almost all the countries of the world, the company regularly develops its technological line to produce high-quality soft drinks and not to justify consumer trust. The corporation “has an uncanny knack for building new brands and products,” and modern production systems, for instance, special methods of water filtration, allow achieving good results (“Mastering strategic management,” 2015, p. 107). Although the whole system of production is not perfect, it allows the company to represent its interests without the fear of inspections by supervisors.
The infrastructure of the company in question is founded in such a way that its branches are located all over the world. Banks (2016) compares Coca-Cola with the well-known postal service FedEx, noting that the corporation’s supply chain management and the delivery of goods to the market are impeccable. Moreover, the company closely monitors all changes in consumer demand and responds immediately, adjusting the volume of the supply of its product.
Comparison of Indicators
Based on the analysis of the company’s external and internal environment, it is possible to draw up a corresponding table with relevant data that has already been mentioned. This format makes it possible to group key findings and determine which areas deserve specific attention. In particular, the table includes the information on the most important strengths and weaknesses and the most salient threats and opportunities.
Table 1. Results of Coca-Cola’s External and Internal Analyses.
Conclusion: Results Assessment
The Coca-Cola brand has significantly more strengths than weaknesses since the long period of work in the market and the use of the relevant strategies of attracting consumers have provided the corporation with consumer recognition. The company’s opportunities also transcend threats, which can be explained by continuous development and the desire to improve current performance. Moreover, Coca-Cola has sustainable competitive advantages, in particular, advanced logistics, representative offices in almost all countries, high demand for its products, and relevant marketing solutions. All these factors make the company one of the leaders and provide it with a good profit.
Banks, H. (2016). The business of peace: Coca-Cola’s contribution to stability, growth, and optimism. Business Horizons , 59 (5), 455-461.
Drake, P. (n.d.). Financial ratio analysis . Web.
Eskandari, M. J., Miri, M., Gholami, S., Reza, H., & Nia, S. (2015). Factors affecting the competitiveness of the food industry by using Porter’s five forces model case study in Hamadan Province, Iran. Journal of Asian Scientific Research , 5 (4), 185-197.
Irefin, P., & Mechanic, M. A. (2014). Effect of employee commitment on organizational performance in Coca Cola Nigeria Limited Maiduguri, Borno state. Journal of Humanities and Social Science , 19 (3), 33-41.
Mastering strategic management . (2015).
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Coca Cola SWOT Analysis 2023 | SWOT Analysis of Coca Cola
Company: The Coca-Cola Company CEO: James Quincey Year founded: 1886 Headquarter: Atlanta, USA Number of Employees (Dec 2021): 79,000 Public or Private: Public Ticker Symbol: KO Market Cap (April 2022): $281.1 Billion Annual Revenue (Dec 2021): $38.66 Billion Profit |Net income (Dec 2021): $9.77 Billion
Products & Services: Coca-Cola | Diet Coke | Coke Zero | Ciel | Dasani | Del Valle | Fanta | Fair life | Georgia | Gold Peak Tea | Honest Tea | Mello Yello | Minute Maid | Odwalla | Powerade | Simply Beverages | Glaceau Smartwater | Sprite | Suge | Glaceau vitamin water | Zico Competitors: Pepsi | Dr Pepper Snapple | Mountain Dew | Gatorade | Nestle | Redbull | Parle | Unilever | Heineken | Diageo |
Fun Fact: Did you know that Coca-Cola originally contained traces of Cocaine?
Table of Contents
An Overview of Coca-Cola
The market leader in the soft drinks industry, Coca-Cola is one of the most renowned brands across the world. Be it your home, office, shops, hotels, bars or restaurants, Coca-Cola is everywhere!
94% of the world’s population recognizes the brand instantly by its red and white Coca-Cola logo as per Business Insider . More than 10,000 soft drinks from Coca-Cola are consumed every second of every day on average.
Coca-Cola was established in 1886 in Atlanta by John Pemberton . Within a few years, Coca-Cola became the most recognized, renowned, and widely distributed brand in the world. Currently, James Quincey is the CEO of this mega corporation.
Read on to discover more about the world’s renowned beverage brand through this Coca Cola SWOT analysis.
SWOT Analysis of Coca-Cola
The following is a SWOT analysis of Coca Cola:
Coca-Cola Strengths – Internal Strategic Factors
Strong brand identity – Coca-Cola is a highly popular brand with a unique brand identity. Its soft drinks are the most-selling drinks in history.
High brand valuation – Coca-Cola is undoubtedly one of the most renowned brands with a high brand value. According to Interbrand annual report, Coca Cola is ranked 6th best global brand in 2021 with a brand value of $57 Billion. Other top ranking companies on the list are Apple at #1, Amazon at #2, Microsoft at #3 Google at #4 and Samsung at #5 position. [ 1 ]
Extended global reach – It is sold in more than 200 countries with 1.9 billion servings per day of Company products. It has introduced more than 500 new products globally. Some of these are variations of Coca-Cola beverage, like Coco Cola Vanilla and Cherry Coca-Cola. Its brands are known to touch every lifestyle and demography.
Greatest brand association and customer loyalty – Coca-Cola is considered one of US’s most emotionally-connected brands. This valuable brand is associated with ‘ happiness ’ and has strong customer loyalty. Customers can quickly identify their particular taste. Finding its substitutes is difficult for them. Moreover, Coca-Cola and Fanta have a huge fan following than other beverage names in the industry.
Dominant market share – Out of Coca-Cola and Pepsi, the only two largest manufacturers of soft drinks in the beverage segment, Coca-Cola has the largest market share. Coke, Sprite, Diet Coke, Fanta, Limca, and Maaza are the highest growth drivers for Coca-Cola.
Unparalleled distribution system – Coca-Cola has the most efficient and most extensive distribution network in the world. The company has nearly 225 bottling partners and about 900 bottling plants globally.
- Acquisitions – Coca-Cola has a long list of strategic and profitable acquisitions including Costa coffee chain , Fairlife (Milk Products), Fuze Tea, AdeS, and many more. Through these acquisitions, Coca-Cola expanded its ready-to-drink beverage portfolio. [ 2 ]
- Coca Cola
- Sparkling Flavors
- Nutrition, Juice, Dairy & Plant
- Hydration, Sports, Tea & Coffee
- Emerging
Coca-Cola Weaknesses – Internal Strategic Factors
Aggressive competition with Pepsi – Pepsi is the biggest rival of Coca-Cola. Had it not been Pepsi , Coca-Cola would have been the clear market leader in the beverage.
Product diversification – Coca-Cola has low product diversification . Where Pepsi has launched many snacks items like Lays and Kurkure, Coca-Cola is lagging in this segment. It gives Pepsi leverage over Coca-Cola.
Health concerns – Carbonated drinks are one of the major sources of sugar intake. It results in two grave health issues – obesity and diabetes. Coca-Cola is the biggest manufacturer of carbonated beverages. Many health experts have prohibited the use of these soft drinks. It is a controversial issue for the company. However, Coca-Cola hasn’t devised any health alternative or solution for this problem yet.
Lawsuits – Trust is undermined whenever the company is accused of wrongdoing. Coca Cola is facing a patent infringement lawsuit for using a dispenser that can recognize users and customize drinks based on their preferences. [ 3 ]
Overdependence on Third-Party Technology Providers – Coca Cola’s operations rely heavily on the technological expertise of third-parties. The company signed another five-year deal with Microsoft to supply business software. [ 4 ]
Environmentally Destructive Packaging – In the 2020 TearFund report , Coca Cola was named as one of the four world’s largest consumer brands that are contributing immensely to global warming and carbon emissions by using throwaway plastic bottles. [ 5 ]
- CEO of Coca-Cola Aims to Reduce Cherished Coke Products – James Quincy, the current CEO of Coca-Cola and a renowned businessman, has recently been bombarded with disgruntled grievances of Coke fans. The complaints are coming in because of the CEO’s shocking decision to permanently discontinue some of the most popular products from Coca-Cola’s diverse product portfolio . Coca-Cola aims to eliminate in-demand and popular products such as Tab (a diet drink), Odwalla (a smoothie brand), and the loved coconut water Zico .
Coca-Cola Opportunities – External Strategic Factors
Introduce new products and reduce added sugar – Coca-Cola has the opportunity to introduce new offerings in healthy drinks and food segments just like Pepsi . It can contribute to their revenue, brand image and they can branch out from carbonated drinks. According to its recent annual report, Coca-Cola has been evolving and prioritizing the reduction of sugar in its beverages and so far 28% of its volume sold was low or no-calorie beverage.
Increase presence in developing nations – Many regions with hot climate have the highest consumption for cold drinks. Thus, increasing presence in such emerging markets can be excellent – Middle Eastern and African countries are a good example.
Bring advanced supply chain system – Coca Cola’s business is entirely dependent upon logistics and supply chain. Transportation costs and fuel prices are always on the rise. Thus, coming up with some advanced and improved systems for distribution can be an opportunity.
Packaged drinking water – Coca-Cola owns several packaged drinking water brands like Kinley . There is a great potential for expansion in this segment for Coca-Cola. There is an opportunity to expand and bring more healthy drinks in the market to avoid people’s criticism.
- Expand through Acquisition – Although different sectors offer lucrative opportunities for growth, quick entry into these markets can be a challenge. Recently, Coca-Cola’s growth was driven by some of its recent acquisitions like Costa Coffee, Aha sparkling water and it can do it again. It has the financial resources to acquire startups or SMBs in emerging markets and exploit the numerous opportunities they present. [ 6 ]
Partners with Constellation Brand – One of the world’s biggest non-alcoholic beverages brand teams up with Corona manufacturers Constellation Brands to make alcoholic Fresca cocktails . It seems like a good maneuver by Coca-Cola in an ecosystem where a handful of non-alcoholic brands are diversifying their product portfolios.
Moreover, both companies are looking to grab a bigger market share for the much-in-demand spirits-based cocktail drinks. Following the news of the partnership, Constellation Brands’ share went up by 1%.
- Coca-Cola introduces its very First TikTok challenge across the US – Coca-Cola enters the TikTok stratosphere, announcing the company’s first-ever TikTok challenge in the US. It’s an excellent move for the company to enhance its brand recognition further.
TikTok is a huge platform with over 1 billion monthly active users . Debuting its first TikTok challenge, Coca-Cola has also collaborated with Grammy-nominated music artist ‘Khalid’ to sing the challenge’s first opening song. Moreover, Coca-Cola will also collaborate with choreographer Jalaiah Harmon, the young woman behind the famous Renegade Dance.
In its debut U.S. TikTok challenge, #ShareTheMagic , @CocaCola has enlisted @thegreatkhalid to ask users to express themselves by showing off their special talent—whatever that might be. https://t.co/bnWuBHKgyX — Adweek (@Adweek) December 8, 2021
Coca-Cola Threats – External Strategic Factors
1. Water usage controversy – Coca-Cola has faced many criticisms over its water management issue. Many social and environmental groups have claimed that the company has a vast consumption of water in water-scarce regions. Besides, people have alleged that Coca-Cola is polluting water and mixing pesticides in water to clear contaminants.
2. Pollution Lawsuit – Coke and three other companies are being sued by a California environmental group for contributing to plastic pollution . In the lawsuit, Coca-Cola is singled out for misleading the public about the recyclability of its single-use plastic bottles. [ 7 ]
3. Direct and indirect competition – Although direct competition from Pepsi is clear in the market, however, there are many other companies which are indirectly competing with Coca-Cola. Starbucks , Costa Coffee, Tropicana, Lipton juices, and Nescafe, are the indirect competitors of Coca-Cola, which can threaten its market position .
4. Economic Uncertainty – The recent events have negatively affected business operations, supply and distribution chains, and devastated revenues of many global companies. In 2020, Coca Cola’s revenues declined drastically as restaurants, theaters, and other venues that contribute about half of its revenue remained closed due to the global crisis. [ 8 ]
5. Increasing Health-Consciousness – Consumers are increasingly adopting healthy lifestyles and avoid products with unhealthy ingredients. The increase in health-consciousness can reduce Coca Cola’s sales and profits as customers migrate to healthier options offered by competitors. [ 9 ]
6. Coca-Cola Recalls Sodas and Juices over Possible Contamination – According to Food Safety News , Coca-Cola announced a recall of its Minute Maid and Coke products over possible contamination issues. According to reports, the brands that have been recalled include Maid Berry Punch, Strawberry Lemonade, and Fruit Punch.
The products were found to contain metal bolts and washers . The company recalled all 59-oz cartons that were distributed. Moreover, Coca-Cola also recalled 12-oz coke cans over possible “ foreign contaminants .”
Recommendations
Based on the above SWOT analysis of Coca-Cola, we can conclude that Coca-Cola has a definitive market position in the soda industry. However, it is recommended to bring more innovative changes.
Some recommendations are explained as follows:
- Stepping into the food market – Coca-Cola needs to introduce new products in snacks and food segments .
- Focusing on health-related matters – It should bring some solution to address the rising health concerns from social activists.
- Improving its water management system and dealing with the criticisms from environmental agencies.
- Expanding into developing countries with humid temperatures – There are many products of Coca-Cola like Fuze Tea, Dasani and Hi-C which aren’t distributed in many developing countries. Coca-Cola needs to increase the distribution of such products.
- Increasing the distribution of packaged drinking water like Kinley.
- Working on sustainability and green marketing It can improve its brand image in the market.
References & more information
- Interbrand Ranking 2021. Best Global Brands: Coca-Cola . Interbrand
- Johnston, M. (2020, June 1). 5 Companies Owned by Coca-Cola . Investopedia
- Law360 (2020, April 6). Fed. Circ. Weighs Undoing Coca-Cola Soda Dispenser IP Win . Law360
- Nellis, S. (2020, April 27). Microsoft wins a five-year deal with Coca-Cola to supply business software . Reuters
- Win, L. T. (2020, March 31). Bottling it? Plastic pollution from Coca-Cola, PepsiCo fuels emissions . Reuters
- Scully, J. (2020, January 31). Coca-Cola’s growth in 2019 driven by trademark Coke beverages . Food and Beverages
- McCormick, E. (2020, February 27). Coke and Pepsi sued for creating a plastic pollution ‘nuisance .’ The Guardian
- Balu, N. (2020, April 21). Coronavirus lockdowns to hurt Coca-Cola’s second-quarter sales . Reuters
- Askew, K. (2020, January 15). Shifting Away from Sugar: What’s the outlook in 2020 ? Food Navigator
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