Strategic Analysis of the Coca-Cola Company

STRATEGIC ANALYSIS OF THE COCA-COLA COMPANY.

Introduction:

On 8th May 1886, a local pharmacist in Atlanta, Georgia (USA) by the name of Dr. John Stith Pemberton produced the syrup for Coca-Cola, which was sampled and pronounced “excellent”. Dr. Pemberton’s partner and bookkeeper, Frank M. Robinson named the product after two of its ingredients; Coca leaves and Kola nuts. Considering that the 2 C’s would look good in advertising he suggested the name ‘Coca-cola’ which is now a famous trademark all over the world and Atlanta, the company’s corporate headquarters. Heritage - The chronicle of Coca-cola http://www.2coca-cola.com

It has now turned into 4th world’s largest manufacturer, marketer and distributor of non-alcoholic beverages and an icon of globalisation. The Globalist, Wed, April 2004.

1. Distinction between the key factors within the organisational environment:

The key factors within the coca-cola organisational environment can be well explained first by analysing the organisation’s Macro-environment through PEST analysis.

Political/legal factors:

These can include changes in government laws and regulations. The extent to which a host nation’s political/legal system promotes or inhibits direct foreign investment in its local economy dramatically influences international channel environments. Seymour & Blair (2001)

Nations with a historical basis for distrusting foreign corporations often initiate efforts to restrict or curtail their involvement through regulations; For example, in the 1970’s, India required Coca-Cola to share its secret formula with the local subsidiary so as to continue doing business there. Coca-Cola refused and halted operations in India for almost 16years.

Also the ability to penetrate developing and emerging markets depends on economic and political conditions and their ability to gain strategic alliances with local bottlers and make basic improvements to production facilities, distribution networks, sales equipment and technology. For instance, September 11th brought latent suspicion to the top of consumers' minds, a reality that presented considerable discomfort for Coca-Cola’s image.

Economic factors:

These are concerned with the monitoring of the economic conditions related to the industry, e.g. currency devaluations, a recession creating increased activity at the lower ends of product price ranges, etc.

For instance, it was reported in Bloomberg 24th November’04, as the Dollar fell to $1.3147 against the Euro in New York, Coca-Cola gained 10cents to 39.81 in Germany, thus, it lifted earning prospects of US exporters.

Social change:

These include demographic changes, which affect a number of people within a particular buying group for instance, as many approach an older age in life, they become more concerned with increasing their longevity. This affects the non-alcoholic beverage industry by increasing the demand for the healthier beverages.

In addition, many people nowadays practice healthier lifestyles, which has affected the non-alcoholic beverage industry in that they are switching to bottled water and diet colas instead of beer and other alcoholic beverages. On the other hand however, many are avoiding Coca-Cola products due to the high sugar content and calories therein.

Technological factors:

The ongoing changes in computer and telecommunication technology are changing the way people work, shop and communicate e.g. voicemail, television, Internet and ECommerce. Special effects are used for advertising through media to make products look attractive and thus increase sales.

For example, Coca-Cola’s most sophisticated billboard in Piccadilly Circus with a state-of-the-art computer technology, built-in cameras and an on-board heat sensitive weather station, the biggest in Britain and widest in the world. (London: Reuters www.boston.com/business/technology.)

Also the introduction of new high-technological machinery in both production and marketing e.g. vending machines, Post-Mix dispensers, also CCE has six plants in Britain which use high drinks technology to ensure quality and speedy delivery; all contributing to Coca-Cola’s sales growth.

Further technological investment see Coca-Cola in the process of replacing HFCs with CO2 as a refrigerant for their coolers and vending machines. The CO2 is extracted and recycled from the environment; hence preventing any additional emissions to the atmosphere, a very basic competence to company.