Background of Coca-Cola Company
Based in Atlanta, Gorgia, the US, Coca-Cola is a company which has dominated the global market for non-alcoholic drinks. Coca-Cola Company has majored in the manufacture and marketing of soft drinks. The beverages manufactured by the company are not alcoholic, and they are marketed in the international markets.
Pemberton J. Stith established the company in partnership with Columbus G. in 1886 (Zurkuhlen, Meeker & Salomon Brothers 1987). The company was later incorporated in 1892 by Asa Candler. Coca-Cola Company has diversified its products, and over 500 brands are marketed in the global markets by the company.
A franchised system of distributing products has been applied by Coca-Cola. Through this system, Coca-Cola manufactures the syrup concentrate. Bottlers located in various countries then buy the syrup concentrate to produce the final products (August 2008).
Coca-Cola has applied the strategy of acquisition to expand on regional and global operations. Some of the companies which have been acquired by Coca-Cola are Minute Maid, Thums Up and Barq’s. The company has also acquired certain products such as the fruit juice brand, Odwalla. Fuze Beverage was acquired in 2007 (Coca-Cola website 2012).
The political environment
Political environment is composed of all political forces which affect a company. These forces may emanate from the domestic politics or the international political scene (Abram 2009). Coca-Cola Company is regulated by FDA government rules. Under FDA, the company must adhere to certain provision of manufacturing beverages.
The company has also been affected by change in policies. An example is the changes in the taxes imposed to the company, accounting standards and other state regulations (Hill 2000). The government has also regulated the operations of Coca-Cola by imposing environmental laws.
These regulations have affected the profitability of the company. Other countries have also imposed regulations to ensure that Coca-Cola does not defy the laws of governments. The global market for beverages has experienced a lot of political influences.
The international political forces have regulated the operations of Coca-Cola to create a competitive environment. The pricing strategies of Coca-Cola and the nature of business have been monitored by the international bodies (Daft 2011).
The US government has created a suitable environment for trade, and this has favored the success of the company (Bowdin 2009). However, the government has regulated the trade laws to ensure that fair trade is practiced by creating equal opportunities and freedom in the market. This is an issue that has affected the operations of Coca-Cola Company. The company has been hindered from creating a monopoly in the industry because this would affect the local and global markets (USC Marshall 2011).
The economic environment
The economic environment is made up of all economic forces, either locally, nationally or globally. It is also involving issues of inflation, recession and other micro-economic and macro-economic forces that affect a country or the world (Harper, Bettinger, Dismukes & Kozarsky, 2002).
The international market for non-alcoholic drinks has been growing over the years because many economies have been improving on their performance. Coca-Cola makes more sales in the international markets than in the US. This has resulted from the fact that most economies have grown tremendously, and they have resulted into a bigger market for the products manufactured by the company.
Coca-Cola relies on other economies to make its sales. Some of the main economies, where the company sells its products are Japan, Brazil, Germany and others. These countries have played a significant role in making the industry of soft drinks successful.
The market for carbonated drinks has been low, and its growth has not been remarkable. North America has been the leading market for carbonated drinks for Coca-Cola. This market has been growing slowly. For instance, in 2004, this market grew by 1 percent (Sellers & Woods 1997).
The socio- cultural environment
Changes in the societal ways of living are considered when analyzing the performance of a com-any. Sociological aspects that affect the performance of any company are lifestyles, consumer attitudes towards some products, fashion, and others (Vault, 2002). There is an increasing concerned by people of ages 35 to 55 to improve on nutrition.
In addition, people are more concerned about increasing their longevity by consuming nutritious foods (Conley 1998). The demand for products from Coca-Cola has been increasing because the company has been producing healthy drinks. The demand for carbonated drinks has been on the decline, and this has reduced the sales of the company (Vault, 2002).
The technological environment
Technology is applied in the production processes and the development of new competitive products. Technology is involved in the development of innovative products. In addition, companies differentiate their products by applying technologies to come up with new brands of products (Bodin, G 2009).
Coca-Cola has been applying technologies to come up with new brands of soft drinks. The company ahs developed differentiated products top capture the demand of many customers in the global markets. Coca-Cola has been improving on its range of products over the years (Kalb 1997).
The legal environment
Legal environment is composed of local and global legislation. Coca-Cola has patented its products to ensure that its products are copyrights protected. Both domestic and international laws have protected the rights of the company to have exclusive use of its products. The company has invented products which are in congruence with the laws of all countries where it operates (McCall 2011).
The eco-environment
Analysis of the eco-environment of a company involves the examination of all environmental issues that affect the activities done by a company. Coca-Cola monitors all its facilities to ensure that environmental standards are not compromised. The company has adhered to all laws related to the environment to ensure that no conflicts with the laws of conserving the environment (Kent, 2010).
The competitive environment
The industry has been competitive because many companies have penetrated the market. The beverage industry has been set free, and companies can get into and out of the market freely. In addition to this, industry is exceptionally attractive because there are many profits obtained by the existing players.
Coca-Cola has managed to rule over 40% of the global market in this industry. Some of the major competitors in the global scene are American Beverage Corporation, Aquaterra Inc. and Bazi International Inc. among others (Masterson & Pickton 2010).
The knowledge environment
Coca-Cola has a wealth of knowledgeable personnel. The company has employed professionals from different backgrounds to improve on its knowledge base. The company offers training to workers to create a better knowledge environment. The company has made a lot of efforts to preserve the skills of its employees (Catherine, 2006).
The financial environment
The Coca-Cola Company has been operating in a viable financial environment. The profits of the company have been increasing over the years. The company has been able to over several financial crisis, and this has been attributed to the large capital base of the company (Albrecht, Stice & Stice 2011).
The international business entry
Coca-Cola has applied several strategies to penetrate into the international market. One of the strategies has been to acquire foreign companies. This has made it possible to penetrate other markets because the acquired companies are accepted by people from such countries. In addition, the company has liaised with governments to create a favorable environment for their operations (Albrecht, Stice & Stice 2011).
How Social and cultural differences within countries and/or between countries affect business
Different business environments have different cultural and social beliefs (Patrice 2004). Cultural and social differences have mainly caused a decrease in profit levels and increased uncertainty in operations (Sweeney 2010). Generally, social and cultural differences within and or between countries may lead to decrease in profit levels and or closure of operation among others (Goldblatt 2010).
There are several dimensions of cultural diversity, among them; building connection between people, structuring projects, motivating people, and developing a strategy among others (Jeffries 2001). Cultural diversity arises because business strategies are not applicable to all business environments.
Standard industrial classification system for Coca-Cola Inc.
Coca-Cola has complied with International Supply Chain Solutions (ISCS) provisions. ISCS controls the supply chain systems of companies. ISCS has been supporting private enterprises, public firms and non-governmental institutions. It aims at ensuring that firms adhere to appropriate supply chain processes.
As such, firms can only follow legal processes in acquiring their supplies. This helps improve the performance and create better profits for firms (International Supply Chain Solutions Ltd (ISCS) 2012).
Market structure of Coca-Cola Company
Coca-Cola operates in a duopoly market structure. This is market system where there two large companies. Such companies sell similar products, and this makes it possible for companies to collude over pricing strategy. In a duopoly market system, the companies cannot make decisions without consulting each other (Webster, 2003).
This shows that the firms are price takes. In the non-alcoholic beverages industry, Coca-Cola has been in operation with Pepsi Co. These two companies have dominated in the market, and they have restricted other players from entering into the industry. The two companies have developed a cartel to set the prices for their products (Basic Economics 2012).
Eco-environmental commitments of Coca-Cola Company
Coca-Cola has made progress in use of eco-environmental friendly products and fuels. The company uses renewable chemicals in the manufacturing process. In addition, the biofuels used by the company are renewable and safe for the environment. Coca-Cola has established contracts with Gevo Inc. to be supplying para-xylene, a renewable raw material, to produce bottles.
The para-exylene material is manufactured from plants. Isobutanol is the chemical from which the materials are obtained. This is a renewable material, and Coca-Cola will be using it to manufacture 2G PlantBottle. Coca-Cola has been committed in the production of beverages in an eco-friendly environment.
There are several goals that have been set to achieve such strategies. In addition, the company has carried out a campaign to encourage consumers to dispose off the bottles after use to avoid polluting the environment (Environmental Leader 2011).
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