Introduction
According to the requirement of the assignment (to chose and write about one of the global top ten brands), the Coca Cola Company has been chosen. In this paper, a short background of the Company has been included. The mission and vision statements, and goals & objectives have also been listed.
Further, the most important task for any organization i.e., the various analyses such as PESTEL analysis, SWOT analysis, and Porter’s five forces analysis have been done. A thorough research on the subject has been done and it has been the endeavour of the writer to include authentic information throughout the paper.
Background
In 1886, when the Statue of Liberty, one of the wonders of the world, was being constructed in New York, little did the people know that eight hundred miles away, in Atlanta, another master piece was being invented that would create history. Yes, it was none other than Coca Cola, the most favoured soft drink in the world today.
John Pemberton was a pharmacist based in Atlanta. Out of curiosity and somewhat coincidence Pemberton invented the formula for Coca Cola that has become one of the most renowned soft drinks in the world. It is interesting that the style in which Pemberton wrote Coca Cola about 126 years ago has become the logo of the company.
Within three years of Pemberton’s death (he died in 1888), an Atlanta businessman named Asa Griggs Candler purchased the Coca Cola business for $2300 and became the first president of the Company. Candler took the Coca Cola brand to great heights by innovative promotions. It was in 1894 when Coca Cola was bottled by Joseph Biedenharn who had business interests in Mississippi.
In 1923, Ernest Woodruff purchased the company from Candler. After four years, Ernest’s son Robert Woodruff became the company president. It was under his tenure as the president of the Company that Coca Cola was launched worldwide.
Woodruff introduced new flavours such as Fanta in 1950s, Sprite in the year 1961, Tab in the year 1963 and Fresca in the year 1966. Today, there are more than 500 different brands of the Company and one can find Coca Cola in the remotest parts of the world. All this has been possible due to the foresightedness of the Company’s management.
Mission statement of the Coca Cola Company
“Our roadmap starts with our mission, which is enduring. It declares our purpose as a company and serves as the standard against which we weigh our actions and decisions” (The Coca Cola Company).
Vision statement of the Coca Cola Company
“Our vision serves as the framework for our roadmap and guides every aspect of our business by describing what we need to accomplish in order to continue achieving sustainable quality growth” (The Coca Cola Company).
Goal and objectives of the Coca Cola Company
“To continue to thrive as a business over the next ten years and beyond, we must look ahead, understand the trends and forces that will shape our business in the future and move swiftly to prepare for what’s to come” (The Coca Cola Company).
Structure of the Coca Cola Company
The following are the members of the Board of Directors of the Coca Cola Company:
Apart from the Board of Directors, following are the holders of different portfolios in the Functional Leadership at the Coca Cola Company:
Corporate culture at the Coca Cola Company
“Our inclusive culture is defined by our seven core values: leadership, passion, integrity, collaboration, diversity, quality, and accountability” (The Coca Cola Company). The Company has a diverse workforce from all over the world and considers operating in a multicultural world as a crucial aspect of sustainability.
PESTEL Analysis
PESTEL stands for the political, economic, social, technological, environmental, and legal aspects that may have an impact on the performance of any organization. This kind of analysis is generally done by organizations in order to get information on the aforementioned aspects prevailing in a specific country or area where they want to launch their products.
The analysis can also be done to have the latest trends and current information of the aspects. This analysis helps the organizations to understand the market (current or future) and the external factors that may have an impact on their performance.
The Coca Cola Company is no exception and as such it also has to undertake the PESTEL analysis. This is vital because it is important for the company to know its competitors and also the existing opportunities. This way the Company can keep pace and sustain the competitive market.
Political factors
All nations have their own laws and policies pertaining to business. Moreover, there are separate policies for foreign companies. It differs from nation to nation with regard to the extent of intervention by the government in the functioning of any company. The intervention may be in the form of taxes, trade and environment restrictions, labour laws, and/or the facilities or services available.
The Coca Cola Company comes under the Food and Drug Administration (FDA) and as such it has to follow stringent rules and regulations laid down by the governments of different nations. The Coca Cola Company has to take approval from FDA for any of its new products to be launched. Governments of nations can impose heavy penalties on the Company if the FDA standards and norms are found to be disregarded.
There are other laws that the Company has to abide by in a particular country. These laws may pertain to the accounting system, income tax, import and export duties, and excise duties.
Another important political factor that may have an impact on the performance of the Company is the political unrest. If the government of a country changes or there is any kind of protest then there are chances of the demand of the Company’s products being decreased.
Terrorist activities in any country might hamper the Company’s marketing plans in that country.
Economic factors
The performance of an organization in any country depends mainly on the prevailing economic condition. There are various factors that come under the economic condition. These are economic growth or progress of that country, the interest and exchange rates, the labour wages, and the current level of unemployment. The Coca Cola Company has been smart to have judged this aspect before venturing in any new area or country.
If the economic growth or progress of a country is good, it means that the purchasing power of its citizens is good. Due to the fluctuations in the exchange rates of a nation’s currency, the overall revenue of the Company is affected. The interest rate on the loans that the Company has taken from the government affects the profitability. The Coca Cola Company uses special financial instruments to tackle with this issue.
If the inflation of a country increases, it means that the cost of living has increased. In such circumstances, the employees expect higher wages. This factor also has an impact on the profitability.
Social factors
Social factors include the culture, attitude of people, awareness about health among people, and the rate of population growth. It is not possible for the Coca Cola Company to change the social attributes of a country.
So the Company has to adapt itself and mould its policies according to the prevailing social values and culture trends. This is very important for the Company because it is a soft drink manufacturing company and as such is a typical B2C company. In order to flourish, the Company has to consider this aspect.
Even though the Coca Cola Company manufactures hundreds of products, all of them cannot be launched everywhere. So the Company first studies the social and cultural trends and then launches the right products only.
Technological factors
Technology is of utmost importance in all walks of life and if it is a manufacturing process then it becomes all the more important to have the latest technology. Coca Cola Company has got the latest technology for its manufacturing facilities. Due to its technological advancements, the Company has introduced various new methods of obtaining a drink of its brands.
It is understood that the Coca Cola Company has bottling partners in most of the countries where it has business interests. The Company has to rely on its bottling partners for delivering quality products and at the same time it has to provide the required support and guidance.
Legal factors
The Coca Cola Company has to abide by all the laws of a country where it is doing business. The governments of all nations have the right to prosecute the Company if it violates any of the laws.
Sometimes these laws are the reason for increase in costs of production. But the Coca Cola Company is very careful about all such laws.
Environmental factors
Since the products of the Coca Cola Company are to be served chilled, the environment plays a vital role in the sales. Apart from this, there are certain environment protection laws in every country. The Coca Cola Company has to abide by them. A special mention of plastic bottles is eminent. The Coca Cola Company takes great care in using only renewable plastic for its PET bottles.
SWOT Analysis of the Coca Cola Company
Likewise the PESTEL analysis, SWOT analysis is also a popular analysis done by organizations in order to know their Strengths, Weaknesses, Opportunities, and Threats in the global competitive market. In the following paragraphs we shall do the SWOT analysis for the Coca Cola Company.
Strengths
Coca Cola is the world’s leading brand. “Coca Cola Company is the leading brand in the soft drinks marketplace and is responsible for an array of brands including MyCoke collection, Fanta, Sprite, 5 Alive, Schweppes, Powerade, Kia Ora, Dr Pepper, Lilt, Relentless, Oasis and Glaceau Vitaminwater” (O’Reilly, 2012).
The Coca Cola Company is the largest manufacturer of soft drinks (non-alcoholic). It is also the biggest distributor for soft drinks.
The Coca Cola Company has a very strong financial base. The Company has a vast infrastructure spread across the globe. Due to this, the company can penetrate the worldwide markets with ease.
The Coca Cola Company is also into the manufacturing of bottled mineral water and juices.
Weaknesses
There have been certain events in the past that have jeopardized the image of the Coca Cola Company. Like for example, there have been instances of human rights violation against the Company. The Company came under criticism due to its stand on the Middle Eastern countries. In India also, the Company had to face negative publicity due to the fact that the Company products being sold in the country contained some traces of hazardous pesticide.
In 2008, the FDA warned the Company that Diet Coke, one of its products, was in violation of the FDA norms.
The company was unable to garner the expected sales in North America.
“Coca Cola’s Dasani brand of bottled water was found to have illegally high levels of bromated a cancer-causing chemical” (Adams, 2004).
Opportunities
During the past years, the Coca Cola Company has acquired a few companies across the globe. Some of the acquired companies are Kerry Beverages (KBL) in Hong Kong, Apollinaris in Germany, and TJC Holdings in South Africa. Apart from the mentioned companies, the Company also acquired other companies in Australia and New Zealand.
The acquisitions have helped the Company in strengthening its base in those countries and increase its revenue. This has also helped the Company in penetrating the world markets.
The incessant growth of the bottled water industry has been a boon to the Company. As the Company has also started bottled water plants, this growth is encouraging.
The Hispanics are believed to have great purchasing power and are good consumers of soft drinks. The increase of Hispanic population in the United States is encouraging since the consumption will increase.
Threats
Due to the fact that the soft drink market is flourishing, many companies have started venturing into this field. Even though many of them are small time players but it does affect the overall performance of the Coca Cola Company.
Apart from these small time players, there are the bigger companies like the PepsiCo, Nestle, Cadbury, etc., who pose a real threat to the Company. Due to the competition, the Company has to keep a nominal profit margin.
In countries where the Coca Cola Company doesn’t have its own bottling plants, it has to rely on its bottling partners. In such cases, the Company doesn’t have much control over the operations.
During recent times, people have become more health conscious and have started avoiding carbonated drinks. In future, there is a threat of the Company’s sales going down. According to an online article, “Don’t drink cola if you want to be healthy. Consuming soft drinks is bad for so many reasons that science cannot even state all the consequences” (Nutrition Researchers, 2007).
Porter’s Five Forces Analysis of the Coca Cola Company
Porter’s five forces analysis is based on five points namely, threat of new competitors, the intensity of the competition, the threat of substitutes, the bargaining power of the customers, and finally the bargaining power of the vendors. It is very important for the Coca Cola Company to do this analysis.
Threat of new competitors
There are already so many players in the soft drink field that more companies entering in this business is not good for the Coca Cola Company. In order to avoid such intrusions, the Company does the following:
The Company does extensive marketing and advertisement campaigns. Billions of dollars are spent on advertising and marketing. “Coca Cola spends $2.8B a year (10% of revenue) on advertising” (Gaudet, 2008). As a result, the brand Coca Cola has entered into the minds of even the layman. It becomes very tough for new companies to replace the brand.
The Company gives good margin to the retailers such that new companies cannot offer more and cannot replace the brand.
The bottling partners of the Coca Cola Company have to sign a contract before starting the business. According to this contract, the bottling partners cannot do the bottling for any other brand.
The intensity of the competition
Apart from Pepsi, there is no other brand that can come in competition with Coca Cola in the global market. Other brands are small players and are limited to local markets.
Threat of substitutes
There can be many substitutes to Coca Cola products such as aerated water, ice tea, beer, fruit juice, cold coffee, etc. But such substitutes need a lot of advertising and marketing to reach the brand image of Coca cola. So as such, there no such threat in the near future.
Bargaining power of customers
The revenue figures are arrived at from the sales and the sales depend on the customers. Since the revenues of the coca cola Company are quite encouraging, it means that the buying power of its customers is good. The major sales of the Company are from the bulk buyers that include super markets, vending machine operators, food chains, restaurants, etc.
Bargaining power of the vendors
The raw materials used in manufacturing the products by the Coca Cola Company include essence, colour, and sweeteners. Packaging is required for packing the products. Since the raw material is purchased in bulk, there is very little profit margin allowed to the vendors.
The vendors of the Coca cola Company don’t have any bargaining power. This is because instead of more profit margins they are being compensated with huge quantity orders. Moreover, there is no dearth of suppliers of raw materials. So if any particular vendor acts smart, there is always another vendor ready to supply the required raw materials.
Recommendations
The most important recommendation that I would like to make is that the Coca Cola Company should try and amend the contracts with its bottling partners. The Company should have the power to intervene in the operations of its bottling partners.
Incidents like the one that happened in India where the Company was accused of mixing hazardous pesticides. Had the Company had the power to intervene, probably this would not have happened.
My second recommendation is in the financial interests of the Company. It is evident that the Company hires renowned personalities for its advertising campaigns. It is for sure that the company might be paying hefty amounts to these renowned people for their services.
Instead of showing such people in the advertisements, the Company should hire people from the masses. This will serve a twin purpose. Firstly, the company will save huge amounts which it may use as cost cutting on its products. Secondly, since the people in the advertisements will be from the masses, it will have a greater appeal.
Conclusion
In concluding, it is evident that the Coca cola Company is one of the top global brands and the leader in non-alcoholic drinks. There are a few things that have been mentioned in the recommendations and if the Company management gets convinced and executes them, I am sure the Coca cola Company will reach unprecedented heights of success.
References
Adams, M. (2004). Coca-Cola’s Dasani water found to contain alarming levels of cancer-causing chemicals. Web.
Gaudet, B. (2008). Coca Cola. Web.
Nutrition Researchers. (2007). What happens to your body within an hour of drinking a coke. Web.
O’Reilly, L. (2012). Coca Cola. Web.
The Coca Cola Company. Mission, vision and values. Web.