Revision Need done in 2 hrs or less

Research Analysis

Natasha R. Chalk

University of Phoenix

In the latter part of the 19th century, the Coca-Cola Company began its existence. Coca-Cola is one of the foremost global producers and disseminators of soft drink beverages, syrups, and concentrates. Coca-Cola maintains a presence in more than two hundred nations and is world-renowned for its innovative beverage, Coca-Cola. The brand has been and has expanded to encompass greater than two hundred and thirty distinct brands (Pöhler, 2017; Telekunta & Rathore, 2018). The Coca-Cola organization has central offices in Atlanta, Georgia. The subsidiaries of Coca-Cola provide gainful employment for more than thirty thousand families worldwide. Coca-Cola derives 70% of its profits and corporate volume from international commerce. The global presence of Coca-Cola is its primary strengths (Levy & Young, 2004).

The US soft beverage market has three primary actors, which are, PepsiCo and Coca-Cola, and Cadbury-Schweppes. Over 40% of the domestic market pertains to Coca-Cola, in comparison to 8% market share held by Cadbury-Schweppes and 21% maintained by PepsiCo. Although Coca-Cola is an international brand, it maintains an emphasis on the local domestic market. Research has shown a clear relationship between the context of organizations´ market percentage and the degree of viability (Pöhler, 2017; Telekunta & Rathore, 2018). Studies show there are four attributes why the market percentage is associated with enhanced viability. First of all, the economies of scale combined with an augmentation of experiential knowledge make the most efficient optimization a production technology and techniques. Second, the clients are adverse to the risks and will consequently remain with the primary market actors resulting from prevailing comfort factors. Third, attributed to presence and leadership sustained by Coca-Cola in the marketplace, the organization can apply its position towards enabling the negotiation decrease pricing in the supply chain. The Coca-Cola organization also has the capacity of decreasing pricing for the products it manufactures. The fourth attribute is that the leader in the marketplace has exceptional administrative units with effective industrial processes in all facets of the organization. The Coca-Cola organization applies the guideline of an adapt stand incorporation (Levy & Young, 2004). Coca Cola´s success represents advocacy of the adaptive stand strategy. Porter study considers the environmental tractors are influencing the competitive position of market actors. Five forces are having a competitive nature governing competitiveness, and these forces are the following:

a.     The introduction of a market actor.

b.    The menace of replacement goods with competitive substitutes.

c.     The negotiating and bargaining capacity of the consumers.

d.    The market positioning and bargaining ability office supplies.

e. The competitiveness of the industry (Levy & Young, 2004).

The Coca-Cola Company engages in an oligopoly category of market structure. An oligopoly market structure is detailed as a framework where a few large market actors are vying for market share. In the soft drink beverage segment of the United States, the primary actors are Coca-Cola, PepsiCo and Cadbury Schweppes.   In an oligopoly, there are usually few participants dominating the sales scenario. In an oligopoly, the potential for numerous small size firms is limited due to the barriers established by major actors. The larger market actors create more than half of all of the sales volume. Oligopolies rely on the differentiation of products (Pöhler, 2017; Telekunta & Rathore, 2018).  Coca-Cola facilitates the availability to consumers using a matrix of corporately-owned or administrated bottling and dissemination associates inclusive of the independent bottling companies, retailers, and wholesalers. The Coca-Cola Company has implemented a system of franchised distribution since the late 19th century. The franchise paradigm enables Coca-Cola to manufacture concentrated syrup products distributed by bottlers nationally. The franchise example empowers Coca-Cola with cost avoidance regarding, distribution, warehousing, and fabrication. The franchise model facilitates more rapid business scaling (Pöhler, 2017; Telekunta & Rathore, 2018).

The business cycle details the fluctuations throughout the economy in general commercial activity, trade, and production. The boom-bust cycle represents the upside and downward variations of indexes of the GDP. The economic cycle describes the intervals of contractions and expansions in the industrial occupations surrounding a long-term developmental growth trend. The business cycles are classified as possessing four different phases. These phases are trough, contraction, peak, and expansion (Federal Reserve Bank, 2018).

The trough in the position economic cycle is the lowest value from which the subsequent stages of expanding and contracting become manifest. The contraction precedes the trough and is manifest by slow growth, decreases in employment and the subsidence of pricing tensions. The economy normally enters the contraction phase after a peak. The peak of the cycle is the superior point of the economic cycle where the national production is established at its maximum permissible output. Moreover, the indexes of employment corresponded to the full and superior values. Peaks are periods of high inflation. The expansion is manifest by enhanced volumes of employment, economic development, and inflation (Federal Reserve Bank, 2018).

The present stage of the business cycle in the United States is the expansion phase demonstrated in the Appendix. The real GDP is manifest by an assessment calibrated for inflation reflecting the values of merchandise and services realized by an economy annually with its expression in base year prices. The GDP is frequently referred to as the constant price, inflation calibrated GDP (Federal Reserve Bank, 2018).   

The real GDP is manifest by an assessment calibrated for inflation reflecting the values of merchandise and services realized by an economy annually with its expression in base year prices. The GDP is frequently referred to as the constant price, inflation calibrated GDP. The inflation-adjusted Consumer Price Index is a complete estimation applied for the assessment price modifications in a basket of merchandise and services manifesting consumption spending in an economic system. Inflation assessed using the CPI. The Consumer Price Index in the United States is an assessment of the modification of the dollar´s buying power and the inflation index (Federal Reserve Bank, 2018).

The Consumer Price Index demonstrates the present prices basket of services and merchandise in the context of the prices occurring during a corresponding interval in a prior year to manifest the influence of inflation regarding buying power. The CPI is one of the most well acknowledged lagging indicators (Federal Reserve Bank, 2018). The recommendations to the administrators of the Coca-Cola Company are to maximize profits using decreasing capital expenditures in its organization by establishing new franchises. The global beverage market anticipated demonstrating an annual growth index of 4% up to the year 2020. The 4% growth on an annual basis is anticipated deliberate to liberate $150 billion in overall market potential. Traditionally, Coca-Cola has been reliant on its sales volume a peak of $46 billion in 2014 which declined to $35.41 billion in 2017 (Pöhler, 2017; Telekunta & Rathore, 2018).The new emphasis placed on the value to increase market share. Another recommendation is the investment in market research and product development to expand its product line further.

The graph demonstrating the economic indication leading index is a compilation of 10 distinct reports published before the release of the LEI. The information on the graph tends not showing a change in the direction of the market until the change has continued for three consistent months. The LEI is broadly viewed as a more efficient forecast tool regarding recessionary periods then expansion periods. Notwithstanding, the LEI has been able to forecast various settings which never realize. Studies have shown that financial analysts had the ability of accurately forecasting of the previous recession with accuracy. The real GDP escalated at a yearly rate up 2.3% during the initial quarter of 2018. This is a forecast provided by the Economic Analysis Bureau. In the fourth quarter of the year, the real GDP has anticipations of increasing 2.9%. The Bureau of Econometric Analysis emphasized the first quarter forecast was having its basis on incomplete origin data having the potential of a revision (Federal Reserve Bank, 2018).

The second forecast for the first quarter founded on more comprehensive information will be published at the end of May 2018. The enhancements in the real GDP during the first quarter were reflections of the assertive contributions derived from fixed Investments of a non-residential nature, personal consumption expenses, and investment in the private inventory sector, federal government expenditures, local government expenditures, and exports (Federal Reserve Bank, 2018). The decline of the real GDP development during the first quarter shows decelerations in local government expenditures, exports, residential stationary investments, and personal consumptions. These motions were in part adjusted by an increase in the investment of private inventory. The import sector is normally subtracted in the tabulation of a gross domestic product. The present dollar value of the GDP augmented 211 billion dollars or 4.3 percentage points during the first quarter to a total of approximately 20 trillion dollars. During the fourth quarter, the present dollar value of the GDP is forecast to increase by 254 billion dollars or 5.3% (Federal Reserve Bank, 2018).  

Many consumers are confounded regarding the distinction between the Consumer Price Index and inflation. The Consumer Price Index is a rating applied for the assessment of change. The federal government selected an arbitrary year as a base which was established equivalent to 100. Presently the year applied is the average between the economic productions of 1982 to 1984. Before the establishment of the 1984 annual base, the previous benchmark was 1967. The Bureau of Labor Statistics conducts a monthly survey nationwide for baskets of merchandise and services while documenting the outcome in numerical form. An item costing $1 in 1984 costs $1.85 today (Federal Reserve Bank, 2018).

Banking institutions apply the effective federal funds rate as a differential for overnight lending to fulfill their reserve capacity. The effective federal funds rate is the most significant interest index in the national economy which influences inflation, development, and employment.  Depository institutions and banks in the United States empower the Federal Reserve with their accounts. These ledgers are the manner by which lending institutions facilitate customer payments and proprietary payments (Federal Reserve Bank, 2018).

The lending institutions with the highest credit ratings receive financing of overnight funds assessed at the sufficient funds' rate. The Federal Reserve publishes benchmarks for funds at depository facilities. The banking institutions deposit funds with the Federal Reserve. In the event a banking institution has a more substantial balance at the end of the day established by the benchmark, the Federal Reserve will compel the lending of money to institutions which do not have sufficient funding. As a consequence, these institutions remit the funding with an interest surcharge at the effective fund's rate (Federal Reserve Bank, 2018). 

The prime rate is the surcharge remitted by clients with good credit to the banking institutions. Conventionally, large corporations including Coca-Cola are the financial institutions of primary clients. The prime interest rate is primarily derived from the federal funds rate. The prime rate has great significance for the individuals attributed to the influence of the prime rate on the interests available for consumers. The primary determinant of the interest indexed surcharge is the peril of default. Coca-Cola and other large organizations have minimal probabilities of default. Consequently, in the banking industry, there is differential treatment between commercial and private clients. The prime rate is a reference point for ascertaining other indexed interest surcharges available to the private and commercial borrowers (Federal Reserve Bank, 2018).

The cost of producing the one-liter bottle of Coca-Cola including labor, water, concentrate, and packaging is $0.15. The production costs are standardized for the soft drink beverage manufacturing industry (Mogaji et al., 2014). The consumption of soft drink beverages has been steadily declining in the US soft drink industry. Consequently, the declining consumption influenced the profit margins realized by the Coca-Cola Company. The revenues have been steadily decreasing (Statista, 2018). The Coca-Cola Company and received economic reinforcement from the Tax Act of 2018 and refranchising bottling initiatives during the fourth quarter of 2017 and the first quarter of 2018 (Coca-Cola, 2018). The suggested course of action for the Coca-Cola Company is to diversify into energy drinks, bottled coffee, and bottled water. The pricing strategy held by Coca-Cola is stable due to the oligarchic nature of the soft drink beverage manufacturing industry in the United States. The threat from substitute products is low considering there are considerable barriers to entry for new market actors. Coca-Cola, Cadbury- Schweppes, and Pepsi-Cola will each continue to vie for increased market share.

Conclusion                                                                             

The Coca-Cola Company has been established since the nineteenth century. It has been an institution that has developed generationally. Presently, the sales revenue of the Coca-Cola Company is in decline compared to 2014. The economic indicators demonstrate stages of expansionary growth for the near future. The suggestions are for Coca-Cola to develop its product line and lower its expenses. The decreasing of expenses and the optimizing of profits will enable the Coca-Cola organization to thrive. Furthermore, the recommendation of making its presence more dominant in the marketplace could be achieved by the exploitation of new markets.

Appendix