Introduction
Cola-cola Company is one of the multinational companies that can be described to be at the helm of their success in the corporate sector. The assessment will begin with an in-depth analysis of its two most significant elements of the general environment, and the two most important forces of competition. It will also analyze the identified company’s strengths and weaknesses, threats, and opportunities as well as strategies. Lastly, the report will highlight resources, capabilities and core competencies.
General Environment
According to Hitt, Ireland, & Hoskisson, (2013) a segment of demography revolves around the ethnic mix, size, income distribution, age and geography which poses as a significant when the company evaluates the need for one of its stores. Analysis of these characteristics contributes to the growth and competitive advantage enjoyed by Coca-Cola in most parts of the country. Considering the income distribution, size and geographic location are similar in most parts of the country, Coca-Cola has benefited by filling a niche in this area. They have stocked their stores based on the needs of individuals from these areas and developed a store that meets the needs of people in specific regions. Considering most stores are located in densely populated areas they take advantage of demographics to provide a wide array of products that are based on ethnic mix and diverse cultural needs.
The technological aspect also impacts the company through innovation which is a critical part of Coca-Cola’s strategy. In the growing beverage industry, the company is shifting to healthier drinks and in improved technologies to benefit from competitive advantage. For instance, Valser, Coca-Cola’s Swiss sparkling water will be the first brand to make use of the Direct Air Capture (DAC) technology to get rid of CO2 from air to use in the processing of beverages (Kotler & Lee, 2008).
Five Forces of Competition
According to Kotler & Lee, (2008) analysis of the five forces of competitions helps to generate a strategic choice. They encompass the threat of new entrants, internal rivalry, supplier power, buyer power, and substitute products. Various forces have facilitated the thriving business in the company. The most significant forces that Coca-Cola has utilized are barriers to entry and substitutes.
Barriers to entry (Item 1)
Coca-Cola has engaged in activities that make it hard for competitors to enter the industry. Brand image, contracts with authorizers, and loyalty from customers have made it hard for other companies to make it in the beverage market. High costs of advertising have also served as barriers to other companies to enter the industry.
Substitutes, Buyers and Suppliers
Coca-Cola’s competence has enabled it to create value for its consumers by undertaking various activities that most competitors cannot do (Mantzari, Hollands, Pechey, Jebb, & Marteau, 2015). These activities help the company to benefit from competitive advantage and often include consumer leadership, leadership, product innovation, and consumer leadership. Other competencies that enable the company to benefit from competitive advantage include value chain in the company that provides for human resources, operations, inbound logistics, accounting, and information technology.
Evaluation
Competitors often face a lot of difficulties when they decide to enter the beverage market or soft drink due to Coca-Cola’s bottling network. Coke and Pepsi have authorized their business contracts with their bottlers who have significant authority in various environmental regions permanently. These contracts prevent other bottlers from engaging in rivaling brands for similar or equivalent products. The union and backward incorporation between coke and pepsin have made it extremely hard for any other company to enter the market and to have bottler’s to distribute their produce. Most of these competitors are left with one choice of building their own bottling plants. This has proven expensive and capital intensive considering the construction of a new plant goes for more than $75 million (Hitt, Ireland & Hoskisson, 2013).
In addition, the company’s advertising speed has established a barrier for other competitors to enter the soft drink industry. Advertising and marketing costs of beverage products make it hard for new companies to enter and compete with other companies that are already in the market. According to, a product’s brand image and loyalty often act as a barrier for competitors in entering the industry. The company invested heavily in advertising which has earned them loyalty from customers and brand equity. This has made it hard for other companies to enter the marketplace. The availability of suppliers, buyers and substitutes are other factors that have contributed to the company’s success. Its competence has permitted it to create value for consumers by carrying out activities that most competitors cannot do. The manufacturers of basic raw materials for the soft drinks often lack control over these products which makes the suppliers weak. The company’s competence enables it to benefit from a competitive advantage (Kotler & Lee, 2008).
Future Improvements
Coca-Cola will always have these two forces in mind in order to benefit from a competitive advantage. The company will continue to invest in expensive forms of advertising which will enhance customer loyalty and make it hard for competitors to enter the industry. The company will also improve its brand image through the provision of customer preferences which will enhance its presence in the market. In addition, I believe that the company will engage in activities that enhance its competence such as product innovation, consumer leadership and market leadership among others. Investment in information technology and inbound technologies will also enable the company to grow its market.
External Threats and Opportunities
Coca-Cola Corporation makes use of SWOT analysis to assess its threats and opportunities. According to Ščeulovs, & Gaile-Sarkane, (2011), the ability to display hats and T-shirts is one of the company’s ultimate strength. The Coca-Cola trademark has gained recognition in most parts of the world. Its variation in marketing has affected the company’s sales and positioning positively. The bottling organization makes it easy for Coca-Cola to take advantage of emergencies globally.
Threats
Coca-Cola Corporation suffers from the threat of replacement. Although the business of soft drinks is strong, most customers are not married to it essentially. Replacements that are likely to exert pressure on Pepsi and coke include chocolates, milk, coffee, and tea.
Threats and Opportunities Strategies
The company can increase its recognition in most parts of the world through increased advertising. Improving its presence in the market by setting up stores in various parts of the world where its presence has not been felt which help to enhance its sales and market positioning. On threats, the company should overcome the issue of replacement by enhancing its product quality to meet the customer taste and preferences. The products should be healthy to reduce the chances of getting replaced by healthier products.
Strengths and Weaknesses
The most significant strength in Coca-Cola is its high brand awareness and brand image. The corporation is present in most parts where it enjoys a significant degree of popularity. It also holds a large market share of the beverages industry and enjoys a strong product portfolio. The company’s greatest weakness is the competition from other brands in the company. Considering the increasing demand for health drinks, the company is likely to face stiffer competition in the future.
Strategy
The company should take advantage of strengths by increasing its brand image and brand awareness through increased advertising and diversification. The company is facing competition from brands that are promoting healthy drinks. It should strive to match this competition by increasing its portfolio of healthy drinks with decreased calorie count (Ščeulovs, & Gaile-Sarkane, 2011)
Resources, Capabilities, and Core Competencies
Coca-Cola’s competencies enable the company to build value for its consumers by undertaking activities that most competitors cannot do. These activities include leadership, product innovation and consumer leadership (Ščeulovs, & Gaile-Sarkane, 2011). In terms of resources, Coca-Cola has a wide array of resources that are used in the manufacture of its products that are not available to most of its competitors. Coca-Cola’s capabilities have enabled them to enjoy high brand awareness and exceptional brand image.
References
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2013). Strategic management: Concepts and cases: Competiveness and globalization (10th ed.). Mason, OH: South-Western Cengage Learning.
Kotler, P., & Lee, N. (2008). Corporate social responsibility: Doing the most good for your company and your cause. John Wiley & Sons.
Lee, N., Senior, C., Butler, M., & Fuchs, R. (2009). The feasibility of neuroimaging methods in marketing research.
Mantzari, E., Hollands, G. J., Pechey, R., Jebb, S., & Marteau, T. M. (2015). Impact of bottle size on in-home consumption of sugar-sweetened beverages: protocol for a feasibility and acceptability study. Pilot and feasibility studies, 1(1), 41.
Ščeulovs, D., & Gaile-Sarkane, E. (2011). E-Marketing for a company: external and internal influence. Economics and management, 16, 947-953.
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