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Coca cola Company SWOT Analysis

Strengths · Financial stability worth billions · Elaborate bottling and supply systems · Cost efficient methods of production

Weaknesses · Lawsuits · Poor performance in bottling subsidiaries · Geographical concentration

Opportunities · Corporate acquisitions · Tax policies in crucial markets such as the US · Growth in the consumption of soft drinks · Appropriate adjustment to socio-cultural changes · Venturing and Emerging Brands (VEB) establishments · Prospects of expanding into new markets · Prospects of expanding into new markets · Brand diversification · Mergers · Brand equity · Improvements of the supply chain

Threats · Scarcity of water in some regions · Strict regulatory policies · Stiff competition · Boycotts · Challenges in obtaining raw materials · Indirect competitors · Ethical purchase behaviors · Health consequences related to sugar consumption. · Risks in foreign exchange · Expansion projects by potential competitors

Strengths

The Coca Cola Company is advantaged with financial stability. Since its establishment till now, the company is worth billions of dollars. With over 500 brand portfolios, Coca Cola has a separate $21 billion brands that support entrants of new company brands into the market (Coca-Cola Co., 2018). The company’s brand, Fanta, is consumed at a rate of about 130 million bottles in the world, and it is the second most favorite carbonated soft drink after Coca Cola (Coca-Cola,. 2018). The company is worth about $80 billion, and has branches in 200 countries worldwide. Secondly, it has a well-defined efficient bottling and supply systems in 200 countries. Coca Cola owns all the distribution channels and assets, which make it save the cost of hiring vehicles and renting or leasing lands for the purpose of bottling and distribution. Furthermore, the company has five of the biggest subsidies which include: FEMSA; European Coca cola Partners; Area Continental; Swire Beverages; and HBC (The Coca-Cola Co., 2018). These subsidiaries represent more than 40% of the company’s total unit volumes in 2017. Further afield, the company enjoys has an advantage of cost-efficiency in its operations. Due to improvements in production methods, Coca Cola’s short-term operating costs was about 70% the total sales in 2017, down from about 80% in 2016 (Coca-cola., 2018). The reduction can be attributed to a decline in administrative and general costs by more than 17% representing about $2.8 billion in 2017.

Weaknesses

Although coca Cola is a well established company that is arguably the biggest in the carbonated soft drinks industry, it has weaknesses just like other smaller companies. Legal tussles have significantly spoiled the company’s reputation. Besides, the cases have also cost Coca Cola huge amounts of money in compensation for damages. For instance, Coca Cola was a defendant in a lawsuit in which a non-profit NGO known as Praxis sued the former and the American Beverage Association for misleading consumers that consuming soda can significantly boost energy levels, and that the sugar is healthy (Coca-Cola Co., 2018). Praxis based its case on finding of several researches such as that by Greenwood et al, (2014), which found that the sugar in carbonated drinks are unhealthy for pregnant women, and can cause non-insulin dependent diabetes type 2. This and other lawsuits have cost the company hundreds of millions of dollars since the past decade. Another weakness is poor performance by some bottling subsidiaries. The revenue generated by bottling investments reduced to $10.5 billion in the fiscal year 2017 from $19.7 billion in 2016 (Coca-Cola Co., 2018). The drop represents about 46% of the total annual revenue generated by the bottling investments, which was attributed to about 40% decline in volumes of units manufactured as a result of the reduction in enfranchising activities in China and Northern America (Coca-Cola Co., 2018). The other weakness is geographic concentration. For instance, Coca Cola Amatil, a subsidiary of the main company, has concentrated its market segment in Australia (Coca-Cola Amatil Limited, 2018). In so doing, it ignores other regions such New Zealand and Indonesia. This makes the company leave loopholes that can be exploited by competitors.

Opportunities

Coca Cola can exploit privileges that have come with acquisitions. Some of the acquisitions that have expanded the company’s scope include: 54% make in Coca Cola Africa from Auheuser-Busch; Ades, which has prominent presence in South America; and minority stake in Aloe Gloe. Tax reformation in the US is another opportunity that will increase the company’s operating capital since the 14% reduction in corporate tax will enable the company to accumulate extra funds that can be used constructively (Coca Cola Co., 2018). Another opportunity is the increase in consumption of soft drinks in the 200 countries that the company operates in. For instance, there was an increase of about 3.7% in consumption of soft drinks, and global consumption is projected to increase by about 120,025.4 million liters from 2013 to 2021 (Coca Cola Co., 2018). Further afield, there have been changes in socio-cultural trends in that consumers in many regions of the world are increasingly embracing healthy drinks that do not have health implications. Coca cola has already taken advantage of this opportunity to manufacture healthy drinks such as Minute Maid products. Besides, the company’s subsidiary, VEB identifies and nurtures brands with high potential, and generates about $2 billion annually through brands such as Blue Sky and Fair Life (Coca Cola Co., 2018). Other opportunities include: prospects of expanding into new unexplored markets; brand diversification; mergers with companies such as Dunkin Donuts; brand equity; and improvement of the supply chain through initiatives such as giving full ownership of assets to suppliers in regions such s North America.

Threats

Water shortage in regions with big market segments such as India has led to public outcry that the company is responsible for a drastic decline in water supply. Approximately 1.2 billion people reside in areas with water scarcity, while another 1.6 million people suffer from economic water shortage (Coca Cola., 2018). The company cannot have manufacturing plants in such regions, which leads to an increase in the cost of transportation of products from manufacturing plants. Further, there are strict regulations with regards to labeling and advertising put forth by organizations such as FDA. For instance, a Law in California known as Proposition 65 requires manufacturers to indicate possible health effects that drinks can cause such as cancer or diabetes, which can scare away customers (Coca Cola Co., 2018). Another threat is intense competition from other well established carbonated drinks such as Pepsi and Danone SA. These competitors often make Coca Cola spend more on advertising and price reduction to overcome the competitors, which significantly reduce the company’s profits (Coca-Cola Icecek, 2017). Another crucial threat is boycotts of Coca Cola products for supporting war on terrorism and Israel to fight other countries such as Palestine (Ishak, Khalid & Sulaiman, 2018). There are also ethical buying behaviors in which people decide not to buy Coca Cola as a result of its secular advertising. Religious people can be reserved to purchase Coca Cola due to its secular advertising. Other threats include: health consequences associated with soda; risks of fluctuations in foreign exchange in some countries; and expansion projects initiated by competitors.

References

Coco-Cola Amatil Limited SWOT Analysis. (2018). Coca-Cola Amatil SWOT Analysis, 1-8.

Coca-Cola Co. (2018). Coca-Cola Company SWOT Analysis, 1-8.

Coca-Cola Icecek A. S. SWOT Analysis. (2017). Coca-Cola Icecek A.S. SWOT Analysis, 1-7.

Ishak, S., Khalid, K., & Sulaiman, N. (2018). Influencing consumer boycott: between sympathy and pragmatic. Journal of Islamic Marketing, 9(1), 19-35.

Greenwood, D. C., Threapleton, D. E., Evans, C. E. L., Cleghorn, C. L., Nykjaer, C., Woodhead, C., & Burley, V. J. (2014). Association between sugar-sweetened and artificially sweetened soft drinks and type 2 diabetes: systematic review and dose-response meta-analysis of prospective studies. British journal of Nutrition, 112(5), 725-734.