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Coca-Colacompanyassignment6.pptxCoca-Cola company ECON 220 October 1st 2020
Organizational overview
Coca cola company is the world leading producer of non-alcoholic beverages. The firms makes more than 500 non alcoholic beverages. Some of the firms products include:
Coca-Cola
Fanta,
Water
Sport drinks
Schweppes
Appletiser
Fresca among others
The firms annual sales exceeded 37. 27 billion dollars in 2019 with a market share of more than 43.7 in he soft drinks industry.
The product portfolio Coca-Cola incorporates non-mixed refreshments, for example, sodas, filtered water, sports beverages and caffeinated drinks. The organization's most well known soda pop is without a doubt the soda Coca-Cola. Brand rankings list the brand, for valid justifications, as one of the most important and conspicuous brands around the world. The historical backdrop of Coca-Cola started in 1886 when Atlanta drug specialist Dr. John S. Pemberton made an enhanced syrup with a particular taste which could be sold at soft drink wellsprings by combining the two segments. The mystery recipe, which started in the United States, is as yet utilized today for delivering Coca-Cola around the globe.
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The firm’s operating efficiency
It is clear that the firm was not operating efficiently in the past here years but demonstrates greater efficiency from year 2019-2019.
People were more sensitive to carbonated drinks due negative information released by health departments
The market in which coca-coal operates
The Coca-Cola company operates as a monopoly.
However the firms operates in an oligopolistic competition.
The market is not perfectly competitive due to existing barriers of entry such as:
Huge startup capita,
Needs for advanced technologies among others
The firms decisions can influence actions of other firms
The company has capacities to control prices in the market
Coca-Cola operates in the "beverage" industry, selling syrup to its franchises that bottle and distributes the final Coca-Cola products. In my opinion, Coca-Cola has operated as a monopoly, yet competes in an oligopoly market; Coca-Cola is not in a perfectly competitive market.
Monopolies are defined as market structures where only one seller or producer exists for a product; additionally there are high barriers to entry. In the United States, thanks to Pepsico, Coca-Cola is not a monopoly. However, in my research, apparently Coca-Cola has been flagged as a monopoly in various other countries where Coca-Cola products are sold. For example in Armenia, Coca-Cola was accused of breaking anti-monopoly laws when Azerbaijan Coca-Cola Bottlers "raised their prices on Coca-Cola products in 0.5 liter bottles by 31.9% thus violating the law on anti-monopolistic activities"
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Coca-Cola branches
Coca-Cola company operates beyond the boarders of USA and has spread to many nations including in Asia and Africa. Some of the regions in which the company has branches include:
Europe,
Middle east,
Africa,
Latin America
Asia pacific
The company also operate bottling services in diverse countries.
Coca-Cola Establishment is the world's principal nonalcoholic beverage corporation. The company makes more than 500 nonalcoholic beverages brands, which are congregated into diverse categories such as sparkling soft beverages, H2O, and sports beverages plat based beverages, and energy drinks, among others. Some of the firm's functioning segments include Europe, the Middle East, and Africa, Latin America, North America, Asia Pacific, and bottling stashes.
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The firms competitors
Some of the rivals of Coca-Cola company include:
PepsiCo
Red bull
Diet coke
Nescafe
Tropicana
Britvic
Fever tree and monster beverage
The Coca-Cola Company's top competitors include Tropicana Products, Pepsico, Britvic, Red Bull, Fever-Tree and Monster Beverage. The Coca-Cola Company is a company that manufactures and distributes various nonalcoholic beverages. although the firms are not massive in sizes compared to Coca-Cola they play a key role in influencing consumer choices and the companies strategic decisions such as pricing.
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Economic concepts that the firm use to its advantage
Some of the economic concepts utilized by Coca-Cola to gain competitive advantage include:
Price-elasticity of demand
And utility concepts and
Product differentiation
The company is an international company as its products are sold worldwide and has branches in more than five regions.
the coca-cola company is aware of the fact that the demand for their products is quite price elastic and hence make sound pricing decisions which implies that a slight increase in prices can significantly decrease demand for their products and lower prices are key for massive sales and higher profits. the firms is aware of the need to put consumers satisfaction at heart which is depicted in packaging's that meet consumer needs of all social classes.
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Changes in market that have impacted the company
One of the changes in the economies which has adversely impacted on the company is the emergence of the global pandemic( corona virus) which has led to lockdowns, movement restrictions among other measures.
The pandemic has led to a 25% decrease in the company sales
In 2 1st quarter of 2020 the firm reported 1% decline in net revenue of more them 8.6 billion
The company witnesses a 2% decline in operating income.
“We’re going to recognize that coming after this virus crisis will be the economic impact and hangover of the lockdown, and there will be a much greater focus from the consumer on affordability or getting the prices lower,” he told CNBC’s Andrew Ross Sorkin.
Coke is still seeing negative global volumes in May, although they have improved slightly after plunging 25% in April, according to Quincey. Roughly half of the company’s revenue comes from away-from-home channels, like restaurants, movie theaters and stadiums. In China, which began easing stay-at-home orders in April, demand in May has not yet recovered to pre-crisis levels.
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Response to the challenges
There are various strategies that the firms can embrace to effectively maneuver through the challenges including:
Diversifying it products
Closure of non-profitable ventures
Mechanization to lower operating costs
Embracing e-commerce
Focusing resources on most profitable products
Quincey said that he expects a “U”- or “extended U”-shaped recovery rather than one shaped like a “V,” where the economy quickly snaps back to pre-crisis activity.
While he said it was too early for Coke to gauge how consumer spending habits are changing as lockdowns lift, the company expects that consumers will be more strapped for cash.
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Conclusion
Despite Coca-Cola being a giant company in the non- alcoholic beverages and having a significant market share, consumers are becoming more aware on the needs for healthier foods and drinks which can adversely impact the firm sales in future. It would be advisable for the firm to venture in sugarless products while ensuring that their products meet consumer heath concerns as a means of having a o competitive edge.
References
Al Dhaheri, Ahmed and Nobanee, Haitham, Financial Stability and Sustainable Finance: A Mini-Review (2020). Available at SSRN: https://ssrn.com/abstract=3538328 or http://dx.doi.org/10.2139/ssrn.3538328
Al Muhairi, Mariam and Al Muhairi, Haitham, Sustainable Financial Management (2019). Available at SSRN: https://ssrn.com/abstract=3472417 or http://dx.doi.org/10.2139/ssrn.3472417
Financial analysis. (2015). Analysis of Financial Statements, 99-145. doi:10.1002/9781119203513.ch4
Seabrooke, L. (2018). The Social Sources of Financial Power: Domestic Legitimacy and International Financial Orders. Ithaca, NY: Cornell University Press.
Wilson, P. (2018). Almanac of business & industrial financial ratios (2019).
