Powerpoint Present

Coca Cola External and Internal Environments

Dr. Brian Grizzell

Michelle A. Cannon

February 8, 2021

Introduction

The environmental factors are external environmental factors and internal environmental factors. External environmental factors are events that occur outside an organization while internal environmental factors occur within an organization. Examples of external environmental factors are economic changes, political factors, and government regulations, among others. Some examples of internal environmental factors include culture changes, employee morale, and financial issues, among others. An organization should have the ability to determine and make changes to internal and external factors affecting an organization’s performance. A detailed analysis of the external and internal environment of Coca Cola will be analyzed.

 Choose the two segments of the general environment that would rank highest in their influence on the corporation you chose and how these segments affect the corporation you chose and the industry in which it operates.

The general environment is the dimensions in the broader society that influence an organization and the industry it operates in. The dimensions are political forces, technological forces, social forces, legal forces, and economic forces. The two segments of the general environment that highly influences Coca Cola are sociocultural and technological factors.

The socio-cultural factor is an important aspect of the general environment. However, it threatens Coca Cola brand since most of its products are extremely unhealthy with a high percentage of high fructose corn syrup. Coca-Cola operates in many countries. However, the tastes of the drinks vary according to local cultures, tastes, and customs. Although the products are made with the same ingredients and process, the tastes of the soft drinks vary based on temperature and string conditions. This factor also affects the beverage industry since most people are shifting to being health-conscious and concerned (Önay Dogan & Gül Ünlü, 2018). Due to this, they tend to analyze the impact that soft drinks such as Coca Cola products will have on their health. This has reduced the overall demand for soft drinks. However, this can be an opportunity for Coca-Cola to shift to healthier products.

The second segment is the technological factor. Technology is always changing and improved across industries. To analyze the impact of technological factors, some of the elements to consider include the recent technological developments by Coca Cola competitors, the impact that technology has on the value chain structure, the impact of technology on product offering, and cost structure in beverages. Coca Cola is always adopting digital technology (Slack, Byers & Thurston, 2020). This has helped in creating new consumer experiences using innovative programs. An example of an innovative program is the sip & scan which helps consumers in unlocking experiences and prizes. Coca Cola has also invested significantly in research and development. It adopted the use of artificial intelligence in ensuring that determines the consumer behaviour from the data collected. For instance, Coca Cola introduced Cherry Sprite as a new flavour after collecting data.

Two forces of competition that is most significant for Coca Cola and how the company has addressed the two forces in the recent past.

The state of competition in an industry is dependent on the five forces of competition. The five forces are a framework used in analyzing and evaluating the competitive strength and position of a business in an industry. The five forces of competition are the bargaining power of buyers, bargaining power of suppliers, industry rivalry, the threat of new entrants, and the threat of substitute products or services (Puravankara, 2007). The two forces of competition that are most significant for Coca-Cola are the threat of substitutes and competitive rivalry.

The first force is the threat of substitutes. Coca Cola’s main substitutes are products offered by Pepsi, fruit juices, and other cold and hot beverages. It faces a high number of substitutes. There are many juices and different kinds of hot and cold beverages on the market. Another challenge is that the switching costs for customers are low hence indicating a strong threat from substitutes. However, there are several ways that Coca Cola has dealt with this issue in the recent past. Coca-Cola has vastly expanded their product portfolio unlike in the past where it only dealt with carbonated soft drinks (Puravankara, 2007). It offers more than 700 beverages in North America. It has also acquired other brands such as Fuze Tea and Vitamin water.

The second force is the competitive rivalry. The two major players in the soda industry are Coca Cola and Pepsi. The rivalry between the two is intense. There are smaller players, but they do not pose a competitive threat as compared to Pepsi. Pepsi and Coca Cola are almost the same size and have similar products. However, the price competition is high. To deal with competition, Coca-Cola uses several techniques including marketing, competitive pricing, attractive packaging, and a diverse product range. Due to this, it has been able to engage the customers and build customer loyalty (Puravankara, 2007). 

With the same two forces in mind, predict what the company might do to improve its ability to address these forces in the near future.

The two forces are the threat of substitutes and competitive rivalry. Coca-Cola can deal with the threat of substitutes in several ways. The first way is by building a sustainable differentiation. The second way is by collaborating with competitors with the aim of increasing the market size. The last way is by building scale for better competition. Coca Cola can also offer its customers an additional value through wider product distribution (Puravankara, 2007). 

To address the competitive rivalry force, Coca Cola should develop a strong brand and grow its customer base. The second way is by having a striking marketing strategy. The third way is ensuring that it provides impressive products that will attract customers and increase brand awareness.

External threats affecting this corporation and the opportunities available to the corporation.

The external threats affecting Coca Cola water usage controversy, packaging controversy, and direct and indirect competition. Coca-Cola has faced criticism over its water management as many social and environmental groups claim that it highly consumes water which is scarce in some regions. It has also been criticized over its recycling and renewable sources. Coca-Cola faces direct competition from Pepsi (Wahlen, Baginski & Bradshaw, 2014). It also faces indirect competition from other companies Starbucks which threatens its market position.

The external opportunities of Coca-Cola are the introduction of new products and diversifying the segments, increasing presence in developing countries, using advanced supply chain systems, and packaging drinking water (Kapferer, 2008). 

Give your opinions on how the corporation should deal with the most serious threat and the greatest opportunity.

Coca Cola can deal with the threats by improving its waste management system and dealing with the criticisms from environmental agencies. Secondly, it should work on sustainability and green marketing. This will help in improving its brand image in the market (Kapferer, 2008). 

Coca Cola can deal with its greatest opportunity by introducing new offerings in health and food segments. This will increase its revenue and diverge from the carbonated drinks. Additionally, many regions have hot climates and may have the highest consumption of cold drinks. Coca Cola should increase its presence in such locations.

Give your opinion on the corporation's greatest strengths and most significant weaknesses.

Coca Cola greatest strengths include strong brand identity, greatest brand association and customer loyalty, highest brand equity, dominating market share, and extended global reach.

The most significant weaknesses that Coca-Cola faces include aggressive competition, product diversification, and health concerns (Banutu-Gomez, 2012).

Choose the strategy or tactic the corporation should select to take maximum advantage of its strengths, and the strategy or tactic the corporation should select to fix its most significant weakness.

The strategy that can be used by Coca Cola to take maximum advantage of its strengths is by expanding to developing nations, intensifying its marketing campaign, and increasing its presence in juice manufacturing.

The strategy that can be used in fixing the most significant weakness is by focusing on health-related matters by addressing the rising health concerns, introducing new products in snacks and food segments, and improving its brand image (Banutu-Gomez, 2012).

Determine the company’s resources, capabilities, and core competencies.

Coca Cola tangible resource is manufacturing and bottling facilities. The intangible resources are Coca Cola system “the company’s value chain”, brand image, marketing capabilities, brand image, beverage formulas, beverages’ taste/flavour, and beverage’s quality.

Coca Cola central capabilities are centralized in its strategy, quality, innovation, and marketing skills. It accomplishes its objectives using its promoting and marketing skills, building external partnerships, and consumer loyalty.

The core competencies of Coca-Cola are strong brand value, distribution network, and administrative control, franchise network, and cost controls (Sastry, 2020). 

References

Banutu-Gomez, M. B. (2012). Coca-Cola: International business strategy for globalization. The Business & Management Review, 3(1), 155.

Kapferer, J. N. (2008). The new strategic brand management: Creating and sustaining brand equity long term. Kogan Page Publishers.

Önay Dogan, B., & Gül Ünlü, D. (Eds.). (2018). Handbook of Research on Examining Cultural Policies Through Digital Communication. Igi Global.

Puravankara, D. (2007). Strategic analysis of the coca-cola company (Doctoral dissertation, Faculty of Business Administration-Simon Fraser University).

Sastry, V. V. L. N. (2020). Current Technologies Employed in e-Commerce Customer Service by Leading Players. Idea Publishing.

Slack, T., Byers, T., & Thurston, A. (Eds.). (2020). Understanding Sport Organizations: Applications for Sport Managers. Human Kinetics Publishers.

Wahlen, J. M., Baginski, S. P., & Bradshaw, M. (2014). Financial reporting, financial statement analysis and valuation. Nelson Education.