Powerpoint Present

profileicajdfciell
FinalCocaCola.doc

9

Business-Level and Corporate-Level Strategies

Michelle Cannon

Dr. Grizell

February 21, 2021

Introduction

The business strategy outlines how a business should compete. On the other hand, the corporate strategy outlines the business to be involved in and how being in a business helps in competing with other businesses. Business-level strategies involve positioning a business to stay ahead of the competition and any economic and technological changes. The strategies involved are cost leadership and differentiation. The corporate-level strategy involves getting a mix of business units. With new and existing entrants in the market, the beverage industry is now highly competitive. The products that beverage companies deal with are differently positioned. Coca-Cola is one of the companies in the highly competitive beverage industry. The company has transformed the beverage company and continues to transform. A detailed report of Coca-Cola will be provided.

Business-Level Strategies

Coca-Cola uses a differentiation strategy in developing its products and services. It uses the strategy to remain on top of the competition and to provide consumers with unique attributes and features. The first way that Coca-Cola achieved differentiation is when it achieved the perception by consumers as a superior quality product ahead of the consumers. It has also achieved a high brand image and recognition. Some of the strategies that Coca-Cola has used to differentiate itself are through promotion and packaging. The promotion strategy is used in promoting customer loyalty and commitment to the products. It also uses 20% of its budget to promote the differentiation of its products. Coca-Cola has been able to develop a unique and distinct range of products for which its customers may pay a premium price. Coca-Cola has been able to position itself successfully as a reputable company for quality and innovation, communication of the product strengths, and branding itself as a joy and fun symbol (Payne & Frow, 2013). 

Coca-Cola has invested a lot in research and development intending to get a clear understanding of the different segments in the market based on different factors such as lifestyle and age, among others. Differential plays a vital role in packaging. Coca-Cola products remain adaptable to different segments of the market. It adopted the use of functional products where its products are of different sizes and forms. The cans and bottles are also of different shapes and sizes to ease vending machine operations. Coca-Cola also uses packaging materials that can be recycled. The use of recycled material is because it seeks to promote environmental sustainability. Materials are well labelled during packaging to ensure that consumers may easily identify the products. Coca-Cola also focuses on image differentiation. Its logo has established its brand name (Banutu-Gomez, 2012).

Coca-Cola uses cost leadership strategies. It has used different methods in reducing its cost of production. Due to its size, Coca-Cola has managed to offer several brands at low prices (Payne & Frow, 2013). Its product design does not attract any extra costs. With its cost leadership strategies, Coca-Cola has managed to reduce the high costs of production operational processes. It also embraces effective manufacturing systems and distribution networks.

On the different kinds of markets, Coca-Cola needs to target to promote its sales. Coca-Cola has managed to meet the needs of health-conscious consumers by manufacturing Diet Coke and Vitamin water, among others. For its promotion, Coca-Cola uses different strategies such as sales promotion, public relations, and advertising, among others. The advertising strategies used by the corporation have played a vital role in promoting brand success to reach the global markets. The techniques also ensure that consumers stay informed on the corporation’s products. Coca-Cola also offers incentives to its retailers and middlemen.

From all the business-level strategies, the most significant strategy is the differentiation strategy. This strategy has ensured Coca-Cola’s long-term success. It has been able to provide unique and valued products (Payne & Frow, 2013). 

Corporate-Level Strategies

Corporate-level strategies are important for directing the performance of an organization on the activities undertaken and resource allocation to meet the organizational goals. Coca-Cola has always developed new products when it enters the new market. Initially, Coca-Cola was known to be carbonated soft drinks. Over time, it started diversifying its products by producing non-carbonated products such as Diet Coke and Sprite. Some of these products have dominated the market. To continue penetrating the market, Coca-Cola branded itself as ready-packaged liquid refreshment. Due to this, it has extended its product line to bottled water among others (Banutu-Gomez, 2012).

The second corporate strategy used by Coca-Cola is globalization strategies. Through technological advancements, Coca-Cola has managed to grow (Banutu-Gomez, 2012). For instance, activities such as product transportation have become cost-effective and easier. Due to this, Coca-Cola has been able to penetrate the furthest markets.

The most significant strategy that has driven Coca-Cola into long-term success is the production of new products for new markets. By doing this, Coca-Cola has expanded its products beyond carbonated soft drinks. By producing and joining new markets such as bottled water, Coca-Cola has managed to penetrate to new markets. It should also embrace the use of a value-creating strategy based on the internal organizational resources and capabilities which will act as a sustainable competitive advantage (Payne & Frow, 2013). 

Competitive environment

A competitive environment is the external system of a business. Different businesses in the same industry tend to compete in terms of success and profitability, among others. In the beverage industry, there are different players such as Coca-Cola and Pepsi. They both are committed to being a leader in the beverage industry and achieving financial stability. Pepsi and Coca-Cola have expanded to different nations in the world. However, Coca-Cola has surpassed Pepsi since it has diverse brands.

For the business-level strategies, a low-cost differential has been engaged by Coca-Cola. Coca-Cola has achieved low-cost differentiation by embracing economies of scale by ensuring mass production (Payne & Frow, 2013). For Pepsi, it has adopted a low-cost differentiation by offering its products at low prices with an aim of increasing its demand and market share.

Both Coca-Cola and Pepsi use smart selling marketing strategies. Coca-Cola mainly focuses on customer relationships hence producing products based on their lifestyle (Banutu-Gomez, 2012). On the other hand, Pepsi has expanded to the snack product segment. It has expanded its presence by proving the beverage and snacks. Coca-Cola on the other hand, though does not have its presence in the snack segment, it has over 100 different choices of drinks that consumers may choose from which has made it difficult for Pepsi to match Coca-Cola.

On cost leadership strategy, Pepsi developed an approach for attracting and retaining customers. With the large economies of scale, Pepsi took advantage of this to practice a low-cost and differentiation strategy. Pepsi keeps close with its marketing environment to ensure that it does not lose its customers (Dhar et al., 2005). Due to the new entrants in the market, Coca-Cola has been imposed with pressure. For instance, Coca-Cola faced some pressure after Pepsi launched its plastic brand and Aquafina water, among others. Due to this, Coca-Cola introduced plastic bottles for some of its products such as coke zero.

On the corporate-level strategies, Pepsi uses mergers and acquisitions as a strategy for expanding into the international market to gain access to competencies and infrastructure. This has helped Pepsi to reduce its direct cost and to achieve organic growth (Dhar et al., 2005). Some of its mergers and acquisition include Spitz International, Simba Pty Ltd, and Bare Foods, among others. Coca-Cola on the other hand should form alliances and cooperate with other companies that produce alcoholic drinks. Consumers in some instances order for whiskey and Coca-Cola. Coca-Cola has failed to address this issue while Pepsi still collaborated with other companies. Pepsi has benefited from mergers and acquisitions. For instance, in 2001, Pepsi had a growth of 13.95 after it acquired Quaker Oats in 2000. The two companies have the same strategies.

The second corporate strategy is the formation of creating an international strategic alliance. Pepsi took advantage of the growing Chinese beverage market and established an alliance with Tingyi in China intending to tap into the Chinese beverage market. Therefore, the important and significant corporate strategies employed by Pepsi are focusing on emerging markets and organizational culture.

Slow-Cycle and Fast-Cycle Markets

Slow-cycle markets are defined by protecting resources against external competition. It can be considered as a form of monopoly where one company dominates the market. From the approaches used by Pepsi, it does not fit in the slow cycle market. This is because the lack of competition may not motivate Pepsi to work towards gaining a competitive advantage. In such a market, Coca-Cola is preferable to Pepsi. This is because Coca-Cola can be categorized as a historical brand that has been able to maintain customer loyalty. The dominating of the market by Coca-Cola may not be a cause for competition for Pepsi since it seeks to determine its long-term success.

In the fast cycle markets, Coca-Cola’s competitors seek to control the market. In this case, Pepsi will have to develop more strategies on how it will gain a competitive advantage. In such a market, competitive advantage is important, and to gain it, Pepsi should have strict management to ensure that the corporation is sustained to meet its long-term goals. Coca-Cola differs in slow and fast-cycle markets. The fast cycle market will play two roles. The first role is designing an organization that will perform with limited challenges and without errors. For Coca-Cola to adjust to the competitive environment, it will require a quick information flow. The second role is the management paradigm.

Conclusion

Coca-Cola has managed to remain on top of the competition in the beverage industry due to its differentiation strategy. With this strategy, it has remained unique and can easily be differentiated from its competitors. It adopted both image and product differentiation strategies. Coca-Cola also positioned itself based on its cost leadership strategy. The strategy was developed due to a result of learning, knowledge, and experience in production and operational processes. Some of the key corporate strategies used by Coca-Cola are globalization and producing new products for new market segments (Banutu-Gomez, 2012). From the competitive environment analysis, it is evident that Pepsi stands to be the most significant competitor of Coca-Cola. From the business and corporate-level strategies used by Pepsi and Coca-Cola, Coca-Cola has a high likelihood of being successful in the long-term than Pepsi, its main competitor.

References

Banutu-Gomez, M. B. (2012). Coca-Cola: International business strategy for globalization. The Business & Management Review3(1), 155.

Dhar, T., Chavas, J. P., Cotterill, R. W., & Gould, B. W. (2005). An Econometric Analysis of Brand‐Level Strategic Pricing Between Coca‐Cola Company and PepsiCo. Journal of Economics & Management Strategy14(4), 905-931.

Payne, A., & Frow, P. (2013). Strategic customer management: Integrating relationship marketing and CRM. Cambridge University Press.