rewriting work -- coca cola strategy

With a growing number of companies using their internal resources to form core competencies, it is important for firms to analyze, understand, and manage their internal organization in a global manner. The Coca-Cola Company must analyze their internal environment to include their strengths and weaknesses and determine the relationship between the internal and external environment. An ongoing evaluation of how these two environments work together will allow Coca-Cola to maintain their competitive advantage.

Internal Environment

The Coca-Cola Company’s internal environment includes the firm’s resources such as employees, management, and corporate culture including its vision and values. The company’s vision which concentrates on people, portfolio, partners, planet, profit, and productivity guides all aspects of the employees at The Coca-Cola Company. The company’s values which include leadership, collaboration, integrity, accountability, passion, diversity, and quality will allow Coca-Cola to grow in the future. Coca-Cola’s leadership value is based on the courage to shape a better future and the company has recently changed leadership with the intention of continuing down this path.

After occupying the position of Chairman and Chief Executive Officer, since April 2009, a succession plan has been announced for Muhtar Kent. In December 2016, the firm announced that company veteran, James Quincey will take Kent’s place as Chief Executive Officer in May 2017. Working closely with Kent over the past 10 years allowed Quincey to demonstrate his industry knowledge, brand expertise, values, and understanding of evolving consumer tastes. Quincey’s’ “strategic vision and inspirational leadership” will be used in the next phase of the business (The Coca-Cola Company, 2016).

The change in leadership will allow for a new perspective that will be beneficial moving forward. Kent will remain on the Board as its Chairman and will continue to be accessible for input if requested by Quincey. According to The Coca-Cola Company  (2016), “James is a proven leader who is passionate about developing people, building strong teams, and creating winning cultures everywhere he has been” (The Coca-Cola Company Announces Senior Leadership Succession Plan). The ability to build strong teams will allow Coca-Cola to continue a strong corporate culture that develops its employee competencies creating value and a competitive advantage.

Strengths and Weaknesses

Coca-Cola has several strength with the biggest being its strong marketing strategies. This is the best manner to lead any organization to success. Coca-Cola has several campaigns that attract customers. The best part of the organization is that the main focus of their campaigns are for people who come from all kinds of backgrounds and are all ages. This would be considered the biggest strength because Coca-Cola is a diverse company and it campaigns to reach out to people around the world. Brand equity is another one of Coca-Cola’s strengths because it has a strong presence in several countries across the globe. Per an article on ProQuest out of the five leading soft drink brands that are being sold all over the world, Coca-Cola produces and sells four of them: Coca-Cola, Sprite, Fanta and Diet Coke (ProQuest 2015).

Customer Loyalty is a very important factor for any organization and Coca-Cola is fortunate to have that as its strength. Having a large customer base increases customer loyalty and since Coca-Cola has multiple brands around the world it’s a plus for building loyalty. Consumer loyalty to Coca-Cola and its products has stayed great, which is evident from the high market acceptance for Coca-Cola’s newly introduced products (Euromonitor, 2013). Even though Coca-Cola has a lot of strengths it also has one major weakness.

Knowledge is a powerful thing and people around the world are more conscious than ever about health and obesity. People are learning about being healthy because social media has made it very easy. Social media is a constant source of information from the fitness and weight loss communities. As any other beverage brand, one of the biggest weakness that Coca-Cola is facing is meeting the need of people who are health-conscious. Trying to brand itself as a healthy option is nearly an impossible factor for Coca-Cola because most of their products fall into a category of junk and unhealthy food whether filled with sugar or sugar substitutes.

Internal and External Environment Relationship

“Strategic management is the managerial responsibility to achieve competitive advantage through optimizing internal resources while capturing external opportunities and avoiding external threats” (The Impact of External and Internal Factors on Strategy, 2017). There are a number of different internal conditions that could affect the external environment of a company and vice versa. Some internal strength and weakness originate from firm organization, technology and equipment, marketing and sales and proper management of inventory to name a few. Coca Cola’s external environment can on one hand be majorly affected by the company’s internal environment, but on the other hand have no relations to the internal environment. Some external opportunities and threats originate from the economy, technology, competitor’s analysis, consumer analysis and marketing to name a few.

To better elaborate on the connection between both internal and external factors within the organization a SWOT (strengths, weaknesses, opportunities and threats) analysis was put together for the company. A strength of the Coca-Cola Company is the brand. Coca-Cola has been around for a long time and benefits off their brand. The name alone allows the company the ability to expand all over the world and gather/maintain consumers (Jurevicius, 2017). A weakness of the company is its lack of healthy options to its consumers. As mentioned previously, many people are starting to become more health conscience and moving away from carbonated drinks, so Coca-Cola should use this as an opportunity and expand its product options.

An opportunity for the company consist of expanding the company and not only offering more flavors but different products than what consumers are used to. Coca-Cola could team with another company and begin to offer different food and snack options as well as offering different flavors and types of beverage options. Finally, a threat to the company is its competitors, both direct and indirect. There are a lot of competitors out there expanding on their brand or offering products in the non-alcoholic beverage field that could later cause a problem for Coca-Cola if they do not look at the options of expanding the company as well as look into offering healthy options for consumers.

Organizational Structure

The purpose of the organizational structure of Coca-Cola is to specify the firm’s formal reporting relationships, procedures, controls, and authority and decision-making processes (Hitt, Ireland, & Hosskisson, 2015). Coca-Cola follows a multidivisional structure or “M-form”. According to Hitt, Ireland, & Hosskisson (2015), “The multidivisional structure consists of a corporate office and operating divisions, each operating division representing a separate business or profit center in which the top corporate officer delegates responsibilities for day-to-day operations and business-unit strategy to division managers” (Pg. 338). The structure of Coca-Cola is headed by a CEO and corporate staff with presidents over each international division. The divisions are Asia Pacific Group, Europe, Middle East and Africa Group, Latin America Group, and North America Group, and Bottling Investments Group (Coca-Cola Company, 2016).

The M-form structure supports innovation and function for Coca-Cola. The structure allows each division to operate as an individual company in many respects while reporting to the corporation. The M-form structure’s major benefits are to enable corporate officers to accurately monitor performance of each business or division, to facilitate comparisons between divisions, and stimulate managers of poorly performing divisions to look for ways of improving performance (Hitt, Ireland, & Hosskisson, 2015). This structure influences performance positively by allowing each division the power to make their own decisions and create their own direction and vision for themselves. The structure also allows the larger corporation to focus on more pressing tasks instead of micromanaging each division. Coca-Cola with their bottling partners, ranks among the world’s top 10 private employers with more than 700,000 system associates (Coca-Cola Company, 2016). The M-form structure is the optimal choice for Coca-Cola because of the high employment rates and multinational operations.

Competitive Position and Competitive Advantage

Within the soda production industry in the U.S., The Coca-Cola Company is one of four main players in the industry with a marketing share of 32.4 %. The other three main players are PepsiCo Inc. with a marketing share of 25.9%, Dr. Pepper Snapple Group Inc. at 9.4%, Monster Beverage Corp. at 6.4% and other soda production businesses falling into the 25.9% other marketing share category (IBISWorld, 2017). Competition in the industry is considered to be high with a steady trend.

The Coca-Cola Company has furthered its competitive position by diversifying its soda products as well as brands and is considered to be the world’s largest beverage manufacturing company with products sold in over 200 different countries around the world. According to IBISWorld (2017), “The Coca-Cola Company still maintains very high profit margins above 19.0%, as the company still benefits from brand loyalty allowing the company to raise prices, which also slowed revenue declines, in recent years.”

To increase its competitive advantage, The Coca-Cola Company has the possibility to expand into additional beverage markets such as energy beverages and sports beverages as well as considering alternative soda and non-soda beverages that can appeal to consumers who are health conscious. The company can further its competitive advantage by entering into the snack food segment of the market.

Because of The Coca-Cola Company’s competitive position, the company is also able to purchase shares of other soda production companies to increase its competitive advantage and is able to sell its rights to the company’s trademark beverages. According to IBISWorld (2017), “However, within the United States, company-owned operations produced, sold and distributed about 82.0% of products. By vertically integrating US operations, the company is able to maintain control of all facets of product production.”

Conclusion

Assessing The Coca-Cola Company’s internal and external environment provided insightful information that can be used to further the company’s operations and implement necessary changes as well as understanding its correlated relationship. Conducting a SWOT analysis has also provided information on The Coca-Cola Company’s structure and the organization’s overall business as well as how resources are utilized. An evaluation on the company’s current competitive position showed different opportunities available to further the company’s competitive advantage as well as to maintain it.