STR581 rewriting work

In 1886, Dr. John S. Pemberton, a pharmacist from Atlanta, Georgia created a flavored syrup and took it to his neighborhood pharmacy where it was mixed with a carbonated water. The beverage that came from this mixture was called refreshing and delicious by those who tasted it. Dr. Pemberton’s bookkeeper, Frank M. Robinson, suggested the name Coca-Cola because the two letter “C”s would look well in advertising and the Coca-Cola brand was born. Mr. Robinson was also the man who penned the well-known Coca-Cola script still used today (The Coca-Cola Company, 2012). Although some things have stayed the same since Dr. Pemberton first introduced Coca-Cola, there have been changes in the external environment in relationship to the company.

Strategic analysis

In performing an external environmental analysis Coca-Cola should start by using the environmental scanning strategy. The scanning process identifies early signals of environmental changes and trends (Hitt, Ireland, & Hosskisson, 2015). Coca-Cola should utilize the scanning process to determine how to create value and sustain competitive advantage in its market. Though the Coca-Cola brand may be considered a stable brand in its market, the environment is considered highly volatile in competition. Scanning will enable Coca-Cola to identify potential and current changes in the general environment. Coca-Cola will scan user data and transactions to determine what the consumer is likely to purchase, as well as how competitors may be changing their products to address consumer preference.

Currently, there are four industry trends shaking up the beverage market in which Coca-Cola is scanning the environment for insight. The trends include, Millennial Motivators, clean packaging, healthy beverages, and natural or organic based ingredients (“PR Newswire”, 2017). Using the scanning process, Coca-Cola will be able to identify the market changes quickly and adapt to meet those changes as necessary to sustain the competitive advantage. Sustaining the competitive advantage allows the consumer to identify with their brand first, which creates more value to the consumer as well as more value to Coca-Cola’s business. Coca-Cola will also be able to keep track of its largest competitors, such as PepsiCo, and analyze if their adaptations are working or failing.

Remote Environment Evaluation

Remote environment as described by Business Dictionary (2016) is the “ecological, political, social, and technical factors or forces that affect a firm’s decision-making abilities and freedom, but are beyond its control or influence.” One such social factor is the fact that consumers are becoming more health conscious. People want to know what they are consuming and this remote factor has caused the beverage industry to come up with healthier alternatives.

A second important aspect is the economic factor, every business in every industry is affected by economic factors. A growth or loss in the economy affects the industry either negatively or positively. Economic factors such as inflation, recession and unemployment rate can impact Coca Cola negatively or positively depending on how low or high the numbers are. In 2015, The World Bank determined that global growth was expected to “rise moderately, to 3.0 percent in 2015, and average about 3.3 percent through 2017. High-income countries are likely to see growth of 2.2 percent in 2015-17, up from 1.8 percent in 2014” (The World Bank). Technology is a major factor as it can improve the performance and profitability of Coca-Cola. Beverage Companies like Coca-Cola use several technological advances such as CRM, Customer Relationship Management. CRM is used by the companies to communicate with their consumers to predict and respond to their needs.

Industry Environment Assessment

Having a knowledgeable understanding of an organization’s industry environment is a key role to the success of the company. The industry environment is all external or internal components, which can affect the organization’s success ("What Is Environmental Analysis?” 2015). With Coca-Cola being one of the largest beverage companies in the world is it important that the firm has a diverse knowledge of not only their consumers, but their competition as well. Some important factors to be aware of are the demographics, economy state, consumer’s preference and competition.

Being one of the largest manufacturers in the business requires innovation. According to Barbara Murray (2006), “The key for all of these beverage companies is differentiation. The giants have new formulations and appearances. Whatever the strategy, be it a new color, flavor, or formula, companies will strive to create the greatest brand awareness in the minds of the consumer in the hopes of crowding out its competitors.” Firms are expected to be the best of the best and should always be one step ahead of its competitors. Doing something as simple as keeping an open communication with consumers can keep the company on track for maintaining proper awareness for the industry.

External Operating Environment Evaluation

Understanding the external operating environment of an organization offers key insight into outside factors that influence a business’s operations. The evaluation of the external environment consists of two main types of environments. The micro environment which refers to an environment where specific factors are directly closer to the organization and can affect the organization immediately and the macro environment which refers to an environment where general outside factors can affect an organization and that there is little or no control over.

According to IBIS World (2017) “The Coca-Cola Company is the world's largest beverage manufacturing company, with more than 500 brands sold in more than 200 countries.” Currently, The Coca-Cola Company owns 32.4% of the market share of the Soda Production industry just in the US alone. The organization, still headquartered in Atlanta, Georgia, has grown to operate on a global scale.

The Micro environment of The Coca-Cola Company’s operations are affected by the market structure, consumers who purchase the products, competition with other major soda product companies as well as non-soda companies, and its suppliers that provide raw materials. The Macro environment of The Coca-Cola Company’s operations are affected by global factors, technological advancement as well as research and development. Also, the social culture and trends, the political and economic stability of the country, changes in GDP, and taxes on products as well as government rules and regulation policies. Because the dynamics of the external operating environment can lead to changes within the organization’s activity, both of these external environment categories can be utilized to conduct a SWOT analysis of the business.

Conclusion

From an Atlanta pharmacist’s syrup and carbonated water combination to a company whose logo is known around the world, Coca-Cola has continuously evaluated its external environment. To see continued success the company will need to assess trends and how they fit into the strategy of the firm, understand which companies are their competitors and stay ahead of them with innovation. Using evaluations of the various elements of the external environment will allow Coca-Cola to continue to be one of the most well-known companies in the beverage industry.

References