Cap V - Final

Strategy Audit

Introduction

Being in existence in a greatly evolved world in terms of modernization and the commercial worldwide as well, numerous companies around the world have had to go an extra mile to remain relevant and needed in the market. The Coca Cola Company is a beverage producing organization that has been able to offer its products to countries across the globe for decades now, and has several factors to attribute its current success to. Evidently, the company has had to look into the future with a keen eye so as to stand a chance of thriving in its business in the coming years. Based on the findings that will be depicted in the discussion, it can be inferred that the organization has extensively understood the trends and forces which have the potential of shaping their business in the coming future.

Value Proposition

The company has guiding factors that impact it-both as an organization and at individual level (Coca-Cola, 2011). With the underlying declarations of its missions and goals, the company has been able to have a clear value proposition. Coca-Cola has a mission to ‘refresh the world’, ‘inspire moments of optimism and happiness’ and ‘to create value and make a difference.’ On the other hand, the company has a vision which is to developed mission and set of goals, by working with their best bottlers in order to achieve. In this case, the 6Ps of the company are usually used in further elaborating their vision. They include;

1. People

2. Portfolio

3. Partners

4. Planet.

5. Profit long

6. Productivity

Market Position

Coca-cola is among the few businesses whose genesis can be traced to very many years back. Research shows that the company’s first bottling ideas began as early as 1894 before being eventually implemented. Indeed, the business venture has been one that has had to go through several obstacles before being the label and franchise that it is today. The Coca-Cola Company is today’s the world’s number one beverage producer, operating in over 200 nations and having a large array of products under its docket.

The business is today placed in a rather permanent position in the world of commercial making and selling of soft drinks. The company continues to exist as the undisputed champion and a number one option for the market, this being in spite of the competition it has constantly faced from other similar business enterprises such as PepsiCo. It is one company that has been able to endure the tests of time, depicting its prospering it times of war, peace and economic boom or bursts. Indeed, it can be termed as one of the most respectable companies in the world today, owing to such facts about itself and the successful management that it has had all these years.

Competitive Advantage

The brunt of Coca-Cola’s competitive advantage lies in its image and availability. Unlike its main competitor in the market-PepsiCo, Coca-Cola has ensured that its products are made available in almost all parts of the world, not excluding the remote areas as well. This has made it possible for the persons to know what exactly has to be offered by the company in areas both far and wide. In terms of its image, the company has products that are advertised in fun-filled adverts that target its market segment (Coca-Cola, 2011). They also are packed in well-designed packs that are attractive to the consumer. In addition to this, the company has a long-standing principle in regards to responsible marketing of its products; a guiding factor that has thusly helped it in drawing boundaries on just how far they can go in enticing its market.

The company’s century-long conviction and deep-rootedness in local communities has been a key attribute in discussing its competitive advantage. This is a heritage that has been found to serve the company very well in this age, where persons appreciate the distinctiveness of local markets and honoring of local identity as well. There also exists an ancient advantage that has set Coca-Cola apart, which is its secret ingredient (PepsiCo, 2010). Even though this may not be an advantage in the near future, due to efforts to generally improve soft drink production, the company still enjoys its legal right not to say what it does to make Coke taste like Coke. The company is also able to sustain its competitive advantage through re-branding and re-inventing its products and associating them with fun things. Its inexpensiveness has also made it a preferred option globally.

Current Environment

Coca-Cola’s success story as a leading beverage company in the globe is mainly attributed to three key causes; a good distribution network, adoption of a strong bottling system and massive levels of penetration as well as recognition. Having been originally started in the United States, Coca-Cola is the largest manufacturer of non-alcoholic beverage, not forgetting its distribution and marketing as well. The company is has a brand that receives global recognition from all corners of the world, a strong brand portfolio and a leading brand. In terms of revenue and monetary capability, the company has been ranked top more than once, with its value as per the 2010 study being well over 70 million U.S dollars.

The company produces soft beverage drinks, diet drinks, energy drinks, water, pure fruit juice and milk-based drinks. The company has a formula for conducting its business, which basically means that it has a planned outlined for enabling its coverage of different markets. It has become imperative for the company to have a means of categorizing its target market in order to go about its product distribution process in the most appropriate manner. The company has an environment that makes its most suitable to thrive in it business, with sufficient funds, recognition and market entrenchment (Beverage Daily, 2007) . Each of these aspects if further promoted by other issues those are to some significant extent, beyond the company’s control. It strong and loyal team of customers have a major role when it comes to the company’s current environment. However, there are other negative issues that form part of its current environment, factors such as the competition it faces and opposition from other forces, such as those in support if more healthy drinks.

External Factors

In order to carry out a substantive insight on the external factors affecting Coca-Cola, it is imperative to use Porter’s Five Forces Model. According to the model, there are five forces responsible for determining the profitability of a company: new entrants to the industry, competitive rival sellers within the industry, substitute products, buyers and suppliers.

Low Threat of New Entrants: The Coca-Cola Company faces a low threat of new entrants in the soft drinks’ market. This is mainly due to the high fixed capital that is required in started off such a project, alongside intensive labor, marketing, production and purchase of warehouses. Bottling is another issue that poses another limitation, as there are limited bottlers in the market as it is.

Strong Threat of Substitutes: there are several substitutes for the Coca-Cola drink, such as bottled water, sports drinks, coffee, tea and fresh juice. Consumers who are more concerned with their health often prefer to go for other healthier drinks than coke, hence creating a great threat to the business. Options such a coffee and tea provide consumers with caffeine, therefore making many others opt for it as well.

Low Threat of Suppliers: most of the supplying done in the Coca-Cola business is in regards to commodity ingredients and bottles; both of which have low bargaining power and therefore place the coke business at a better position to work (Datamonitor, 2003). Suppliers in this chain of production have a lower power in terms of pricing, hence their weakness in the industry. Despite its lack of an independent bottling capability, the company has incorporated bottlers such as Coca-Cola Enterprise, and still manages to gain profits with the continued weakening of the supplier’s bargaining power.

Moderate Bargaining Power of Buyers: large stores, supermarkets and restaurants are the first buyers of soft drinks such as coke, before selling them to the secondary buyers. This therefore gives them a strong bargaining power. The shift to healthier drinks has also increased this power, which allows them to bargain for lower prices.

Strong Competitive Rivalry: Coca-Cola faces its greatest challenge from the pressure brought about by its rivals such as PepsiCo. Although Coca-Cola has managed to tap more sales from the global market, it has failed in the North American, market, where its main competitor-PepsiCo, gunners much more profits than it.

Strategic Issues

Publicity: The Company’s publicity has not always been the best in all instances. This has been due to various occasions that led to painting of the company in a negative image. The manner in which a company such as Coca-Cola is publicized matters a lot, since it is the business world, where image means a lot (New York Times, 2003). Failure to take keen measure in these issues may in due time take toll on the company’s international growth.

Company performance in North America: For a company that has constantly been ranked as the number one beverage company globally, Coca-Cola’s performance in North America is nothing less than sluggish. The company has been found to have the highest profits and earnings in the global platform but fails terribly when compared to its main competitor in the North American market. Conducted surveys have shown the company having drop in sales between 1% and 2%.

Diversification: despite having over 200 brands to its name, Coca-Cola has less diversity in the soft drink market when compared to PepsiCo. According to a study conducted up to 2009, it was found that PepsiCo had its larger 63% consisting of food while the other 37 comprises of beverages. In case of a major decrease in demand for beverages, Coca-Cola may find itself in serious problems.

Health: with the advent of cancer in most of the developed nations where Coca-Cola has managed to thrive, health interest of the people has been a force to reckon with. Many consumers in the market have in the recent years voiced their concerns in terms of the soft drinks that they take for refreshment, seeking to move towards the consumption of healthier drinks. Looking at the chemical composition of Coca-Cola products, it can be inferred that it is not the healthiest drink and other options can be swiftly taken as an alternative.

Globalization: Although the company has been able to extensive penetrate the global market, it is about time it incorporated other factors in its global ventures in the business. The world is drastically evolving in the technological sector and the various businesses are expected to be similarly technologically advanced. This is to mean that the company should align its globalization ventures with technological advancements so as to ensure the venture is successful.

Findings and Recommendations

Based on the above discussion, several findings can be noted and therefore appropriate recommendation being in order. As it is, Coca-Cola Company is among the most successful companies in the world today-and not just in the soft drink business. Not only has the company been in existence for over a century, but has also gained mileage to a significant extent in its particular field of business. The company has clearly stated and well depicted values that it seeks to meet in the course of its business transaction. Its market position is firmly placed as the leading beverage producer, reaching consumer in places both far and covering wide areas. In regards to its competitive advantage, it has global and ready availability to attribute its advantage to.

Taking the company’s current environment and the external environments into account, it can be seen that there are important opportunities which are not being pursued and significant external threats that are not being addressed under the current strategy. Since the key issues that ought to be looked into in terms of strategy have been mentioned, it is only fit to state appropriate recommendation in relation to each issue previously mentioned. The issue of the company’s publicity can be easily addressed by ensuring that the company is constantly seen in good light by the global market. This can be done by first correcting the issues that led to a negative image in the first place. Also, constantly having activities that or the greater good can play an important role in creating a positive image.

The company should also improve on its North American efforts so as to defeat or at least be at par with its competitor. Regarding its diversification, it can be stated that this poses the greatest threat to the company. It should therefore take prompt measures to have more products, rather than just having numerous brands of similar products. In order to approach the health issue properly, it will be required of the company to seek other ingredients that are less harmful to use. Technology in the other hand can be easily addressed by incorporating it in global communication process and the production processes.

References