Cap IV

External Environmental Scan

Dwayne Woods

Capstone Experience in Integration and Strategy

Dr. Thomas Kemp

January 1, 2014

Assignment 2: External Environmental Scan

The Coca-Cola Company has built the brand over the years tremendously. This has enabled the company to develop a big market share that enables it enjoy a monopoly advantage over the other companies in the same industry. The analysis of the environment is quite important just as the internal analysis is important. The environment is composed of the economic, political, social and technological among others (Weinstein, 2004). The economic analysis of the industry is quite a challenge even for the Coca-Cola Company. This is a challenge due to the changes that might be unexpected and vary widely over the years.

This is a factor that affects the strategies and the plans of the company during the different economic times. The purchasing power of the consumers is greatly altered by either a boom or a drift to the positive or negative side in view of the company. This is owed to the fact that the products that are offered by the company are not a necessity, but rather a luxury to a certain level. This factor greatly impacts on the operations of the Coca-Cola Company (Weinstein, 2004). The political factors of the Company go hand in hand with the regulatory and the legal factors. The Company owns a great market share and is known widely. This makes them among the major Companies affected by the political and legal sector.

The Company is exposed to strict rules and regulations because of the fame gained over the years by the Company. Practically all the sectors of the Company are regulated to ensure that they suit the needs of the people and satisfy them. The factor of ecology even chips in here, the Company has opted for environmentally friendly packages in order to satisfy healthy consumption and disposal of the products (Bell, 2004). Some of the laws with regard to the environment are put into serious consideration during the manufacturing process to ensure that they are on the right side of the laws. Politically, with the branches of the Company saturated all over the world. An unrest in a country greatly impacts on the revenues and gains from the Company.

The Company owns a great market share so, if any issue comes up due to political factors, the Company might be greatly affected compared to other Companies in the same industry. This is putting into consideration the revenues and shares, not mentioning the efforts that have been indulged to ensure the company’s shares are maintained and even increased in the industry. Products consumed by a region with certain societal beliefs hold some aspects dear to them (Bell, 2004). The Company is dispersed all over the world but changes in the norms greatly impact on the consumption of the products. In the present times, health issues are considered, with some believing that the products are unhealthy for consumption. The issue of differentiation chips in to outdo the effects of this belief. The ages and other factors are considered when manufacturing the products.

The societal changes have a great impact on the Company as an external factor that requires consideration and deep though to ensure the success of the Company. Geographically, the company is spread all over with maser branches in the regions and the countries. This is to ensure that the wide coverage is sustained and developed. The target groups of the products are reached easily considering the wide coverage. The technology is another crucial factor that impacts on the normal running of the Company. There has been much advancement even in the communication that has been made worldwide. The operations and the running of the Company, with better and faster machines included are a major factor also considered in the running of the Company.

The Company has utilized the increased use of the internet to gather ideas and information considered to improve the running of the Company. This is a factor that has greatly improved the running, with the infrastructural systems in order to improve the production and service to the people at large. With the big market share that is owned by the Company, the threat of new competition is a rather minor issue. The Company has basically targeted all the people and has left no hitches or gaps. This gives a big threat to the new Competitors that may want to indulge in the industry. The intensity of the competition in the industry is quite high. This is because; there are some healthier and cheaper products that a consumer might opt for like water.

The competition also chips in especially with Pepsi products as they are sweeter than the Coke products although, Coke products prove to be healthier and more differentiated to suit the needs of the consumer. The bargaining power of the consumers is quite high as the other products are affordable at a much cheaper price. This is a challenge as the Company battles to earn more revenue while at the same time maintaining the loyalty of the consumers (Weinstein, 2004). The monopoly power gained over the years by the company gives it an economic advantage and a bargaining power considering the suppliers. The Company can produce the products cheaply due to the advantage of the big market share.

References

Weinstein, A. 2004.Handbook of market segmentation: strategic targeting for business and technology firms.3 rd edition. New York: Probus Publishing Co

Bell, L., 2004.The Story of Coca Cola. Mankato: Smart Apple Media