Keywords: coca cola goals and strategies
1. Background
Coca Cola was founded by Dr. John Pemberton, a pharmacist from Atlanta, Georgia in May, 1886. (inventors. about) Coca Cola has achieved a solid and substantial expansion before 120 years. The desk below details the swift development of Coca Cola from a little glass of soda pop beverage to typically the most popular can of drinks all around the globe.
2. Vision, Mission, Goals and Values
Mission and vision
Similar to other multi-national companies, Coca-Cola aims to maximise their earnings while retaining a long-term lasting growth within the drink industry. The company's mission statement states that the company aims to:
- refresh the planet,
- inspire occasions of optimism and happiness and
- Create value and make a difference in the area that we all reside in.
In order to place the company's quest into perspective, the organization conducts their business in a distinctive fashion which is quite distinguished from its competition. Rather than going right through immediate marketing programs and traditional programs to the consumers, Coca-Cola utilizes various bottling partners in order to target more on drink creation and marketing.
It is named "The Coca-Cola system". The company starts by developing the concentrates, beverage bases and syrups then distribute them to their bottling lovers while keeping possession of the brands. The business itself is more mixed up in marketing activities such as print and tv advertising, retail store shows as well as contests and package deal designs.
The bottling companions on the other side, comprise of numerous entities. They include international and publicly bought and sold businesses and even some small family based businesses. These partners are usually in charge of the producing, presentation and distributing of the company's products.
3. Exterior Analysis
The company can identify its opportunities and risks in their operating industry, by analyzing the exterior industry environment. Besides, it is vital to select and formulate an appropriate proper planning, because external factors have the effects on the organization in different aspects.
3. 1 Macro-environment
The macro-environmental causes surround businesses. The analysis of the macro-environmental pushes can be carried out by using PESTEL model six pushes, which include the following:
1. Political Legal
2. Economic
3. Sociocultural
4. Technological
5. Environment
6. Legal
3. 1. 1 Political
Political/legal is the factor that affects the political and legal system. The non-alcoholic beverages fall season in the category under the FDA and the government plays a role within the operation of manufacturing these products. In terms of regulations, the government has the capacity to set fines for the firms that not meet their standard legislations requirement.
In addition, with the changes in laws and regulations, such as accounting criteria, taxation requirements and environmental laws and regulations, foreign jurisdictions, deregulations, monopolies legislation and standard government policy might impact the book of the company as well as their admittance in foreign country. However, Coca Cola is consistently monitoring the insurance policies and regulations placed by the government.
3. 1. 2 Economics
Economic factors are analyzing local, nationwide and world economy impact, which also, includes the issue of downturn and currency exchange rates, inflation rate, interest, personal cutting down rate, income levels and unemployment levels. As the typical and Poor's Industry survey indicates, "For major soft drink companies, there has been economical improvement in many major international marketplaces, such as Japan, Brazil, and Germany. " These markets will continue to play a major role in the success and secure growth for most the non-alcoholic beverage industry.
3. 1. 3 Sociological
Sociological analyzes the ways in which changes in culture affect the business such as changing in life styles and attitudes of the market. Since many are reaching an older era in life, they are becoming more concerned with increasing their durability. This will continue steadily to have an effect on the non-alcoholic drink industry by increasing the demand for the healthier range of drinks. As the demand for carbonated carbonated drinks decreases, the revenue of Coca Cola also declines.
3. 1. 4 Technological
Technological force refers to analysis where in fact the introduction and the appearing technical techniques are valued. This creates opportunities for services and product improvements in terms of marketing and development. As the technology advances, services are introduced in to the market.
3. 1. 5 Environmental
Environmental factor analyses the local, countrywide and global environmental issues. According to the data of the Coca Cola Company, every one of the facilities are strictly monitored according to the environmental laws enforced by the federal government.
3. 1. 6 Legal
Legal aspect focuses on the result of the national and world legislation. The Coca Cola Company will get all the privileges applicable in the nature with their business and every inventions and product improvements are always entering the copyrighted process.
3. 2 Micro-environment
To analyze the micro-environment and its factors, we use the Porter's five makes model to recognize the existing commercial factors, which include the following:
1. Threat of new entrants
2. Rivalry among existing competitors
3. The bargaining power of buyers
4. The bargaining electricity of suppliers
5. Risk of substitute product
3. 2. 1 Threat of new entrants
Threat of new entrant is the consequence of new competitors joining in the industry, triggering the company to build up competitive advantage and maintain the market talk about. Hence, competition within the industry becomes higher. However, to lessen the threat of new entrants, Coca-Cola would need to create a strong brand image. By creating brand image, customers would become more likely to stay with the product and therefore the hazard is reduced. As Coca Cola is the dominant player in vending machines in public areas, with the ability to create a solid presence for the Coca-Cola brand in public places through its numerous vending machines (Euromonitor International, 2008).
3. 2. 2 Rivalry among existing competitors
High competitive pressure influences price. Depth of rivalry is related to the amount of challengers, rate of industry growth, service or product characteristics, amount of set costs, the capability, height of exit barriers and diversity of rivals. It really is hard to avoid poaching business when competitors are numerous or are about equal in proportions and ability. The major rival for Coca-Cola is Pepsi. To reduce the rivalry among existing opponents, company should make an effort to identify their products or even consider buy out competition to be able to help them develop. Sutton (1998) cited in Matraves (1999) argued that Coca-Cola has an initial mover advantage going out with from World Warfare II. It was in a position to persistently dominate the market through its superior advertising competition. In addition, Coca Cola's market share relative to Pepsi is a lot higher within the cola portion.
3. 2. 3 The bargaining power of buyers
The bargaining electric power of customers is powerful when the customer purchases larger percentage of seller's products or there exists a small negotiating power whenever there are many similar products on the market. If the company is providing to professional customers, they should be given that those customers tend to be more price sensitive. In addition, cutting off powerful intermediaries is one of the most common ways utilized by companies to reduce the bargaining of buyers.
3. 2. 4 The bargaining electric power of suppliers
The bargaining ability of suppliers in soft drink industry is known as strong. Suppliers are powerful when a few suppliers dominate the marketplace somewhat than an imperfect source of source where there is no substitute for that particular input.
Company could choose to buy more than a supplier. By doing so, company could reduce its production cost in long term.
3. 2. 5 Risk of substitute product
The risks of substitutes are high because the soft drink industry is an extremely competitive industry. The dangers of substitutes would be high when: the product that the business is offering does not provide any real benefits set alongside the other products, customers have little commitment, the price of switching and replacing the merchandise is low, and the substitute product offers an attractive price performance trade off to the industry products. If we were to see erosion in Coca Cola's market talk about, this would claim that other companies are effectively convincing consumers that the perceived quality with their products is higher than Coca-Cola.
3. 3 Industry Life Cycle
Change in communal concerns, behaviour, and lifestyles are essential trends. Inside the recent century, people are becoming more worried about a healthy lifestyle. "Consumer awareness of health problems arising from weight problems and inactive lifestyles represent a serious risk to the soda pops sector" (Datamonitor, 2005, p. 15). The style is triggering the industry's business environment to change, as organizations are differentiating their products to be able to increase sales in a stagnant market.
4. Internal Research:
SWOT Examination Using Coca Cola Amatil (CCA) as an example
4. 1 Internal Analysis
Internal environment examination is the process whereby the strategic strengths and weaknesses within the business are identified and analyzed to determine the degree of the influence on the main element value string management and the root base of competitive advantages, which include competencies, resources and features.
4. 2 Value Creation
The Coca-Cola Amatil (CCA) Company is committed to becoming a great leader in both customer and distribution services and also to continue building value string quality. Value creation is an essential process for attaining and sustaining a competitive advantages. It entails creating and providing products with features or features that customer's value (Hill, Jones, Galvin and Haidar, 2007 p 96). Examples of what CCA has done to set-up value as explained by Favaro (1998) include "increasing and refocusing the company's marketing investment; development into new countrywide marketplaces; acquiring and consolidating bottling companies to be able to set-up new, better agents in their resource chain; and reducing their contribution in non-beverage businesses".
According to Kitzmiller (2006), technology is another key factor in value creation. With technology, Coca Cola can satisfy the constantly changing needs of the consumer. Coca Cola continually brings out technology in their products such as intro of the Sprite Green, a low calorie sparkling beverage made out of natural sweetener possesses 5 % lemon drink and the new Coca-Cola little cans, that have only 90 calorie consumption. They also innovate the frosty drink equipment program, which aspires to provide high-end answers to customers.
4. 3 Competencies
The major factors that allow CCA to accomplish superior efficiency, quality, innovation and responsiveness to customers represent their ownership of competencies, capabilities and resources essential to outperform its competitors. Referring to the SWOT analysis matrix above, we can easily see that the main element competencies or unique advantages that allow CCA to achieve competitive advantages include, strong brand image, strong franchising business model and a diversified product range. Competencies of CCA are also produced from its features such as effective inventory and syndication systems, enabling the business to manage resources better and valuable resources held by the business as shown by its consolidated budget.
4. 4 Capabilities
According to Crawford (2004) key features of CCA include improvements with their inventory management systems, which mainly directed to ensure that marketers receive appropriate quantities of beverages and this stock replenishment occurs effectively, thus allowing CCA to operate with lower inventory levels and minimizing the costs of storage area and warehousing. CCA also implemented a Co-Managed Inventory system, which electronically screens inventory levels at Coles and Woolworth supermarkets to ensure suitable stock levels. The utilization of the source chain-remodeling program "Project Jupiter" also allows CCA to boost physical distribution functionality, hence lowering syndication and transport costs.
CCA is also capable of delivering what their consumers and customers value. With an in-depth knowledge of customer's needs and perceptions and innovations in wireless technology, CCA can improve service with their customers, by meticulously monitoring vending machine stocks and shares. This decreases the chance that the product will not be available when the consumers intend to acquire and raises consumer assurance in the vending machine channel. It also supplies the promotional advantages to CCA by creating a solid existence for the Coca-Cola brand in public places (Euromonitor International, 2008).
4. 5 Resources
Factors that Coca Cola is the owner of controls and uses for creating value can be classified as tangible and intangible resources. These resources must also be organized to be able to determine effective and reliable internal organizational structure of the business enterprise.
CCA's cola carbonated carbonated drinks, which were traded under the most recognizable brands of all the producers on the market, are considered uncommon, unique resource. It has enabled CCA to make a competitive advantage in the global drink market (Hill, Jones, Galvin and Haidar, 2007). However, the carbonated drinks sector in Australia appears to start nearing its maturity period. CCA and many other manufacturers have responded to this matter by committing resources to the market with better product categories such as fruit juices, bottled waters and energy drinks (Business Screen International, 2009).
5. Stakeholders
Being the world's most significant non-alcoholic beverage company, Coca-Cola is committed to maintain a dialogue with its stakeholders both inside and outside of the company. Major stakeholders include:
6. Coca-Cola Product Line
Source: http://www. mycca. com. au/SelfServe. Cca/Health-and-Wellbeing. aspx?filter=Appletiser
7. Functional-Level Strategy
To lead competitive edge a business can either perform functional activities:
- At an expense lower than its competitors.
- Easily to distinguish its goods and services from those competitors.
(Quick MBA 2009)
8. Business-Level Strategy
Three generic strategies identified by Michael Porter such as cost authority, differentiation and focus. Coca Cola Company applied these generic strategies to develop a competitive gain.
These will be the pursuing three competitive advantages to be able to achieve and keep maintaining Coca Cola Company:
- Cost management; by changing in to the most reasonably priced producer
- Differentiation: when you are exclusive and unique on the market.
- Focus: by choosing the narrow competitive range within the industry.
Requirements for Universal Competitive Strategies:
8. 1. Cost leadership
Coca cola is by using a mixture of cost control and differentiation strategy. The reason is due to business is often required facing a number of segments of the value chain. Coca cola development system is the most efficient in the world therefore it gives them an inexpensive strategy in the global drink industry. Moreover, Coca cola has differentiated its products from those opponents together with the basis of drink designs and flavors. This advantage provides company ability to fee it price for many of its popular products. (Knowledge Reference Centre)
8. 2. Differentiation
Recently you can see there is a lot of Coca cola advertising in the summer time. The differentiation strategy has been employed by the Coca Cola, which they spends massive amount money to advertise for differentiating and creating a unique image for his or her products. The various products toward the customers therefore it's been successful in increasing and gaining a leading position against the competitors.
The Coca Cola Company is designed to be a low cost leader, that may increase product sales and gain buyer loyalty. However, the expense for covering up the reduced cost products is difficult to achieve. Therefore, it is vital for the company to connect its differentiation to its customers. Furthermore, the Coca cola must implement targeted differentiation strategy, which is the way of selecting and choosing profitable market segments to them. (Knowledge Learning resource Centre)
9. Corporate and business Strategies
9. 1 Vertical Integration
Vertical integration is the procedure of merging several steps in the circulation string either the inputs or outputs of the organizational control buttons. In this case, Coca-Cola started out Coca-Cola Businesses (CCE) and situated it as an unbiased bottling subsidiary of Coca-Cola. The parent company would buy other struggling bottlers and resell them to CCE.
Apart from that, the business has also established a long-standing romance with various vendors and bottlers that would lower transaction consistency. This could in turn lower purchase costs and unreliability. This is done by getting into long-term contracts with its counter get-togethers.
9. 2 Diversification Strategy
Diversification strategy identifies seeking new products or markets to build up and exploit. It really is a strategy to remove the potential risk of an up-to-date product or market orientation does not seem to be to provide further opportunities for progress.
Coca-Cola uses this strategy to explore new drink categories constantly, and it is keeping the custom of expanding on their current collection of brands and products. Coca-Cola has more than 3000 products in over 200 countries of the beverage brands with key focus on brand of Coca-Cola, Diet Coke, Coke Zero, Sprite and Fanta. Branching out from its traditional carbonated drinks, Coca-Cola ventured into energy beverages section in Powerade.
9. 3 Strategic Alliance
The distribution of Coca-Cola has reached all over the world; it has a huge and large customer base. Therefore, Coca-Cola highly focuses on enabling their customers to reach their products more regularly. Thus, all lovers of Coca-Cola work directly with customers - road vendors, amusement parks, convenience stores, food markets, restaurants and concert halls, among many others -- to implement localized strategies developed in partnership with Coca-Cola.
On the other side, Coca-Cola also gained gain entering joint ventures with others. For example, in February 2001, the Coca-Cola Company and Procter & Gamble declared a $US 4. 2-billion jv to utilize Coca-Cola's huge circulation system to increase reach and reduce time to market for the P&G products Pringles and Sunny Delight.
9. 4 Multidomestic Strategy
Globalization is the key matter of Coca-Cola. The company has a complete control in expense pressure, therefore the cost pressure is low. Therefore, Coca-Cola can operate under the Multidomestic Strategy. Thus, by jogging the local responsiveness of Coca-Cola is high.
However, the features of multidomestic technique for Coca-Cola are that they mutually comprehensive customize both their product offering and marketing strategies in different place with different nationwide conditions. Furthermore, they are working in seven regional operating teams such as, North America Group, Latin America Group, Europe Group, Eurasia & Africa Group, Pacific Group, Bottling Assets Group and McDonald's Section. The reason is they are trying to create their value innovation activities by doing the market and product research in different potential nationwide market.
Recommendation
In order to position itself as one of the most socially liable organizations in the midst of financial downturn, market saturation and weather change, Coca Cola should adopt inexperienced strategies and integrate them into every proper aspect. They ought to implement the inexperienced strategy into their supply chain by trying to reduce energy costs or use substitute renewable energy resources and encourage suppliers, marketers and employees to use in a renewable way.
As Coca Cola, products product packaging rely seriously on the use of plastic material and metal cans the business's research and development team should innovate new and environmental friendly materials to respond to the constantly changing demand of customers for greener and even more sustainable products. For instance, using plant-based plastic containers, that are 100 % recyclable and biodegradable. The use of plastics made out of renewable materials not only minimizes the impacts of plastics on health and environment, but also reduces their reliance on the utilization of petroleum oil.
Coca Cola could also focus on changing and enhancing consumer understanding about their brand image as a higher calorie and bad drink by repositioning itself through a more rigorous value creation and creativity. To respond to a growing style of consumer desire for a wholesome and more nutritious diet and allow consumers to make educated decisions on the beverage options, Coco Cola range from front-of-pack energy information on all their products and add services with lower calorie.
Conclusion
In order to endure and perform efficiently within an extremely competitive industry, Coca Cola has had the opportunity to make use of various corporate and business strategies to align each business unit's aim and goals and become one complete company. In so doing, the company can combine and use their resources in a far more efficient manner.
It is not due to serendipity that Coca Cola is among the most world's largest maker and supplier within the beverage market. It is apparent that the management of the company has articulately positioned the company within the drink industry. This can only be achieved through extensive market research on its customers, its resource chain as well as the company itself.
