Coca-Cola Case study

SWOT ANALYSIS :

Strengths Coca -Co la ha s been an i n t r i c a t e pa r t o f Amer i can cu l t u r e fo r ove r a c en tu ry . The p roduc t ’ s image i s l aden w i th s en t imen t a l i t y , and t h i s i s an image many peop l e have t aken deep ly t o hea r t . The Coca - Co l a image i s d i sp l ayed on T - sh i r t s , ha t s , and co l l e c t i b l e memorab i l i a . Th i s ex t r eme ly r ecogn i zab l e b r and ing i s one o f Coca -Co la ’ s g r ea t e s t s t r eng th s . “En joyed more t han 685 mi l l i on t imes a day a round t he wor ld Coca -Co la s t ands a s a s imp le , ye t power fu l symbo l o f qua l i t y and en joymen t” (A l l en , 1995 ) . Add i t i ona l l y , a cco rd ing t o Be t tman , e t . a l , ( 1998 ) Coca -Co la ’ s bo t t l i ng sy s t em i s one o f t he i r g r ea t e s t s t r eng th s . I ta l l ows t hem to conduc t bus ine s s on a g loba l s ca l e wh i l e a t t he s ame t ime ma in t a in a l oca l app roach . The bo t t l i ngcompan i e s a r e l oca l l y owned and ope ra t ed by i ndependen t bus ine s s peop l e who a r e au tho r i zed t o s e l l p roduc t s o f t heCoca -Co la Company . Because Coke does no t have ou t r i gh t owne r sh ip o f i t s bo t t l i ng ne twork , i t s ma in sou rce o fr evenue i s t he s a l e o f concen t r a t e t o i t s bo t t l e r s (Be t tman , e t . a l , 1998 ) .

Weaknesses: A l t hough domes t i c bus ine s s a s we l l a s many i n t e rna t i ona l ma rke t s a r e t h r i v ing (vo lumes i n La t i n Amer i ca we re up 12%) , Coca -Co la ha s r e cen t l y r epo r t ed some "dec l i ne s i n un i t c a se vo lumes i n Indones i a andTha i l and due t o r educed consumer pu rchas ing power . " Acco rd ing t o an a r t i c l e i n Fo r tune magaz ine , " In J apan , un i tc a se s a l e s f e l l 3% in t he s econd qua r t e r [ o f 1998 ] . . . s c a ry because wh i l e J apan gene ra t e s a round 5% o f wor ldwidevo lume , i t con t r i bu t e s t h r ee t imes a s much t o p ro f i t s . La t i n Amer i ca , Sou thea s t As i a , and J apan accoun t f o r abou t 35%of Coke ' s vo lume and none o f t he se ma rke t s a r e pe r fo rming t o expec t a t i on (Mc lean , 1998 ) .

Opportunit ies: B rand r ecogn i t i on i s t he s i gn i f i c an t f a c to r a f f ec t i ng Coke ’ s compe t i t i ve pos i t i on . Coca -Co la ’ s b r and name i s known we l l t h roughou t 90% o f t he wor ld t oday . The p r ima ry conce rn ove r t he pa s t f ew yea r s ha s been t o ge t t h i s name b rand t o be even be t t e r known . Packag ing changes have a l so a f f ec t ed s a l e s and i ndus t ry pos i t i on ing , bu t i n gene ra l , t he pub l i c ha s t ended no t t o be a f f ec t ed by new p roduc t s (A l l en , 1995 ) .

Coca -Co la ’ s bo t t l i ng sy s t em a l so a l l ows t he company t o t ake advan t age o f i n f i n i t e g rowth oppo r tun i t i e s a round t he wor ld . Th i s s t r a t egy g ive s Coke t he oppo r tun i t y t o s e rv i ce a l a rge geog raph i c , d ive r se , a r ea (Be t tman , e t . a l , 1998 ) .

Threats: Cur ren t l y , t he t h r ea t o f new v i ab l e compe t i t o r s i n t he c a rbona t ed so f t d r i nk i ndus t ry i s no t ve ry subs t an t i a l . The t h r ea t o f subs t i t u t e s , howeve r , i s a ve ry r ea l t h r ea t . The so f t d r i nk i ndus t ry i s ve ry s t rong , bu t consumer s a r e no tnece s sa r i l y ma r r i ed t o i t . Pos s ib l e subs t i t u t e s t ha t con t i nuous ly pu t p r e s su re on bo th Peps i and Coke i nc lude t e a ,co f f ee , j u i c e s , m i lk , and ho t choco l a t e ( “Co la War s” , 1991 ) .Even t hough Coca -Co la and Peps i con t ro l nea r l y 40% o f t he en t i r e beve rage marke t , t he chang ing hea l t h -consc iousnes s o f t he ma rke t cou ld have a s e r i ous a f f ec t . Of cou r se , bo th Coke and Peps i have a l r e ady d ive r s i f i ed i n tothe se marke t s , a l l owing t hem to have fu r t he r s i gn i f i c an t ma rke t sha r e s and o f f s e t any l o s se s i ncu r r ed due t of l uc tua t i ons i n t he ma rke t ( “Co la War s” , 1991 ) .Consumer buy ing power a l so r ep re sen t s a key t h r ea t i n t he i ndus t ry . The r i va l ry be tween Peps i and Coke ha s p roduce a ve ry s l ow mov ing i ndus t ry i n wh ich managemen t mus t con t i nuous ly r e spond t o t he chang ing a t t i t udes and demands o f t he i r consumer s o r f a ce l o s ing marke t sha r e t o t he compe t i t i on . Fu r the rmore , consumer s c an ea s i l y sw i t ch t o o the r beve rages w i th l i t t l e co s t o r consequence ( “Co la War s” , 1991 ) .

PEST ANALYSIS

The PEST ana ly s i s examines changes i n a ma rke tp l ace caused by Po l i t i c a l , Economica l , Soc i a l and Techno log i ca l f a c to r s . P: Po l i t i ca l change , f r om one pa r t y t o ano the r i n con t ro l - f o r example t he r i s e i n p r i va t e hea l t hca r e and p r i va t i s a t i ons unde r Conse rva t i ve gove rnmen t s .

Pol i t ical Analys is for Coca-Cola

Non-a l coho l i c beve rages f a l l w i t h in t he food ca t ego ry unde r t he FDA. The gove rnmen t p l ays a r o l e w i th in t heope ra t i on o f manufac tu r i ng t he se p roduc t s i n t e rms o f r egu l a t i ons . The re a r e po t en t i a l f i ne s s e t by t he gove rnmen t oncompan i e s i f t hey do no t mee t a s t anda rd o f l aws .

The fo l l owing a r e some o f t he f a c to r s t ha t cou ld cause Coca -Co la company ' s a c tua l r e su l t s t o d i f f e r ma t e r i a l l y f rom the expec t ed r e su l t s de sc r i bed i n t he i r unde r ly ing company ' s f o rwa rd s t a t emen t : - Changes i n l aws and r egu l a t i ons , i nc lud ing changes i n a ccoun t i ng s t anda rds , t axa t i on r equ i r emen t s , ( i nc lud ing t axra t e changes , new t ax l aws and r ev i s ed t ax l aw in t e rp r e t a t i ons ) and env i ronmen ta l l aws i n domes t i c o r f o r e ignju r i sd i c t i ons .Changes i n t he non -a l coho l i c bus ine s s env i ronmen t . These i nc lude , w i thou t l im i t a t i on , compe t i t i ve p roduc t andp r i c ing p r e s su re s and t he i r ab i l i t y t o ga in o r ma in t a in sha re o f s a l e s i n t he g loba l ma rke t a s a r e su l t o f a c t i on bycompe t i t o r s . Po l i t i c a l cond i t i ons , e spec i a l l y i n i n t e rna t i ona l ma rke t s , i nc lud ing c iv i l un re s t , gove rnmen t changes and r e s t r i c t i ons on t he ab i l i t y t o t r ans f e r c ap i t a l a c ro s s bo rde r s . The i r ab i l i t y t o pene t r a t e deve lop ing and emerg ing marke t s , wh i ch a l so depends on economic and po l i t i c a lcond i t i ons , and how we l l t hey a r e ab l e t o a cqu i r e o r f o rm s t r a t eg i c bus ine s s a l l i ance s w i th l oca l bo t t l e r s and makeneces sa ry i n f r a s t ruc tu r e enhancemen t s t o p roduc t i on f ac i l i t i e s , d i s t r i bu t i on ne tworks , s a l e s equ ipmen t and t e chno logy .E: Economic change , f o r example a r e ce s s ion c r ea t i ng i nc r ea sed ac t i v i t y a t t he l ower ends o f p roduc t p r i c e r anges . Ra t e o f i n t e r e s t r i s e s dep re s s ing bus ine s s and caus ing r edundanc i e s and l ower spend ing l eve l s .

Economic Analys is for Coca-Cola

Las t yea r t he U .S . e conomy was s t rong and nea r l y eve ry pa r t o f i t was g rowing and do ing we l l . Howeve r , t h ings changed . Mos t e conomis t s l oose ly de f i ne a r e ce s s ion a s two consecu t i ve qua r t e r s o f con t r ac t i on , o r nega t i ve GDP g rowth . On Monday 26 , t he gove rnmen t o f f i c i a l l y dec l a r ed t ha t t he U .S . ha s been i n r e ce s s ion s i nce March . (CBS Marke t Wa tch . " U .S . Of f i c i a l l y i n a r e ce s s ion . " Rex Nu t t i ng . [ nov 26 ,2001 ] . www.cbsmarke twa t ch . com) Howeve r , because o f agg re s s ive ac t i on by t he Fede ra l Rese rve and Congre s s i t w i l l be sho r t and mi ld . The economy wi l l r e t u rn t o su s t a ined , pos i t i ve g rowth i n t he f i r s t ha l f o f 2002 . Fu tu re Ou t looks The Fede ra l Rese rve i s do ing a l l t ha t i t c an he lp t he e conomy r ecove r . They have cu t t he i n t e r e s t r a t e t en t imes t h i syea r . The r a t e now l i e s a t a 40 -yea r l ow o f 2%. Lower ing t he

i n t e r e s t r a t e s w i l l u l t ima t e ly exc i t e consumer demand i nthe economy . Compan i e s w i l l expand and i nc r ea se u se o f deb t a s a r e su l t o f t he l ow bo r rowing r a t e s . Coca -Co la c anbo r row money fo r i nves t i ng i n o the r p roduc t s a s t he i n t e r e s t r a t e s a r e l ow . I t c an u se t he bo r rowing on r e sea r ch o f newproduc t s o r t e chno logy . As r e sea r ch ing fo r new p roduc t s wou ld cos t l e s s t he Coca -Co la Company w i l l s e l l i t s p roduc t sfo r l e s s and t he peop l e w i l l spend a s t hey wou ld ge t cheap p roduc t s f rom Coca -co l a .Be fo re t he a t t a cks on Sep t embe r 11 , 2001 , t he Un i t ed S t a t e s was s t a r t i ng t o t s ee t he e conomy r ecove r s l i gh t l y and i t i s on ly j u s t r e cen t l y t ha t t hey ach i eved t he economic l eve l s . Consumer s a r e now r e suming t he i r no rma l hab i t s , go ing t o t he ma l l s , c a r shopp ing , and ea t i ng ou t a t r e s t au ran t s . Howeve r , many a r e s t i l l h and l i ng t he i r money cau t i ous ly . They be l i eve t ha t w i th l ower i n f l a t i on s t i l l t o come , consumer s w i l l r e cove r t he i r con f idence ove r t he nex t yea r . The non -a l coho l i c beve rage i ndus t ry ha s h igh s a l e s i n coun t r i e s ou t s i de t he U .S . Acco rd ing t o t he S t anda rd and Poo r ' s I ndus t ry su rveys , "Fo r ma jo r so f t d r i nk compan i e s , t he r e ha s been economic improvemen t i n many ma jo r i n t e rna t i ona l ma rke t s , such a s J apan , B raz i l , and Ge rmany . " These marke t s w i l l con t i nue t o p l ay a ma jo r r o l e i n t he succe s s and s t ab l e g rowth fo r a ma jo r i t y o f t he non -a l coho l i c beve rage i ndus t ry .

S: Soc ia l change i nvo lve s chang ing a t t i t udes and l i f e s t y l e s . The i nc r ea s ing number o f women go ing ou t t o work , f o r example , l ed t o t he need fo r t ime - sav ing p roduc t s f o r t he home . Social Analys is for Coca-Cola

Many U .S . c i t i z ens a r e p r ac t i c i ng hea l t h i e r l i f e s t y l e s . Th i s ha s a f f ec t ed t he non -a l coho l i c beve rage i ndus t ry i n t ha tmany a r e sw i t ch ing t o bo t t l ed wa t e r and d i e t co l a s i n s t e ad o f bee r and o the r a l coho l i c beve rages . A l so , t imemanagemen t ha s i nc r ea sed and i s a t app rox ima te ly 43% o f a l l househo lds . ( h t t p : / /www.cd f -mn .o rg ) . The need fo rbo t t l ed wa t e r and o the r more conven i en t and hea l t hy p roduc t s a r e i n impor t an t i n t he ave rage day - to -day l i f e .Consumer s f rom the ages o f 37 t o 55 a r e a l so i nc r ea s ing ly conce rned w i th nu t r i t i on . The re i s a l a rge popu l a t i on o f t he

age r ange known a s t he baby boomer s . S ince many a r e r e ach ing an o lde r age i n l i f e t hey a r e becoming more conce rnedwi th i nc r ea s ing t he i r l ongev i t y . Th i s w i l l con t i nue t o a f f ec t t he non -a l coho l i c beve rage i ndus t ry by i nc r ea s ing t hedemand ove ra l l and i n t he hea l t h i e r beve rages .T: Techno log i ca l change - c r ea t e s oppo r tun i t i e s f o r new p roduc t s and p roduc t improvemen t s and o f cou r se new marke t i ng t e chn iques - t he In t e rne t , e - commerce .

Technological Analys is for Coca-Cola

Some f ac to r s t ha t c ause company ' s a c tua l r e su l t s t o d i f f e r ma t e r i a l l y f rom the expec t ed r e su l t s a r e a s f o l l ows :

The e f f ec t i venes s o f company ' s adve r t i s i ng , ma rke t i ng and p romot iona l p rog rams . The new t echno logy o f i n t e rne t and t e l ev i s i on wh ich u se spec i a l e f f ec t s f o r adve r t i s i ng t h rough med ia . They make some p roduc t s l ook a t t r a c t i ve . Th i s he lp s i n s e l l i ng o f t he p roduc t s . Th i s adve r t i s i ng makes t he p roduc t a t t r a c t i ve . Th i s t e chno logy i s be ing u sed i n med i a t o s e l l t he i r p roduc t s .

I n t roduc t i on o f c ans and p l a s t i c bo t t l e s have i nc r ea sed s a l e s fo r Coca -Co la a s t he se a r e e a s i e r t o c a r ry and you can b in t hem once t hey a r e u sed . As t he t e chno logy i s ge t t i ng advanced t he r e ha s been i n t roduc t i on o f new mach ine r i e s a l l t he t ime . Due t oin t roduc t i on o f t h i s mach ine r i e s t he p roduc t i on o f t he Coca -Co la company ha s i nc r ea sed t r emendous ly t hen i t was f ewyea r s agoCCE has s i x f a c to r i e s i n B r i t a i n wh ich u se t he mos t s t a t -o f t he - a r t d r i nks t e chno logy t o ensu re t op p roduc t qua l i t y andspeedy de l i ve ry . Eu rope ' s l a rge s t so f t d r i nks f a c to ry was opened by CCE in Wake f i e ld , Yorksh i r e i n 1990 . TheWake f i e ld f a c to ry ha s t he t e chno logy t o p roduce cans o f Coca -Co la f a s t e r t han bu l l e t s f r om a mach ine gun .