INTRODUCTION

The Coca-Cola Company is an American historical multinational beverage corporation

and manufacturer, retailer, and marketer of nonalcoholic beverage concentrates and syrups,

which is headquartered in Atlanta, Georgia. The Coca-Cola was founded in May of 1886 and

continues for more than a century through the times of war and peace, prosperity and depression

and economic boom and bust. As late as the 1990s, Coca-Cola was one of the most respected

companies in the world, building and known as a very successful management team.

The Coca-Cola Company operated as an “independent, local business” until it merged

with John T. Lupton and BCI Holding Corporation. Collectively, they became known as the

Coca Cola Enterprise Incorporation (Inc.). They began to offer stock, and stales instantly

increased. Additionally, it merged with the Johnston Coca-Cola Bottling Group, Inc. and

combined teams for operations and management in 1991. By 1992, the incorporation

successfully generated over $5 billion dollars in revenue.

Its products can be found in over 200 countries around the world. Its product portfolio

consists of roughly more than 400 brands; this includes soft drinks, energy drinks, and bottled

water and as well as juice products. The company is most well-known for its soft drink, coke.

Actually, the beginnings of Coca-Cola go further back than the company merging. The original

idea to make coke and its inventor, John Pemberton, created a concoction by simply being

curious of how a mixture of certain ingredients would taste. Being a pharmacist, he knew to use

a fragrant to appeal to the masses that would consume it, use a caramel color which appeared to

be luscious, and to make sure the ingredients would be safe. He added carbonated water, got

customers to try it, and begin to sale 5¢ glasses.

As December 31, 2006, Coca-Cola operated through eight segments which are: Africa;

East, South Asia and Pacific Rim; European Union; Latin America; North America; North Asia,

Eurasia and middle East; Bottling Investment and Corporate.

COMPANY FOCUS

The company is best known for its flagship product Coca-Cola, invented in 1886 by

pharmacist John Stith Pemberton in Columbus, Georgia. Coca-Cola is one of the world’s leading

non-alcoholic soft drink manufacturers.

EXTERNAL ENVIRONMENTAL ANALYSIS

Political

Coca-Cola is subjected to strict regulations since its products is food category product. However,

few changes in law are expected to impact Coca-Cola. The factors that impact are:

The issue of negative impact of Coca-Cola manufacturing plants on environment has

been highlighted in many countries. Laws for environment protection and stringent

regulations in this regard can impact the production process. Coca-Cola can work

towards minimizing this impact by improving the efficiency of its process and

reducing wastage.

Government changes, civil unrest, military takeover and other disturbances in a

country can effect sales and operations of Coca-Cola in the country.

Expansion to a new country depends on the political conditions of the area. For

example like Coke abstained from Israel for many years because to protect the Arab

market, which quite large.

Economic

Every business in every industry is affected by economic factors. A growth or loss in the

economy affects the industry either negatively or positively. The following economic variables

can impact Coca-Cola:

Economic downturn in a country is going to have a negative impact on sales of Coca-

Cola. The impact on the company would be huge since its product are non-essential.

So, people will buy the essential product that they need first rather than buy Coca-

Cola which is just non-essential product.

Various macroeconomic factors such as inflation and labor price would impact

operations of Coca-Cola.

Countries with high income per capita would have more to spend on products such as

beverages.

Social

The pursuit of healthy lifestyle and increasing level of consumer health concerns towards obesity

fuelled by sugar and carbonated drinks can be specified as the most important social change that

has direct and significant effect on Coca Cola performance. Due to this shift the users of soft

drinks are shifting to water or diet drinks and thus the need to adapt and launch products

accordingly have come up. Nowadays the middle aged consumers are getting very nutrition

conscious and regarding the longevity of their life so want to have healthier option availability in

terms of beverages. So, social and culture of a country has a huge impact on food habits of its

citizens and this would impact the portfolio that Coca-Cola can introduce in the country.

Technology

Technology is a major factor for the industry. It has the ability to improve the performance and

profitability of a company. Technology is used in every step of Coca-Cola’s value chain which

are syrup manufacturing, bottling operations and storage at retail shops. Technological factors

have an impact on:

Coca-Cola’s marketing, for example, television, web, and social media

advertising are constantly evolving the technology. It is important for the

company to connect to the customer through different channels. The ability of a

company to effectively promote their products through these channels impacts

sales.

Technology is used for packaging. Different type of packaging has helped Coca-

Cola drive sales. Apart from the original glass bottle, the beverages are now

available in plastic bottles and cans. These are easier to store and transport.

Technology also use in manufacturing operations. Because of these new

technologies, Coca-Cola's production volume has increased sharply compared to

that of a few years ago. Adopting of new technology allows the company to

manufacture more efficiently, with better quality and in greater quantity.

The refrigerator need in order to be cooled the product before consumption.

Therefore, consumption is limited to the places that can provide the facility of

cold storage.

Environment

Environmental factor is climatic conditions. For example during winter people usually do not

consume anything cold. And then, during summer or hot season, people consume a lot of drinks

and this help increase the sales of Coca-Cola. Because the weather condition of various countries

is different like Indonesia which is only has two seasons while US has four seasons, so the level

of sales is different in each country based on people who take cold drinks like Coca-Cola.

Legal

The main legal factor that affecting Coca-Cola may be seen as changes in legislation

and regulation of the country. For example is the tax. If the tax is high, the price of the product

will be higher than the price in other countries which the tax is lower. The law of the country

also can affect the decision making of the company in some specific areas. So, it means the legal

factors will give the effect to the company.

INDUSTRY ANALYSIS

The soft drink industry is very competitive for all corporations involved, with the greatest

competition being that from rival sellers within the industry. All soft drink companies have to

think about the pressures; that from rival sellers within the industry, new entrants to the industry,

substitute products, suppliers, and buyers.

Factors such as competitors, market size, and trends in the industry affect Coca-Cola and its

strategic decision making. Globally, Coca-Cola is more dominant and has a majority of the

global market share.

Michael Porters mentions that there are five forces that affect profitability in an industry which

are competition, threat of new entrants, supplier power, power of customers and threat of

substitutes. These forces impact Coca-Cola and affect its decisions based on the industry and as

well as competitors.

Competition

Competition in the beverage industry is very hostile. PepsiCo and Coca-Cola are the main

rivalries. Both these companies have the majority market in the industry. In the beverage

industry brand identity is a huge factor, competitors spend a lump sum on advertising in order to

differentiate their products. Differentiation is significant because both competitors have the same

8 products so the only way they can get competitive advantage over each other is through

product differentiation. A high degree of competitive rivalry makes the industry as a whole very

competitive.

Threat of New Entrants

The threats of entry for the beverage industry are low, for example, entering the industry requires

high fixed costs, immense labor and extensive marketing. New entrants have limited to no access

to distribution channels such as stores. Due to the fact that there are limited bottling companies’

new entrants to the industry will have to build their own plants. Since there are already existing

valued name brands such as Coca-Cola, PepsiCo and Dr Pepper Snapple Group any new entrants

will have to spend a large sum of money on marketing and advertising. Due to customers brand

loyalty it will be very difficult for new entrants to gain a significant percentage of the soft drink

beverage market share. With threats of entry low, the degree of competition is low.

Power of Suppliers

The supplier power for beverage industry is low. The ingredients used in to make soft drinks are

very common; there are several suppliers who offer the same basic commodities such as high

fructose corn syrup, food coloring etc. because these ingredients are readily available the

suppliers have no power over pricing. Low supplier power makes the industry less competitive.

Power of Customers

In the soft drink industry, because the main buyers are grocery stores, restaurants and several

independent stores the power of customers is high. They have the power to choose what brand

they want to sell in their stores. Coca-Cola distributes its drinks to major retailers for resale,

these retailers buy beverages in large quantities. This gives them the power to negotiate the price

at which they want to buy. The buyers hold most of the power because they have the ability to

switch to a different company of their choosing. Everyday consumers of soft drinks have high

power because there are several options to choose from. One can choose to buy naked juice

instead of a bottle of coke. Because the power of customers are high the industry is more

competitive.

Threats of Substitutes

The threat of substitutes in this industry is low. Although there are many substitutes for soft

drinks such as beer, milk and water, these products are already in existence and cannot

counterpart each other. Companies in the industry spend large amounts of money on advertising

to build good brand loyalty. This eliminates any threat of new products replacing soft drinks.

Because the threat of substitutes is low the degree of competition of competition is low.

INDUSTRY ATTRACTIVENES

The Coca-Cola Company is known for its marketing expertise and the company has always

followed a great marketing strategy that is responsible for bringing the success to the company

for over a century. The biggest strength of Coca-Cola is its brand. It has taken a lot of effort and

good strategy to create the widely known brand. Apart from this, there are various strategies that

Coca-Cola has followed over the years in order to achieve competitive advantage using its

strategic capabilities. These strategies include:

Marketing and branding strategy

In this world, there are only few companies that have developed a brand as strong as

Coca-Cola. The company has used its marketing resources to create a brand that is widely

known and has become the biggest competitive advantage for the company. Coca-Cola

has been successful in creating brand loyalty among its consumers. This is a result of

sustained marketing efforts starting from early 20th century. Apart from usual advertising

through billboards and newspapers, Coca-Cola focused on organizations, universities and

colleges. The result is increasing sales while promoting the brand name.

Coca-Cola’s Global Strategy

Coca-Cola has used its organizational capability to adopt a global strategy using a mix of

central and local marketing functions in order to achieve maximum marketing and

distribution effectiveness. Using this, Coca-Cola maintains the strong global brand while

introducing the local elements in the marketing to make sure that the product image is in

harmony with the local culture.

New Product Introductions

Coca-Cola follows out to in approach while developing new products. Coca-Cola has

always preferred taking note of customer preference and designing its products according

to customer, instead of taking an internal approach. Based on these, the company either

introduces a new product or acquires a company producing the suitable product. This is

essential to survive in the changing market and to change the product portfolio according

to customer requirements.

COMPETITOR’S ANALYSIS

The competitive pressure from rival sellers is the greatest challenging faced by Coca-Cola.

PepsiCo is the main competitor for Coca-Cola and these two brands have been in a power

struggle for more than a century.

Although Coca-Cola owns four of the top five soft drink brands (Coca-Cola, Diet Coke, Fanta,

and Sprite), PepsiCo dominated North America with sales of US$22billion, while Coca-Cola

only had about US$7billion, However, Coca-Cola has higher sales in the global market than

PepsiCo.

Brand name loyalty is another competitive pressure. The Brand Keys Customer Loyalty Leaders

Survey 2010 shows the brands with the greatest customer loyalty in all industries, Diet Pepsi

ranked 258th (the highest ranking of diet soft drink) and Pepsi Coke (the highest ranking of

regular coke) ranked 324th, while Diet Coke, the highest ranking of Coca-Cola’s products, is far

behind Pepsi’s soft drinks at the position 336th. From this, Pepsi has a more solid loyal customer

base which can make itself more competitive than Coca-Cola.

INTERNAL ENVIRONMENT ANALYSIS

Value Chain Analysis

The value chain describes all the activities that make up the economic performance and the

capabilities of Coca-Cola. It portrays activities required to create value for customers. Value

chain is an excellent means by which management can determine the strength and weakness of

each activity and compare it with Coca-Cola’s competitors.

The value chain of non-alcoholic beverage industries contains five main attributes. They are

inbound logistics or suppliers, operations, outbound logistics, marketing and sales, and service.

Many of these attributes coincide with the Porter Strategy. Inbound Logistics or suppliers play a

huge role in the quality and value of a product. Quality and value are the most important things

to customer. If the value is too high or too low and the product quality is bad then the company

does not profit. Operations are the way a company runs on a daily basis. Outbound logistics

focus on buyers and customers and there satisfaction. Marketing and sales focuses on the way

Coca-Cola is advertised and its profitability. Service is the work by those involved that benefits

the company.

Support Activities

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RESOURCES: TANGIBLE & INTANGIBLE

Tangible

Coca-Cola owns the strong and sustainable financial resources. They use strong financial

resources to invest billions of dollars in major markets such as India, China, Russia and a

few potential markets such as Vietnam. Investment money is used to build the brand,

infrastructure and to develop close partner to expand distribution network. Coca-Cola owns

the modern head office is divided into four department including sales, HR, marketing and

ICT. Each department is equipped with the appropriate facilities for the work of that

department. Besides, Coca-Cola’s factory contains two main parts production and

ICT. ICT department only serves to check product quality. Otherwise, in the Production

department, modern machineries were invested (Olkarinaite, 2010).

Intangible

Technological resources and reputation of Coca-Cola are considered as intangible

resources. In term of technological resource, Coca-Cola invest to modernize machinery. All

steps in the production process is almost fully automated. Coca-Cola can accelerate the

production process, to keep the product quality stable and secure working environment.

Moreover, Coca-Cola keep expand its network of hybrid engine truck .It not only helps Coca-

Cola saves fuel costs but also help reduce harmful emissions to the environment.

Coca cola researched and produced the PlantBottle â€" the greenest bottle. This kind of

bottle more eco-friendly due to high decomposition and recycling capabilities.

In term of reputation, Coca-Cola Company has existed for more than 127 years. It has

become one of the top 3 most valuable brands in the world. Coca-Cola products are popular

and widely used in more than 200 countries Coca-cole is the product of the most consumed

beverages.

CAPABILITIES

Resources or

Capabilities

Worldwide Distribution

Network

Secret Formula Consumer

Marketing Skills

Valuable (exploits

opportunities and

neutralizes

threats)

Yes – Coca-Cola exploits

this network effectively

for entering global

markets

Yes – Coca-Cola has

made it work to its

advantage in many

markets around the global

Yes – effective use of

advertising to differing

demographics in many

locations around the

world

Rare (possessed by

one of a few firms

in the industry)

Yes – forever worldwide Yes – only Coca-Cola has

it

Yes

Inimitable (costly

to imitate)

Maybe – Coca-Cola can

shut out Pepsi with

exclusive agreements

Yes – only handful know

the formula and it has a

long history of keeping it

so

Yes – It is hard for

Pepsi to exactly copy

this skill and in many

case the Coca-Cola

brand name is well

known globally and

fairly well respected

Non-substitutable

(there is no

equivalent

resource of

capability that

could be used by a

competitor)

Yes – hard for Pepsi to

use another capability to

replace Coca-Cola’s

advantage in this aspect

Yes – hard for Pepsi to

use another resource or

capability to beat Coca-

Cola

Yes – it is unclear if

Pepsi could use

another resource or

capability to

counteract this core

competency

Core competency

that provides a

sustained

competitive

advantage

No – only a temporary

advantage at best since

Pepsi may imitate it

without bearing too much

cost

Yes – who has to copy it yet after 120 years?

Yes

CORE COMPETENCIES

SWOT ANALYSIS

SWOT analysis would give a good insight of the strategic capabilities and resources available

and the way these capabilities strengthen the competitive advantage as well as allow the

company to exploit new opportunities (Kotler, 1991). SWOT framework analyzes both internal

factors (strengths and weaknesses) as well as external factors (opportunities and threats) that

define the market environment as well as the capability of a firm to respond to the market

conditions. At the same time, distinction is also made between positive factors (strengths and

opportunities) and negative factors (weaknesses and threats). Here is the SWOT analysis of

Coca-Cola Company

Strengths:

- Brand Equity

- The Supply Chain System

- Strong Marketing Strategies

- Worldwide Distribution Network

- The Good Taste

Weaknesses:

- Criticisms Regarding Health and

Environmental Issues

- Lack of Popularity of Many Coca-

Cola Product

Opportunities:

- Acquisitions

Threats:

- Changing Trends

- Developing Nations

- The Weather of Country

- Competition

- Threat of New Entrants

- Threat of Substitute Product

- Supplier Power

Strengths

- Brand Equity

One of coca cola’s strength is its brand equity. Coca cola has a strong presence in several

countries across the globe. It is one of the world's most recognized brand which has been

recognized as one of world’s leading brands by various studies conducted by Interbrand,

Businessweek and other experts. The company has spent huge amount of money over

more than a century to build a brand that has a high customer recall and is the most

recognized one. It has over 16 million customers that it serves directly. Its current

consumers are very loyal and it has nearly 6 million potential customers that are suitable

and willing to consume Coca-Cola’s line of product.

- The Supply Chain System

The whole supply chain of Coca-Cola and its bottling system is a big strength for the

company. It allows the company to target various markets globally and take the bottlers’

help to gain knowledge about the local market. It also allows the company to expand

rapidly to new markets without a big upfront investment.

- Strong Marketing Strategies

Coca-Cola has several strengths but its biggest strength is its strong marketing strategies.

It has several campaigns that attract customers. It targets its campaigns to people of all

ages and backgrounds. Coca-Cola’s campaigns are diverse and reach out to several

people around the world, unlike its competitor Pepsi that doesn’t do much global

advertising.

- Worldwide Distribution Network

The other strength of Coca-Cola is their worldwide product distribution network. Coca

cola has the largest distribution network because of the demand in the market for its

products. Coca-Cola is currently sold in over 100 countries. It has been fortunate to be

able to expand its non-alcoholic beverages worldwide to bring in billions of dollar in

revenues (Khan 7). There is constantly a positive growth in the company due to

innovation and improvisations, and part of its success can be traced back to its effective

bottling and delivery affairs (Khan 10).

- The Good Taste

With such strong products, it is natural that Coca cola has a lot of customer loyalty.

People will prefer this soft drinks over others because of the good taste of Coca cola

which makes finding substitutes becomes difficult for the customer.

Weaknesses

- Criticisms Regarding Health and Environmental Issues

A major weakness that Coca-Cola is facing right now is its lack of beverages that meet

the need of health conscious consumers. Products of the Coca-Cola Company are

considered to be high in calories and harmful for health. Various groups have advocated

healthier drinks over carbonated ones. Trying to brand itself as a healthy option is really

difficult for Coca-Cola. Because of most of its products being known as junk and

unhealthy, the healthy beverage market has proven difficult to be penetrated by Coca-

Cola.

- Lack of Popularity of Many Coca-Cola Product

Another aspect that could be viewed as a weakness is the lack of popularity of many of

Coca Cola’s drinks. Many drinks that they produce are extremely popular such as Coke,

Fanta and Sprite, but actually this company has approximately 400 different drink types.

Most are unknown and rarely seen for available purchase. These drinks do not probably

taste bad, but are rather a result of low profile or non-existence advertising.

Opportunities

- Acquisitions

The Coca-Cola Company has been acquiring various local beverages companies

aggressively over the last decade. Also, the company has increased its stake in major

bottling operations. This has given the company more control over the entire value chain

and allows it to align the goals of these bottling operations with those of the company.

The company acquired other companies in almost all major markets around the world.

These acquisitions gave head start to Coca-Cola on the international markets and allowed

the company to diversify its revenue stream.

- Developing Nations

Although developed nations have a high presence of Coca cola, these countries are

slowly moving towards healthy beverages. However developing countries are still being

introduced to the delight of carbonated drinks and soft drinks.

- The Weather of Country

Countries like Indonesia and India which have hot summer, find the consumption of cold

drinks almost doubled during summers. Thus the higher consumption in developing

business environment can be a good opportunity to capitalize for Coca cola.

Threats

- Changing Trends

Nowadays, the trend id move towards healthier drinks and there is a big threat of

substitution facing Coca-Cola. Possible substitutes include coffee, tea, milk, juices and

energy drinks.

- Competition

There is competition between the other companies that sell soft drinks like Pepsi and Big

Cola. These companies are the competitors of Coca-Cola Company because they also sell

carbonated drinks. From these two competitors, the largest competitor of Coca-Cola

Company is Pepsi Co. Coca-Cola and Pepsi compete in almost all the markets

worldwide.

- Threat of New Entrants

There is always possibility of new entrants because Coca-Cola Company business is very

successful, people will think to open the same business too.

- Threat of Substitute Product

The threat of substitution is high for soft drink industry with products like bottled water,

juices, tea and coffee readily available. For people who take soft drinks for its caffeine,

tea and coffee can be easy substitutes as well. Many people are moving towards healthier

drinks and substituting soft drinks with juices and other drinks. It costs nothing for a

customer to substitute soft drink with another drink and hence there is a high threat of

substitution.

- Supplier Power

There is a threat from the supplier such as if the supplier is out of stocks or increase the

price. But for Coca-Cola Company, supplier power is low because raw materials such as

sugar and water are standard materials and the suppliers can be easily replaced without

any problems. For bottling equipment manufacturers, they are suppliers for Coca-Cola

since the company own stake in many bottling units. These equipment can be supplied by

many companies.

TOWS MATRIX

Opportunities:

- Acquisitions

- Developing Nations

- The Weather of

Country

Threats:

- Changing Trends

- Competition

- Threat of New

Entrants

- Threat of Substitute

Product

- Supplier Power

Strengths:

- Brand Equity

- The Supply Chain

System

- Strong Marketing

Strategies

- Worldwide

Distribution Network

- The Good Taste

Weaknesses:

- Criticisms Regarding

Health and

Environmental Issues

- Lack of Popularity of

Many Coca-Cola

Product

- Advertise Coca-

Cola’s less popular

product

- Launching products in

the category of

healthy drinks.

BCG MATRIX

RECOMMENDATIONS

REFERENCES

Reference:

- McWhorter, et all. (n.d). Marketing Study of The Coca-Cola Company

- Baah, Sandra. 2015. The Coca Cola Company

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b1d1afb365c3&v=qf1&b=&from_search=6

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