Consider the corporation you have selected to use in your first three assignments.Researchthe company on its own website, the public filings on the Securities and Exchange Commission EDGAR database, t

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Week 6 Assignment 2

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BUS499 Business Administration Capstone

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Week 6 Assignment 2

Businesses operate in a dynamic environment that impacts business directly on their operations and whether the objectives can be achieved. This paper will analyze Coca-Cola in regards to its general environment, forces of competition, how it can improve its ability to address the forces, eternal threats, and its greatest strengths and weaknesses and strategy that it can use to take maximum advantage of its strength and reduce its weakness.

The two segments that I would rank the highest are the political segment and social segment. Although Coca Cola stands to be a giant in the production of beverages, changes in the general environment may impact it. Coca Cola undertakes its activities globally and hence it is subjected to pressure. The world market is highly globalized and hence they are affected by certain factors. Coca Cola profits and revenue can be impacted by any change in the global business environment.

Political segment

Laws and regulations from the government on food products may impact Coca Cola directly. For instance, Coca Cola operates in the US and hence is impacted and should follow the Food and Drug regulations. Laws are different from country to country. Given the global nature of Coca Cola, it must conform to all the relevant laws in countries that it operates in. Coca Cola is also required to adhere to all the quality standards as it applies to a country that it operates in. Additionally, it is required to conform to common accounting and business regulations. Tax laws also apply differently in countries. To do business effectively in a given market, Coca Cola has to follow all the relevant laws. However, a change in these laws may impact the revenue and profit of Coca Cola. Additionally, when tax rates are prone to any increase or decrease, it may impact the profits. Further, when a political situation changes such as political uncertainties, this may impact Coca Cola negatively.

Coca Cola has undergone through several lawsuits and remains a target due to the overconsumption or over usage of water. Coca Cola highly relies on water, which is a scarce resource, for production. For instance, it has received several protests in India. In Kerala state India, a case was filed against Coca Cola as its high consumption had led to an increase of water shortage. Villagers from the stated that they had a shortage of water near the Coca Cola plants due to the high consumption (Doshi, 2017). Coca Cola has also received lawsuits relating to the use of ingredients that are harmful for consumption and some lawsuits related to the quality standards. It was alleged that Coca Cola was using pesticides in its products. These issues negatively affect their brand image and revenue.

Social segment

Consumer needs, tastes and wants to keep on changing and hence an organization must keep up with the changes. Most consumers have transited from flavored drinks to healthy drinks. Such trends impact Coca Cola as it leads to reduced popularity of its products. This indicates the changes in the taste and preference of the consumers affect the profits of Coca Cola. Its products are of different flavors and hence that has gained popularity over the years. However, with the transition to healthier drinks, Coca Cola will be required to focus and invest more in the efforts of marketing. Media has also played a vital role in changing the perception of the consumer from the consumption of soda drinks due to its calorie count. Obesity has been an issue globally and there are efforts made for people to change their choice of food products. This has led to a global decline in the consumption of junk food and soda beverages. Coca Cola can hence receive declined sales as most people are adopting lifestyles that are healthier and shifting from products such as soda which can add weight.

Due to the changes in taste and preferences, Coca Cola introduced products that have a low calorie count. This was an effort to adapt to the changes. Coca Cola is also affected by other social trends such as a change in attitudes towards brands. Culture also plays a vital role in international trade as it impacts businesses. However, it can be used as a marketing tool. In developing countries, Coca Cola has to factor in culture as it is highly respected. Therefore, it must adopt a marketing strategy that incorporates local markets and their culture.

Five forces of competition is a tool that can be used by business in analyzing the critical forces that affect competition in an industry. The five forces present an evaluation of every part of the market and industry. The forces can be analyzed and be used as strategies to increase the profitability of the business. The two forces of competition chosen are; bargaining power of suppliers and the threat of new entrants.

Bargaining power of suppliers

Coca Cola’s bargaining power of suppliers is weak. This is attributed to the fact that it has a high number of suppliers and it has low switching costs. This indicates that Coca Cola can easily switch from a supplier to another but a supplier cannot switch easily. Suppliers can lose easily as compared to the organization. The products that may be supplied to Coca Cola include sugar and flavor among other ingredients. This indicates that suppliers have limited control over price and hence cannot change the price structure. The suppliers are also required to observe the guiding principles such as the Agriculture Guiding principles. Such a principle suggests that suppliers have a lower bargaining power hence giving organizations a higher influence on pricing and contracts.

The threat of new entrants

Coca Cola has a low entry to barriers hence leads to the low cost of production and marketing expenses. The market entry is easy as there are small scale companies that entering this industry. Coca Cola, however, is a global organization whose products are consumed in more than 200 countries and hence the small scale companies and new entrants may have no significant impact on its operations. Coca Cola has a strong market presence and hence it can easily expand and penetrate in new markets. It also has moderate customer loyalty in the industry.

The two forces that have been assessed are; bargaining power of suppliers and the threat of new entrants. The bargaining power of suppliers may be addressed in several ways in the near future. To improve its ability to address this force in the near future, Coca Cola needs to develop programs that will ensure that diversity is promoted among suppliers for a valid reason. It should also make efforts in developing strategic partnerships and agreements with its suppliers. This will ensure that the bargaining power of suppliers standardizes the pricing in case of future fluctuations.

For the threat of new entrants, Coca Cola should strengthen its market presence. This can be done through penetration into new markets as well as expanding its portfolio. This will help Coca Cola in acquiring a stronger base and will also gain part of the competitor’s market share by gaining the competitor’s customers. It may take some time for a new entrant to build customer loyalty. This is an advantage that Coca Cola has over the new small businesses.

The greatest external threat that Coca Cola is facing is new and existing competitors. In the past, Coca Cola was suspected to be using pesticides. Most people are opting for healthier options that soda beverages which contain high calories count. There are trends and development of cafes which pose danger to Coca Cola. Other products such as smoothies, healthy tonics, and teas are being supplemented by many consumers and this threatens Coca Cola. People are looking for alternatives that are healthy and for products that have less sugar. Companies such as Starbucks are taking over and hence could affect Coca Cola sales. Governments and media are publicizing for obesity concerns and are promoting the need for a healthier lifestyle. As compared to other external threats, this stands to be the greatest as it impacts the financial performance of Coca Cola.

The strategy that would help in combating this threat is for Coca Cola to develop low and zero-calorie drinks. With these products, Coca Cola will be able to compete effectively with companies offering healthier options brands. Coca Cola will see an improvement in its performance report after considering this solution. It should consider other innovation plans which will help stay ahead of the competition. It already has made some efforts such as the provision of water. It should have a continued effort in developing and innovating new health and wellness brands.

The greatest opportunity that Coca Cola has lies outside of the U.S. Coca Cola can invest worldwide and mostly in developing markets such as Russia, China, and India among others over the next five years. Coca Cola should put more emphasis on emerging-market growth. It should have more penetration in developing countries. Without penetration, its major competitor Pepsi will gain market share in the developing countries (Craft.co, 2020). Therefore, its opportunity is to develop future investments in an emerging market. Other opportunities that Coca Cola has include the creation of new products among others. However, this opportunity remains the greatest as it will be able to find the niches that are untouched by its competitors and to penetrate in new markets.

The strategy that Coca Cola should choose is a market development strategy. This strategy will involve finding new buyers for its existing product. Coca Cola has launched products such as Diet Coke. Coca Cola can find new markets for its products.

The greatest strength that Coca Cola has is brand image and high brand awareness (Raben, 2019). Coca Cola is known in almost every part of the world and hence has a high degree of popularity. With its global presence, it enjoys the largest market share of around 48% in the industry. In history, Coca Cola’s soft drinks still stand the most-selling drinks. Another greatest strength is extended global reach. According to research, it has a serving of 9 billion per day. It also has the largest brand valuation as its estimated brand value is around $79.96 billion.

The greatest weakness of Coca Cola is aggressive competition. Pepsi stands out as its greatest competitor and this impact Coca Cola greatly (Craft.co, 2020). The second weakness is product diversification. Coca Cola has a low product diversification as Pepsi have developed many snacks. The third weakness is health concerns. Carbonated drinks have high calories and hence may pose health issues such as obesity and diabetes.

Strategy or Tactic

To maximize its strengths, it has to focus on the market and growth strategy. It should focus on developing more opportunities in developing markets. It should do this by leveraging its scale as well as reaching its system to shape and capture value. This strategy is a good choice as Coca Cola will be able to penetrate the emerging markets and countries before its competitor, Pepsi (Craft.co, 2020).

The strategy that can fix its weakness is through developing healthier specialty brands. It should also consider expanding its corporate sector, diversifying its products and provision of beverages with less to no calories. This strategy is the best choice as it will be able to compete effectively with other companies in the industry.

Coca Cola has tangible and intangible assets. Its intangible assets can be directed in increasing market position and dealing with competition. Coca Cola has strong and sustainable financial resources. With its strong financial resources, it invests billions in major markets. For its physical capital, Coca Cola has a strong telecommunication infrastructure and multiple facilities. Its employees are also impacted by their required skills, expertise, and credibility. Coca Cola’s capabilities act as its basis for strategy and primary source of returns. Its capabilities have also led to the creation of a competitive edge. It has enabled the expansion of Coca Cola. This has led to increased sales and increased market share. For its competencies, Coca Cola has a strong brand, distribution system, and human assets. In history, it is the company with a popular and high rate of sales of soft drinks. It has around 400 brands and hence shows how diversified its products are (Porth, 2003). Its employees contribute highly to business model success.

Sources

Craft.co. (2020). The Coca-Cola Company competitors. Retrieved from, https://craft.co/the-coca-cola-company/competitors

Doshi, V. (2017). Indian traders boycott Coca-Cola for ‘straining water resources’. Retrieved from https://www.theguardian.com/world/2017/mar/01/indian-traders-boycott-coca-cola-for-straining-water-resources

Porth, S. J. (2003). Strategic management: A cross-functional approach. Prentice Hall.

Raben, N. (2019). Coca-Cola’s Timeless Brand Identity. Retrieved from https://ibrandstudio.com/articles/coca-cola-timeless-brand-identity