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

WEEK 8 ASSIGNMENT 3 0

Week 8 Assignment 3

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BUS499 Business Administration Capstone

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Week 8 Assignment 3

Coca-cola being a leading organization in the beverage industry contributes largely to the sales of soft drinks globally. With today’s stiff competition, organizations need strategies to gain competitive advantage. This paper will analyze Coca-Cola in regards to its business-level strategies, corporate-level strategies, competitive environment, and market cycles.

A business-level strategy is concerned with the position of organizations in a given industry while considering factors comparison to the competition (Schermerhorn & Bachrach, 2010). Coca-Cola's business-level strategy is a differentiation strategy. This strategy is based on offering product that is unique hence an organization ends up acquiring a greater market share and defending the higher pricing of products. Therefore, this strategy differentiates an organization from its competitors. Coca-Cola uses a differentiation strategy for it to remain unique. With the high competition that it is facing, this strategy separates Coca-Cola from its competitors. With this strategy, Coca-Cola has been able to develop products that are unique and valued by its customers. For instance, most of the consumers opted for healthy drinks as compared to flavored drinks and this had a negative impact on Coca-Cola. The taste and preferences of customers keep on changing and hence an organization has to develop ways that will help it remain relevant in the market. Coca-Cola, therefore, developed Coca-Cola Zero Sugar which was branded and marketed as a healthy drink but a version of the original sugar-sweetened. The production of this product was for it to remain relevant and continue to be successful even with the transition of consumer’s tastes and preferences. This indicates that Coca-Cola has a unique capacity that is used for customization of its products and services to ensure that the wants and the needs of the target market are met. For instance, Coca-Cola provides Diet Coke and vitamin to the old consumers who are health conscious. It also meets the needs and expectations of its young customers through the provision of cherry and vanilla coke.

Coca-Cola management invests a lot of time and money in research and development. The main aim is to acquire an understanding of the different market segments about customer’s age, income, and lifestyle. This information is then used in marketing for the products right and achieving the right development. Coca-Cola packaging has remained unique as compared to its competitors and hence it has been able to remain adaptable in different market sections (Schermerhorn & Bachrach, 2010). With its functional packaging, it has been able to make its products appear different in the form of its sizes and forms. Coca-Cola has achieved the production of cans and bottles based on different sizes and shapes and hence this has eased the operations of the vending machine. It also uses materials that are recyclable hence promoting environmental sustainability. Coca-Cola has also embraced image differentiation. Its logo is essential in establishing the brand.

The main core competency of Coca-Cola is brand building. This has been concerning its differentiation strategy. This is evident from its logo which can be easily differentiated by its competitors and consumers. Coca-Cola has embraced image differentiation and this has been achieved by the logo. The logo is important for every organization and with this; Coca-Cola has been able to establish its brand name. Its brand and logo are well recognizable by the consumers and hence makes it comfortable for consumers to purchase Coca-Cola products. Coca-Cola's motto is sharing happiness. This indicates that the strategy is not only aimed at selling its products but to also share a good relationship and communication with its consumers. Every aspect of differentiation is related to brand building. For instance, Coca-Cola has made its bottle in a manner that will save the design and remain relevant in the market. The bottle has proved to have an easy-grasp handle and recognizable by the consumers.

A corporate-level strategy is involved in decision making that affects the organization as a whole. The strategy tends to impact the products, human resources, management, and finances of an organization (Schermerhorn & Bachrach, 2017). The products produced by Coca-Cola are limited to non-alcoholic beverages. This is different from its main competitor, PepsiCo, who produces soft drinks as well as a snack food (Schermerhorn & Bachrach, 2010). Coca-Cola’s main corporate-level strategy focuses on vertical integration through acquiring bottle companies and horizontal diversification which focuses on the product range through the development of new products.

Vertical integration is based on the fact that the supply chain of an organization is owned by that organization. It can also be used in describing the management styles which incorporated the large portion of the supply chain into the corporation. Coca-Cola remains to be the largest bottler. In 2010 and 2011, it strategically advanced its operations through partnerships. For instance, Coca-Cola acquired Coca-Cola Enterprises (CCE) which was a North American business. With this, Coca-Cola was able to acquire more than 90% of the North American market. For instance, Coca-Cola produces juice drinks, and to develop these drinks, it had to purchase the minute maid company whose main activities were the production of juice products. The purchasing was done in 1960. However, by 1987, Coca-Cola had introduced a new line of minute maid soft drinks in the US. Coca-Cola also purchased a 40% stake of the Honest Tea Inc at $43 million. The purchasing of the stake from this company was aimed towards acquiring more resources for its business (Schermerhorn & Bachrach, 2017). 

With the vertical integration utilized by Coca-Cola, it has been able to increase its operational effectiveness and efficiency through integration of the manufacturing and distribution capabilities into one company. The changes and partnerships that Coca-Cola has made have strengthened its commitment to the provision of sustainability and the provision of opportunity for increased momentum. Initially, Coca-Cola limited its activities in the manufacturing of extracts and marketing of the final product. It, however, sold the extracts to local bottlers who manufactured the products. With the increased product line in Coca-Cola and high transaction costs with the independent bottlers, Coca-Cola opted for forward integration processes. The main aim of this involvement in this process was to reduce the costs and gain more control over its distribution and production processes.

Coca-Cola has dedicated much time and resources on brand building. It developed a new mission which was to refresh the world and inspire moments and happiness. This was to be done through the creation of value and making a difference. Therefore, the mission was targeted on the beverages and the strategy management changes. Coca-Cola is committed towards the provision of value and refreshment to its stakeholders and hence this resulted in the nurturing and protection of its brands. The key strategic objectives of Coca-Cola include; strengthening alliances, acquisitions, and eradicating weakening purchasing power among others (Schermerhorn & Bachrach, 2017). To meet these objectives, Coca-Cola acquired other companies. It still invests in the traditional popularity of its brands. For instance, Coca-Cola developed a “three cola strategy” whose main aim was to focus on Coca-Cola, Diet Coke, and Coca-Cola zero brands.

Coca-Cola, therefore, concentrates on a single business since diversifying into a new market is risky. This hence helps minimize risks through diversification of the opportunities within its existing capabilities and resources. To portray its corporate growth strategies, Coca-Cola focuses on its products and the potential products and markets that it may have in the future. Coca-Cola considers; expanding product lines within its existing product range, offer new products in the existing brand, and increasing market share and developing new products.

A competitive environment is an external system in which an organization competes and functions. The most significant competitor of Coca-Cola is Pepsi. The competition between Coca-Cola and Pepsi has affected the profits in the beverage industry. In the 1960s and ’70s, they both had a different differentiation and advertising strategy. For instance, in 1974, Pepsi developed a Pepsi Challenge where Pepsi hosted blind taste tests to differentiate itself from its main competitor at the time, Coca-Cola. In the 1990s, Coca-Cola and Pepsi adopted low priced strategies in the supermarket channel. The main aim was to compete with the store brands. However, this has a negative impact on both Coca-Cola and Pepsi. Between the two, Coca-Cola has proved to be a dominating organization in the international market as compared to Pepsi. The main strategy that led to this success is through entering markets early while Pepsi entered new markets last (Schermerhorn & Bachrach, 2010). However, Pepsi is still competing aggressively in emerging economies.

Coca-Cola and Pepsi have been able to sustain their profits in the industry due to several reasons. The first reason is that they have operated in the beverage industry for long and hence have accumulated brand equity which has highly contributed to their sustainability. They both use the strategy of brand equity in diversifying its business by leveraging their brand. The second reason is that the industry for a long time had no new threats from new competitions. The third reasons are due to globalization. Due to globalization, individuals have raised from the emerging economies to the economic ladder. This has provided a better opportunity for both the organization. The fourth reason is the huge potential for growth presented to both companies. This is due to the per capita consumption in the emerging economies which has proved to be relatively small as compared to the US (Hitt, Ireland & Hoskisson, 2010). The last reason is due to the opportunity that Coca-Cola and Pepsi can both diversify into the non-carbonated drinks. This can be a solution to the reduced demand in the carbonated drinks.

For the business-level strategy, Coca-Cola uses a differentiation strategy that has helped in remaining unique in the market. On the other hand, Pepsi uses low-cost differentiation. It achieves this strategy through the use of economies of scale. This is done through production in mass. With this strategy, Pepsi has been able to offer its products at a low price as compared to Coca-Cola to stimulate demand and increase its market share. For the corporate-level strategy, Coca-Cola has been developing new products whenever it enters a new market. On the other hand, the corporate-level strategy used by Pepsi is the use of mergers and acquisitions (Hitt, Ireland & Hoskisson, 2010). The main aim of this strategy is to expand into the international market. It also seeks to gain access to competencies and infrastructure. With this, Pepsi has been able to limit its direct costs for it to achieve organic growth. Coca-Cola, as compared to Pepsi, has a high chance of remaining successful in the long-term.

The slow cycle market is a market where resources are secured and the monopoly is maintained. On the other hand, a fast cycle market is where the competitive advantage of an organization is not protected from imitation, and imitation may happen quickly. From the business-level and corporate-level strategies of Coca-Cola and Pepsi discussed above, both companies have different marketing operations. Today’s business environment is showcased by the slow and fast cycle market. A segmentation strategy can be applied to the groups' diverse markets based on performance and characteristics. For both companies, market segmentation may benefit both as they will be able to promote their products in different and specific target markets. This will hence help in ensuring that Coca-Cola fulfills the needs of the market and increase its purchases by the consumers.

Sources

Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2010). Strategic management: Concepts: Competitiveness and globalization.

Schermerhorn, J. R., & Bachrach, D. G. (2010). Introduction to management.

Schermerhorn Jr, J. R., & Bachrach, D. G. (2017). Exploring management. John Wiley & Sons.