Coca-Cola Company’s Strategic Analysis and Management

The development of many modern and well-known brands depends largely on how effectively the principle of managing all the areas of work is organized. In various corporations, directors pay specific attention to those spheres that they consider the most significant – interaction with consumers, building partnerships, attracting sponsors, and other aspects. All these factors form a certain image of the company and influence its success in the market. Using some of the aforementioned criteria as a basis for evaluation, it is possible to determine how effective this or that type of management is and which leadership methods are the most beneficial. As a background, the world-famous Coca-Cola brand will be used. To consider the quality of the ongoing management work in this corporation comprehensively, such criteria will be used as threats, opportunities, strengths, and weaknesses. The analysis of these factors makes it possible to identify the central areas that deserve particular attention and conclusions regarding the effectiveness of the measures applied to the company’s internal and external policies.

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Assessment of Coca-Cola’s External Environment

The assessment of Coca-Cola’s external environment is based on the analysis of threats and opportunities. To identify the key features of these areas, it is possible to apply the relevant theory of Porter’s five sources. According to Eskandari, Miri, Gholami, Reza, and Nia (2015), this concept provides the evaluation of business enterprises’ activities based on five specific components. They include the level of competition, buyers’ power, suppliers’ capacity, “threat of entry of new competitors and the threat of the substitute products” (Eskandari et al., 2015, p. 186). Each of these categories of Coca-Cola should be analyzed separately to compile a comprehensive picture of the corporation’s external environment.

Competition Level

Since the Coca-Cola brand is one of the most famous and expensive in the world, competition does not play a significant role for this corporation. As Eskandari et al. (2015) argue, Coca-Cola has “higher sales than other competitors” due to its global frame. This organization producing soft drinks is unlikely to face the failure caused by rivalry. Therefore, this category does is not associated with crucial problems.

Buyers’ Power

The marketing policy of the company in question is strong enough to ensure stable consumer demand and interest. Also, according to Banks (2016), the supply chains and logistics of Coca-Cola are successful, and there are no interruptions in the delivery of goods to target markets. Thus, the power of buyers is the indicator that opens up broad opportunities for the development of the corporation’s business.

Suppliers’ Capacity

Because the Coca-Cola Company is one of the leaders in its sales area, a sufficient number of partners and sponsors are ready to offer the organization their services for the delivery of raw materials. The corporation cooperates with other enterprises successfully and, besides its target activity, it is involved in the work “of distributing medicine and supplies to remote communities” (Banks, 2016, p. 458). Therefore, judging by such charitable activities, the company does not experience difficulties with the introduction of target products.

Threat of Entry

The threat of new entrants to the market is not a significant danger for Coca-Cola’s business. Although such a perspective is “a metaphorical punch in the face” for many organizations, the corporation in question has managed to achieve almost sole leadership in the field of sales of target products. Any potential competitors are unlikely to achieve the advantage that Coca-Cola has secured for itself for more than 140 years of its existence (“Mastering strategic management,” 2015, p. 9). Therefore, this category of analysis does not carry any threat.

Availability of Substitutes

Although Coca-Cola is the sole leader in its field, the company has competitors. In particular, Eskandari et al. (2015) give the example of Pepsi and argue that organizations like this one “can expand the existing capabilities and use the new cash flows to increase competition” (p. 191). Pepsi’s leadership certainly seeks to build capacity and also pursues a successful domestic and foreign policy. However, the threat of complete replacement of Coca-Cola with another brand is absent.

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Assessment of Coca-Cola’s Internal Environment

To assess the internal environment of Coca-Cola, an analysis of several important categories is necessary. Based on this work, it is possible to determine the strengths and weaknesses of the corporation in the context of its work in the market and evaluate the success of its internal policy. Assessment factors include such criteria as financial activities, marketing, human resources, operations management, technology, and logistics.

Accounting/Finance

The company’s coverage ratio allows it to fulfill its intended goals effectively and implement planned business strategies. This parameter indicates the correct activity regarding the distribution of available resources (Drake, n.d.). Coca-Cola’s return ratio determines the degree of its profit, and when taking into account that the brand is one of the world leaders, its share of income is significant. Also, a turnover ratio deserves attention, and this parameter characterizes the company’s high ability to transform resources and distribute profits by the current needs.

Marketing

As Banks (2016) remarks, Coca-Cola’s well-thought-out marketing policy allows the company to form “a deep understanding of real human needs, desires, and behavior” (p. 461). Focusing on a specific target audience helps the corporation to have a stable demand for products constantly. As a result, revenues always multiply due to implementing relevant strategies, and successful advertising moves bring significant dividends to the owners of the organization.

Human Resources

Stimulating staff activity and encouraging the achievement of the company’s visions through the effective performance of work responsibilities is the component of Coca-Cola’s work. According to Irefin and Mechanic (2014), in this corporation, human resources practices are aimed at motivating the organization’s employees and retaining them. A corporate policy allows optimally selecting performers and assigning responsibilities, which is evidence of a successful personnel management strategy.

Operations Management

Coca-Cola’s policy about operational management pursues the interests of attracting the audience through inventive and high-quality proposals. As Banks (2016) remarks, investing in the youth is the feature of the corporation’s business strategy. The emphasis on meeting the needs of the target audience through constant product updates and new offers allows maintaining stable consumer interest and opens up great prospects for increasing demand.

Technology

Because the Coca-Cola brand is represented in almost all the countries of the world, the company regularly develops its technological line to produce high-quality soft drinks and not to justify consumer trust. The corporation “has an uncanny knack for building new brands and products,” and modern production systems, for instance, special methods of water filtration, allow achieving good results (“Mastering strategic management,” 2015, p. 107). Although the whole system of production is not perfect, it allows the company to represent its interests without the fear of inspections by supervisors.

Logistics

The infrastructure of the company in question is founded in such a way that its branches are located all over the world. Banks (2016) compares Coca-Cola with the well-known postal service FedEx, noting that the corporation’s supply chain management and the delivery of goods to the market are impeccable. Moreover, the company closely monitors all changes in consumer demand and responds immediately, adjusting the volume of the supply of its product.

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Comparison of Indicators

Based on the analysis of the company’s external and internal environment, it is possible to draw up a corresponding table with relevant data that has already been mentioned. This format makes it possible to group key findings and determine which areas deserve specific attention. In particular, the table includes the information on the most important strengths and weaknesses and the most salient threats and opportunities.

Table 1. Results of Coca-Cola’s External and Internal Analyses.

Strengths Weaknesses Threats Opportunities
Constantly developing marketing policy, personnel motivation system, stable financial base, advanced logistics, quality resource management Production system (more attention should be paid to technological equipment) Rivalry with other major brands for the market leadership An opportunity to develop supply chains and attract investors, strengthening leading positions, increasing demand

Conclusion: Results Assessment

The Coca-Cola brand has significantly more strengths than weaknesses since the long period of work in the market and the use of the relevant strategies of attracting consumers have provided the corporation with consumer recognition. The company’s opportunities also transcend threats, which can be explained by continuous development and the desire to improve current performance. Moreover, Coca-Cola has sustainable competitive advantages, in particular, advanced logistics, representative offices in almost all countries, high demand for its products, and relevant marketing solutions. All these factors make the company one of the leaders and provide it with a good profit.

References

Banks, H. (2016). The business of peace: Coca-Cola’s contribution to stability, growth, and optimism. Business Horizons, 59(5), 455-461.

Drake, P. (n.d.). Financial ratio analysis. Web.

Eskandari, M. J., Miri, M., Gholami, S., Reza, H., & Nia, S. (2015). Factors affecting the competitiveness of the food industry by using Porter’s five forces model case study in Hamadan Province, Iran. Journal of Asian Scientific Research, 5(4), 185-197.

Irefin, P., & Mechanic, M. A. (2014). Effect of employee commitment on organizational performance in Coca Cola Nigeria Limited Maiduguri, Borno state. Journal of Humanities and Social Science, 19(3), 33-41.

Mastering strategic management. (2015). Web.

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StudyCorgi. (2021, July 1). Coca-Cola Company's Strategic Analysis and Management. Retrieved from https://studycorgi.com/coca-cola-companys-strategic-analysis-and-management/

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StudyCorgi. (2021) 'Coca-Cola Company's Strategic Analysis and Management'. 1 July.

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