Coca-Cola: Grand Strategy

Introduction

Following modern trends and management models allows both large corporations and small companies to develop their business and promote products to the market. Based on the activities of such a world-famous organization as Coca-Cola it is possible to pay attention to some specific approaches and strategies. The purpose is to provide a possibility to improve the performance of the company and gain even greater recognition of the target audience.

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To do it, taking into account the strengths, weaknesses, threats, and opportunities of the corporation, it is required to consider certain matrices. They can correct the mode of operation of the enterprise and its policies in relation to key financial and production aspects. Applying appropriate strategies may help to find optimal development mechanisms and turn the business’s weaknesses into strong and potentially profitable areas.

Coca-Cola Company SWOT

The SWOT analysis of the Coca-Cola Company includes the assessment of key factors determining the effectiveness of work in different areas. According to Banks (2016), the strength of the corporation in question is a well-chosen supply chain management system. Also, there are other aspects that allow the organization to operate in the market successfully – a good financial base, thought-out logistics, the modern system of work with personnel, and high-quality resource management. However, in almost no companies, there are absolutely perfect conditions, and in Coca-Cola, the main weakness is the production system, in particular, insufficiently advanced technological equipment (Banks, 2016).

The most significant potential threat is a rivalry with other large corporations in this area. Finally, the opportunities of the corporation include strengthening the leadership position, expanding the supply chain, and increasing consumer demand.

In order to evaluate the type of strategy that the management of the corporation adheres to, it is possible to resort to using special matrices. In particular, the SWOT analysis diagram can be applied for the assessment procedure (CalMiramarUniversity, 2012). Based on this scheme and taking into account the aforementioned characteristics of the organization, Coca-Cola belongs to the cell where the turnaround strategy is displayed. It is due to the fact that the company has significant environmental opportunities and does not follow an aggressive leadership style. Internal weaknesses are not significant, but insufficient quality production equipment imposes some limitations. In this regard, the current policy of the corporation may be improved by strengthening those areas in which the increase in efficiency is acceptable and possible.

Application of the Grand Strategy Selection Matrix

The analysis of the characteristics of Coca-Cola may provide an opportunity to evaluate the productivity of the chosen strategy and to identify other potentially valuable strategies. For this purpose, it is possible to apply the Grand Strategy Selection Matrix proposed as a model for finding an optimal development path (Ddd9255, 2013). Relying on two axes with characteristics, it can be noted that the external orientation of the company is quite strong, and internal transformations are more necessary.

From the point of view of the other axis that characterizes the movement in the direction of strengths and weaknesses, it is more correct for the corporation to concentrate on the strengths, thereby increasing productivity. In this regard, based on the presented matrix, the Coca-Cola strategy may include concentrated growth, market development, product development, and innovations (Ddd9255, 2013). All these characteristics make it possible to expand the capacity of the organization and achieve the strengthening of those areas that deserve attention.

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When trying to apply other indicators to Coca-Cola, the result will be inaccurate. The company does not adhere to the merger and acquisition strategy since this brand is strong and stable and does not need additional assistance from other corporations. According to Banks (2016), this organization is distinguished by its focus on internal resources, following the classical principles of corporate governance and financial distribution. Such an approach gives the Coca-Cola management an opportunity to focus on individual working strategies. Therefore, the corporation succeeds in achieving its goals not through the help of partners but due to competent operational management, including thoughtful logistics, control over supply chains, and activities related to improving product quality.

Application of the Model of Grand Strategy Clusters

Another matrix for evaluating the activities of the Coca-Cola Corporation allows evaluating the nature of the organization’s work regarding the speed of its market growth and its competitive position. It is the Model of Grand Strategy Clusters and based on its results the company in question belongs to Quadrant 1 (CalMiramarUniversity, 2012). In particular, the growth of the corporation is rapid since the constant updating of the product line and following the market trends help Coca-Cola to achieve significant success and consumer recognition.

Compared to slow growth when an enterprise increases its business potential gradually, the company under consideration regularly presents new products regularly, which indicates its stable activity. The market penetration is confident, and due to many years of work and an advanced marketing system, the target audience learns about all the innovations quickly. The organization’s competitive position is strong and, despite the presence of other companies that produce similar products, Coca-Cola increases its production potential constantly, thereby reacting to other market participants. Based on the current business strategy, the corporation maintains a stable position; therefore, its rank in the cluster system under consideration is the highest.

Application of the BCG Matrix

The mechanism for evaluating the growth of the company can also be based on the indicators of market share and profits derived from sales. For this purpose, a specific model may be applied – the Boston Consulting Group (BCG) Growth-Share Matrix that implies using such criteria as market share and growth indicators (Alanis Business Academy, 2013). Regarding this rating system, Coca-Cola can be described as the Cash Cow in the context of the matrix formulation (Alanis Business Academy, 2013).

The company’s earnings are significant, and cash flows are consistently high. According to the latest data, Coca-Cola “currently enjoys a profit margin of approximately 33 percent, meaning that about thirty-three cents of every dollar it collects from customers is profit” (“Mastering strategic management,” 2015, p. 153). The organization’s investments are not too large since the corporation has already achieved significant market recognition among consumers. All updates concern products and the introduction of new financial strategies is not typical for this company. This strategy may be described as stable, which allows Coca-Cola to work successfully and receive good profits.

Despite the insufficiently high-class production base, the corporation has been successfully promoting its brand for many decades. Based on the principles of internal improvement, the company has managed to establish the mode of operation that allows it to ignore the activities of competitors and follow its own development course. “The firm does not have to match any promotions that its rivals launch to keep its customers,” and an opportunity to create unique and well-known beverages opens up positive prospects (“Mastering strategic management,” 2015, p. 153).

Contrary to the opinion that Coca-Cola manufactures products of the same type, the corporation regularly introduces new types of soft drinks designed for a specific audience. Such attention to consumers allows the organization to follow the chosen strategy and not to strive to grow by all means due to non-stop investments. Therefore, Coca-Cola belongs to the Cash Cow category and brings stable and high profits to the brand owners.

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Comparison of Results

When comparing the results obtained in the process of applying the three different matrixes for evaluating the activities of the organization, it is possible to receive a comprehensive picture. Coca-Cola is focused on the internal development of assets and does not seek to merge and acquire, which can be observed through the Grand Strategy Selection Matrix (Ddd9255, 2013). While using the Model of Grand Strategy Clusters, it can be noted that market-oriented penetration is sustainable, and product introduction is constantly monitored (CalMiramarUniversity, 2012).

Based on the BCG Growth-Share Matrix, it is possible to talk about Coca-Cola’s strong position in terms of its financial flows and resource allocation, which means that the corporation does not need constant investments in its development (Alanis Business Academy, 2013). Due to these three assessment methodologies and analysis results, the current management and growth strategy in the organization under consideration may be traced.

The comparison may be based on the key indicators used in the matrices considered. Such aspects of activity should be assessed as growth rates, resistance to competition, product and market development, internal or external orientation, as well as relative market share. According to all these parameters, it can be determined that in the Coca-Cola policy, the emphasis on product promotion may be traced, and the focus on internal assets is predominant, which makes it possible to achieve stable profits. All of these indicators are valuable resources that contribute to evaluating the success of the current model of the corporation’s activities and its potential challenges.

The Grand Strategy Coca-Cola Should Choose

When taking into account the data from the SWOT analysis, it can be assumed that Coca-Cola should focus on product development strategies. Despite high market demand and consumer recognition, the corporation’s manufacturing base is not perfect, and some upgrades are required to improve performance. For instance, the introduction of new systems for the processing and preparation of raw materials may help to save money and ensure faster operation. These conditions are the essential aspects of activity since much depends on the speed of work in the conditions of the market competition. Therefore, this direction can be considered one of the priorities.

Conclusion

Adherence to effective strategies is the important component of the activities of such a large and world-famous brand like Coca-Cola. The introduction of appropriate mechanisms can contribute to achieving high-performance results and improving the quality of work, which is a crucial condition in the competitive market environment. Based on the analysis using several matrices, it is possible to determine the course of Coca-Cola’s work and its key areas that deserve attention from the management. Focusing on these indicators may help to improve current results and provide an even higher level of work, thereby proving a strong brand position.

References

Alanis Business Academy. (2013). Episode 96: How the Boston Consulting Group (BCG) Growth-Share Matrix works [Video file]. Web.

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

CalMiramarUniversity. (2012). Strategic management: 15 grand strategies [Video file]. Web.

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Ddd9255. (2013). Grand Strategy Matrix [Video file]. Web.

Mastering strategic management. (2015). Web.

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StudyCorgi. (2021, July 20). Coca-Cola: Grand Strategy. Retrieved from https://studycorgi.com/coca-cola-grand-strategy/

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