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Running head: STRATEGY FORMULATION 1

Strategy formulation

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STRATEGY FORMULATION 2

Strategy formulation

Introduction

Strategy formulation is a vital aspect of any business because it involves the process of

choosing the best course of action in which the company’s goals can be achieved. The process

can be subdivided into six steps which include setting objectives, evaluating the business

environment, setting quantitative targets, aiming in context with departmental plans,

performance analysis and choice of strategy. This report will, however, focus on the latter aspect

of strategy formulation which is the choice of strategy (Corporate strategies, generic strategies,

and international strategies) about Coca-Cola bottling company.

Concepts

This section will expound on the different types of corporate strategies, generic strategies,

and international strategies

Corporate Strategies

Corporate strategies are meant to guide the direction and scope of a company and how

the business operations are incorporated to achieve the set goals. There are different types of

corporate strategies which include single business strategy, related-constrained diversification,

dominant business strategy, and unrelated diversification. A single business strategy involves the

dependence on one entity of the business to deliver over 95 percent of sales. A dominant

business strategy involves the prioritization of one strategy and downplaying the other

approaches. A related constrained diversification strategy involves the expansion of existing

markets or products lines. On the other hand, an unrelated diversification strategy involves the

expansion into unrelated or new markets or product lines.

Generic Strategies

STRATEGY FORMULATION 3

There are three types of generic strategies that were formulated by Michael Potter that

include cost leadership, differentiation, focused differentiation, focus cost leadership, and hybrid

strategy. Cost leadership focuses on gaining advantage by ensuring the production costs are set

to a minimum to maximize profits. Differentiation strategy is based on creation or development

of different segments or products with products markets independently and charge higher prices

by being different. Focused differentiation is a strategy that prioritizes a niche market. Focused

cost leadership strategy is based on price competition to target a small market by charging lower

prices compared to rival companies. The hybrid strategy is a combination of differentiation and

low-cost strategies and is mostly used by large corporations. The hybrid strategy is further

subdivided into stuck-in-the-middle strategy and integrated strategy. Stuck-in-the-middle is not a

deliberate strategy but a result of an unsuccessful attempt in pursuing any of the generic

strategies. An integrated strategy involves the creation of separate business entities within a

company for each strategy.

International Strategies

There are two main types of international strategies which include entry strategies and

competitive strategies. The main types of International entry strategies include exporting,

licensing, strategic alliance, franchising and wholly-owned subsidiary. Exporting involves the

use of distributors or agents to represent a company in a foreign market. Licensing is whereby a

company transfers the rights of production or service to another company or firm. Franchising is

a business strategy that allows the company to distribute its services or products through

connected dealers. The strategic alliance is an entry strategy that is based on an agreement by

different companies to try and achieve certain objectives while remaining independent entities. A

STRATEGY FORMULATION 4

wholly-owned subsidiary is an entry strategy that focuses on buying a company that is located in

the targeted market location.

Once companies enter the market their main focus shifts to gaining a competitive

advantage and there are different kinds of international competitive strategies that include multi-

domestic strategy, global strategy, transnational strategy and home replication strategy. The

multi-domestic strategy involves the maximization of local receptiveness by customizing the

products to match the needs and demands of the national market environment. A global strategy

involves the setting up of manufacturing plants in countries with low-cost labor, sales personnel

in different parts of the world and global advertising and branding. The transnational strategy is

the implementation of a global vision but with tailor-made implementations for local regions and

markets. A home replication strategy involves the replication of home-based strategies at an

international level including brand power, distribution, and production sales.

Analysis

Coca-Cola bottling company is one the companies that have clear and defined strategies

that have enabled it to expand into foreign markets. In this section, the Corporate, Generic and

International entry strategies for Coca-Cola will be analyzed.

Corporate Strategy

The main corporate strategy for Coca-Cola bottling company has been the related

constrained and unrelated constrained diversification strategies. This is because the company

started by only bottling Coke products but has grown by expanding into unrelated and related

markets. This is evident by the fact that the company does bottling for many products which

include Dasani water, Monster Energy drink, and many other products. Furthermore, the

company has been able to diversify from glass bottling to plastic bottling. This has enabled the

STRATEGY FORMULATION 5

company to gain global recognition and expansion because the different products have different

target markets and this increases the sales of the company.

Generic Strategy

In this sector, I will focus on the Coca-Cola brand of the Coca-Cola bottling company.

The generic strategy that Coca-Cola bottling has applied to this brand is the Hybrid Strategy.

This strategy is based on setting lower prices than those of the rival companies while at the same

time creating separate business entities within a company for each strategy. For example, the

main competitor for the Coke brand is Pepsi and Coca-Cola has deliberately set the selling price

of Coke products at a lower mark compared to Pepsi. Furthermore, the bottling company has

included different entities such as Fanta and Sprite to increase sales and market share.

International Strategies

Coca-Cola bottling has managed to enter foreign markets, and one of its entry marketing

strategies is through a wholly-owned subsidiary strategy. Coca-cola has used this method as an

entry strategy, especially in Africa. For example, the bottling company recently purchased

Equator Bottlers which is a bottling company in Kenya. This entry strategy is effective because it

reduces the time and resources required to set up a manufacturing plant and distribution

channels.

One of the main International competitive Strategies of Coca-Cola bottling company is

the global strategy. The company has set up manufacturing plants in countries with low-cost

labor, sales personnel in different parts of the world and global advertising and branding.

Consequently, this helps to drive revenue and profit growth.

STRATEGY FORMULATION 6

Evaluation

Problem

The major problem facing Coca-Cola bottling is increased regulations from managing

disposal wastes to ensuring product safety. The major cause for increased regulations is the need

to enhance and ensure customer safety.

Solution

The only way of ensuring that this problem is solved is by the control of global supply

chains by the company to attest their compliance and that of the suppliers, and by setting up

proper waste disposal and recycling mechanisms. By setting up proper disposal and recycling

mechanisms, the company will be able to meet the Environmental Impact assessment

requirements and avoid fines and closure of manufacturing plants.

Conclusion

Strategy formulation is an essential element of any business because helps to support or

increment the firm’s worldwide presence or rather market share. Coca-Cola is exceptionally

entrenched internationally and is the market front-runner. This is vital to maintain because it is

the wellspring of the dominant part of their benefits. On the off chance that they lose a

worldwide piece of the pie, their benefits will decrease drastically.

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