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The Coca-Cola Company: A business Analysis

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Abstract

Coca-Cola has continued to prove to the world that it is the best soft drink company, with

production and distribution plants in over two hundred countries. Like any other company, Coca-

Cola continues to analyze its business strategies, and identifies ways to maximize its returns.

This paper attempts to analyze the company’s business strategies, mechanisms and plans that

constitute to its success. The company faces many threats and challenges in today’s market.

Based on a SWOT analysis, this paper attempts to analyze both Coca-Cola’s strengths and

weaknesses and also the role that the company plays in environment conservation and in the

market industry.

It identifies the company’s forces of competition, analyzes the company’s internal and external

environment and the impact of these environments to the firm.

The Coca-Cola Company: A business Analysis

The Coca-Cola Company is a beverage company that specializes with beverages and bottling

services. It is the leading company in the beverage sector, producing more than five-hundred

beverage brands. Coca-Cola is globally recognized, and considered the most valuable brand in

the world having operated in more than two-hundred countries. The original Cola brand was

invented at a backyard in May 1886, by a person named John Pemberton. Initially, it contained

cocaine extracts in its formula till 1905, hence the prefix of its name: “Coca”. Later on, the

cocaine extracts faded in the ingredients but the name prevailed.

It then became worldwide over the years, as the product gained customer loyalty. Today, Coca-

Cola is a house-hold name together with the firm’s other brands like Fanta and Sprite. It has a

large portfolio of more than five hundred brands and three thousand five hundred beverages. The

products mainly vary from fruit juices, diet and regular beverages, energy drinks, tea and coffees,

etc.

Coca-Cola’s mission, is stated in the company’s website as, “enduring”. (The Coca-Cola

Company, 2013). The mission includes the following;

 To refresh the world

 To inspire moments of optimism and happiness…

 To create value and make a difference. (The Coca-Cola Company, 2013).

This mission statement emphasizes on impacting the world positively. It is evident that the

happiness of the customer is the primary objective of the company. More happy customers

equals more profits, because the customers will prefer the product as compared to others. On the

other hand, the vision statement, however, concentrates on the accomplishments needed to

continue the growth of the business. The websites states that; “Our vision serves as the

framework for our Roadmap and guides every aspect of our business by describing what we need

to accomplish in order to continue achieving sustainable, quality growth.” (The Coca-Cola

Company, 2013). It focuses on people, partners, planet, profit, portfolio, and productivity. The

Coca-Cola Company desires to make itself a great place to work, with inspiring environments to

come up with a quality beverage brand that is suited to people’s needs.

In addition to this, as a corporate entity, the company seeks to make a difference to the world by

being responsible and supportive towards communities. This vision ensure that the company is

on the right track towards achieving its goals. Without the mission and the vision statement, the

company would lack focus on its main purposes and hence poor production and customer

satisfaction. The primary stakeholders provide the overall financial and operational support of

the business. Without them, there would be a lack of growth in the business.

Forces of competition

The five sources of competition of Coca-Cola Company are described below.

Threat of Competition: Medium

Though Coca-Cola has been top in the bottling industry for quite some time, the emergence of

other beverage companies along-side Pepsi Company have somehow posed a threat in

competition. These beverage companies e.g Kellogg, and Hershey also contribute to its

competition.

Threat of New Entrants: Low

Since the soft drink industry needs a large amount of capital to start up, new competitors find it

rather hard to compete with Coca-Cola Company. In addition to this, most customers remain

loyal to Coca-Cola due to its heavy advertisement all over the world.

Threat of Substitutes: Low

Due to its high advertisement, brand loyalty by consumers, threat statistics and well-organized

distribution techniques, the company has made it hard for substitute beverage companies to

compete with it. The companies find it very hard to expand their businesses because they require

immense advertising and brand loyalty. This shows that Coca-Cola acquires competitive

advantage through its recognized trade marks by attaining the exceptional prices. “It means that

Coca-Cola have something that their competitors do not have” (MBA Posts, 2012).

Power of Suppliers: Low

According to MBA posts (2012), the suppliers in the beverage industry are weak. This is because

the commodities that are needed in beverage manufacturing “have no bargaining power over the

pricing” (MBA Posts, 2012). These commodities may include sugar, color, potatoes, caffeine,

etc. These materials are readily available to every producer at a low cost. Therefore,

manufacturers can easily shift to other suppliers or consider alternatives.

Power of Buyers: High

Coca-Cola’s chief source of revenue comes from its buyers. In the soft drink industry, the buyers

that exist include convenience stores, restaurants, fast food fountain, and many others.

These five forces have positively impacted the company, because the management can now

analyze the strategies to overcome various threats brought about by the analysis of these sources.

SWOT analysis

The Coca-Cola Company has various strengths and weaknesses that constitute to its productivity.

These strengths and weaknesses can be analyzed by SWOT analysis, where the strengths,

weaknesses, opportunities and threats of the company are revealed. Below is the SWOT analysis

of Coca-Cola Company.

Strengths

The Coca-Cola Company is considered the leading global brand in the world. This is because it

has the largest market share in the beverage industry, and its value is about eighty billion dollars.

It has an effective distribution network, ensuring its products reach their customers. Furthermore,

it has a strong advertising and marketing strategy in order to make sure it gains more customers.

Since the commodities needed to come up with the products are mostly basic, it gains the

bargaining power over its suppliers. Also, it enjoys customer loyalty.

Weaknesses

Despite being the best in the beverage industry, the Coca-Cola Company has various

weaknesses. Being a multi-million dollar company, the firm experiences negative publicity. Due

to acquisitions, it also has high debt values. The products being made are undiversified due to the

focus on carbonated products. In addition to this, there have been various cases of brand failures

where new brands fail to return the expected amount of revenues and therefore bringing losses to

the company.

Opportunities

There is an increasing demand for beverages as part of daily diet. Therefore the company stands

in a perfect place to fulfill the demand. With the venture in to new markets, the company is

introduced to new markets where there is a chance to increase its market share. Also, as a health

measure, more people are turning to bottled water as their sole source of drinking water.

Threats

With global warming, there stands a threat of water scarcity in drought hit countries where the

company has ventured into. Therefore production may become difficult. Also, there is

competition from other beverage brands, like PepsiCo. In addition to this, changes in the

consumer preference may occur, making the company’s market share to decrease.

Strategy

Based on the SWOT analysis, it is evident that Coca-Cola’s dominance in the beverage industry

relies heavily in proper implementation of the analysis. Each and every day, the company finds

new ideas on how to market their brands, and ensuring that they make connections with their

consumer. They offer products of the highest quality in a bid to attract even more customers. In

addition to this, they ensure that these products are readily available worldwide. What this shows

is the company’s main focus, that is, the customers. Their ability to constantly toil on new ideas

and create more unique products keeps them ahead of other emerging beverage companies and

discourages product competition. Therefore, their strategy to capitalize on their strengths and

opportunities mainly includes Innovation and Product advertisement. To minimize its

weaknesses and threats, the company strives to retain its market share, and runs eco-friendly

production plants to conserve the environment.

Communication Plan

The Marketing communication plan for the Coca-Cola Company, a multi-million dollar beverage

company operating all over the world is as follows.

Audience: Television and Radio audience, Internet users, Social media users.

Strategy: Since Coca-Cola intends to venture more across the world, its main area of

communication would be advertising, to both the literate and illiterate people. The main

advertisements will feature themed formats, each slightly modified to suit the advertising

method.

 The Television advertising platform will target both the literate and illiterate people

whereby there will be product identification, and product promotion.

 The radio audience will target the audience in rural areas.

 Internet and social media advertising targets people using the internet and social media.

Future formats: Due to constant change in technology and thus fashion trends, Coca-Cola’s

marketing department will ensure up-to-date marketing strategies are put in place to capture the

ever changing preferences of the consumer.

Projected effectiveness: with all the measures put in place there is an expected increase in

the market share of the beverage industry, and the customer base therefore pushing sales up.

Closing: This document functions as a guide to the marketing department of Coca-Cola

Company and is subject to change.

Corporate governance mechanisms

The Coca-Cola Company uses various mechanisms in its managerial actions. For this study, only

two are considered.

Internal Mechanism

These controls observe the growth and activities of the organization, and take counteractive

measures for the negativities concerned. Coca-Cola has introduced employee training programs

to help employees grow in terms of productivity and skill. This in-turn helps in the smooth

operations of the business. By also ensuring a proper employee to management relation, the

company is able to oversee the performance of the workforce and determine the next step to be

taken accordingly.

External Mechanism

The Coca-Cola Company holds itself liable to the uppermost ethics of corporate governance,

according to its website. The Company operates under various laws in various countries, and

strictly follows any regulations stipulated by the governments of the countries. In short, it is in

legal compliance with the law. In addition to this, the company has a finance department that

ensures adequate debt management.

Effectiveness of Leadership

The Coca-Cola Company struggles to sustain a safe and healthy workplace for its employees so

as to reach its goals. To do this, the company has to have an effective leadership. Therefore, the

company recently started leadership development and succession planning. For one to become a

leader at the company, one must excel in a series of areas: Corporate social responsibility,

Leadership, People development, Business and financial results and lastly, management. After

all, for one to be a good leader one must be able to manage properly. It is because of this strict

leadership criteria that makes Coca-Cola a successful company. Its leaders portray the

characteristics of good managers, and therefore they steer the firm into success. With many

branches opened up, careful planning must be done, and must involve all the branches. It is the

duty of the leaders to come up with proper budgeting techniques to keep the company afloat in

the coming years. By sustaining a healthy employee-employer relationship, the company will

continue to increase production and sales. Also, by internalizing all un-necessary external costs,

the company will have eliminated a small fraction of their expenses and hence gain more profit.

According to the Company’s annual report on Form 10-K obtained from the EDGAR database, it

is the duty of the management of the company (its leaders), to “establish and maintain a system

of internal controls and procedures to provide reasonable assurance regarding the reliability of

financial reporting and the preparation of financial statements” (The Coca-Cola Company,

2012).

This further shows that the management is effective in decision making based on past financial

statements.

The efforts made by this company towards becoming a responsible entity are countless. For quite

a few years, Coca-Cola has been renovating its production and distribution facilities in a bid to

conserve the environment. For example, one of the major facilities in Brampton, Ontario

transformed into an energy efficient lighting system, consuming fifty percent less energy than it

did before. The Company also seeks to reduce the water consumption experienced in beverage

making by providing recycling plants for waste water treatment, and reducing the water use ratio

in its operations. In the distribution department, the firm seeks to minimize the amount of

packaging materials used. This is done by recycling more than ninety percent of waste materials.

To provide a sustainable, environmental friendly packaging option, the firm opted to reduce the

heaviness of the plastic bottles used in packing their packaged water, Dasani. In addition to this

the company developed a lighter fiberboard for its other product, Minute Maid thus saving about

one-hundred and twenty four metric tons of fiberboard annually. On top of it all, the company

encourages its consumers to recycle these bottles. These and many other efforts have made the

Company successful by reducing costs and conserving the environment.

Coca-Cola has developed to be the leading beverage company in the world, reaching the four

corners of the globe thanks to its marketing strategies. Primarily, its success is featured to its

founder, John Pemberton. It heavily relies on the sales generated as a part of their revenue. In a

bid to conserve the environment its new ways to minimize energy consumptions also provides it

with cost minimization advantages and hence improved its production levels. The management

of Coca-Cola have proven to be efficient at what they do, and by implementing the strategies

they analyze they have contributed to the company’s success. Coca-Cola remains the world’s

favorite drink and with their vision in mind, the company will become one of the greatest

companies of all time.

References

MBA Lectures. (2010, November 25). Porter's Five Forces Model of Coca Cola. Retrieved from

MBA Lectures: http://mba-lectures.com/marketing/principles-of-marketing/1119/porters-

five-forces-model-of-coca-cola.html

MBA Posts. (2012, June 16). MBA Posts. Retrieved from MBA Posts: http://mba-

posts.blogspot.ca/2012/06/porters-five-forces-model-of-coca-cola.html

Singh, K. (2010, July 25). The Cola War: Coke's Porter's Five Force Model. Retrieved

December 10, 2013, from Bright Hub:

www.brighthub.com/office/entrepreneurs/articles/79263.aspx.

The Coca-Cola Company. (2012, February 23). United States Securities and Exchange

Commission. Retrieved from United States Securities and Exchange Commission:

http://www.sec.gov/edgar.shtml

The Coca-Cola Company. (2013). The Coca-Cola Company. Retrieved from The Coca-Cola

Company: Journey: http://www.coca-colacompany.com/

Wong, D. (2011, August 8). Coca-Cola: A case Study In Sustainability. Retrieved from

Environmental Leader: http://www.environmentalleader.com/2011/08/08/coca-cola-a-

case-study-in-sustainability/

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