Week 8 Assignment: The Coca-Cola Company Case Analysis

The Coca-Cola Company case analysis
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COMPANY NAME, WEBSITE, AND INDUSTRY
The paper centers on the Coca-Cola Company, the company operates in beverage industry. The Coca-Cola Company website is -colacompany.com.
BACKGROUND AND HISTORY
The Coca-Cola Company is an American beverage corporation, established in the year 1886 by Asa Griggs Candler. The company based in Atlanta, Georgia adopted franchised distribution method, where the company produced syrup concentrate and sold it to several bottlers’ companies throughout the world. Besides the company’s flagship brand Coca-Cola, the company produces more than 450 beverage brands, such as Sprite, Coke, and Fanta. James Quincey, the Coca-Cola president and Chief Operating Officer (COO) is in charge for all of the corporation operating units globally. Muhtar Kent, appointed in April 2009, is the current Chief Executive Officer of the Coca-Cola Company. The company reported total sales of 17482 million US dollars and profit of 7351 million US dollars in the year 2015. Some of the Coca-Cola key events began in 1886 when John Pemberton, a chemist, created a unique tasting soft drink by blending heated sugar liquid with carbonated water. Frank Robinson, who worked as John bookkeeper christened the drink Coca-Cola and wrote its production procedure that is utilized by the company until today. In 1994, Robert Woodruff became the head of the Coca-Cola after his father; Ernest purchased the corporation in 1923 from Candler. In 1960 to 1961, the company commenced to expand its product’s line by acquiring Minute Maid Company, which produced juices and sprite. In 2005, the company launched coke zero, a calorie free drink, due to increase of consumer’s health conscious. Finally, in 2013, the company introduced a smaller 250ml can in the UK market to cater more health conscious consumers (Coca-cola, 2016).
The Coca-Cola Company gross profit margin improved from year 2013 to 2014, however, deteriorated significantly from 2014 to 2015. The Coca-Cola Company operating profit margin declined from the year 2013 to 2014 and reduced from 2014 to 2015.The company net return margin declined from the year 2013 to 2014, although, faintly recovered from 2014 to 2015. The company Return on Equity (ROE) diminished from 2013 to 2014, but improved from 2014 to 2015 greater than 2013 level. In addition, the company return on Assets (ROA) declined from the year 2013 to 2014, however faintly recovered from the year 2014 to 2015 (Coca-cola, 2016).
ANALYSIS VIA PORTER’S FIVE FORCES MODEL
Threats of new entrant
There beverage industry has many entry barriers, making the threats of new entry low. The Coca-Cola Company spends millions of dollars in advertising its brands, which makes it difficult for new rival to capture the market. The Coca-Cola Company has created higher product loyalty that makes it not viable for new rivals to match the company level in the beverage industry. In addition, the saturation of sparkling drinks, international market makes it difficult for new entrants to gain from the economies of scale utilized by the Coca-Cola Company (Dess et al., 2012).
Competition from substitutes
Competition from substitutes exists in the beverage industry. Health conscious customers tend to prefer the Coca-Cola substitutes, such as energy drinks, water, juice, and tea. Moreover, the low switching costs makes it easy for consumers to shift to substitute products (Dess et al., 2012).
Bargaining power of buyers
The lack of switching costs for consumers and price flexibility of products increase buyer bargaining power. Moreover, accessibility of various cola beverages raises the consumer’s power. However, direct buyers such as bottlers tend to have more powers other than indirect buyers such as restaurants (Dess et al., 2012).
Bargaining power of suppliers
Suppliers have low bargaining power in the beverage industry. The raw materials required in manufacturing soft drinks, such as flavor, packaging, and sugar are easily available from every producer. Low switching costs encourage companies to shift to other producers. Besides, low threats of forward integration, due to high capital requirements reduce supplier’s power (Dess et al., 2012).
Rivalry among competitors
Rivalry among competitors in the beverage industry is moderate. The soft drinks’ industry competes on advertising and differentiation. Except for the Coca-Cola Company and its main competitor the Pepsi Company, other competitors have low market shares (Dess et al., 2012).
Low threat of new entrant

* High capital requirements
* Saturated global market
* Higher brand loyalty

High bargaining power of buyers

* Low switching costs
* Availability of assortment of cola beverages

Low bargaining power of suppliers

* Low switching costs
* Easy availability of raw materials

Moderate rivalry of competitors

* Composition of competitors
* Product differentiation
* Non-price based rivalry

High Competition from substitutes

* Aggressive advertising of substitutes products
* Consumer’s health conscious
* No switching costs

STRATEGY USED
The Coca-Cola Company adopted franchising strategy, where the company sold its syrup concentrates in several bottlers throughout the world. The franchising strategy enabled the firm’s flagship product Coca-Cola and other brands achieve strong brand devotion in several markets around the globe. The company currently has more than 200 sovereign bottlers around the globe, which continue to raise the company markets share. In addition, the Coca-Cola Company secret recipe for Coca-Cola syrup, which is highly protected, has aided the company to establish a global brand. The strategy and secret recipe has enabled the Coca-Cola Company to design stronger barrier against the power of industry rivalry and offered a strong basis for competitive advantage sustainability (Coca-cola, 2016).
The Coca-Cola Company applied differentiation strategy by utilizing intangible resources of its research and development department to manufacture cobot, a vending machine that distributes beverages and smiles. The company manufactured cobot that is unique and integrated emotional expressions of smile, which is denoted as pleasure, happiness, and joy among humans. The strategy was noted to be successful after successful sampling events, where thrilled consumers were delighted in sampling the product and interacting with the cobot. Other companies can apply the strategy, especially companies that produce substitute products of the Coca-Cola Company (Coca-cola, 2016).
Introduction stage of industry life cycle is depicted with low sales escalation, because consumers are unfamiliar with the product. The growth stage is depicted by increase in sales that attract company competitors. In maturity stage, market becomes saturated after competi...