Final draft of the paper

Coca-Cola Company Name of Student Institution Affiliation Contents TOC \o "1-3" \h \z \u Coca Cola Company PAGEREF _Toc1403084 \h 3Background PAGEREF _Toc1403085 \h 3Competitive Strategies PAGEREF _Toc1403086 \h 3Coca-Cola Company PAGEREF _Toc1403087 \h 4Price Elasticity of Demand: Pricing Decisions PAGEREF _Toc1403088 \h 4Costs of Production: Output Decisions PAGEREF _Toc1403089 \h 5Recommendation: Future Production PAGEREF _Toc1403090 \h 6Conditions: Firm’s Actions PAGEREF _Toc1403091 \h 6Price Elasticity of Demand: Analyze PAGEREF _Toc1403092 \h 6Costs of Production: Profitability PAGEREF _Toc1403093 \h 6Overall Market: Market Share PAGEREF _Toc1403094 \h 6Overall Market: Barriers to Entry PAGEREF _Toc1403095 \h 6Overall Market: Market Structure PAGEREF _Toc1403096 \h 6Recommendation: Recommended Action PAGEREF _Toc1403097 \h 6Conditions: Impact PAGEREF _Toc1403098 \h 6Price Elasticity of Demand: Consumer Responsiveness PAGEREF _Toc1403099 \h 6Recommendation: Sustain its Success PAGEREF _Toc1403100 \h 6 Coca Cola Company Background Organizations exist in complex business environments marred with varying economic, political, social, technological legal issues that influence their performance and competitiveness. Both external and internal conditions largely affect the operations and strategic decisions taken by firms in the course of their operations. Globalization, on the other hand, has shifted the competitive landscape in various markets thus creating a complex macro-environment for businesses operate in. Adapting to the changing business environment remains crucial in the success of an organization by incorporating new strategies that seek to maintain and improve the competitive advantage of an organization. Despite the changing business environment, a crucial aspect of the success of a business is the environment in which it operates. According to Thompson and Strickland (2007), essential elements and competitive strategies involve understanding the competitive process in a given industry which is vital in establishing the main source of competitive pressure within the industry and the strength of a given competitive strategy. Firms continue to adopt multiple strategies in a bid to improve competitiveness, counter growing competition, increase market share, increase profitability and sustain their success over time. Such strategies include continuous product development, specialization, and product diversification, increased distribution and product growth to achieve a competitive edge. Competitive business strategies are meant to position a company within an industry elevated for a long time thus remaining profitable and able to weed out the possible competition. An effective strategy influences the environment in which the firm operates, therefore, enabling its operations to succeed against the competitors. Understanding the strengths and weaknesses of the competitors helps an organization in formulating effective strategies and taking advantage of the competition (Aaker, 1990). Organizations seeking success must, therefore, improve their operational effectiveness, formulate practical and advanced strategies to counter competition and promote growth and engage deliberate strategic decisions that enhance their strategic positions within a given industry. Competitive Strategies A competitive business strategy empowers a company to compete within an industry after a full evaluation of its strengths and weaknesses against its competitors. Success in a competitive industry can be realized by leveraging their strengths and exploring new opportunities. According to Porter (1998), company strengths are classified as either cost advantage or differentiation. These strengths can either be applied in a broad or a narrow scope that results in three operational strategies, namely, differentiation, focus and cost leadership. Porter (1998) postulates that the differentiation strategy is interested in the production and development of a product or a service that gives a unique experience to the clients, thus, adding its value as depicted by the consumers against other products and ahead of the competition. Differentiation adds value to a product or a service that may enable an organization to increase its sales, counter competition or even sell at a premium price. By conducting extensive feasibility studies, a firm can come up with specific attributes that are regarded as valuable by the consumers thus incorporate them in their product release. Porter (1998) opines that a focus strategy centers on a specific segment and attempts to achieve either differentiation or a cost advantage strategy. By putting maximum effort on a single and narrowed segment, a business can reap the maximum benefits of the strategy. By employing a focus strategy, an organization is likely to enjoy higher degrees of customer loyalty that increases its competitive abilities against other competitors. A cost leadership strategy, on the other hand, focuses on producing company products for the least cost within the industry for a given quality level. The business can then sell the products at the prevailing market prices earning more profits or opt to sell the products below the market price thus outselling their rivals and expanding the organization’s market share. The low-cost strategy is made possible through improved production efficiencies, access to large-scale raw materials at relatively low costs, minimizing overhead costs, making optimal outsourcing and vertical integration of company decisions. Supposing the rival firms fail to take advantage of the low-cost advantages, a business can sustain a competitive edge against such competitors given application effective cost leadership. Coca-Cola Company The Coca-Cola Company is the largest y total beverage company globally producing over 500 sparkling and still brands across multiple markets through the lift, shift, and scale strategy (News Release, 2019). The company prides in producing over 3,500 beverages. In its portfolio of global brands there are plenty of the beverage brands, including some of the most valuable brands include AdeS soy-based beverages, Ayataka green tea, Costa coffee, Dasani waters, Del Valle juices and nectars, Fanta, Georgia coffee, Gold Peak teas and coffees, Honest Tea, innocent smoothies and juices, Minute Maid juices, Powerade sports drinks, Simply juices, smart water, Sprite, Vitaminwater and ZICO coconut water. The company is constantly involved in transforming and diversifying its products with developments such as reducing sugar in drinks and introducing products in the market. The company is also heavily invested and committed to reducing its impact on the environment by replenishing water and promoting recycling. Further, together with the company’s bottling partners, Coca-Cola Company has employed more than 700, 000 people globally thus improving the economic conditions to areas it operates globally (News Release, 2019). The company has an extensive beverage distribution system that allows it to supply its products to more than 200 countries globally. With an extensive global reach, consumers enjoy Coca-Cola products more than 1.9 billion of the 60 billion servings every day (Elmore, 2013). Coca-Cola was ranked position 87 in 2018 Fortune500 in the list of the largest corporations in the US by its total revenue (Fortune500, 2019). Price Elasticity of Demand: Pricing Decisions Pricing decisions, like production decisions, are critical in establishing a ground for a company in a given industry thus determining its competitiveness and profitability. Coca-Cola Company largely operates in an oligopoly market with PepsiCo being the biggest business rival. Therefore, the Coca-Cola Company decisions on pricing are checked by competition in determining the most appropriate pricing decisions. In pricing decisions, therefore, Coca-Cola employs appropriate price differentiation methods to appeal to different consumers, while at the same time; taking into consideration the pricing decisions the rival firms. According to Gans, King, and Mankiw (2011), the cost of production is the most significant factor in determining what price to set. Therefore, the company is critical in providing in setting the prices for its products. In its pricing decision, the Coca-Cola Company provides differentiated and distinct prices for its clientele. For example, the price for a 20-ounce bottle of Coca-Coca is priced between $1.25 and $3.49 depending on the location the client buys it (Simon, & Fassnacht, 2018). The table below indicates the differences in the price of a 20-ounce Coca-Cola soda. Source: Simon, & Fassnacht (2018, p. 210) As per the table above, a Coca-Cola Soda bought at a hotel gift shop costs almost three times as the same product bought at a club store within the same city. The pricing decision has been necessitated by the customers’ abilities and willingness to pay at different prices for the same commodity. Such is a classic example of a pricing decision that cuts across all other products while minding the pricing strategy taken by the rivals for similar products. On a global outlook, pricing decisions can be based on how segmentation of markets based on price elasticities look. Pricing differentiation is also applied in regional segments where price elasticity differs. Costs of Production: Output Decisions Output decisions are essential in any business. Costs are involved in procuring for inputs necessary for producing goods and services. Similarly, for the Coca-Cola Company, output decisions are determined such as demand for their products (law of demand and supply), production costs and pricing decisions, and the capacity to produce at a given time. Variable and fixed costs incurred by Coca-Cola in the production and distribution of its beverages globally determine its output decisions. Fixed costs are ass...