The Coca Cola Company: International Development Strategies

The Coca Cola Company: International Development Strategies
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The Coca Cola Company: International Development Strategies
1 Introduction
The Coca-Cola Company is the largest worldwide producer and supplier of beverages. Currently, the company operates in more than 200 countries with a product line consisting of more than 500 non-alcoholic beverage varieties. Coca-Cola does not necessarily carry out all the processes in the production and distribution of the products until it reaches the end-users. Instead, it produces and distributes beverage bases, concentrates, and syrups to partner companies who then completes the production process for the final branded products and facilitate their distribution to retailers and consumers. The branding and marketing are active roles of the company. Despite numerous challenges in production, operations, and marketing, the firm has defied all odds to retain its dominance in the industry.
2 Summary of the company
1 History
The history of Coca-Cola dates back to the year 1886. Dr. John Pemberton, a pharmacist from Atlanta, invented the Coke drink in 1886 and sold it in the neighborhood in glass portions, and later in bottles. After the death of Pemberton in 1888, a group of entrepreneurs bought the bottling rights for the drink in 1899, marking the beginning of the Coca Cola bottling system. At the time, the firm issued coupons and magazine adverts to market its beverage item. Several years later, the Coca Cola had acquired other beverage companies as an effort to expand its beverage portfolio and to satisfy a wide variety of consumer tastes. The most recently acquired company is Costa Coffee at a cost of $5.1 billion. The acquisition provides new expertise and capabilities to the company, which are essential for its competitiveness in the global market.
2 Brands
Currently, the Coca-Cola product line has more than 500 varieties of brands across the world. The major brands in the USA include Coke, Fanta, Sprite, Dasani water, Minute Maid, Fresca, Nestea, Barq’s Root Beer, Mello Yello, and several others (The Coca-Cola Company, 2019). Inca Kola, Samurai, and Vita are common Coca Cola products in North and South America, Asia, and Africa, respectively. Coke, Fanta, Sprite, and Fresca are carbonated drinks while Minute Maid, Bibo, Maaza, and Qoo are Juices and juice drinks. Water products include Dasani, Ciel, and Bonaqua. Also, the company produces energy drinks such as Powerade and Aquarius, as well as tea and coffee beverages including Marocha and Georgia Coffee, respectively.
3 Corporate governance
The current organizational structure of the firm reflects its competitiveness in the industry. Its operations are categorized according to regions for easy governance and to match the needs of its diverse customers in different parts of the world. Coca-Cola’s Board of Governance comprises of professionals with a wide range of skills, experience, independence, and knowledge in their respective roles (Coca-Cola: Hellenic Bottling Company, 2018). The current board represents a well-balanced and diverse group whose focus includes supporting the management towards the success of the company. For example, the new Chief Executive Officer successfully executed the 2018 business strategy mainly because he had maximum support from the Board. The progress of the company highly relies on the collaborative culture between governance, management, and the general staff. The organization and operations of the Board are usually transformed to match the production and consumer needs as well as the current market and technological trends. The corporate governance frameworks are always formulated based on the company's mission, vision and core values (Coca-Cola Company, 2018). They, therefore, support the production and growth direction of the company by gaining a competitive advantage against other firms in the industry. The Board oversees and reviews managerial issues and the risk-taking procedures which are critical for the innovation and growth of the company.
3 Environmental analysis
4 PEST Analysis
Being the leading company in the beverage industry, PEST analysis is useful to analyze Coca Cola's macro-environmental factors that influence its operations in the international scene. The external factors include political, economic, social, and technological aspects that are critical to the company's production and marketing operations.
* Political factors
When entering a new foreign market, the company examines the country’s political history and trends. The initial step would be to find out whether the country’s administration supports foreign direct investments and whether their leadership policies are in line with the company’s international growth objectives (Coca-Cola Company, 2018). Political stability in the country of interest is paramount for the company’s investment and business expansion.
* Economic factors
The economic issues, including trade policies and regulations, in a country, influence the need of the firm to invest, the type of entrance and expansion strategy to use, and the nature of operations to conduct (The Coca-Cola Company, 2018). Some countries have very restrictive trade laws that inhibit smooth operations, especially for foreign and international companies. The economic factors significantly influence the company's level of investment as well as its growth and expansion in foreign markets.
* Social factors
These are the socio-cultural aspects that influence the productivity, performance, and operations of the company. They include cultural practices, religious beliefs, social norms and values, and customer tastes and preferences (The Coca-Cola Company, 2018). Therefore, the Coca Cola Company has to consider whether business practices support the sociocultural aspects of a particular country, community, or a group of target consumers. Consumer tastes and preferences change over time. Therefore, the company's strategic planning and execution must prioritize the specific needs of potential customers. This explains the increasing effort of the company to diversify its production line by including a variety of beverage categories.
* Technological factors
The 21st century has witnessed a tremendous increase in the development and utilization of advanced technologies. Technology plays a key role in promoting product quality and innovations, through research and development. Therefore, the organization has embarked on incorporating technology in its production and marketing strategies to enhance its competitiveness against rival companies (The Coca-Cola Company, 2018). As a result, the company has made several innovations to include a variety of flavors for its beverages.
4 Competitive analysis
5 SWOT analysis
SWOT analysis attempts to identify the internal and external factors that influence the growth and profitability of a business. The internal factors determine the strengths and weaknesses while the external factors comprise the opportunities and threats in a business.
* Strengths
The strengths of the Coca Cola Company lie in its strong brand loyalty and unique beverage taste and quality. These factors are responsible for the company’s wide customer base and brand loyalty. Also, the firm is among the world’s most innovative and aggressive product campaigners. It has unique and effective marketing strategies that focus on attracting all genres of the audience, regardless of age, gender, culture, or region. Its marketing and campaigning efforts are evenly applied across its distribution networks, even in the most rural parts of the world (Banutu-Gomez, 2012). A strong customer base, brand loyalty, distribution network, and marketing skills earned the company brand equity in 2018 for being among the most valuable brands across the globe.
* Weaknesses
Over the years, Coca Cola Company has been criticized by agents and organizations with interests in public health. Occasionally, the company receives backlashes for its products that either harmful to the health of consumers or add little or no nutritive value to its users (Banutu-Gomez, 2012). The inability to produce nutritive and healthy products act as a weakness to the company. As a result, the company’s critics have been spreading rumors and speculations about the negative health consequences that can befall its product consumers. The company was recently accused of misleading the public through its marketing. Such backlashes have a huge impact on the popularity and publicity of the company and its products.
* Opportunities
The company has the opportunity to use its brand popularity and wide customer base to introduce new products or modify some of its current portfolios. Both are diversification strategies for its products and can alleviate the existing company weaknesses. Also, the company can use its resources, including manufacturing and distribution facilities, to develop new product niches that are yet to be explored by its rivals. Potential new niches include health-focused products and products for people with specific nutritional requirements. In the 21st century, people have developed a heightened concern over the health implications of the products they consume (The Coca-Cola Company, 2018). Once implemented, a health-sensitive production line will help the company transform its image regarding its limited concern about the health of its customers. Lastly, the company has the opportunity to develop positive campaigns by incorporating themes that support environmental and societal developments. Spreading a positive vibe will help the company achieve more loyalty and praise from the customers and the general society.
* Threats
The success and prosperity of the firm are mainly attributed to its strong customer loyalty. However, the tastes and preferences of consumers change over time. Unless the company keeps track of the slightest indicators of consumer taste changes, there are higher chances of a mismatch between production and demand. For example, a sudden drop in the demand for Coca Cola products can result in surplus inventory and eventually their prices fall (Banutu-Gomez, 2012). Also, the wide and intense marketing and distribution networks of Coca Cola might eventually turn out to be expensive and difficult to sustain. Such a phenomenon poses a great threat to the competitiveness of the company relative to its current and potential rivals in the industry.
6 Porter’s Five Force Analysis
In the Five Force Analysis, Michael Porter explains industrial competition based on an economic structure consisting of five core competitive factors. They include competition amongst existing firms, new entrants to the industry, the threat of substitute products, the bargaining power of customers, and the bargaining power of suppliers.
* Competition from rival companies in the industry
The global beverage industry is highly competitive. The main rivals, especially in the non-alcoholic category, are Coca Cola and Pepsi Cola. They have the largest share in the global soft drinks market. Therefore, the cost of switching between the two companies is minimal. Other competitors include RC Cola and Dr. Pepper.
* Threat from potential new entrants
The likelihood of having new and emerging firms in the beverage industry is minimal. A well-established company such as Coca Cola experiences the minimal threat of new entrants. The brand already dominates the beverage industry, thus setting a high bar for both new and emerging firms (The Coca-Cola Company, 2018). Besides, the company has already made different distribution deals and special licensing deals with potential new entrants, including fast-food chains such as Mc Donald's and KFC.
* The threat of competition from substitute products
Coca Cola products experience a moderate threat of competition from substitute items in the global market. The main substitutes are fruit juices and caffeinated beverage products including Nescafe and Lipton Iced Tea. The number and variety of potential substitutes are huge. Also, customers can easily switch between its products and their substitutes since the switching cost is minimal. Most of the substitutes are high-quality products that intensify the threat of substitution against Coca Cola branded items.
* The bargaining power of suppliers
Ethical considerations form the basis of most of company's strategic decisions. The company applies similar considerations when selecting and recruiting their suppliers. It is an important measure to ensure that all suppliers and bottling partners conform to law standards and other requirements. The company has a set of Supplier Guiding Princip...