Coca cola opportunities and threats

Coca-Cola Strategic Analysis Implementation

STR/581

Coca-Cola Strategic Analysis Implementation

1

Executive Summary

Largest Beverage Provider

Almost $2 Billion in sales

Presence in 200 countries

Mission, Vision, and Value Statements

Environmental Scan

Internal and External

SWOT Analysis

The Coca-Cola Company is an almost $2 Billion company that is arguable the world’s largest beverage provider. With presence in over 200 countries Coca-Cola has grown to become a household name since its start in Atlanta, Georgia in 1886. Coca-Cola’s mission “To refresh the world...To inspire moments of optimism and happiness...To create value and make a difference” is achieved in conjunction with its vision that is surrounding six “Ps”. People, Portfolio, Partners, Planet, Profit, and Productivity all working together to be a great place to work, offer drinks consumers want while being conscious of the world and Coca-Cola stakeholders.

In order to be a continually successful company, Coca-Cola understands the need for environmental analysis to include internal and external forces driving the business. Social factors such as the fact that consumers are becoming more health conscious and economic factors such as inflation, recession and unemployment rate should be considered in the environmental scan. The industry environment should also be considered which includes demographics, competitors, and consumer preferences. Internal and external environments can be evaluated with the help of a SWOT analysis.

The SWOT analysis for The Coca-Cola Company reveals that the major strength of the firm is the brand name and the recognizable aspects of it. A weakness as well as an opportunity is the increased awareness of healthy options even with beverages. Another opportunity is that of additional flavors. A threat, as with all companies, is Coca-Cola’s competitors. Keeping ahead of competitors in terms of technology, flavors, and overall customer service will help alleviate the threat of competing firms.

2

Executive Summary Continued

Generic, Grand, Global Strategies

Value Disciplines

Implementation Plan

Risk Management Plan

Generic, grand, and global strategies are recommended in addition to value disciplines. Focus strategies of both cost leadership and differentiation are recommended along with market growth. Each of the three value disciplines of operational excellence, product leadership, and customer intimacy are recommended as there are benefits for each in different areas of the Coca-Cola business. These strategies will support the implementation plan that begins with building upon the already successfully developed business structure of Coca-Cola, and continuing a successful path for the growth of the business.

The same strategies will be applied for organizational change management. Both long term and short term goals will be addressed and a risk management plan put in place. The risk management plan will identify and prioritize risks that include new government regulations and potential major changes to the operations. The Coca-Cola Company will look at expanding its product line globally creating a wider consumer market and consider offering new products in other segments of the market. Patent infringement and poor product performance will also be addressed in the risk management plan.

3

Company Background

Coca-Cola Start

Dr. John S. Pemberton

1886

Atlanta, Georgia

Sold at Jacob’s Pharmacy

Coca-Cola Name

Frank M. Robinson

Advertising

In 1886, Dr. John S. Pemberton, a pharmacist from Atlanta, Georgia created a flavored syrup and took it to his neighborhood pharmacy where it was mixed with a carbonated water. The beverage that came from this mixture was called refreshing and delicious by those who tasted it. Dr. Pemberton’s bookkeeper, Frank M. Robinson, suggested the name Coca-Cola because the two letter “C”s would look well in advertising and the Coca-Cola brand was born. Mr. Robinson was also the man who penned the well-known Coca-Cola script still used today (The Coca-Cola Company, 2012). Coca-Cola was sold for just five cents per glass and averaged only nine servings per day.

4

Company Background Continued

1888

Portions of Company sold

Distribution beyond Atlanta

1894

Moved Beyond Soda Fountains

1899

Purchase of bottling rights

1977

Bottle trademarked

In 1888, Dr. Pemberton sold portions of his business with the majority going to Asa Candler, an aTlanta businessman. Candler began distributing Coca-Cola beyond Atlanta. Coca-Cola was originally sold only in soda fountains and in in 1894, Joseph Biedenharm installed a bottling company in the back of his soda fountain making Coca-Cola “portable”. Fiver years later the bottling rights were purchased from Candler by three businessmen for just $1. It wasn’t until 1977 that the unique Coca-Cola bottle was trademarked ("Coca-Cola Journey", 2017).

5

Current Company Status

World’s largest beverage company

500 brands

3900 beverage choices

1.9 Billion servings daily

Over 200 countries

The Coca-Cola Company is now the world’s largest beverage company with more than 500 brands and almost 3,900 beverage choices. More than 1.9 billion servings of Coca-Cola’s beverages are consumed in over 200 countries each day. According to “Coca-Cola Journey” (2017), “each Coca-Cola product undergoes nearly 450 different tests to ensure that the ingredient and packaging quality meets Company standards (About Us: Coca-Cola Beverages and Products).

6

Mission Statement

Our mission is:

To refresh the world in mind, body and spirit

To inspire moments of optimism and happiness through our brands and actions

To create value and make a difference.

7

Vision Statement

People: Inspiring each other to be the best we can be by providing a great place to work

Portfolio: Offering the world a portfolio of drinks brands that anticipate and satisfy people's desires and needs

Partners: Nurturing a winning network of partners and building mutual loyalty

Planet: Being a responsible global citizen that makes a difference by helping to build and support sustainable communities

Profit: Maximizing long-term return to shareholders, while being mindful of our overall responsibilities

Productivity: Being a highly effective, lean and fast-moving organization.

Coca-Cola’s mission and vision work in cohesion, they both support each other. Both mission and vision addresses customer market; “to inspire moments of optimism and happiness and in its 4vision it’s to; bring the world a portfolio of quality beverage brands that anticipate and satisfy peoples desires and need” (coca -cola.com).

8

Value Statement

Leadership: The courage to shape a better future

Collaboration: Leverage collective genius

Integrity: Be real

Accountability: If it is to be, it's up to me

Passion: Committed in heart and mind

Diversity: As inclusive as our brands

Quality: What we do, we do well

9

Environmental Scan

Monitoring of external and internal environments

Remote environment

Social factors

Economic factors

Industry environment

Demographics

Competitors

Consumers preference

One thing to look at when doing an environment scan is the remote environment. Remote environment as described by Business Dictionary (2016) is the “ecological, political, social, and technical factors or forces that affect a firm’s decision-making abilities and freedom, but are beyond its control or influence.” One such social factor is the fact that consumers are becoming more health conscious.

A second important aspect is the economic factor. Economic factors such as inflation, recession and unemployment rate can impact Coca Cola negatively or positively depending on how low or high the numbers are.

10

Internal Environment

Firm’s Resources

Employees

Management

Corporate Culture

Vision

People, Portfolio, Partners, Planet, Profit, Productivity

Values

Leadership, Collaboration, Integrity, Accountability, Passion, Diversity, Quality

The Coca-Cola Company’s internal environment includes the firm’s resources such as employees, management, and corporate culture including its vision and values. The company’s vision which concentrates on people, portfolio, partners, planet, profit, and productivity guides all aspects of the employees at The Coca-Cola Company. The company’s values which include leadership, collaboration, integrity, accountability, passion, diversity, and quality will allow Coca-Cola to grow in the future. Coca-Cola’s leadership value is based on the courage to shape a better future and the company has recently changed leadership with the intention of continuing down this path.

11

External Environment

Key insight into outside factors that influence a business’s operations.

Organization needs to act/react to these changes to continue flow of operations.

Information gathered can be utilized for enhanced operation strategies.

External environment consists of two main types of environments

Micro Environment

Macro Environment

Conducting an evaluation of The Coca-Cola Company's external operating environment gives valuable insight into the outside factors that can influence the organizations operations. The organization itself will need to be able to adapt to these changes in order to continue the flow of its operations. The information and data collected can be utilized through additional analysis and tools for enhancing operations strategies of the organization. The external environment can be classified into two types of environments: a micro environment and a macro environment.

12

Micro and Macro Environment

Micro Environment: specific factors that affect the activities of the organization and are directly closer to the operations.

Market structure

Consumers

Competition

suppliers

Macro Environment: general outside factors that affect the organization; has no control over.

Global

Technological

Social culture

Economy

Government/ political

As mentioned in the previous slide, the external environment can be classified into two types. the micro environment which focuses on specific factors that affect the activities of The Coca-Cola Company's operations and generally directly influence the operating process. These factors include the market structure, the consumers or customers who purchase Coca-Cola products, the competition from other major companies in the industry, and suppliers who provide the raw materials.

The macro environment focuses on the general outside factors that a can affect the organization and has no control over. These can be global factors, technological advancement especially with research and development, the social culture and attitudes towards soda products, the economy of the country such as GDP as well as the economical and political stability, and government rules and regulation policies for consumer products.

13

S.W.O.T

Strengths

The brand

Global presence

Loyal customers

Weaknesses

Water management

Healthy options

Branching out

Coca-Cola brand posses the largest portfolio of product in the beverages industry. By already having a strong brand Coca-Cola is able to introduce a number of new product flavors like Vanilla Coke and Limon Coke. Its unique product along with its global population has allowed for the brand to be found in over 200 countries across the world and worth about 79.2 billion dollars. It is important with having such a large brand that the distribution network is where it needs to be to allow the cut of cost along with the mass production needed to produce the quality of product that the loyal consumers are used to. A part of Coca-Cola’s weakness is its lack of healthy options. For a company to produce so many different products and team with so many other companies, it still lacks availability of a healthy options for those looking to have a healthier lifestyle. Unlike its competitor, Pepsi, Coca-Cola has yet to branch out beyond beverages. Pepsi has teamed with Lays to increase their revenue and Coca-Cola could do the same (Bhasin, 2017).

14

S.W.O.T

Opportunities

Expansion

Diversification

Developing nations

Threats

Competitors

Healthier Options

There are a number of opportunities available for the company. To start, because of the points mentioned in the strengths Coca-Cola has the opportunity to become more innovated with products offered. This would included adding more favor options and teaming with other company’s and brands to expand on the different product types offered. There is also an opportunity in introducing carbonated drinks to developing countries especially those who may suffer from hotter summers and may not be as familiar with the products (Bhasin, 2017). Some threats that the company can face is there are a number of different direct and indirect competitors. There are different beverage companies who are offering another alternative to healthy drinking that can maybe one day become a problem for Coca-Cola. Another threat is the lack of a healthy options. Carbonated drinks are not the best option for a healthy beverage and with Obesity at an all time high, people are being to try to develop a healthier lifestyle and right now Coca-Cola does not give them many options to do that.

15

Strategic Recommendation

Generic Strategy: Focus

Grand Strategy: Market Growth

Global Strategy

Value Disciplines:

Operational Excellence

Product Leadership

Customer Intimacy

After reviewing the strategic recommendations of each team member, it is decided that a combination of the generic focus strategy, the grand strategy market growth, global strategy, and all three value disciplines operational excellence, product leadership, and customer intimacy will be utilized.

16

Generic Strategy: Focus

Cost Strategy

Differentiation Strategy

The focus strategy incorporates both cost and differentiation strategies cohesively to produce a focus strategy that can more accurately strategize our market and achieve our business goals. The focus strategy will allow Coca-Cola to provide products at acceptable costs while remaining differentiated from the rest of the beverage market.

17

Grand Strategy: Market Growth

The grand strategy market growth will add customers in channels where Coca-Cola is already located. Coca-Cola will need to focus on each factor to accommodate the niche of each of its regions throughout the world to accomplish the market growth goals.

18

Global Strategy

The global strategy is recommended simply because Coca-Cola is a global company and there needs to be a strategy to accommodate our current global markets. The strategy will be beneficial to include new means of acquiring more countries around the world for business with the goal of acquiring every country in the world.

19

Implementation Plan: Objectives

The objectives of the strategic plan are to build upon the already successfully developed business structure for Coca-Cola, and continue a successful path for the growth of the business. The strategic plan will allow Coca-Cola to create goals and more value for the business and its brands.

20

Functional Tactics:

Separate each strategy recommended, develop them

Analyze cost and differentiation of current markets

Analyze current markets and regions for growth opportunities

Finding new global markets to move into

Coca-Cola will separate each strategy recommended and develop upon them immediately. In the generic strategy Coca-Cola will analyze cost and differentiation of their current markets and provide feedback of the current conditions. In the grand strategy Coca-Cola will analyze the current markets and regions for necessary changes or innovations that may be necessary for growth. The global strategy will focus on supporting our current global markets while finding new global markets to move into.

21

Action Items:

Investment in technology and more efficient logistics

Find lower priced ingredients for the manufacturing process

Action on current markets with advertising and innovation

The current action items for Coca-Cola are the investment in technology and more efficient logistics to support the analysis of costs for the focus strategy. Cost leadership will require Coca-Cola to find lower priced ingredients for the manufacturing process or purchasing the ingredients in larger bulk for a lower price. The grand strategy will require immediate action upon the current markets with advertising and innovation for domination and growth.

22

Milestones & Deadlines

Monthly Progress Reports

Quarterly Review and Reevaluation

Milestones will include monthly progress reports for each strategy, the successful execution of action items, and the overall success of each strategic plan and its goals for the company. The deadline for the strategic plan’s full implementation will be 2 years after the start date. The strategic plan will be reevaluated and adjusted each quarter as necessary.

23

Tasks & Task Ownership

Tasks will be given by the CEO to each of the team members as necessary. Each team member will be placed on one of the strategic plans exclusively with another member and expected to work cohesively to carry out the plan. All team members will collaborate each quarter and aid each other as necessary on all plans.

24

Resource Allocation

Coca-Cola currently has multiple resources that will allow the successful implementation of the strategic plan. All team members are able to allocate resources as necessary to their strategy. Each quarter the team will approve the initial plans of resource allocation and be available for collaboration if necessary to reevaluate.

25

Organizational Change Management Strategies

Utilizing a combination of strategies to enhance organization change management.

Generic Strategy.

Cost Leadership strategy.

Value Discipline.

Operational Excellence.

The organizational change management strategies to be applied for The Coca-Cola company are a combination of generic, grand, and international strategies as well as value disciplines. Generic strategies in the cost leadership strategy will provide The Coca-Cola company with product positioning through strategic pricing methods as compared to key competitors in the industry by reducing production costs as well as producing products on a large scale to minimize operating costs. Value discipline in operational excellence focuses on cost, efficiency, and product volume will tie into the cost leadership strategy by streamlining the process and standardization of products for overall cost reduction.

26

Organizational Change Management Strategies

Grand Strategy.

Growth strategies.

Expansion of operations and product development.

Horizontal integration by acquisition growth.

International Strategy.

Globalization.

Company reinvestment.

Grand strategies are aimed in achieving the long term goals and objectives of The Coca-Cola Company and will focus on growth. Growth strategies can be applied that focus on expansion of operations, product development by modifying existing products that can be remarketed to consumers as well as introducing new products to consumers to earn premium margins for new products and horizontal integration by acquisition growth of similar companies. . The International strategy will be focused on globalization. Since The Coca-Cola Company has already established recognizable logos and trademarks as well as the foundation of the company operating in soda production, The Coca-Cola Company can maximize on efficiency along with continued investment in the company as a global strategy.

27

Risk Management Plan

Identify and address risks to carry out implementation plan.

Identify and prioritize risks and establish measurement for minimizing risks.

A continuous process to monitor risks.

Identifying and addressing risks are necessary in being able to carry out the implementation plan. There are different risks that that are presented that must be addressed early on to minimize its impact and any complications that can arise further along the process and the risk management plan should be considered a continuous process in monitoring identified risks and external factors that can also impact the company negatively.

28

Risk Management Plan

New regulations posed by government bodies that restrict marketing and production or require additional regulations for soda production.

Food and Drug Administration, European Food Safety Authority etc.

Adaptable to major changes to meet compliance.

Economic Downturn.

Pose a threat to operations and sales of company.

Procedures set in place for economic shifts.

Reducing resources, reroute product volume, reevaluate budget criteria.

Some of the risks identified are new regulations by government bodies that restrict marketing and production or require additional regulations for soda production. Government body regulations such as through the Food and Drug Administration and European Food Safety Authority may introduce new laws or amend acts that can impact the company and major changes will require adaption in order to be in compliance with the law.

Economic downturns can also pose a threat to the operations and sales of The Coca-Cola Company. Certain procedures will need to be set in place when these economic shifts take place to sustain its business. these procedures can include reducing resources or raw materials, rerouting product volume and reevaluating budget criteria needs.

29

Risk Management Plan

Oversaturation of local market.

Numerous competitors offering the same product.

Consider offering new products in other segments of the market.

Look into countries with wider consumer market.

Patent infringement concerns.

Branding awareness concerns.

New or enhanced product ideas.

Poor product performance.

Product image and taste

Understanding consumer responsiveness to soda products.

Oversaturation of the local market is another risk when there are numerous competitors offering the same product. The Coca-Cola Company will need o consider offering new products in other segments of the market, capitalizing on brand awareness and consider operating and increasing sales in countries that have a wider consumer market. Patent infringement concerns are another risk in terms of new or enhanced product ideas that may have been patented by others as well as branding concerns. Poor product performance is the last identified risk which can be influenced through product image and tastes to consumers. It is necessary to understand consumer responsiveness to soda products which can vary from country to country and ad in determining well a product will perform on the market.

30

Conclusion

Understanding internal and external factors

SWOT Analysis

Strategic Recommendation

Implementation Plan

Risk Management Plan

In conclusion, Coca-Cola is a company that has been around for a long time. Its mission, vision and value statement gives its consumers an understanding of where and what they stand for as a company. Assessing the company’s internal and external environment helps to provide major insight on information needed to help further the company’s operations. This information can also help the company make the necessary changes to help improve on sales and company/ customer relationship. An evaluation on the company’s current competitive position showed different opportunities available to further the company’s competitive advantage as well as to maintain it. Conducting a SWOT analysis gives the company a focal point on different areas to help increase productivity. Strategic recommendations can help Coca-Cola evaluate what is working and what is not and implement any changes accordingly. Coca-Cola’s implementation plans will allow all employees to be on the same page as well as give employees a clear understand of their role within the company. The implementation plans must be realistic, achievable and measurable and a risk management plan should be in place in case anything from the plan needs to be changed or removed.

31

References

Bhasin, H.SWOT of Coca Cola. (2017). Retrieved from http://www.marketing91.com/swot-coca-cola/

Coca-Cola Company. (2016). Retrieved from http:// www.coca-colacompany.com/our-company/leadership

Coca-Cola Company. (2017). Mission, Vison and Value. Retrieved from http://www.coca-colacompany.com/our-company/mission-vision-values

The Coca-Cola Company. (2016). Coca-Cola Journey. Retrieved from http://www.coca-colacompany.com/press-center/press-releases/the-coca-cola-company-announces-senior-leadership-succession-plan