Swot analysis of coca cola 2016

SWOT ANALYSIS 1

SWOT ANALYSIS 6

The Coca-Cola Company SWOT Analysis

Derrick Underwood

Waldorf University

Company Background

The Coca-Cola fizzy drink giant is an American multinational Company that first opened its door for trade in 1886. The Company was founded by Asa Candler and currently has its headquarters in Atlanta, Georgia (Form 10-K, 2016). Coca-Cola Inc. trades its shares at the NYSE and has an extensive portfolio of soft drinks and beverages. The business has over 250 franchises selling its brand in regions as far as Asia, Middle East, Africa, Europe, and the North and South America (Form 10-K, 2016). The subsequent section of the paper will perform a critical examination of the Coca-Cola Company SWOT strategy.

Strength

Some of the significant strength of the Coca-Cola business in the market is that it has a strong brand awareness and reputation. The Coca-Cola Company is a global market leader in the production of fizzy drinks and beverages (Form 10-K, 2016). The firm offer over four hundred different portfolios of beverages and bottled water rendering it as the biggest brand in the global market. Coca-Cola controls over 45% of the entire market share for drinks and beverages in the world. Furthermore, its brand value continues to grow and currently is estimated to worth over $80.3 billion (Form 10-K, 2016). Another strength of the Company is that it enjoys the advantages of its brand loyalty following the reputation it has created with its markets (Jurevicius, 2017). Coca Cola Inc. is widely regarded as a reliable and an honest brand when it comes to providing quality and nutritious beverages (Form 10-K, 2016). Also, Coca-Cola has an extensive, robust, and vibrant distribution networks in its mainstream and global market. Also, the firm has over 61,800 human capitals on standby to assist with all its innovative production and distribution needs in the market. Another advantage of Coca Cola Inc. is that it deploys vertical strategies to build on the efficiency of its output processes (Jurevicius, 2017).

Weaknesses

The frail attributes of Coca-Cola Company that can render it vulnerable to competition comprised of the global health perception regarding its carbonated drinks. The Company has fallen short of the need to meet the dynamic needs of its market by using a single product strategy of targeting the vast market (Form 10-K, 2016). It means that there are little healthy beverage alternatives produced by the Company to respond to health problems relating to its carbonated drinks (Jurevicius, 2017). Again, Coca-Cola Company is doing little to diversify its portfolio. Such inabilities render it difficult for Coca-Cola to penetrate and tap other segments in the market, exposing it to competition to its challenges such as Pepsi and McDonalds who serve snacks alongside their beverages (Jurevicius, 2017). The Coca-Cola Company has also in the past continued to receive negative criticism from the public regarding its sustainability practices (Jurevicius, 2017). Coca-Cola has been accused of failing to manage its industrial water that has resulted in wrangles about water scarcity. Also, Coca-Cola was accused of disinfecting its industrial water using pesticides. Another shortcoming by the enterprise is that it continues to engage in acquisition strategies of enhancing its dominance in the market (Form 10-K, 2016). Such a strategy has seen it continue to borrow in the capital market risking its leverage/ gearing and probable litigations (Jurevicius, 2017). Also, there are other states that have been excluded from partaking in the Company’s distribution channel limiting its chance to capitalize on the underserved segments (Form 10-K, 2016).

Opportunities

Some of the opportunities Coca-Cola Company can deploy in revitalizing its weaknesses include tapping into the underserved segments of the market. For instance, Coca-Cola Company has the ability to open up its distribution channels in the excluded states, e.g., Indonesia and in the emerging markets in the Far East and in Africa. Also, Coca-Cola should diversify its services to the underserved niches, e.g., the US and Africa with its branded bottled water products and other cold products demanded during summer season (Jurevicius, 2017). Furthermore, the health and safety boards along with the consumers around the world are increasingly demanding for healthy alternatives from their market. As such, the Coca-Cola Company can use the opportunity to research the market and introduce these healthy beverage options in the industry and to its markets (Jurevicius, 2017). Also, it is important that Coca-Cola should sort for diversification strategy to compete in other segments of the market and gain from the lost opportunity costs owing to failure to diversify, e.g., include snacks and confectionaries alongside its beverage portfolios (Jurevicius, 2017). Furthermore, Coca-Cola Company should work towards developing a resilient supply chain and can seek strategies for improving revitalizing its supply chain to minimize the overall logistics cost involved in transporting its products. Coca-Cola can also seek to expand its portfolio of packaged bottled water as it is regarded as a healthy alternative in the market (Form 10-K, 2016).

Threats

The threats that Coca-Cola Company is likely to face and those that continue to crop up include a heightened level of competition from other global brands, e.g., PepsiCo. PepsiCo is increasingly gaining dominance in BRIC countries and could lay potential hurdles for Coca-Cola to expand in those regions (Jurevicius, 2017). Coca-Cola also faces indirect competition from other sectors such as the coffee producers who eat into its market share. Coca-Cola Company also continues to encounter a fall in its market share following the changing lifestyle against unhealthy carbonated and sugary beverages in the global markets (Form 10-K, 2016). Likewise, Coca Cola Inc. continues to endure the severe economic situations resulting in currency fluctuations among states, and most considerably among the developing nations (Form 10-K, 2016). Such fluctuations in dollar rate continue to affect the stability of the firms pricing strategies, along with accounting for revenue and cost for its franchises (Jurevicius, 2017). Again, Coca-Cola risks suffering expensive lawsuits following allegations of patent infringements in the beverage market and for the inability to adhere to global CSR policy demands (Jurevicius, 2017). From the Company’s report of 2016, it continues to suffer from the scarcity of raw material impacted by the changing climate. For example, Coca-Cola constantly faces the problem of water scarcity and rationing, along with inconsistencies in its industrial supplies (Form 10-K, 2016).

References

FORM 10-K. (2016, September 12). UNITED STATES SECURITIES AND EXCHANGE COMMISSION. Retrieved April 26, 2018, from https://www.sec.gov/Archives/edgar/data/21344/000104746911001506/a2202147z10-k.htm

Jurevicius, O. (2017, July 24). Coca-Cola Company SWOT analysis 2017. Retrieved April 26, 2018, from https://www.strategicmanagementinsight.com/swot-analyses/coca-cola-swot-analysis.html

Appendices

STRENGTHS

· High Company valuation.

· High brand equity.

· Large market share.

· Vast global presence.

· Unique marketing strategies.

· Large distribution networks.

· Customer loyalty.

WEAKNESSES

· Health issues.

· Low product diversification.

· Competition.

· Water management problems.

· High leverage/ Low gearing.

· Ineffective and unresponsive to dynamic markets.

· Underserved market segments

OPPORTUNITIES

· Capitalize on the developing nations.

· Diversification.

· Supply chain improvement.

· Packaged drinking water.

· Investing in healthy alternatives.

· High growth prospects.

· Pursue product differentiation.

· Endowed with resources.

· Divesture in Chinese bottling syrup manufacturing business.

· Newer manufacturing technologies.

· Infrastructural development in the emerging markets.

THREATS

· Direct and indirect competition.

· Buyer and Supplier power.

· Raw material sourcing.

· Fall in the market share for carbonated drinks.

· Currency fluctuations.

· Risk lawsuits over patent infringements.

· Soda Tax

· Rising terrorism threats and detest by the anti-American in some countries, e.g., Indonesia.

· Price wars.

· Water scarcity

· Growing cost of labour and raw material.

· Saturated market.

· Policy requirement for disclosure of negative information about consumer products.