COCA COLA COMPANY (COKE)

EXTERNAL FACTOR EVALUATION MATRIX: EFE

1.
2.
3.
4.
5.

6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.

20.

Key External factors

Opportunities
Growing market for sports drinks
Sales of Pepsi.co declined domestically
Bottled tea is fastest growing drink in
industry
China is huge coke customer
Coke should also acquire confectionary
business to compete with Cadbury
Schweppes
Bottled water consumption has
increased
Coke should introduce complementary
health conscious food with drinks
Advertisement of unpopular products
Increase global expansion like
competitors.
Sponsor fitness programs
Threats
Rising cost of raw material
Limitation of water in some countries
Ban of selling soft drinks in some
countries
Higher revenues of competitors from
snack division and soft drink business
Huge no of substitutes
Competitors are more focusing on
energy drinks
Low value of dollar
Pepsi co is doing well in fitness market
Federal regulation may prohibit Coke
and Pepsi co for bidding up Cadbury
carbonated soft drinks.
Warning label against coke ingredients
Total

Weights

Rating

Weighted score

.08
.05
.06

3
4
3

.24
.2
.18

.07
.03

4
2

.28
.06

.06

.24

.09

.36

.01
.07

2
3

.02
.21

.03

.06

.04
.08
.07

3
3
4

.12
.24
.28

.07

.28

.03
.02

3
4

.09
.08

.02
.04
.04

3
3
2

.06
.12
.08

.04
1

.08
3.28

INTERPRETATION:
The weights in EFE matrix show us the how important is the external factor for the firm in term
of threat and opportunity. Rating 1-4 to each factor indicate whether the factor represents a major
weakness (rating=1),minor weakness (rating=2),minor strength (rating=3),major strength
(rating=4).The highest weight .09 is given opportunity to introduce complementary health
conscious food with their drinks as trend towards healthy eating is increased globally; rate 4 is
given to it as being superior opportunity and .08 is assigned to expanding product line into sports
products for athletes as also they are sponsor of many sports events like Fila world cup. Also .08
for limitation of water in some countries as water is used as a main substance in soft drinks with
rate 3.Sales of Pepsi declined domestically so Coke can work on its availability locally to earn
more profit it is rated 4 in terms of good opportunity. Bottled tea is fantastic opportunity in the
industry so to increase the revenue they have to grab the opportunity. Rate 3 is given to it. China
is a huge Coke customer with weight of .07 Coke has to introduce more products over there as
they have strong brand image with rate 4.In order to compete with Cadbury they should adopt
confectionary business also, to remain competitive and invest in diversified market. Bottled
water consumption has increased so coke has to add up different water flavors in their product
line. Also make ads for their unpopular products so that customers are aware of them and
purchase them. Increase global expansion in terms of all products to generate more revenues like
Pepsi Co.Sponser fitness programs to make their brand image strong as health conscious drink
and promote their diet Coke. Some of the major threats to Coke are ban of selling soft drinks in
some countries due to obesity issues. Competitors are earning major revenues from the snack
division e.g. Frito-lays so Coke have to introduce its snack division to counter this threat.
Competitors are more focusing on energy drinks in product line on customer choice for
minimizing the threat Coke also has to add up energy drinks in product line. The above threats
are given rating 4.Other threats are rising cost of raw material with .04 weight which can cut
demand by increased prices. Huge no of substitutes in local and foreign markets are threat for
cokes profit level with weight .03 and rate 3.Low value of dollar results in lower gains has
weight of .02 and rate 3.Weight .04 and rate 3 is given to Pepsi Co is doing well in fitness market
which can hurt cokes profit. Federal regulation may prohibit Pepsi Co and Coke for bidding up

Cadburys carbonated soft drinks so they cant acquire it with weight .04 and rate 2.Weight of .04
and rate is assigned to warning label against Coke ingredients hurt its sales. The weighted score
(weights multiply by ratings) of 3.28 shows that Coke is taking advantage of opportunities and
good in minimizing the threats facing the firm.

INTERNAL FACTOR EVALUATION MATRIX: IFE

Key Internal Factors
Strengths
1.
Innovative packaging
2.
Collaborating with customers
3.
Market Leader
4.
Strong leadership team
5.
Dealing in powerful brands
6.
Earn more than 1.5 billion as coke
distributed through restaurants, groceries
and street vendors.
7.
A strong social image by sponsoring
many programs for youth.
8.
Digital marketing platform
9.
Operation
10. Reward system
Weaknesses
11.. Trend towards healthy eating and
drinking
12. Not all soft drinks are available in all
operating groups
13. Low sales in Japan
14. Product line is limited to brewages
15. Market positioning as a city based brand
16. Affordability of coke in some areas
17. Net income less as compared to
competitors
18. Operating revenues declined in Africa
division.
19. Less no of employees
20. Price less of competitors in some areas
Total

INTERPRETATION:

Weights

Rating

Weighted scores

.01
.07
.09
.08
.04
.05

3
4
4
3
4
4

.03
.28
.36
.24
.16
.2

.06

.18

.03
.07
.03

3
3
4

.09
.21
.12

.08

.08

.07

.14

.02
.07
.05
.06
.04

2
1
2
2
1

.04
.07
.1
.12
.04

.02

.02

.03
.03
1

2
2

.06
.06
2.6

Weights in IFE matrix describe relative importance of factors to the success of firm. Rating
assign to each external factor indicate how effectively firms current strategies respond to the
factor, where 4=superior response,3=above average response,2=average response and 1=poor
response. Here highest weight of .09 is given to the strength of Coke as a market leader being a
transnational company it has the highest market share in the beverages industry. Weight of .08 is
given to the trend towards healthy eating which can damage the Coke revenues as a carbonated
drink contains lots of sugar and chemicals. Also .08 is given to strong leadership team because
running a successful company is impossible without team work. Major strengths of the company
are rated as 4. Coke Company has the following major strengths like innovative packaging then
competitors, collaborating with customers for repeated purchases, market leader as having
highest market share, dealing in powerful brands for diversification, earning more than 1.5
billion revenue from selling through restaurants, street vendors and groceries and reward system
for employee morale. Other minor strengths are with 3 ratings. A strong social image by
sponsoring many events like coke studio, fifa world cup etc, digital marketing platform to
connect with customers and know more about them and effective companys operations that
results in increase revenue. Some of the weaknesses of Coke Company are not all soft drinks
products/ flavors are available in all operating groups results in less revenue. Low sales in Japan
due less demand. Product line includes beverages only while Pepsi and Cadbury and their
competitors deal in diverse products. Market positioning of Coke as city based brand, not focus
on rural areas in their ads. Affordability of coke in some areas makes it less desirable in those
areas.Net income is less compared to competitors means less cash flow for growth, Operating
revenue declined in Africa leads to less profit from that areas, less no of employees so company
needs to design compensation plans to motivate employees, Competitors less price to some
products in less developed area results in demand cut of coke in that areas. The weightage score
of IFE is 2.6 which is above 2.5 (average) that means that firm has strong internal position but
still there is room for improvement as the optimum score is 4.Firm has to introduce more healthy
products in soft drinks and snacks also make it more available internationally to improve their
weightage score of firms internal factors.