Assignment Submission

Student Name Nickson Danquah

Student ID P1094871

Assessor Name SUJATA OMWENGA

Qualification Pearson BTEC Level 5 HND Diploma Business

(Management)

Unit Number & Unit Unit 32 BUSINESS STRATEGY

Title

Assignment Title Business Strategy

Date of Submission 20/05/2019

Signature: Nickson Danquah ………Date: 20/05/19___________________

 TABLE OF CONTENTS
TASK ONE……………………………………………………….4

 An Environmental Analysis conducted on your chosen organisation using

PESTLE………………………………………………………………………4

i. Overview of Coca-Cola……………………………………………………4

ii. Aims, Vision and Objectives of Coca-Cola company…………………...4

 Using PESTLE, critically analyse the impact and influence of the macro
environment, on your chosen organisation and its business strategies…
i. P- Political Factor…………………………………………………………..5
ii. E- Economic Factors……………………………………………………….5
iii. S-Social Factor………………………………………………………………5
iv. T-Technological Factor……………………………………………………...5
v. L-Legal Factor………………………………………………………………6
vi. E-Environmental Factors…………………………………………………..6
 Using SWOT, critically analyse the impact and influence of the macro
environment on Coca-Cola and its business strategies……………………6
i. STRENGTH ………………………………………………………………….9
ii. WEAKNESSES………………………………………………………………9
iii. OPPORTUNITIES………………………………………………………….9
iv. THREATS……………………………………………………………………10
 SWOT impact on Coca-Cola company and its strategies………………….10

TASK TWO………………………………………………………………….10

2.1. An analysis of strategic capabilities of your chosen organisation carried

out using the VRIO framework………………………………………………………..10

What is VRIO Framework?............................................................................................................11

i. Valuable (VRIO)
ii.Rare (VRIO)………………………………………………………………………11
iii. Inimitable (VRIO)……………………………………………………………….12
iv.Organization-wide supported (VRIO)…………………………………………12
 Strategic capabilities on Coca-Cola company………………………………….12
 Identify the key components of strategic Capabilities………………………….14
2.2A critical evaluation of the internal environment (internal capabilities, structure
and skills set) to assess strengths and weaknesses ………………… using the
McKinsey 7-S Framework…………………………………………………………………14
Explain the McKinsey’s 7S framework…………………………………………………..14
i. Strategy………………………………………………………………………15
ii. Shared Values………………………………………………………………..15
iii. Structure……………………………………………………………………….15
iv. Systems……………………………………………………………………….16
v. Skills……………………………………………………………………………16
vi. Staff…………………………………………………………………………….16
vii. Style…………………………………………………………………………16
TASK THREE…………………………………………………………………………..16
Applying Porter’s Five Forces model evaluate the competitive forces of a given
market sector
Porter’s Five Forces Model……………………………………………………16
 Threat of new entrant………………………………………………………17
 Bargaining power of suppliers……………………………………………17
 Bargaining Power of Buyers………………………………………………18
 Threats of Substitute Products or Services………………………………18
 Rivalry among the Existing Competitors…………………………………18

Appropriate strategies devised, using Ansoff matrix, to improve competitive

edge and market position based on the outcomes…………………………20

Explain the Ansoff Matrix…………………………………………………………20

i. Market penetration…………………………………………………………20
ii. Market development………………………………………………………20
iii. Product development………………………………………………………21
iv. Diversification………………………………………………………………21

TASK FOUR…………………………………………………………………………….24
4.1 Interpret and devise strategic planning applying Porter’s generic strategies (cost
and price leadership strategy, differentiation strategy, focus strategy) and the
extended model of Bowman’s strategy clock………………………………………24
4.2 Three growth strategies recommended based on the SWOT carried out in
Task 1.2…………………………………………………………………………………25
4.3 A Strategic Management Plan that has tangible and tactical strategic priorities
and objectives…………………………………………………………………………26

SMART OBJECTIVES………………………………………………………………….27

CONCLUSION………………………………………………………………………….28

REFERENCE……………………………………………………………………………29
Task 1 (This task provides evidence for P1 and M1)

D1It is a requirement to interpret and critique data and information by the application
of environmental and competitive analysis to produce a set of valid strategic
directions, objectives and tactical actions

By conducting an environmental analysis on my chosen organisation using PESTLE.

It is based on the fact that, every organisation can’t be in existence, without its
environmental influence. What constitutes these factors are the basic components
and the inevitable internal (being the strengths and weaknesses) and external
(showing the great opportunities to be gotten and the likely threats to be faced)
controls, which play a vital role in its performance.
By taking a careful look into this study, my chosen organization to be taken is Coca-
Cola Company Limited.
Overview of Coca-Cola
One of the world well-known and major brands in the drinks business is Coca- Cola;
which was established in 1886 in Atlanta, Georgia USA. This product has soared to
become a domestic drink in over 200 countries worldwide. The single largest
element in Coca-Cola Company is the Carbonated drinks which constitutes about
78% of the total capacity being sold in the year 2008.
It has about 500 products and over 3000 beverage products in its range which of
these includes Coca-Cola/Diet Coke family. The Coca-Cola enterprise (CCE)
widespread range of carbonates comprises of Fanta, Lilt, Sprite and PowerAde, plus
the Schweppes brand in the UK according to a vital report.

Aims, Vision and Objectives of Coca-Cola company.

Similar to the other global companies, the aim of Coca-Cola is to maximise their
profits while maintaining a long-term sustainable growth within the beverage
industry. As the mission statement of the company states, the company aims:
To put the main goal of the organization on the lookout, thereby directing the
business of the company in a one of its strategies well recognized from its rivals. The
Coca-Cola company applies different kind of packaging accomplices so as to
concentrate more on refreshment, marketing and advertising.
This is referred to as “The Coca-Cola system”. Here, the organization commences
by assembling the syrup, concentrates and drink bases at that point appropriate
them to their packaging accomplices while keeping responsibility for brands. The use
of marketing activities such as print and television advertising, retail store displays as
well as contests and package designs are some of the company’s elegance.

Let’s take a look at using PESTLE to critically analyse the impact and influence of
the macro environment, on my chosen organisation and its business strategies.
In relation to the fact that, every organisation can’t be in existence, without its
environment influence, these factors can be the basic components and the inevitable
internal (being the strengths and weaknesses) and external (showing the great
opportunities to be gotten and the likely threats to be faced) controls, which play a
vital role in its performance?
With a careful look into our study, my chosen organization to be taken is Coca-Cola
Company Limited.

The (PESTLE Analysis) environmental analysis to be discussed is a mechanism or a

structure put in place to aid marketers to carefully evaluate and examine their
external marketing environs; based on the macro- environmental components which
at the long run have a great impact on the organisation. Whereby all this information
gotten will surely help to recognize the organisations threats and weaknesses, which
ends up been used in SWOT analysis.
For example, Coca Cola Company will use this tool to monitor what is going on in the
marketing environment, as it is a manufacturing company. With this, information
concerning pricing, branding, competitive advantage, customer’s reaction to their
products to mention but a few would pop up. By so doing this will help them to build
upon their weaknesses and possible threat arising or that may arise.

P- Political Factor
The Political factor shows the level in the operations of the economy at which the
government can intervene. This is to say any settling, both in the short and long run,
been made by the government will either have positive or negative impact on the
organisation (Coca Cola company); which may include- both political stability/
instabilities concerning oversees trading, government policy, tax policy, labour law,
trade restrictions to mention but a few. By so doing, Coca cola is being affected both
in the UK and other countries outside.
E- Economic Factor
The Economic factor relates to how the operation of the organization is carried out
and its influence on the profitability of the business. Here, the disposable income of
consumers and business comes in, inflations, exchange rate, culture and the
economic growth of the country, to mention but a few. Having all these mechanisms
in place, the government uses the various interest rate controls, policies relating to
tax and their expenditure as their mainstream in regulating the economy.
S-Social Factor
The Social factors is also referred to as Socio-cultural factors. As its name implies, it
has a direct influence on the concern of different cultural and demographical factors
within the environment. Such as population change, the adjusting of those earning
disposable income to the various product and services must be produced in order to
maximize revenue from the organization (Coco Cola) working environment.
Considering the changes in taste of the soft drinks and the rate at which women are
entering the workforce (compared to the past and now) indicates that the domestic
tasks are reducing causing Coca Cola company to produce meals or products to suit
these gap created (examples are Georgina, Fanta, Minute Maid, Dasani, and Gold
Peak, to mention but a few.)
T-Technological Factor
The Technological Factor forms part of the rapid changing factors which are
influencing the various organizations worldwide. Take a look at a manufacturing
company like Coca Cola, the level of communication is a vital key both within and
with customers. Handling or doing it well increases their revenue and when poorly
done,it will be on the other end.
With the introduction of new technology, it will bring about alternative ways of doing
things faster, such as reducing operational cost, effective way of monitoring and
controlling both quality and quantity of goods produced (meeting standard of the
required beverages worldwide). It will also bring about the growth in e- commerce
which will allow Coca-Cola to sell globally without having to set up operations in the
countries that purchases their products. The whole transaction can be accomplished
through the use of the online platform.
L-Legal Factor
The Legal Factor is the regulation which are used nationally, metropolitans, districts,
to mention but a few. Example being, corporate governance regulations which
government have applied to organization, with the aim of wishing them to float their
various shares on the stock market or exchange. Moreover, regulated restrictions on
mergers and acquisitions, in other to prevent the increase of monopolies, and
through that, national and international powers of individual large firm, operate in
many developed and developing countries. These are the few examples to be
mentioned. For Coca-Cola, they have taken all the rights related to their operations
(concerning both products made in the past and future established with patented
process.)
E-Environmental Factors
The Environmental Factors has to do with the nature of the environment or
surroundings. In relation to the natural nature of this earth, it has finite resources
which in its own state are rapidly diminishing. Due to this, organizations are under a
lot of pressure from both consumers and governments to safeguard resources
including water, energy and other vital raw materials. With corporate policies in play,

organizations both small and large have specific commitment to effective usage to
resources and responsibility in their relation to the environment. which in its own
state are rapidly diminishing. With this, organizations are under a lot of pressure from
both consumers and governments to safeguard resources including water, energy
and other vital raw materials.

Using SWOT to critically analyse the impact and influence of the macro
environment on Coca-Cola and its business strategies.

Due to its simplicity and power in developing strategy, the SWOT analysis basis has
gained widespread acceptance. Similarly, to any planning tool, a SWOT analysis is
only as good as the information that constitutes it. To identify key issues in an
organization’s environment, Research and accurate data are most needed or vital.
The Macro environments have a huge impact on the success of Coca-Cola
company, and therefore the factors of these environments should be given much
consideration during and when deciding the kind of strategy to use in the business.
Given much consideration to these factors will improve the success of the
organisation and the reputation of the brand in the long term.
The different market segments are typically impacted by common demographic
forces which includes: country/region; ethnicity; age; household lifestyle; education
level; cultural characteristics and movements(smallbusiness.chron.com).
Furthermore, the economic environment can have a huge impact on the
organisation’s production when a proper strategy put in place.
Moreover, the knowledge and skills applied to the production, and the materials and
technology needed for production of products and services can also have a great
impact on the smooth running of the business hence therefore; must be given much
consideration.
The Comprehensive business strategies must also take into consideration the
political and legal developments in relation to the Coca-Cola company and its
markets as explained above.
Last but not the least, looking at a macro perspective, the impact of the products and
services the company brings to market and the society originates from its organised
strategy.
The elements of the production process or any products and services that are
harmful to society should be eliminated to proof that the company is taking on its
social responsibilities.
An example of this in recent times is the environment and the number of sectors
being forced to review their products and services in order to become more
environmentally friendly.

The SWOT acronym has been a household name which stands for Strength,
Weaknesses, Opportunities and Threats. It has a further segmentation where
Strength and Weaknesses stands for the internal factors within the organization. The
Opportunities and Threats stands for the external factors and serve as a major tool
of control because the company have less impact on it. The key principle is to notice
all the strategies which will help in establishing Coca-Cola’s precise business model
which will be the appropriate match for the organizations resources and capabilities
in order to meet the standards needed for the various environment the company
operates in.
THE GENERAL DIAGRAM FOR SWOT TOOL IS AS SHOWED BELOW
STRENGTH-
The Strength of the Coca-Cola’s serves as the virtues which vividly depicts the
means and the know how used in accomplishing the company’s mission. This
strength can either be tangible or intangible. The Tangible denotes what their
expertise are, with great beverage distribution channels, powerful marketing and
advertising of products and above all their well-versed corporate responsibilities in
the various environment they can be found across the globe. Due to this, most of
their product are widely accepted by their customers, bringing in much revenue to
mention but a few.

WEAKNESSES-
The Weaknesses factor plays a vital role in reducing or deteriorating the need for the
organization’s growth. It also serves as a factor preventing one from meeting its
organizational standards. With high debt based on the level of acquisition and
momentous aim set on carbonated drinks, Depreciation in machinery, poor decision
making, and narrow product range to mention but a few, are some of the
weaknesses the company battles with. All these, being put under control or even
taken out of the picture totally.

OPPORTUNITIES-The Opportunities come about or are gotten from the

environment in which the beverage company finds itself. They can be brought about
as the company is able to take advantage of the benefits of conditions in their
operating environment so as to establish well-structured plans and bring it to day
light for it to generate more revenue or profit for them. Owing to this fact, the arising
and grasping of the opportunities that comes up grants the beverage company a
competitive advantage over others in the same industry. Talk of the huge
consumption of bottled water, expansion through acquisition and a good increase in
the demand of health foods and beverage to mention but a few.

THREATS-The Threat factor is being recognized as a greater change in the external

environment which tempers with the reliabilities (or sustainability) and productivity of
the operations of the organization. It also serves as a guide to its running’s more
than it being a just a prescription. Taking a look at the changes in the consumer’s
preference, the scarcity of water for usage, competition for others in the same
industry, to mention but a few. Also, the success of the needs to build upon,
correcting all weaknesses, identifying and exploiting all arising opportunities and
putting protective measures in place to stand against threats
Threats in SWOT analysis also refers to the factors that are likely to cause harm to
an organization. For example, a drought is a threat to a wheat-producing company,
as it may destroy or reduce the crop yield. Rising costs of materials, increase in
competition, tight labour supplies and so on are other common threats examples.

SWOT impact on Coca-Cola company and its strategies.

The source of the SWOT analysis has increased extensive reception due to its
effortlessness and power in evolving plan. Like any planning tool, the SWOT
analysis is only as good as the data that constitutes it. Reliable and precise
information are vibrant in order to classify the key problems in the situation of an
organization.
The macro environments have a substantial impact on the achievement of Coca-
Cola company, therefore the features of these environments should be measured in-
depth during decision making on what strategy is to be applied in the business.
Taking these factors into consideration will help progress the success of the
organisation and the status of the brand in the long term.
Common diagnostic forces play a major role in impacting the changed market
sectors naturally, as well as country/region; age; ethnicity; education level;
household lifestyle; cultural features and activities (smallbusiness.chron.com).
Furthermore, the economic environment can have an influence on the organisation’s
production when a suitable strategy put in place.
Moreover, the awareness and experience applied to the production, coupled with the
technology and resources required for production of products and services can also
have a major impact on the smooth running of the business and must be well-
thought-out.
The wide-range of business strategies should continuously look at the political and
legal changes in relation to the Coca-Cola company and its markets as clarified
above.
Finally, from a macro perception, the effect of the products and the services the
company conveys to market and the community comes from its planned strategy.
Therefore, any basis of the production procedure or any products and services that
have damaging effect on the society should be eliminated to show social concern the
company is taking. A recent study of this reveals the environment and how many
sectors are being forced to analyse their products and services in order to become
more globally friendly.
Task 2 (This task provides evidence for P2 and M2)
D1You are required to critique and interpret information and data
applying environmental and competitive analysis to produce a set of
valid strategic directions, objectives and tactical actions

An analysis of strategic capabilities of my chosen organisation

carried out using the VRIO framework.

What is VRIO Framework?

The VRIO Framework is one of such business analysis framework tool used to
analyse the internal resources and capabilities of the firm. Jay B Barney started the
development of this framework tool in his work ‘Firm Resources and Sustained
Competitive Advantage’ in 1991. In his book, he pinpointed out four factors that can
make a firm’s resources gain a source of sustained competitive advantage. Originally
this framework was called VRIN. He made an improvement on the VRIN framework
in 1995 in this later work, ‘Looking Inside for Competitive Advantage and named it
VRIO.
VRIO is used as a framework to evaluate the capabilities and resources of the firms
like financial, human, material and non-material resources and capabilities;
irrespective of the business model,. Every letter or word in VRIO denotes the four
framework questions asked about a resource or capability in order to determine
its competitive potential.

Valuable (VRIO)
The first thing to consider in the framework is that, resources must be valuable. The
RBV states that, resources are valuable when they help a firm to implement
strategies that will improve a firm’s efficiency and effectiveness by exploiting
opportunities or by mitigating threats. Also; another way to assess whether a
resource or investment is valuable is by looking at its Net Present Value (NPV),
meaning that the costs invested in the resource should be lower than the expected
future cash flows discounted back in time. The focal firm is likely to have a
competitive disadvantage if none of the resources possessed by the firm are
considered valuable.
Rare (VRIO)
The second thing to look at in the framework is that resources must be rare. Rare
resources are resources that can only be acquired by one or few companies. If a
certain valuable resource is possessed by many players in the industry, each of the
players has a capability to exploit the resource in the same way, thereby
implementing a common strategy that gives none of the players a competitive
advantage. This situation is referred to as competitive parity or competitive equality.
Just in case a company possesses a large amount of resources which are valuable
and rare, that company is likely to have at least temporary competitive
advantage.
Inimitable (VRIO)
Since valuable and rare resources may help companies to engage in strategies that
other firms cannot pursue because the other firms lack the relevant resources, it is
no guarantee for long-term competitive advantage. This may give the focal company
a first-mover advantage, even though competitors will probably try to imitate these
resources. Resources should also be hard and costly to imitate or substitute. The
RBV states that, resources can be imperfectly imitable due to a combination of three
reasons:
The Unique historical conditions are choices made in the past which influences the
options a company has both in the present and future (path-dependency). Likewise,
a company that has located its facilities on what turns out to be a much more
valuable location than initially anticipated, has an imperfectly imitable physical
resource.
The Causal ambiguity exists when the link between the resources controlled by the
focal company and its sustainable competitive advantage is not fully understood.
Competitors won’t be able to duplicate the focal company, since they simply don’t
know which resources they should imitate.
Also the Social complexity is whereby if the most important resource of a company is
a combination of the strength of its social network, interpersonal relations, a
company’s culture and its reputation among both suppliers and customers, it is very
hard for competitors to build an identical social network since it is dependent on so
many different factors.
If a company’s resources are both valuable, rare and inimitable due to the reasons
mentioned above, then the focal company will have a high potential to gain a
competitive advantage that will be sustainable over time. However, there is one more
important criterion that needs to be present within the company.
Organization-wide supported (VRIO)
If the company is not organized in a way to adequately exploit these resources and
capture the value from them, the resources themselves do not create any advantage
for the company. There is a need for the focal company to assemble and coordinate
resources effectively.
Examples of these organizational components include a company’s formal reporting
structure, strategic planning and budgeting systems, management control systems
and compensation policies.
Even companies with valuable, rare and imperfectly imitable resources will not be
able to create a sustainable competitive advantage without the correct organization
to acquire, use and monitor the resources involved.
With the presence of all the four resource attributes, a company is safe to assume it
has a distinctive competence that can be used as source of sustainable competitive
advantage.
Strategic capabilities on Coca-Cola company
In simple terms, Strategic capability is defined as the capacity of a business to
survive, prosper and deliver future value. There are several distinct components
which includes: Clarity of thinking and action in objectives and strategy;
evidence of strategy in action and strategic progress in operational achievement;
sensitivity to the future and to the impact of controllable and uncontrollable trends
and factors upon future performance; investment in resources, strengths and less
tangible drivers of value; and, an approach to social ethical and environmental
matters that is integral to the strategy of the business.
These capabilities are very important to the Coca-Cola Company. Their presence
has enabled the creation of competitive advantage in favour of the organization.
There are several ways that the capabilities have contributed to competitive
advantage. Amongst them are:
The company’s capabilities have enabled the organization to get bigger since the
time of inception up to the current operations which has resulted to increased market
sales. The increase in market share brings about the increased sales.
Also, the aspect of increasing the market share brings about a competitive
advantage. Thus, when a company is big, economies of scale are realized (Hays,
2011). At this point, as the output increases there is a fall in average cost per unit.
The cost reduction comes with several benefits to the organization. One is that it
permits production of extra units with no extra costs.
Another aspect is that it allows reduction of prices being charged on the products.
The reduction results in increased demand hence an increase in sales revenue. Not
many organizations will be able to meet these prices thereby creating a competitive
advantage to the organization.
How the organization deals with its consumers is another importance of capability in
creating competitive advantage. Here, the industry experiences a high bargaining
power from the side of consumers.
However, this is an exemption to Coca-Cola Company. Over the years of operation,
the company has been able to gain consumer loyalty through its offering and
business strategy. This aspect has helped in eliminating price sensitivity. Once the
prices go a notch high, consumers will have the ability of switching to other brands
being offered by the competitors. Nevertheless, this has not lived to be the case. The
loyal consumers have preferred to remain with the products despite there being a
rise in price. Their taste and preference go beyond the prices being offered by
different companies out there. This situation has reduced the buying power of other
products significantly which acts as a competitive advantage to Coca-Cola.
Parity on its part comes in through Coca-Cola’s active involvement with the business
community. These include governments, local individuals and merchants. Their
involvement with these stakeholders is aimed at improving prosperity, favourable
environment and good economy. The company also has a responsible marketing
team that enhances child nutrition. This policy that has been set forward by the
relevant bodies.
The encouragement of schools and other developmental institutions necessary for
improving healthy lifestyles is another side to be looked at. On the other hand, Value
is created through the number of bottling plants that the company enjoys. There is no
any other competitor in the industry that has been able to come up with such an
operation (Petretti, 2011). This creates value to the company’s products, hence
attracting more consumers. It also acts as a form of brand recognition in the market.
Coca-Cola also enjoys the ability of having a secret formula that cannot be copied by
any other organization. This formula has been kept as a secret for a long time since
the inception of the company. There is an assertation that even the high-level
management team is not aware of the detailed contents of the formula. The formula
is responsible for the unique taste that is found from any other organization out
there. Several companies have tried to come up with a similar formula, but their
efforts have all along proved worthless. The Coca-Cola company has declined the
prospects of getting patents to the formula since it does not want to disclose it its
contents. This formula has been a huge resource to the company and has
contributed a lot in creation of a competitive advantage (Young & Witzel, 2012).

Identify the key components of strategic Capabilities.

Analyse strategic capabilities of your chosen organisation by using the VRIO

framework

2.2M2A critical evaluation of the internal environment (internal capabilities,

structure and skills set) to assess strengths and weaknesses …………………
using the McKinsey 7-S Framework

Explain the McKinsey’s 7S framework.

Mc Kinsey 7s model was developed in 1980s by McKinsey consultants Tom Peters,
Robert Waterman and Julien Philips with help from Richard Pascale and Anthony G.
Athos. Since the introduction, the model has been widely used by academics and
practitioners and remains one of the most popular strategic planning tools. It sought
to present an emphasis on human resources (Soft S), rather than the traditional
mass production tangibles of capital, infrastructure and equipment, as a key to
higher organizational performance.
The goal of the model was to show how 7 elements of the company: Structure,
Strategy, Skills, Staff, Style, Systems, and Shared values, can be aligned together to
achieve effectiveness in a company. The key point of the model is that all the seven
areas are interconnected and a change in one area requires change in the rest of a
firm for it to function effectively.
The McKinsey model below represents the connections between seven areas. The
shape of the model emphasizes interconnectedness of the elements.

Strategy is a plan a firm develops in order to achieve sustained competitive

advantage and to compete successfully in the market. In 7s McKinsey model, What
does a well-aligned strategy mean? Generally, a sound strategy is the one that is
clearly articulated, its long-term, helps to achieve competitive advantage and is
reinforced by strong vision, mission and values. But it is hard to tell if such strategy is
well-aligned with other elements, which actions they take and their symbolic value.
Also, it can be referred to as the management style of company’s leaders.

Shared Values are at the core of McKinsey 7s model. These are the foundation of
every organization. They are the norms and standards that guide employee
behaviour and company actions.
As earlier pointed out, the McKinsey 7s framework is often being used when
organizational design and effectiveness are at question. It is easier to understand the
model but becomes much harder to apply it for your organization due to a common
misunderstanding of what should a well-aligned element be like.
A useful paper from excellencegateway.org.uk provides examples showing how
effective and ineffective elements look like. Meanwhile, separate elements that are
effective on their own do not necessarily lead to optimal organizational alignment.

Structure is the organizational chart of the firm. It is also one of the most visible and
easy to change elements of the framework. It represents the way business divisions
and units are organized and includes the information of who is accountable to whom.

Systems are the area of the firm that determines how business is done and it should
be the focus for managers during organizational change. They are the processes
and procedures of the company, which reveal business’ daily activities and how
decisions are made.
Skills are the capabilities and competences, and the abilities that firm’s employees
perform very well. In an organizational change, the question often arises of what
skills the company will really need to reinforce in its new strategy or new structure.

Staff element is concerned with how many employees an organization will need,
what type and how they will be recruited, trained, motivated and rewarded.

Style is the way a company is being run or managed by top-level managers, how
they interact, what like to do that. If you find out that your firm’s structure and
management style are not aligned with company’s values, you should decide how to
reorganize the reporting relationships and which top managers should the company
let go or how to influence them to change their management style so the company
could work more effectively.

Conduct a critical Evaluation of the internal environment using The McKinsey

7-S Framework

Task 3 (This task provides evidence for P3 and M3)

D1You are required to critique and interpret information and data applying
environmental and competitive analysis to produce a set of valid strategic directions,
objectives and tactical actions

Applying Porter’s Five Forces model to evaluate the competitive forces of a

given market sector
Porter’s Five Forces Model
Porter’s Five Forces analysis refers to the framework that helps in analysing the level
of competition within a certain industry. It is very useful when starting a new business
or when entering a new industry sector. According to this framework,
competitiveness does not only come from competitors but rather, the state of
competition in an industry depends on these five basic forces: threat of new entrants,
bargaining power of suppliers, bargaining power of buyers, threat of substitute
products or services, and existing industry rivalry. The strength of these forces
collectively determines the profit potential of an industry and thus its attractiveness. If
the five forces are intense (e.g. airline industry), almost no company in the industry
earns attractive returns on investments. If the forces are mild however (e.g. soft drink
industry), there is room for higher return.

Threat of new entrants

The new entrants in an industry bring new capacity and the desire to gain market
share. The barriers to enter a certain industry determines the seriousness of the
threat. The higher these barriers to entry, the smaller the threat for existing players.
Examples of barriers to entry are the need for economies of scale, high customer
loyalty for existing brands, large capital requirements (e.g. large investments in
marketing or R&D), the need for cumulative experience, government policies, and
limited access to distribution channels.

Bargaining power of suppliers

It analyses how much power and control a company’s supplier (also known as the
market of inputs) has over the potential to raise its prices or to reduce the quality of
purchased goods or services, which in turn would lower an industry’s profitability
potential. The concentration of suppliers and the availability of substitute suppliers
are important factors in determining supplier power. The fewer the suppliers, the
more power they have. Businesses are in a better position when there are a
multitude of suppliers. The sources of supplier power also include the switching
costs of companies in the industry, the presence of available substitutes, the
strength of their distribution channels and the uniqueness or level of differentiation in
the product or service the supplier is delivering.

Bargaining power of buyers

The bargaining power of buyers is hereby described as the market of outputs. This
force analyses to what extent the customers can put the company under pressure,
which also affects the customer’s sensitivity to price changes.
Customers possess a lot of power when there aren’t many of them and also when
the customers have many alternatives to buy from. Moreover, it should be easy for
them to switch from one company to another. When customers purchase products
in small amounts and act independently, buying power is low. Likewise, when the
seller’s product is very different from any of its competitors.
Customers to become more informed due to the internet, and thereby becoming
more empowered. Customers can easily compare prices online, get information
about a wide variety of products and get access to offer from other companies
instantly. Companies can take measures to reduce buyer power by implementing
loyalty programs or by differentiating their products and services.
Threat of substitute products
The increase in the propensity of customers to switch to alternatives depends on the
existence of products outside of the realm of the common product boundaries. To
discover these alternatives, one should look beyond similar products that are
branded differently by competitors and instead consider every product that serves a
similar need for customers.
For instance, soft drink like Coca-Cola is usually not considered a competitor of
Pepsi Cola. However, since both soft drinks fulfil a similar need, customers might be
willing to switch from one to another if they feel that prices increase too much in
either Coca-Cola or Pepsi Cola. This will ultimately affect an industry’s profitability
and should therefore also be considered when evaluating the industry’s
attractiveness.

Rivalry among existing competitors

This last but not the least force of the Porter’s Five Forces examines how intense the
competition is currently in the marketplace, which is determined by the number of
existing competitors and what each competitor can do. The rivalry is high when the
industry is growing slowly; when there are a lot of competitors that are roughly equal
in size and power and when consumers can easily switch to a competitor offering for
little cost. The concentration ratio of an industry is a good indicator of how
competitive rivalry is. The lower this ration, the more intense rivalry will probably be.
With high Rivalry, competitors are likely to actively engage in advertising and price
wars, which can hurt a business’s bottom line. Also, there will be intense rivalry when
barriers to exit are high, forcing companies to remain in the industry even though
profit margins are declining. These barriers to exit can for example be long-term loan
agreements and high fixed costs.
Produce an industry analysis for Coca-Cola using Porter’s Five Forces model
The Coca-Cola Company is one of the leading firms in the Beverages - Soft Drinks
over the years. The Company has redefined the ways of doing business in
Consumer Goods.
The Coca-Cola Company is listed at New York Stock Exchange (NYSE) and have a
market cap 193.33B USD.
New entrants in Beverages - Soft Drinks brings innovation, new ways of doing
things thereby putting pressure on The Coca-Cola Company through lower pricing
strategy, reducing costs, and providing new value propositions to the customers. The
Coca-Cola Company has to manage all these challenges and build effective barriers
to safeguard its competitive edge.
With the innovation of new products and services, the new products not only bring
new customers to the fold but also give old customer a reason to buy The Coca-Cola
Company’s products.
By building economies of scale so that it can lower the fixed cost per unit and
building capacities and spending money on research and development, the
New entrants are less likely to enter a dynamic industry where the established
players such as The Coca-Cola Company keep defining the standards regularly. The
window of extraordinary profits for the new firms is reduced significantly which then
discourage new players in the industry.

Bargaining Power of Suppliers

Almost all the companies in the Beverages - Soft Drinks industry purchase their raw
material from numerous suppliers. The suppliers in dominant position can decrease
the margins Coca-Cola Company can earn in the market.
Powerful suppliers in Consumer Goods sector use their negotiating power to extract
higher prices from the firms in Beverages - Soft Drinks field. The overall impact of
higher supplier bargaining power is that it lowers the overall profitability of Beverages
- Soft Drinks.

Bargaining Power of Buyers

The buyers often demand a lot. They always want to buy the best offerings available
by paying the minimum price as possible, thereby putting pressure on The Coca-
Cola Company profitability in the long run. The smaller and more powerful the
customer base is of The Coca-Cola Company the higher the bargaining power of the
customers and higher their ability to seek increasing discounts and offers.
The Coca-Cola Company can tackle the Bargaining Power of Buyers by building a
large base of customers. This will be helpful in two ways; It will reduce the bargaining
power of the buyers plus it will provide an opportunity to the firm to streamline its
sales and production process.
With the rapid innovation of new products, the customers often seek discounts and
offerings on established products so if The Coca-Cola Company keep on coming up
with new products then it can limit the bargaining power of buyers.
New products also reduce the defection of existing customers of The Coca-Cola
Company to its competitors.

Threats of Substitute Products or Services

Industry profitability suffers when a new product or service meets a similar customer
needs in different ways. For example, services like Dropbox and Google Drive are
substitute to storage hardware drives. The threat of a substitute product or service is
high if it offers a value proposition that is uniquely different from present offerings of
the industry.
How can the Coca-Cola Company tackle the Threat of Substitute Products / Services?

By being service oriented rather than just product oriented.

By understanding the core need of the customer rather than what the customer is
buying.
By increasing the switching cost for the customers.

Rivalry among the Existing Competitors

If the rivalry among the existing players in an industry is intense then it will drive
down prices and decrease the overall profitability of the industry. The Coca-Cola
Company operates in a very competitive Beverages - Soft Drinks industry. This
competition does take a toll on the overall long-term profitability of the organization.
The Coca-Cola Company has the ability to tackle Intense Rivalry among the Existing
Competitors in Beverages - Soft Drinks industry by building a sustainable
differentiation and building scale so that it can compete better. Coca-Cola company
can increase the market size rather than just competing for small market by
collaborating with other competitors.
By analysing all the five competitive forces, the Coca-Cola Company strategists can
gain a complete picture of what impacts the profitability of the organization in
Beverages - Soft Drinks industry. They can identify game changing trends early on
and can swiftly respond to exploit the emerging opportunity.
Coca-Cola Company 's managers can shape those forces in their favour by
understanding the Porter Five Forces in detail.

Explain the Porter’s Five Forces Model

Include a diagram
Produce an industry analysis for Coca-Cola using Porter’s Five Forces model
(M3) Appropriate strategies devised, using Ansoff matrix, to improve
competitive edge and market position based on the outcomes

Explain the Ansoff Matrix

The Ansoff Matrix, also called the Product/Market Expansion Grid, is a tool used by
firms to analyse and plan their strategies for growth. This matrix shows four
strategies that can be used to help a firm grow and analyses risk associated with
each strategy.

Market penetration
The right strategy for your company's growth is the market penetration. One way of
achieving growth is by taking more customers away from the competition in the
existing market. A different strategy is to increase sales through your existing
customer base, i.e. to motivate your customers to purchase more frequently. It is
necessary to implement new marketing strategies for both factors. Good results can
also be achieved by using an adjusted pricing policy. Another recommendation is
sales training, especially to increase sales through existing customers.
The growth is limited by market penetration even if you can win over additional new
customers, since the number of customers within a market is limited. You should first
know your degree of market penetration in order to determine the growth potential of
your company with this strategy. This is achieved by dividing your existing customers
by the number of potential customers in the market.
Market development
Another different strategy is Market development: If you want to continue with your
existing product portfolio but want to take on new markets, this Ansoff strategy is the
one to use. This means, for example, expanding to another geographical region or
increasing the target group. A high marketing effort is required in order to achieve
effective growth with market development, – even more than with market
penetration. Owing to the high financial investment, this strategy involves a certain
risk.

Product development
The growth strategy "product development" is applied when you establish yourself
with a new product in an existing market. There are two different options: Either you
develop a completely new product for your target group, or you produce a variant of
a product that you are already selling.
You can better adapt the new or modified product to the target group when you
respond to customer feedback. Because the development of new products or
services is expensive, the costs for this strategy are comparatively high. The risk
here being that: you will only know if the innovation has been successful after its
release on the market.

Diversification
There is a possibility of taking on a completely new market with a new product. This
strategy involves the highest risk but can also have the greatest success. This
strategy also enables you to develop new customer groups for your company in
addition to increased sales. Diversification also helps to spread the risk: this growth
strategy gives you several driving forces for your success instead of focusing on a
single product or on a specific market. This fourth strategy of the Ansoff Matrix can in
turn be divided into three types. The choice of the right strategy depends on your
willingness to take risks.

Apply the Ansoff Matrix to devise appropriate product/market strategy for Coca-Cola
Growth is a primary objective of every business, be it a start-up that’s just closed its
first deal or an established market leader seeking to further increase profitability. But
how is the best strategy for growth decided upon by the business? The Ansoff Matrix
management tool provides a solution to this question by assessing the level of risk –
in consideration of whether to seek growth through existing or new products in
existing or new market. A demonstration of the robustness and legitimacy of Ansoff’s
Matrix, being applied to Coca-Cola, the most well-known trade name in the world
and a company operating today in over 200 countries; and a brand that has
undertaken countless growth strategies in its 100+ year history.

Market Penetration: (EXISTING Market, EXISTING Product)

The Market Penetration strategy involves an attempt to increase market share within
existing industries, either by selling more product to established customers or by
finding new customers within these markets – typically by adapting the ‘Promotion’
element of the Marketing Mix. Looking at the significant strength of Coca-Cola’s
brand, the company has been able to utilise market penetration on an annual basis
by creating an association between Coca-Cola and Christmas, such as through the
infamous Coca-Cola Christmas advert, which has helped boost sales during the
festive period.

Product Development: (EXISTING Market, NEW Product)

The Product Development strategy involves developing new products for existing
markets by thinking about how new products can meet customer needs more closely
and outperform competitors. A typical example being the launch of Cherry Coke in
1985 – Coca-Cola’s first extension beyond its original recipe – and a strategy
prompted by small-scale competitors who had identified a profitable opportunity to
add cherry-flavoured syrup to Coca-Cola and resell it. The company has since gone
on to successfully launch other flavoured variants including lime, lemon and vanilla.
Market Development: (NEW Market, EXISTING Product)
The market development strategy also entails finding a new group of buyers for an
existing product. A classic example of this is the launch of Coke Zero in 2005 – its
concept being identical to Diet Coke; the great taste of Coca-Cola but with zero
sugar and low calories. More than 30 years ago, Diet Coke was launched and whilst
more females drink it every day than any other soft drink brand, it came to light that
young men shield away from it due to its consequential perception of being a
woman’s drink. With its shiny black can and opposite advertising campaigns, Coke
Zero has successfully generated a more ‘masculine’ appeal.

Unrelated Diversification: (NEW Market, NEW Product)

Last but not the least, unrelated diversification involves entry into a new industry that
lacks important similarities with the company’s existing markets. Coca-Cola generally
avoids risky adventures into unknown territories and hence can utilise its brand
strength to enjoy massive growth within the drinks industry. With this, Coca-Cola
offers official merchandise from pens and glasses to fridges, therefore exploiting its
strong brand advocacy through this strategy.

Conclusion:
Clearly with Ansoff’s Matrix is the incremental increase in risk offered by the five
strategies, as a result of growing cost with each step beyond market penetration and
uncertainty of operating in new markets and industries.
Tracing back to the example of Coca-Cola, the firm’s emphasis on market
penetration and other non-diversification strategies therefore suggests it is a
relatively risk-averse company, as compared to a firm like the Virgin Group.
With that being said, there is no one best strategy to select because each offers
different benefits to companies in various circumstances. For example, Coca-Cola
has had little need to diversify relative to the Virgin brand which traditionally operates
in uncertain markets such as the volatile airline industry, meaning diversification
spreads risk.
Although, Coca-Cola would not have been the powerhouse it is today without
knowing when to step out of its comfort zone – the Glace au acquisition being a clear
case in point. Although there was little potential that it could dilute Coca-Cola’s
reputation for carbonated soft drinks in the short term, it’s proven to be a suitable
strategy given the brand’s long-term view for growth in the face of a changing
market.

Task 4 (This task provides evidence for P4 and M4)

D1 You are required to critique and interpret information and data applying
environmental and competitive analysis to produce a set of valid strategic
directions, objectives and tactical actions

4.1 Interpret and devise strategic planning by applying Porter’s generic

strategies (cost and price leadership strategy, differentiation strategy, focus
strategy) and the extended model of Bowman’s strategy clock
Explain Porter’s generic strategies.
Apply the Porter’s strategy and Bowman’s Strategy Clock to devise strategic
planning/strategic directions for your chosen organisation.

4.2 Three growth strategies recommended based on the SWOT carried out
in Task 1.2.

You are required to critique and interpret information and data applying
environmental and competitive analysis to produce a set of valid strategic directions,
objectives and tactical actions.
(Choose one strategy from each row in the diagram below)

The Limited Growth Strategy: Market Penetration

The Market Penetration strategy involves an attempt to increase market share within
existing industries, either by selling more product to established customers or by
finding new customers within these markets – typically by adapting the ‘Promotion’
element of the Marketing Mix. Looking at the significant strength of Coca-Cola’s
brand, the company has been able to utilise market penetration on an annual basis
by creating an association between Coca-Cola and Christmas, such as through the
infamous Coca-Cola Christmas advert, which has helped boost sales during the
festive period.

The Substantive Growth Strategy: Horizontal Integration

This is the expansion of a business at the same point within the supply chain, either
within the same industry or a different one. The Coca- Cola company can achieve a
substantial growth through internal expansion. When Coca- Cola increases the
variety of products it sells in a specific category, it gives consumers the experience
to choose from a wide range of different products from the same brand or
organization with differences in individual preferences without compromising on
 quality. The Coca- Cola company has successfully added other flavoured variants
including lime, lemon and vanilla to their previously existing types.

The Retrenchment Strategy: Divestment

The retrenchment strategy is a strategy the organizations apply to reduce the
diversity or the overall size of the operations of the company. This retrenchment
strategy is often used in order to cut expenses with the goal of becoming a
more financial stable business. Typically the strategy involves withdrawing from
certain markets or the discontinuation of selling certain products or service in order
to make a beneficial turnaround. The Divestment Strategy is another form
of retrenchment that handles the downsizing of the scope of the business. A firm is
said to have followed the divestment strategy, when it sells or liquidates a portion of
a business or one or more of its strategic business units or a major division, with the
objective to revive its financial position. The Coca- Cola company can apply this
strategy when the need arises so as prevent financial bankruptcy.

4.3 A Strategic Management Plan that has tangible and tactical strategic
priorities and objectives.

What is a strategic management plan? This is the management activity of an

organization that is used to set priorities, ensure that employees and other
stakeholders are working toward common goals, focus energy and resources,
strengthen operations establishing agreement around intended outcomes/results,
and assess and adjust the organization's ... The understanding of the basics
of strategic management and planning is critically the first step to the success of
most organizations.

aim objectives resources allocation target review deviation revised

Required. of dates dates/ diagnosis target dates
responsibilit review and if applicable
y point corrective
action
dates
1)
2)
3)
4)
5)

SMART OBJECTIVES
What are SMART objectives?
 Specific
 Measurable
 Achievable
 Relevant
 Time-bound

One way to strategically run or manage a business or organization is to be SMART

about quantifying the objectives and then articulating them clearly and validating with
stakeholders. The SMART acronym stands for “specific, measurable, attainable,
relevant, and time-bound”.
Specific: The objective is clear and unambiguous and explains to the (future) project
team exactly what’s expected.
Measurable: The objective gives concrete measurements to assess your progress
against the objective and determine whether you’ve met it.
Attainable: The objective can be reached. It must be realistic; otherwise you’re
setting yourself up to fail. Note: Sometimes “agreed-upon” is also suggested as
the A here; if stakeholders don’t agree on an objective, it’s not necessarily a good
one.
Relevant: The objective has to matter to the organization. Note: If the A changes to
“agreed-upon,” the R typically switches to “realistic.”
Time-bound: The objective provides a time frame of expected achievement. This
criterion often affects your solution option design choices or decisions.
The value in defining SMART objectives is that the team members understand
clearly what they and the solution will be measured against, providing a basis and
justification for making specific choices and decisions. Without the SMART objective,
each member of the team may have his or her own perspective on levels of
acceptability, which can cause conflict and frustration.
SMART objectives ensure everyone in the company knows exactly what’s expected.

Conclusion
After conducting several analyses on my chosen organisation which is The Coca
Cola Company, a conclusion has been achieved that, every organisation can’t be in
existence, without certain strategies and influence. A business strategy is the skills
and know- how the top management of the organization adapts in running their
businesses. With the application of PESTLE, SWOT, VRIO, Porter’s five forces and
Ansoff matrix can help a business manager strategize a business successfully in
order to achieve their required aims or goals.

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