SWOT, PESTLE & PORTER’S ANALYSIS

ON COCA’COLA

The Coca Cola Company

The Coca-Cola Company, American corporation founded in 1892 and today engaged primarily in the
manufacture and sale of syrup and concentrate for Coca-Cola, a sweetened carbonated beverage that is a
cultural institution in the United States and a global symbol of American tastes.
The drink Coca-Cola was originated in 1886 by an Atlanta by an Atlanta pharmacist, John S. Pemberton
(1831–88), at his Pemberton Chemical Company. His bookkeeper, Frank Robinson, chose the name for
the drink and penned it in the flowing script that became the Coca-Cola trademark.
According to Coca-Cola UK, about 1.9 billion servings of coca cola are enjoyed by more than 200
countries each day. To further break down the amount of sales into a simpler version, we can say that
more than 10000 coca colas are consumed per second.
SWOT Analysis on Coca Cola
SWOT Analysis is a tool used to analyze the internal and external environments of a business. Below, we
will be able to identify further about the Strengths, Weaknesses, Opportunities, and Threats of Coca Cola.

 Strengths ( Internal Strategic Factors )

 Strong brand Identity – Coca Cola is a highly popular brand with a unique brand identity. Its
soft drinks are the most selling drinks in history.
 Dominant Market Share – Out of Coca-Cola and Pepsi, the only two largest manufacturers of
soft drinks in the beverage segment, Coca-Cola has the largest market share. Coke, Sprite, Diet
Coke, Fanta, Limca, and Maaza are the highest growth drivers for Coca-Cola.
 Unparalleled distribution system – Coca-Cola has the most efficient and most extensive
distribution network in the world. The company has nearly 250 bottling partners globally.
 Weaknesses ( Internal Strategic Factors )
 Product diversification – Coca-Cola has low product diversification. Where Pepsi has launched
many snacks items like Lays and Kurkure, Coca-Cola is lagging in this segment. It gives Pepsi
leverage over Coca-Cola.
 Health concerns –Carbonated drinks are one of the major sources of sugar intake. It results in
two grave health issues – obesity and diabetes. Coca-Cola is the biggest manufacturer of
carbonated beverages. Many health experts have prohibited the use of these soft drinks. It is a
controversial issue for the company. However, Coca-Cola hasn’t devised any health alternative or
solution for this problem yet.

 Opportunities ( External Strategic Factors)

 Introduce new products and diversify its segments – Coca-Cola has the opportunity to
introduce new offerings in health and food segments just like Pepsi. It can contribute to their
revenue, and they can branch out from carbonated drinks.
 Packaged drinking water – Coca-Cola owns several packaged drinking water brands like
Kinley. There is a great potential for expansion in this segment for Coca-Cola. There is an
opportunity to expand and bring more healthy drinks in the market to avoid people’s criticism.

 Threats ( External Strategic Factors )

 Water usage controversy – Coca Cola has faced many criticisms over its water management
issue. Many social and environmental groups have claimed that the company has a vast
consumption of water in water scarce regions. Besides, people have alleged that Coca Cola is
polluting water and mixing pesticides in water to clear containments.
 Introduce new products and diversify its segments – Coca-Cola has the opportunity to
introduce new offerings in health and food segments just like Pepsi. It can contribute to their
revenue, and they can branch out from carbonated drinks.
Based on the above SWOT Analysis of Coca Cola, we can conclude that Coca Cola has a definitive
market position in the soda industry. However Coca Cola can implement some innovative ideas to
become better.
  Stepping into the food market.
 Focusing on health related matters.
 Improving its water management system.
 Working on sustainability and green marketing.

PESTLE Analysis on Coca-Cola

A tool used by a business to analyze the external environment of the business. The external environment
is uncontrollable and every business needs to adopt to these factors. These factors can be opportunities or
threats.

Political factors
Economic factors

Social factors PESTLE

Technological factors
Legal factors
Environmental factors

 Political factors
 Coca Cola products are at the mercy of the FDA. They must meet regulations, given by the
government, to put products on store shelves.
 Changes in established laws may prevent Coca Cola from distributing drinks. Accounting, taxes,
internal marketing, and changes in labor laws can affect Coca Cola in this way.

 Economic factors
 Coca Cola products are distributed to hundreds of countries in which they have different customs,
cultures, tastes, and desires. Coca cola has changed and updated how it handles its products by
creating new flavors to accommodate these customers.
 They have $80+ billion worth of equity. The majority of that comes from the beverage industry.
And their income (roughly 70%) is from countries outside the United States.

 Social factors
 Coca Cola distributes the majority of its products in cultured countries. And they meet the
demands of these customers. In Japan, they created 30 alternative flavors to appeal to Japanese
consumers. In China, they are making similar efforts.
 In America, people focus on their health. They’re swapping sugary drinks for waters and teas.
Because these drinks are better for their health. Coca Cola needs to respond to these needs by
creating a product the healthy American public will respond to.

 Technological factors
 Machinery have helped Coca Cola manufacture products in better and higher quantities. Coca
Cola has factories in Britain with top of the name machinery to ensure fast delivery times and
quality product development.
 Coca Cola has used social media technology to connect with audiences. When they launched their
name campaign — putting real names on their bottles — customers lined up to take photos of
bottles with their name on it. These photos trended on social media sites like Facebook, providing
social proof and encouraging Coca Cola sales.

 Legal factors
 Coca Cola retains all rights related to their business, including past and future products developed
with a patented process.
 Coca Cola has faced trouble due to quantity of caffeine in its products in different countries in the
past.
 The company was also accused of paying low wages and inappropriately treating their employees
which attracted various protests from labor unions.

 Environmental factors
 Coca Cola is considered to be the biggest consumer of freshwater in the world. And for this
reason alone, the company has faced a massive amount of backlash from environmental groups.
In countries such as India, Coca Cola is being held accountable for completely draining off
groundwater in large areas. Coca Cola needs to immediately take steps to put in water
management operation or it can be banned in these countries.
 They can take advantage of humid climates who would enjoy Coca Cola drinks as a means to
cool down. This works well in developing countries where Coca Cola would have very little
“premium” competition.
 The Coca Cola incident

Coca Cola – Drinking the world dry.

PORTERS FIVE FORCES on Coca-Cola

A tool used to analyze the industry in which a business operates in. This tool will show if any industry is
profitable or not based on the strength of five forces.
- Bargaining power of buyers
- Threat of substitutes
- Rivalry among existing firms
- Threat of new entrants
- Bargaining power of suppliers

 Bargaining power of suppliers : Low ( High Profitability )

 The bargaining power of suppliers of Coca Cola is weak. It is so low because the number of
suppliers is high and switching costs for Coca Cola is low. While Coca Cola can easily switch
from one supplier to another, it is not possible for any supplier to switch from Coca Cola easily.
That can lead to losses for any of the suppliers.
1. Large number of suppliers.
2. Small to moderately size of individual suppliers
3. Switching costs for Coca being not so high.

 Bargaining power of buyers : Low ( High Profitability )

 The bargaining power of individual customers in case of Coca Cola is low. Individual customers
generally buy small volumes and they are not concentrated in specific markets either. Switching
costs are not high for customers and still the two brands (Coke, Pepsi) enjoy high brand loyalty.
The customers of coca cola are not price sensitive.

 Threat of new entrants : Low ( High Profitability)

 In the beverages industry there are several factors that discourage new brands from entering.
Growing a brand overnight is impossible. There are significant investments to be made. From
operations to marketing every part requires a large investment. The level of customer loyalty in
the industry is moderate and for any brand to build customer loyalty it will take some time. So,
while new entrants can compete with brands like Coca Cola at a smaller or local level, to build a
brand as big is a mammoth task requiring both capital and skilled human resources.

 Threat of substitutes: Strong ( Low Profitability )

 Main substitutes of Coca Cola products are the beverages made by Pepsi, fruit juices, and other
hot and cold beverages. The number of substitutes of Coca Cola products is high. The switching
costs are low for the customers. Apart from it, the quality of the substitute products is also
generally good. So, based on these factors the threat from substitutes is strong. Also due to the
health conscious society many people try to find healthier substitutes to switch from Cola.

 Rivalry among existing firms : High (Low Profitability)

 There are two major players in the soda industry and they are Coca Cola and Pepsi. There is
intense rivalry between the two major players. There are also a few small players. The two main
players are nearly of the same size and they have similar products and strategies. The level of
differentiation between the two brands is also low and therefore the price competition is intense.
People have already heard of the Cola wars. So, the level of competitive rivalry between the
existing firms is a strong force.
In conclusion, The Coca-Cola Company is the leading soft drink maker nationally and globally. It has set
itself far apart from its competitors by building a solid foundation of consumers since 1896.