COCA-COLA 1

1. Internal Organization Analysis

The internal analysis entails the identification of strengths and weaknesses of a firm. It reveals
the factors influencing the success of an organization. It helps in the strategic planning
process since the company can identify its weaknesses and decide on means of improving.
Further, decision-making is possible with an internal analysis report as it provides essential
areas in the company that are critical to consider when assigning resources. A company can
identify its fitness in the competitive landscape through the internal analysis as it reveals areas
it is best in and those it may require to improve.
2. Financial Ratios
The operating margin is the measure of profitability which shows the value of the dollar left after
considering the goods sold and the operating expenses. The formula is
Operating Cost = Operating earnings/ Revenue.
At Coca Cola: the net operating revenue was $41,863 and the operating income was $8,626
Therefore, the operating margin = 8626/41863= 0.2060
As a percentage 0.2060*100= 20.6% as indicated on the analysis of consolidated statement of
income (Coca Cola Inc., 2016).
3. Internal Analysis Conclusion
Coca Cola has strong competitive abilities due to its strengths. The competitive advantage is
drawn from its large product line, proper leadership, and huge opportunities. Coca Cola’s
products are unique and the marketing strategies used create a superior image of its products
on the customer’s minds. The successful marketing strategy shows the company has adopted
modern technology and employs skilled sales personnel. It has enormous financial capabilities
making it possible to enter new markets. The large market share reveals the financial
capability of the company and the efficiency of its marketing policies. The customer loyalty
shows that most of its products are quality and are available when needed, hence a
successful supply chain. The negative publicity results from the perception of unhealthy
products especially concerning the sugar and cholesterol content. The company has strategized
on the products such as zero sugar products to meet the market needs. Hence, Coca Cola is
generally a successful company.
Industry Driving Forces Analysis
4. Technology
It is applicable in the production area in automation of the processes. The company is able to
produce in bulk by automating its processes to suit the market demand. Besides, the supply
chain management applies modern technology by enhancing proper delivery of raw materials,
inventory management, and the distribution of the final products. Technology is also
applied in marketing at Coca-Cola through mass and digital media advertisement. Further,
it allows the organization to gather appropriate data useful in decision-making and it permits
revolutionized communication (Vrontis & Sharp, 2003). Thus, technology is a useful tool at
Coca Cola, and it is the driving force for its success in the market.
5. Marketing
The marketing strategies employed at Coca Cola have allowed it to remain competitive in the
soft drinks market for a long time. Useful principles include the marketing mix, targeting, and
segmentation. The company segments its market in terms of geography, demography, and
income. The marketing mix encompasses the product, price, promotion, and place. These
helps in identifying the right people and making it possible for prospective consumers to
find the products. The targeting involves the identification of customers and applying the
right methods of attaining them. Coca Cola has been successful in reaching most of the
target consumers since it has high sales over the years of operation.
6. Large Product Portfolio
Coca Cola has a huge line of products in the soft drinks market. According to Porter’s five
competitive forces, Coca Cola’s threat of brand substitution is very low for most of their
target sector (Vrontis & Sharp, 2003). This gives it power to market its products with minimal
competition as other companies do not have products in equal quality. Besides, this also bars
entry of new companies as they cannot meet the huge product portfolio. There is huge product
differentiation that surpasses the nearest rivals, and each brand has a high image and
recognition in the market (Vrontis & Sharp, 2003). Thus, this gives the company a huge
competitive power in all the products.
Impact of the Driving Forces on the Firm
7. Technology- It has streamlined the processing by reducing the time and cost through
automation, hence high productivity. It has also helped in inventory management which
is vital for productivity. Marketing is also easier through modern technology, thus the
company reaches its target market faster using modern technology.
8. Marketing- Coca Cola has high sales compared to its competitors showing that its
marketing strategies are successful. The company is recognized globally, and its
products marketing strategies are applied in most countries. It has increased customer
loyalty through creating a superior image of Coca Cola’s products. The targeting and
segmentation strategies have enabled the company achieve the high sales in the market.
9. Product Portfolio- the large product line has barred entry of new companies making it
possible for the company to strategize on existing competitors. It helps in marketing
mix through product strategy where the firm is able to provide goods as per the demand
in the market. It has led to product differentiation which assists a company gain
competitive advantage.
Firm’s Current Strategies
10. Cooperative Strategies
It is widely applied in Coca Cola for bottling and marketing. The company’s bottling partners
participate in the design of the bottles as per the firm’s instruction. There are numerous joint
ventures and partnership present at Coca Cola. First, its partnership with Monster Beverage
Corporation in production of Monster Energy in domestic and global markets ("Five Strategic
Actions", 2016). Second, Coca Cola distribute some third-party brands such as Dr Pepper
Snapple Group, Inc. in the U.S and Canada. Third, there is a strategic partnership between
Coca Cola and Aujan Industries Company in the Middle East. Fourth, a joint venture exists
between Nestle South Africa and Coca Cola known as the Beverage Partners Worldwide
for the distribution of Nestle products globally (Coca Cola, Inc., 2017). Thus, the cooperative
strategy is commonly used at Coca Cola for bottling and distribution.
Intensive Strategies
11. Market Penetration
It is achieved by expanding the company’s market in the domestic, regional, and international
areas to reach the prospective customers. The impact of this strategy is that it leads to increased
market share since the company penetrates in new markets where the competitors may not have
massive customer base. Besides, it also aims at increasing product usage through increased
advertising the benefits of using the particular product. Market penetration entails the increase in
the frequency of use of the products. At Coca Cola, the initial operation as a carbonated soft
drinks company has changed to ready packaged liquid refreshments to increase its market
penetration abilities (Vrontis & Sharp, 2003). The market penetration strategy also focuses on
increasing the quantity used and applying the products in various ways.
12. Product Development Strategies
The existing products in any company requires frequent improvement to meet the market
demands. Coca Cola applies various approaches to ensure the products conform with the
customers’ needs. First, product improvement is enhanced by continuous research. Coca Cola
invests significantly in research on ways of improving current products. Second, product line
extension is observable as the company continues to increase the drinks within a portfolio to
meet the market demand and remain competitive. Third, the company produces more new
products for the same markets to increase the sales.
13. Market Development Strategies
The strategies aim at reaching more potential customers for the company’s products. This can be
achieved through expansion of the market for existing products. For instance, Coca Cola may
target a geographical area that has not been a part of the market. For example, the
developing countries may not be favorable for the soft drinks business but the company may
strategize to ensure that with time, the income may rise. Further, the company may target new
segments through the branding of products to suit these sections. The marketing strategies
employed by the company may also be helpful in ensuring it meets the demands of these new
sections. The results if this strategy is increased sales.
14. Diversification Strategies
The approach is used to enter into a new market or industry where the firm does not operate
and introducing a new product. It can be divided into two approaches; diversification into related
business and in unrelated business. The former is also known as concentric diversification while
the latter is the conglomerate. Coca Cola has applied the diversification strategy through the
production of goods in markets such as that of bottled water, fruit juices, and ready to drink
tea (Vrontis & Sharp, 2003). It mainly applies the concentric strategy since most of its products
are the ready to drink packaged soft drinks.
15. Integration Strategies
Coca Cola acquisition of operations associated with the production of its products has influenced
its success. The company acquired the North American operations of the bottling sector to
form the Coca Cola Refreshments ("Sustainability Update: Overview", n.d.). The vertical
integration has resulted in increased operating effectiveness. The firm also enjoys efficiency by
combining manufacturing and distribution. Further, it increased its commitment towards a
sustainable opportunity for North America. Coca Cola also integrated with the German
Bottlers in 2008 (Coca Cola Inc., 2017). The vertical integration has led to various charges due
to operations and taxes resulting from involuntary terminations.
16. Mergers and Acquisition Strategies
Coca Cola has acquired several small companies during its expansion to new markets.
Besides, most of it branded beverages are distributed by independent bottling partners which
it acquires in case of underperformance (Coca Cola Inc., 2017). In particular, this results in
compensation for limited local resources, increased focus on bottle sales and marketing
programs, and developed bottling business. The company also mergers with local companies
to enhance distribution of the final products.
17. Porter’s Generic Strategies
The generic strategies include cost leader, differentiation, and focus strategies. The most
applicable at Coca Cola is the differentiation leader policy. The company has built its image
over the years to be the leading beverage and syrup producer globally. It has huge sales and
its products are easily accepted in the market due to high-quality. Further, it provides unique
products that increases its value to the customers, hence remaining competitive.
Differentiation is achieved through proper marketing strategies that enhances customer loyalty
and meets the target of the company. The marketing strategies employ modern technology in
advertising, targeting, and segmentation.
18. Cost leadership
It is achieved through economies of scale where the company removes the excess from the
product and use proper forecasting to ensure it meets the demand. The employees must also
learn to employ the most efficient method of producing a particular product to reduce waste
hence lowering the cost of production. Besides employing workers with sufficient knowledge
and experience in the manufacturing industries saves the cost of training and lowers the price
of destroyed materials. Further, the company uses effective operational processes through
automation and mechanization of most of its activities. Further, efficient strategic chain for
distribution of its products is employed to reduce the cost of inventory management. (Vrontis
& Sharp, 2003). Hence, the company remains competitive and influential in the market.
References
Coca Cola Inc. (2017). 10-K Form. Retrieved from https://www.sec.gov
Five Strategic Actions. (2016). The Coca-Cola Company. Retrieved 21 March 2018, from
http://www.coca-colacompany.com/stories/five-strategic-actions
Vrontis, D., & Sharp, I. (2003). The Strategic Positioning of Coca-Cola in their Global
Marketing Operation. The Marketing Review, 3(3), 289-309.
http://dx.doi.org/10.1362/146934703322383471
Sustainability Update: Overview. The Coca-Cola Company. Retrieved from http://www.coca-
colacompany.com/our-company/sustainability-update-overview