Strategic Management Assignment: Analysis & Critical Evaluation of Coca-Cola

Question

Task: Analyse and critically evaluate, using relevant models, frameworks and\or theories, the potential sustainability of any competitive advantage (or value adding activities) that CocaCola may possess through its current resources and capabilities. Based on your analysis of Coca-Cola’s key resources and/or capabilities, discuss a range of probable strategic options the company could adopt to underpin its business success. Critically evaluate the Suitability, Acceptability and Feasibility of your proposed strategic options.

Framework Answer:
Key words for focus:
Critically evaluate
Sustainable competitive advantage
Resources, and/or capabilities
Probable strategic options
Suitability, Acceptability and Feasibility

Question 3
a) Coca-Cola is one of the top soft drinks in the globe. Where is its competitive advantage
b) Can you think of anything a leading rival might do to threaten Coca-Cola’s position in the industry

Question 4
Critically assess the extent to which Coca-Cola can use the below two areas (a-b) to sustain competitive advantage in its industry.
a) Innovation
b) Customer Service

Answer

Part A
This framework is about the structure of the Coca-Cola industry referring to changing dynamics according to micro and macro-organizational environment. This strategic management assignmenttends to examine the relationship between the changing business environment with various factors. The evolution of brand development of the enterprise includes the redevelopment of its policies and technologies with changing business dynamics. This tends to increase the frequency of purchases. Coca-Cola also works in an advertising campaign by making celebrities their brand ambassador worldwide. Coca-Cola ensures that everyone who joins their business should make a profit, therefore, involving them to enhance their value, which makes the enterprise achieve its goal. The framework included are the PESTLE framework and Poster’s five forces to show strategic management.

The keywords to be focused on are product, price, promotion, and place. With the evolving dynamics, Coca-Cola assists 4P’s - product, price, place, and promotion. In the product section, Coca-Cola manages 3900 types of products worldwide (Suay 2020). These cold drinks are categorized on the basis of age and health of consumers such as energy drinks, juice, tea, fruit, etc. Coca-Cola has gained a lot of success in global existence among existing carbonate drink firms. Price plays a key role in the profit of the industry. Coca-Cola makes the prices of the product based on a competitor, geographic segmentation, macro and micro-environment. Coca-Cola gives a high discount when someone purchases it in bulk. Coca-Cola has a network in almost every place in the world. Coca-Cola makes promotion through various platforms like TV, online media, music, radio, print, hoardings, etc. Coca-Cola applies CSR to advertise according to the sentiments of customers.

The upcoming paragraph has been critically evaluated the fundamental dynamic features of internal and external analysis environments like the efficient process for production, the skills needed by the organization to meet the marketing needs with changing environment, and efficient distribution of network and communication (Tien et al. 2018).

Evolving Dynamics of Coca-Cola with time- The ways of evolution of Coca-Cola are acquisitions, new products, and logo evolution.

The acquisition has assisted Coca-Cola to compete with its competitors. The few brands that Coca-Cola developed dynamically are: Minute maid in 1960, Thums Up in 1993, Costa Coffee in 2019 (Kalashnikov and Lutsenko 2020).

Coca-Cola always works to launch new products to determine its attractiveness and make buzz among buyers. These new products that were manufactured with evolving dynamics are Diet Coke, Coke zero, Caffeine-free Coke, etc. Flavors were added like vanilla, lime, strawberry, lime, and coffee. Products were made for consumers who wanted less sugar, and who wanted to avoid consumption of caffeine(Guo and Wen 2021). Coca-Cola constantly changes its logo with time. They have evolved logos more than 10 times since the company was established. They make little changes in the core logo to give new messages and objectives with time so that consumers can relate it with the old logo with a new message to convey.

Critical application is the application that is needed by Coca-Cola to systematically and strategically do its activities. Some of the critical application model used by Coca-Cola is PESTLE, Porter’s five forces, SWOT, etc. (Geng et al. 2021).
Positioning confers to the position that a company takes in the minds of its consumers. Coca-Colas’ positioning is to get the audience who want good quality beverages. Coca-Cola offers many products to consumers and each product makes a good separate place in the mind of its consumers. Coca-Cola tries to make consumers happy and make a positive impact on their livelihood.

The strategic management frameworks, models, and theories of Coca-Cola includes two main framework models that are PESTLE theory and Porter's five force.

Coca-Cola assists SWOT analysis technology to know its inner weakness and strength that is a complex part of the structure of the company. For managing the dynamic changes in internal sections, the enterprise works on assessment in all the groups of consumption and manufacturing process to ensure the proper functionality in internal aspects. The dynamic evolution in the external enterprise environment has more importance than the internal dynamic evolution. This external dynamic evolution operates on two factors- Macro and micro-environment. These two factors are capable of affecting the entire business. The macro-environment is transcribed as a group of factors, that does not only affect the company's dynamic but also the section under the micro-environment. The micro-environment is the second factor of the external enterprise environment that includes suppliers that work from manufacturing to packaging, competitors that make Coca-Cola give more preferences to people than competing cold drink companies. Lastly, the customer is an important factor of the micro-environment, Coca-Cola has made a worldwide network of manufacturing to satisfy its customer around the globe (Chua et a. 2020). The company works on the optimization of the distributed network around the globe and the acknowledgment of targeted customers in the international market. Coca-Cola works on PESTLE (political, economical, social, technological, legal, environmental) analysis framework that is helpful to enhance their company for macro-environment that include political factors like constant check by government and health authorities that whether the company is following regulations or not, environment factor that includes maintaining prices in different countries, social factors includes cultural forces of different religion and creed of people, macro-environment comprises of technological factors like getting feedback of customers, manufacturing different shaped bottles, creating online stores, etc. with the evolving dynamics, Legal factors include the corporate ethics that should be followed by the company, lastly Environmental factors include the manufacturing of company’s product according to the resources available on that particular area so that it will not have an adverse effect on that particular area.

Porter’s five forces framework model is a tool to know critical powers affecting the company in the competition. This model is used by many companies across the world. There are five forces included in it. Coca-Cola's authority makes strategies and goals based on the analysis given by this framework model. These five forces are the Bargaining power of suppliers that includes switching the cost of Coca-Cola. Coca-Cola’s bargaining power is not good because of the large number of suppliers, the low switching cost of a product, and the size of suppliers. Second Porter’s force is the bargaining power of customers that is low of Coca-Cola because most of the time, customers buy a low amount of products so they do not bargain much in printed amount and the customers of Coca-Cola are not much sensitive about price. The third Porter’s force is the threat of new entrants that can compete with Coca-Cola at a very small level since Coca-Cola is a very old and trusted brand, A new entrant must need a mammoth amount and skilled workers to compete with a brand like Coca-Cola. The fourth one is the threat of substitutes that is high in number for Coca-Cola. Products sold by Pepsi, energy drinks, fruit juice, etc. are major substitutes for Coca-Cola. Added to this, the quality of the substitute products is generally better than Coca-Cola. Threats of substitutes are high for Coca-Cola. Lastly, the fifth Porter's force is Competitive rivalry between existing brands, there is only Pepsi brand that has a strong competitive rivalry with Coca-Cola since both are old and trusted by consumers. They launch the products of the almost same size with the same price so this distributes Coca-Cola's customers. There are a few smaller players too that compete with Coca-Cola. Coca-Cola is also having a competitive rivalry with Red Bull, so the competition between existing brands is strong for Coca-Cola.

Part B
Question 1
Coca-Cola is one of the most famous and globally trusted beverage companies. In more than 200 countries, Coca-Cola sells their different types of soft-drinks and that made this company so much popular and gave an ideal market place. Apart from its rivals in the global market, Coca-Cola is having many competitive advantages that give this company a superior and favourable business position.

Brand equity is one of the important and essential strength for Coca-Cola. Due to the strong brand equity of the company, the customer base of Coca-Cola has grown in a large extent. This is the reason that brings a trust of the customers towards this company. Past some years, the company was having various types of problems like product quality and water management. Still the trusted customers of the company loved the products and showed their belief to the company. The main reason behind the huge sale of the Coca-Cola products is its popularity and its brand value in the global market.

Coca-Cola is present in all over the world. The company is dealing with global production and distribution networks in all over the world. The company is having the largest beverage distribution system in the world. This gives them a competitive advantage. Apart from this, the pricing of Coca-Cola is also a major factor for having such a great competitive advantage. The company is having many competitors but apart from that, the products of the company are most popular in the market due to its product pricing (Qassas and Areiqat 2021). All the products from this famous brand are accessible and affordable for common people. This is one of its competitive strategies that gives the company enormous benefits and attracts the customers towards its products.

Marketing is also one of the major factors that give the company profit over the other companies in its competitive advantages. Coca-Cola spends a huge amount on the product promotion and advertisements. This is the reason behind the huge sales increment in every year. In the year 2017, almost 4 billion dollars was invested in the advertisement and promotion of the brand products. The company also uses some of the popular faces that give them huge benefits in attracting individuals towards their products.

Customer loyalty is again one of the most important advantages of the Coca-Cola that gives huge competitive advantages to the company. In the given case study, it is clearly mentioned that the many times the company tries to do some new implementations with the products. The scenario in 1985 where the company tries to implement new coke by replacing the original one and the company fails due to the customers loyalty towards the old cola products. The company followed the suggestions of their customers and launches many other drinks like Sprit for their customers. These all efforts from the Coca-ColaCompany give them huge market advantages and a balanced place in this competitive market.

The customer loyalty directly affects the customer base. Coca-Cola is one of the leading brand of soda and has a huge customer base. Due to the large customer base, the company is dealing with huge sales and generates huge revenues from the market. The huge customer base of this company is responsible for its huge popularity all across the world in almost 200 countries.

From all of the points given in the above section, it can be clearly seen that Coca-Cola is having various competitive advantages that give them huge benefit in competing against their market rivals like Pepsi (Guo and Wen 2021). By using all these advantages, Coca-Cola is continuously innovating their products and this helps them competitive benefits over the past years.

Question 2
Coca-Cola is having a good market support and having many competitive advantages but apart from that, there are many factors available by the use of that, the competitors of Coca-Cola can threaten them in this competitive market. The company is dealing with so many weaknesses and operational lapses that create an opportunity for its rivals to take a lead in the soft drink industry.

Product diversification is one of the main factors in which Coca-Cola is lagging from its competitors like Pepsi. Coca-Cola is having the less diversification in terms of products. This competitive advantage is used by the other companies and they are continuously working in the launch of new products.Coca-Cola company is only dealing with the soft drinks and apart from that, Pepsi launched many types of snacks like Kurkure and Lays and other food items. In the field of snacks and other food items, Pepsi is much more ahead of Coca-Cola and this can be a serious problem for the company as Pepsi can also tackle Coca-Cola in the soft drink field (Gersen and Hemphi 2019). Coca-Cola is the biggest company for manufacturing carbonated beverages. These drinks are majorly thesource of sugar intake. Due to this, the customers are facing many health issues in their day to day life. Obesity and diabetes are the most common health issues faced by the customers of soft drink. Till now, the company is not having any solution for dealing with such kind of health issue. If any of the competitors of Coca-Cola will find the solution in this field then that can surely degrade the position of this company in the market.

The company is also facing the issue of destructive packaging that is a huge concern for the environment. Coca-Cola was among the top 5 consumer brands who contribute immensely to carbon emission and global warming by using the bottles that are made up of throwaway plastics. It is not only the problem with Coca-Cola but these bottles are used by other companies like Pepsi too.If any of its rivals like Pepsi came with an innovative idea to provide the customers in such kind of bottle that are eco friendly then surely the government will take their side and this may ban the products from Coca-Cola. This is one of the biggest concerns that the company need to work on stop future threats.

The company is also dealing with various controversies based on the water used by Coca-Cola for making their soft drinks. Coca-Cola is criticized by many other organizations for using polluted water and lack of water management by the company. Many environmental and social groups are day to day claiming that the company is consuming huge water in those areas where there is the issue of water-scarce (Štofová and Kopáková 2020). Many groups are also claiming that the company is dealing with mixed pesticides that help them to clear the contaminates of the water used for making the soft drinks. This is degrading the reputation of the company in this competitive market. These facts can be used by any of the rivals of Coca-Cola and they can take the competitive advantage by some innovative ideas.

Coca-Cola is dealing with direct as well as indirect competitors in the market. It is clear that Pepsi is the direct competitor of Coca-Cola but there are also some of the hidden companies from which Coca-Cola is dealing indirectly. The company needs to work on its weaknesses otherwise the competitors can threaten the company in the market position.

References
Chua, J.Y., Kee, D.M.H., Alhamlan, H.A., Lim, P.Y., Lim, Q.Y., Lim, X.Y. and Singh, N., 2020. Challenges and solutions: A case study of Coca-Cola company. Journal of the Community Development in Asia (JCDA), 3(2), pp.43-54.

Geng, H., Jiang, N. and Liang, Q., 2021, December. Strategic Management and Financial Analysis in the Context of Epidemic--A Case Study of Coca-Cola Company. In 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021) (pp. 2396-2404). Atlantis Press. Gersen, J. and Hemphi, C.S., 2019. 33 Coca-Cola Bottle. A History of Intellectual Property in 50 Objects, p.273.

Guo, X. and Wen, M., 2021, December. Research on Competitive Strategy of Coca-Cola Company. In 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021) (pp. 2879-2885). Atlantis Press.

Kalashnikov, S. and Lutsenko, R., 2020. Investment analysis of Coca Cola Hellenic Bottling Company. «», (98), pp.145-157. Qassas, K. and Areiqat, A., 2021. Management Intellectual Capital and Its Role in Achieving Competitive Advantages at Jordnanian Private Universities. Strategic management assignmentInternational Journal of Higher Education, 10(2), pp.92-107.

Štofová, L. and Kopáková, J., 2020. The Competition Strategy between Coca-Cola vs. Pepsi Company. Calitatea, 21(179), pp.40-46.

Suay, F., 2020. Integrated marketing communications. The Coca-Cola Spain IMC model. Revista de Estudios Empresariales. Segunda Época, (2), pp.18-31.

Tien, N.H., Vu, N.T. and Tien, N.V., 2019. The role of brand and brand management in creating business value case of coca-cola Vietnam. International Journal of Research in Marketing Management and Sales, pp.57-57.