Technological progress way, industrialisation, and globalisation act as influential factors and transform the global business environment. It has become uncertain, volatile, intensely competitive, unpredictable, and challenging for contemporary business entities. The management of a business entity has to use its core competencies and key resources in order to create sustainable competitive advantages and thrive in the industry in which it operates. In this paper, the vision, mission, core values, and other details of Coca-Cola will be analysed. The management of the firm has to explore emerging opportunities and generate maximum value by using appropriate business strategies and marketing strategies. The objective of this paper is to assess the external environment in which Coca-Cola operates. This paper will identify the strengths, weaknesses, opportunities, and threats of Coca-Cola. It will be fruitful for the management of this company to utilise its strengths and opportunities. It will allow this USA-based business entity to stay ahead of the competition.
The Coca Cola Company, established in 1886, operates in the beverage industry. This firm offers carbonated soft drinks for its target audience. The headquarters of this organisation is located in Atlanta, Georgia, United States. The business operation of this USA-based business entity is controlled by James Quincey, the CEO of this organisation. This organisation offers its products across the world. With the assistance of 86200 employees, this organisation fulfils the demand of its target audience. The annual revenue of this organisation was 37.27 billion US$. In this year, the profit of this organisation was 8.92 billion US$. The product portfolio of this organisation contains a wide range of products such as diet coke, diet coke caffeine-free, caffeine-free coke, Coca-Cola vanilla, Coca-Cola lime, Coca-Cola cherry, Coca-Cola life, Coca-Cola mango, Coca-Cola Citra, and others. The mission statement of this organisation is to inspire moments of optimism and happiness and assist customers to create value and make a difference. The vision of this organisation is to craft the brands and choices of drinks that the customers love.
Coca-Cola is confronting several challenges due to the changes in the consumption pattern of the target audience. That is the reason the management of this organisation has to identify its strengths, weaknesses, opportunities, and threats. Appropriate utilisation of SWOT analysis will be beneficial for this USA-based business entity to identify areas that need further modification to generate values from the opportunities.
Dominant market share in the beverage industry is beneficial for this organisation to manipulate the competition in the industry. Being a large business entity and having a dominant market share enables this USA-based business entity to create sustainable competitive advantages. Economies of scale allow Coca-Cola to control its fixed costs over several brands. It allows this organisation to offer its products as cheap as possible. The market power over suppliers and distributors due to its size and controlling power is the reason for which this organisation generate value. The power over buyers is a strength for Coca-Cola Company. This organisation has enormous brand recognition all over the world. This organisation has the financial strength to influence the purchasing decision of the customer through its brand power and effective marketing campaign. A diversified product portfolio with a 21-billion-dollar brand is a strength of Coca-Cola. At present, this organisation owns more than five hundred brands. The product portfolio of this company consists of products from seven beverage categories, which are carbonated soft drinks, bottled water, sports drinks, alternative drinks, energy drinks and shots, juice and juice drinks.
For the weakness of Coca-Cola, it can be said that aggressive competition with Pepsi is creating new challenges for this organisation. This organisation is forced to compromise with its profit margin in order to dominate the competition. Compared to its rival business entities like Pepsi, Coca-Cola has low product diversification. Pepsi has launched snacks like Lays and Kurkure. In this segment, Coca-Cola is lagging. People are becoming health cornered. As a result of this, they have started reducing carbonated drinks, which is the major source of sugar intake. High sugar intake can lead to health issues like obesity and diabetes. This organisation fails to diversify its product portfolio to include any healthy alternatives to address this issue.
For the opportunities, it can be said that this organisation can introduce new products and diversify its segments. The inclusion of products in health and food segments will allow this organisation to create sustainable competitive advantages. This organisation can expand its business operation in emerging countries. Expansion of its business operation in Middle Eastern and African Countries will allow this company to maximise its market share and customer base. This organisation can dominate its competitors by using an advanced supply chain system. As the business operation of Coca-Cola heavily relies on logistics and supply chain. This organisation has several packaged drinking water brands such as Kinley and others. For Coca-Cola, expansion of its business in healthy drinks and packaged water will be an opportunity to generate revenues by avoiding people's criticism.
For the threats for Coca-Cola Company, it can be said that this organisation has faced several criticisms for its water management issue. Several social and environmental groups have claimed that Coca-Cola has a vast consumption of water in water-scarce regions. This organisation has faced several criticisms as there is an allegation is that Coca-Cola is polluting water and mixing pesticides in water to clear contaminants. The brand reputation of Coca-Cola has been affected by this incident. The sustainable growth of this organisation is affected by packaging controversy. For packaging, this organisation mostly uses single-use plastic bottles, which is harmful to nature and the environment. The sustainable growth of Coca-Cola is affected by direct and indirect competition. It is a major threat for this company.
In order to assess the external business environment, in which Coca-Cola operates, the management of Coca-Cola has to use PESTLE analysis. It will allow this organisation to get insights into the target market.
Political factors can create challenges for the business operation of this USA-based business entity. The presence of political stability in the target market can allow this organisation to operate its business operation without any disturbance. The interference of bureaucrats and political parties can create challenges for this organisation. The presence of corruption, government effectiveness can create challenges for Coca-Cola.
The economic stability of the target market can influence the business operation of Coca-Cola. The per capita income, GDP, GDO growth rate, the inflation rate of the target country plays influential roles for Coca-Cola. Though this organisation dominates almost fifty per cent of the market share in the carbonated beverage market, yet this company is facing stiff competition from its direct and indirect competitors. By including health products into its product portfolio, Coca-Cola can create sustainable competitive advantages and generate more revenue in the upcoming days.
This organisation operates in different countries across the world. The cultural disparities between different countries might create challenges for this organisation. That is the reason this organisation can use Hofstede's cultural dimension model to identify cultural disparities between different countries. The outbreak of Covid-19 has disrupted the sustainable growth of this organisation. The demand for consumer goods has decreased drastically in this pandemic situation. Several people are losing their jobs in this challenging situation. It might create an adverse impact on the business operation of Coca-Cola. In order to create sustainable competitive advantages, this organisation has to understand the cultural factors, societal values, beliefs of the target audience. Based on that analysis, the management of Coca-Cola has to optimise its business strategy and marketing strategy.
This organisation has to utilise the advanced technology to manage its distribution channel and logistics. In a country where advanced technology and infrastructure are available will be fruitful for this organisation to gain advantages. In order to stay ahead of the competition, this USA-based business entity has to use technology and infrastructure strategically.
This organisation has to follow the environmental regulations set by the government. As this company operates in several countries, it might be challenging for Coca-Cola to manage its business operation by following the laws and compliances. This organisation uses single-use plastic bottles for packaging. It can be said that this company should focus on green packaging.
This company has to follow the regulations set by the government. The management has to ensure that this company follows employment laws and provide a safe and discrimination-free workplace for its employees. This company has to provide adequate remuneration and other benefits to its employees.
Thus, this discussion concludes that the external business environment in which Coca-Cola operates is challenging. This company has to utilise its strengths and opportunities to mitigate threats and weaknesses. This organisation has to focus on green packaging, sustainable business practices. It will allow this company to create a positive brand image in the marketplace. This organisation has to expand its business operation and include healthy drinks into its product line to attract health-conscious customers.