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Business Environment: Coca Cola Add in library

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Question:

Task:

Describe the organisation of your choice. You must explain the nature of the organisation and its background, as well as the factors that have heled it to become successful in its sector. You will need to identify the criteria you have used for judging the organisation success.?

Discuss how SWOT and PESTLE frameworks can be utilised by the organisation in its strategic decision making and how the use of these models can impact upon an organisation long term success.?

Analyse the evolution of the culture of your chosen organisation in the context of the changing business environment and how organisation’s culture can influence its long term success.?

 

Answer:

Introduction:

Business environment is the total of external and internal factors that affects the company’s operations and functions like customers, employees, stakeholders, demand and supply, competitors etc. These external and internal factors are dynamic in nature, they keeps on changing which is unpredictable. Business environment is different in every country. Every business has some objectives which they need to accomplish and sustain themselves in the market. Every organization should do a study on their business environment to understand the market and the future prospects related to planning and action for the betterment of the organization and achieving the organisational objectives. The below is the detailed analysis about the company name Coca-Cola, a well-known and renowned brand of beverages across the globe.

Coca-Cola started its journey in the year 1886, when Dr. John S. Pemberton who was a pharmacist wanted to create a soft drink with distinctive taste. He created a flavored syrup get the same tested at the pharmacy and it was liked by those who tested it. Dr. Pemberton and his partner Frank M. Robinson opened the company name Coca-Cola.

It started with the 9 servings per day for 5 cent per glass in Atlanta but now its 1.9 billion servings per day are estimated globally. In next 2 yrs. the company was sold to various parties after it becomes the world’s number one sparkling drink(Myanmar, 2012).The distribution of Coca-Cola was expanding, the growth rate was very high and hence the company decided to make portable beverage. They installed the bottle plant for Coca-Cola. Benjamin Thomas, Joseph Whitehead and John Lupton purchased the bottling rights and made the bottling system of Coca-Cola worldwide( Houpt, 2011).  

Coca-Cola  

With the growing needs and demand of the industry there were many challenges faced by the bottlers, the plants at that time were capable of producing 1000 bottles at a time. So the bottles decided that this drink a distinctive and standard bottle. Contour bottle was selected in 1916. The new bottle was very unique and catchy, it can recognize in the dark also and it sets the co-cola brand apart from its competitors. In 1977 the bottle got the trade mark and there are many artists who keeps on working on the logo and designing of the Coca-Cola.

In 1987, the first marketing tactic was considered which distribution of coupons for the free sample was. It was an innovative tactic and after they advertised Coca-Cola in newspapers. After that many advertising campaigns took place like  Many fondly remember the 1971 Hilltop Singers performing “I’d Like to Buy the World a Coke”, or the 1979 “Have a Coke and a Smile” commercial featuring a young fan giving Pittsburgh Steeler, “Mean Joe Greene”, a refreshing bottle of Coca‑Cola (Geuss,2010). People started relating the brand of Coca-Cola with friends, fun and good times.

In 2009, the campaign name “Open happiness” took place globally. It gives a simple message to enjoy the small events of happiness around us. We need to halt, enjoy and get back to work. The campaign message was seen all over the place on television, radio, shops, billboards, Printed advertisement. It was also the part of various sports events and these campaigns ran for about a year through videos, tweets, pictures, bogs etc.There is a connection baton wellness and happiness and Coca-Cola is playing a big part into the same around the globe. 

 

Key Success Factors

In today’s competitive industry, key success factors are very important to survive. Factors like products, resources, competencies, attributes and market achievements. It is important to understand the industry background for recognizing the success factors(Mark, 2000). Because of the various external and internal factors there may be change or fluctuation in the key success factors. Some of the key success factors for Coca-Colaare as below:

Strong Global Presence:

Coca- cola is available worldwide;almost every nook and corner of the world and it is because of the easy portability and less risk of getting spoiled. It is sold in markets, restaurants, stores through bottles as well as vending machines(Georgia, 2012).The presence of Coca-Cola is in 200 countries and it is due to the marketing strategies and global expansion policies. It is the leading drink of 20th century.

Licensed Bottles:

This is one of the major success factors of coke. They produce mixture and give it to their licensed bottles and they further produce the final product by adding sugar and filtered water. These bottles have access to the local territory and they sell it further in the market and to local vending machines. This gives them the more geographical area for serving the product.

Fixed assets utilization:

Coca-Cola operates on the global scale and still has local approach with the help of bottling system. These firms allow them to run business in local market with licensedtrademark. Since the ultimate revenue goes to the bottlers and hence they generate it majorly through selling the concentrate to the bottlers (Benson, 2004).

Differentiation and advertising:

Coca-Cola is major player in advertising and they believe in differentiating their product rather than focusing on pricing. In 2000, the coke has spent $1.3 billion dollars on advertising. They always have theme attached to their advertising campaigns and have associated with worldwide sports event like cricket, football(Harford, 2007).Their focus is to appeal the masses in segments. They keep their product different from their competitors by always giving it a different tag line or variety of flavors available in market as per the preference, need and geography.

Cherished and recognized brand name:

Coca-Colahas established a brand name worldwide. Everyone what Coca-Cola is, everyone has tasted it, they have their loyal customers now and hence it has given them a success factor. The other products like minute maid, Fanta of Coca-Cola brand are highly profited because of the brand name associated with them.

Distribution and retail network:

 In this era of competition, if the product is available at the doorstep of the consumer it means it is not working. Coca- cola has a very strong chain of distribution and retail network. They provide 15-20 % margins to the retailors which are enough for them to keep the Coca-Cola products with them (Mark, 2000). 

Product Innovation:

Coca-Cola cheery, Coca-Cola Zero, Coca-Cola vanilla are the different variations of the main product. The company keeps on experimenting and giving variety to its consumers. The reason is to always give consumers better taste and surprise according to their needs and preferences. This keeps their market open and does not bring fatigue in customers.

Big Product Line:

Diet Coke, Coca-Cola cheery, Coca-Cola Zero, Coca-Cola vanilla, coffee, lemon is all the variety of coke available in the market. So there are various products launched under one product line. Different countries offer different product line (Katie, 2011).

The success criteria for any organization are very important. The purpose of nay business is to be successful in the market, beat the competition and achieve organisational objective. There may be different views for judging the organisational success like time, quality, cost or growth but according to experts, for Coca-Cola it is their approach towards their customers (Brett, 2011).They have been into the market from part 125 yrs. and that only because they have loyal customers and they are able to provide the quality product to them. They have always been innovating their products bringing something new for their consumers as per their taste and geographies, they have been able to associate themselves with various worldwide events and providing happiness to the viewers of the events, because of their larger consumers they have a big and strong distribution network and they are globally present. 1.9 billion Servings per day proves it that it’s only the customer focus they have when it come to their success factor

 

SWOT Analysis for Coca- Cola

Strengths:

Coca-Cola is multinational company with its presence in more than 200 countries. They have almost the biggest number of customer base and the largest selling beverage company. They have breadth of product line according to geographical presence and preference. The product can be consumed by anyone of any age and they are existing in some counties where they have no competitors. Also theyproduce their bottles themselves. (David, 2011).

Weaknesses:

The major weakness of Coca-Cola is that they are significantly focused only on carbonated drink and they have not diversified their products. They are also in debts due to unreasonable acquisitions. Also some of their brands are not doing well in the market and they have been spending a lot of revenue on them.

Opportunities:

There are many opportunities for Coca-Cola to grow like increase in the consumption of bottled water, growing consumption of beverages especially in BRIC, more demand of healthy beverages, they can also acquire some new and small beverage company and can grow.

Threats:

There is a huge competition in the industry; there are similar products available in the market. A small is mistake will not be affordable by the company like internal conflicts like late salary payments, employee conflicts, bad team work etc. which can lead to late delivery and bad reputation of the organization (May, 2006).

Swot analysis provides a clear picture to the organization about their current situation and help in developing the plan of action. It has provided Coca-Cola about the strengths they are carrying and the weaknessthey have along with future opportunities and threats. This has given picture to Coca-Cola for its survival strategy and future action plan. In order to achieve the profit above market average, the Coca-Cola should apply their business model, network and core competencies.

 

PESTEL Analysis

A pestle analysis is one the method to analyses the external factors that affects the business. This can be used with other methods to analyses the internal factors. This is used to create the strategic plan for the business and the upcoming opportunity for the business. Pestle stands for political, economic, social, technological, environmental and legal factors (Tucker,  2009).

PESTEL analysis for Coca-Cola

Political:

Political factors like tax policies, trade restrictions, tariffs, employment laws, environmental regulations, political stability, corrupt government, underdeveloped economy affects the company. It has affected Coca-Cola also in several ways. Hence these factors should be considered always because they vary from country to country and Coca-Cola has to consider new policy and government laws for every new country where they open their business (Stafford, 2012).


Economic:

There may be countries which are poor or underdeveloped or may be in a developing stage. This affects the pricing of the Coca-Cola product. People may be poor and due to credit crunch they may like to invest their money in more important items like food, accommodation, clothing etc. that affects the company’s business (Will, 2007).

Social:

Social issues are like age, heath factors of a particular place, where maximum number of people are of higher age and taking beverages is not good for their health that affects the company business.

Technological:

Technology plays a very important role these days, the countries which have better technology there are facilities for better packaging systems, automation process, more R&D activities and growing economy. Hence in such a case the Coca-Cola has to take advantage and can grow their operations there. People are more advance in such country they require innovation and change from time to time as well as they are more informed about the product and service they are using. Hence, the company needs to be more careful, honest and advance in such a place (Julian, 2012).

Environmental:

Environment factors like hot and cold climate, there are places which are very cold throughout the year their people would prefer a warm beverage over the cold one. There are places which are hot in climate and their consumption of water and cold beverages are more. Hence, Coca-Cola sale strategies should keep such factor in mind (Murden, 2005). 

Legal:

Legal factors are particularly related to the tax and legal laws of the country. There may be high tax in some countries and in some countries there may be no tax on the food and drink items. In some counties Coca-Cola is paying high tax but generating less revenue. In such cases the company strategies for pricing differs and it particular affects the decisionmaking for Coca-Cola.

Various Micro and Macro environment factors can be analyzed by using SWOT and PESTLE framework for Coca-Cola. It affects the decision making, helps in facing and fighting the competition and also ascertaining the future of the company by defining the threats. It is not confirmed to the profit making rather they are wonderful tool for strategizing the planning and action for Coca-Cola. (Kripalani and Mark, 2003).

 

Culture

Every organization has it unique characteristics and personality, like any person. These unique characteristics  makes an organization culture.Organisation culture affects the Behaviour of the people working together to achieve company’s objectives. It is a kind of invisible force. Organisational culture is process of shared values, assumptions, beliefsetc. that affects the behavior of the people working with that organization. It affects how they act, dress and perform their tasks. It is kind of boundary and guideline that makes a unique culture (Barbara and David, 2007).Every organization has some unique characteristics on the basis of which the culture is formed. Innovation is one characteristic, the employee’s takes high risk and brings something new in the organization if organization believes in innovation, otherwise the employees do their work in the same manner always. The organization which gives more emphasis to attention to detail are likely to see better results rather than those who gives less importance to attention to detail. There are organization which are more outcome oriented , they does no emphasis on the process of work they only requires the results. There are organization which provide fair treatment to their employees in terms of salary, treatment etc. and give them dignity and respect. There employees are more likely to stay with the organization and have low attrition rate. Teamwork is another important aspect for any company, where there is more emphasis on team work , people are likely to have better relationships with their managers, subordinates and peers (Orozco, 2006).

The above characteristics define an organisational culture. The more positive organization culture is likely to have more success rate and satisfaction within the employees.

Coca-Cola culture is defined by the seven values they follow which are passion, leadership, integrity, diversity, collaboration, accountability and quality. They believe in creating valued culture and making a difference. With the change in the business environment the culture of Coca-Cola has also changed. They believe in two assets that is their people and their brand. They are dealing with worldwide diverse staff members, ideas and talents. They are able to embrace the diverse world and creating sustainability (Jessica, 2011).  They have programs which retain and attract the diverse talent. They believe in respecting humans and giving them a better workplace as part of their culture and sustaining business. Coca-Cola is also providing a safe and healthy work environment. Every individual is important to them and they have a right for workplace safety (Hamowy, 2007).Business partners and suppliers are core for their business success, so they are following supplier guideline principles that gives importance to responsible workplace practices and policies and applicable to the local labor laws, technology, environment and regulations. Theyalso practice Anti-bribery law for protecting company’s reputation. There are more than 70000 associates who are making the Coca-Cola system. They believe in environment where everyone’s talent and ideas are encouraged. They have open flow of communication where staff member can discuss the issues, share ideas, information, share success and information, increase awareness. Various development programs are there in which the people can learn and grow their skills, they are also offering the best competitive packages as per the industry standards. High performers are rewarded and recognized(Boville, 2004).

culture diversity

Hence, with the changing business environment Coca-Cola is working hardtop give fair treatment to their workers, manage the diversity programs  on regular basis and developing enhanced understanding with suppliers, stakeholders, colleagues and customers (D'Amato, Fasoli, Kravchuk, Righetti,2011).This is a long term strategy which gives rise to the long term success of the company. If the company is rigid and not ready to change with the changing environment , they may not be able to sustain in long run. But with the company like Coca-Cola  which is globally present , have to deal with the cultural issues on daily basis and they are imbibing the new practices and changes. They’re understanding the external and internal factors that are responsible for the growth of their organization and leading towards success at the marketplace (Esterl, 2011).

 

References

In June 2012, Coca-Cola announced its intentions to begin distributing in Myanmar.Stafford, Leon (September 9, 2012). "Coca-Cola to spend $30 billion to grow globally".The Atlanta Journal-Constitution. Retrieved January 24, 2013.

Houpt, Simon (October 4, 2011). "Apple cracks Interbrand’s best global brands top 10 list". Globe and Mail (Toronto).

Geuss, Megan (October 2010). "First Coupon Ever". Wired 18 (11): 104.

Richard Gardiner, “The Civil War Origin of Coca-Cola in Columbus, Georgia,”Muscogiana: Journal of the Muscogee Genealogical Society (Spring 2012), Vol. 23: 21–24.

Mark Pendergrast (March 16, 2000). For God, Country and Coca-Cola. Basic Books. p. 25. 

Benson, Drew (2004-04-19). "Coca kick in drinks spurs export fears". The Washington Times (The Washington Times, LLC). Coke dropped cocaine from its recipe around 1900, but the secret formula still calls for a cocaine-free coca extract produced at a Stepan Co. factory in Maywood, New Jersey.

Harford, Tim (May 11, 2007). "The Mystery of the 5-Cent Coca-Cola: Why it's so hard for companies to raise prices". Slate. Archived from the original on July 10, 2007.

Mark Pendergrast (March 16, 2000). For God, Country and Coca-Cola. Basic Books. p. 32. 

Katie Rogers, "'This American Life' bursts Coca-Cola's bubble: What's in that original recipe, anyway?," Washington Post BlogPost, February 15, 2011, retrieved February 16, 2011.

Brett Michael Dykes, "Did NPR’s ‘This American Life’ discover Coke’s secret formula?,"The Lookout, Yahoo! News,February15,2011.
David W. Freeman, "'This American Life' Reveals Coca-Cola's Secret Recipe (Full Ingredient List)," CBS News Healthwatch blogs, February 15, 2011.

May, Clifford D. "How Coca-Cola Obtains Its Coca", The New York Times, July 1, 2006. Retrieved December 4, 2007.

Stafford, Leon (September 9, 2012). "Coca-Cola to spend $30 billion to grow globally".The Atlanta Journal-Constitution. Retrieved January 24, 2013.

Will Weissert (May 15, 2007). "Cuba stocks US brands despite embargo". USA Today. Associated Press. Retrieved August 11, 2013.

Julian Ryall (August 31, 2012). "Coca-Cola denies 'cracking' North Korea". The Telegraph (London). Retrieved August 11, 2013.

Murden, Terry (January 30, 2005). Coke adds life to health drinks sector. Scotland on Sunday. Retrieved February 14, 2006.

Kripalani, Manjeet and Mark L. Clifford (February 10, 2003) "Finally, Coke Gets It Right in India". BusinessWeek. Retrieved August 9, 2006.

Barbara Mikkelson and David P. Mikkelson, "The Claus That Refreshes," snopes.com, February 27, 2001 . Retrieved June 10, 2005. Archived 10 July 2007 at WebCite.

Orozco, Cynthia E. Quintanilla Perez, Selena. The Handbook of Texas online. Retrieved on June 5, 2006.

Jessica Burke (September 26, 2011). "Sharing your Coke: marketing genius or just entirely weird? | Food Magazine". Foodmag.com.au. Retrieved February 23, 2013.

Hamowy, Ronald (2007). Government and public health in America (illustrated ed.). Edward Elgar Publishing. pp. 140–141. Nikki Sandison (November 16, 2007). "Coca-Cola revives popular 'holidays are coming' ad". Brand Republic.

Boville Luca de Tena, Belén (2004). The Cocaine War: In Context: Drugs and Politics. Algora Publishing. pp. 61–62. ISBN 978-0-87586-294-1.

Tucker, Sundeep (March 18, 2009). "China blocks Coca-Cola bid for Huiyuan".Financial Times (Hong Kong). Retrieved March 18, 2009.

Esterl, Mike (December 1, 2011). "A Frosty Reception for Coca-Cola's White Christmas Cans". The Wall Street Journal.

D'Amato, Alfonsina; Fasoli, Elisa; Kravchuk, Alexander V.; Righetti, Pier Giorgio (2011-04-01). "Going Nuts for Nuts? The Trace Proteome of a Cola Drink, as Detected via Combinatorial Peptide Ligand Libraries". Journal of Proteome Research (American Chemical Society) 10 (5): 2684–2686.

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