Every organization has both the internal and external environment. For success to come forth, these organizations have to scan the environment.
Environmental scanning is a process where firms possess and utilize information on the activities and trends that are in the organizations’ environment (Caa rpenter & Sanders, 2009).
This process assists firms to predict the future thereby planning how to counter or minimize the threats and maximize on the opportunities.
This paper will discuss the internal and external environments of the Coca-Colthe a Company and PepsiCo Company. In addition, it is going to analyze the business strategies that these companies use to gain a competitive advantage over their competitors.
The internal environment of the Coca-Cola Company there is a diverse workforce that includes all generations, races, and religions. This culture of absorbing employees from different backgrounds has assisted the company in encouraging product identification among its customers.
Markedly, the company has branches in over 200 countries; therefore, absorbing different workforce improves product identification among customers. The company practices workforce flexibility by allowing employees to attend to some of their activities.
An employee can choose on the time schedule that he/she feel to work. This system has enhanced employees’ satisfaction. PepsiCo has also adopted a similar management technique of diversity in employment and using recent technological development in order to meet their strategic objectives.
Moreover, it encourages harmonious relations between employees and the management. The two companies in the beverage industry have the opportunities of persuading consumers to use their products.
These two multinational companies are competitors; as a result, they have been striving to differentiate their products and services with the intention of gaining competitive advantage over one another.
The Coca-Cola Company has adopted product differentiation as a business level strategy. This strategy involves creating unique products for their customers. Coca Cola has been producing unique soft drinks that distinct it from the competitors.
For example, it designed plastic bottles, which are extremely light to meet the needs of the customers at all events like travelling. The differentiation strategy also includes the launch of the Coca Cola Free Style machine, which enables consumers to produce drinks of different flavors.
Coca Cola has maintained its customers even with the entry of other beverage companies. The strategy has assured the company of customers’ loyalty.
PepsiCo, on the other hand, has adopted the cost leadership strategy where it has lowered the prices of its products to gain access to the market and maintain its customers.
For instance, the market price for the 350ml Mirinda is the same as the market price for 300ml coca-cola (PepsiCo Americas Beverage, n.d.). Clearly, PepsiCo has adopted this cost reduction approach in order to gain competitive advantage over the competitors within the industry.
The Coca Cola Company has been in the beverage industry for over 126 years. During this time, it has extended its branches to over 200 countries and increased its soft drinks to over 500 brands.
Some of its brands include fanta, coke zero, diet coke, sprite, coca-cola among others (Coca-Cola Journey, n.d.).
The brand variety gives consumers a range of product choice hence satisfying many customers. Those who do not like one brand can easily switch to another. The variety brands of soft drinks have enabled Coca Cola to survive in the competitive market.
PepsiCo has also adopted the competitor’s approach of producing variety of soft drink brands and with the maintenance of brand quality and quantity; it has been able to make profits in the dynamic market. PepsiCo has also adopted performance approach style of management.
It has dedicated itself to production of variety of brands that are healthy and convenient. Moreover, it strives to produce fun foods and drinks that appeal to the local consumers thus remaining relevant among its customers.
PepsiCo has also involved local master chefs in order to produce products that are in line with the local tastes. For instance, in India and some parts of the Middle East, it has flavored Mirinda to have the tamarind flavor (PepsiCo Americas Beverage, n.d.).
The company has also engaged itself in encouraging people to live a balanced and healthy life. In 2010, it initiated the Global Nutrition Group that has accelerated their growth in Good-For-You products and brands.
From this perspective, PepsiCo has created value to their products through different programs. The large size of the company has enabled it to offer numerous brands at relatively low prices as compared to their competitors (PepsiCo Americas Beverage, n.d.).
The company can practice this strategy since it has a large volume of production thus lowering their costs of production. In the end, they will still make profit and sustain competitions from other firms that enter the market.
Moreover, if suppliers increase their prices, the company will be at an advantaged position to adjust to the new prices by effecting the changes in consumers with ease.
In the case of economic instabilities, PepsiCo can remain operational given the internal efficiency and capability to lower the cost of their products and still make a profit.
The Coca Cola Company has engaged itself in a variety of programs to test the effectiveness of its strategies in the market.
For example, it uses performance measurements to conduct market research through surveys and questionnaires to understand the feedback of their customers in terms of quality, pricing, and packaging.
Here, the top management specifies the implementation processes and outcomes that require evaluation and monitoring. The program must measure the processes in a consistent and non-subjective manner.
The results of the research provide essential information on the effectiveness of their strategy and possible areas that requires improvement (Wheelen & Hunger, 2010).
The go-to-market strategy attests to this initiative; the company constantly evaluates its strategy given the dynamic nature of the market. This approach has assisted them in adjusting their distribution models across their networks.
The company has been able to manage and deliver products after using the above data collection methods.
The guidelines are essential in testing strategy effectiveness, as the companies are able to know their weaknesses and strengths in the internal environment and opportunities and threats in the external environment.
Further, Coca Cola had adopted the facial coding technology to test the impacts of an advertisement strategy on consumers. The technology analyses the emotions of consumers towards a given product.
The data is compared to the surveys to access the customers’ response to a company’s strategy. This approach together with performance measurement has improved the delivery of Pepsi’s products.
Performance measurement guidelines can demonstrate the progress of an organization towards its strategic objectives and goals (Carpenter & Sanders, 2009).
Additionally, they show the effectiveness of the departments within an organization hence assisting in identifying areas that need improvement.
In essence, the current dynamic and competitive market require organizations to conduct detailed environmental scanning in order to remain profitable in long-term aspects.
Carpenter, M. A., & Sanders, W. G. (2009). Strategic management: A dynamic perspective concepts and cases (2nd ed.). Upper Saddle River, NJ: Pearson/Prentice Hall.
Coca-Cola Journey. (n.d.). The Coca-Cola Company. Retrieved May 7, 2013, from http://www.coca-colacompany.com/?topic=business
PepsiCo Americas Beverage. (n.d.). Pepsico.com. Retrieved May 7, 2013, from www.pepsico.com/Company/Global-Business-Units/PepsiCo-Americas- Beverages.html
Wheelen, T. L., & Hunger, J. D. (2010). Concepts in strategic management and business policy: Achieving sustainability (12th ed.). Upper Saddle River, NJ: Pearson/Prentice Hall.