Executive Summary
The report aims to critically assess the Coca-Cola Company and provide relevant recommendations to the organization. Below, a number of relevant tools – PESTLE and SWOT – were used to evaluate the company’s external and internal environment, respectively. Founding on the results of these analyses, it was recommended to adhere to the current business strategies of the corporation, as well as to pay more attention to its sustainability affairs, diversifying its product portfolio with mineral water.
Background
With the company logo, taste and classic glass bottle, one can easily recognize the Coca-Cola drink in any part of the world. The company successfully uses these strengths to promote the product. Coca-Cola is a real brand that can be found in homes, grocery stores, offices, and hotels around the world (Pasztor, 2019). From the word Coca-Cola, one involuntarily imagines a glass bottle with a red label and a delicious aromatic carbonated drink inside.
Coca-Cola is the only brand of its kind that represents the family product of millions of people. This drink has many flavors, of which at least one can find in more than 200 countries around the world. The Coca-Cola Company has over $80 billion in the capital (The Coca-Cola Company, 2021). Sales especially increased when the company launched a trade policy aimed at attracting consumers by placing customers’ names on their bottles (Khan, 2020). It was offered to buy Coca-Cola, take pictures with the drink and post photos on social networks. This was a great move from a marketing standpoint, as most people are now addicted to the Internet and social media.
Coca-Cola’s main competitor today is Pepsi. The main disadvantage of the first carbonated drink is that, in addition to this soda, the company did not develop food and snacks for its product. Thus, in this aspect, in terms of competition, Coca-Cola comes after a rival company since Pepsi has developed and introduced its chips and many other products (Becheur et al., 2017). Coca-Cola is able to create new products and diversify its current offerings because they have the brand, the customer base, and the industry to support this activity. Pepsi, in turn, can find market niches for the development of products aimed at a healthy lifestyle. Thus, despite the fact that these producers are moving away from the production of soft drinks, they still remain strong competitors. However, carbonated drinks are a serious factor affecting diabetes and obesity (Harrison, 2021). Coca-Cola, due to its high sugar content, can contribute to an increase in the number of people suffering from overweight and obesity. Nevertheless, the company has not yet found a solution to this problem. Below, the discussion of the company’s affairs, using the relevant management tools, as well as a subsequent recommendation, will be provided.
Discussion
Among prominent enterprises, one can single out the most successful, well-known and the most developed networks around the world. One of them is The Coca-Cola Company, which occupies a leading position. The company’s products are represented in more than 200 countries around the world (The Coca-Cola Company, 2021). The company pursues an active policy of distribution, promotion and advertising of its products using the latest technologies. The Coca-Cola Company uses the following strategies for its successful work: the strategy of reminding the audience about its brand and the strategy of maximum proximity to the product.
One of the directions of the communication policy of The Coca-Cola Company is a constant reminder to the buyer of its existence. The main object of the company’s advertising is primarily Coca-Cola. The Coca-Cola Company uses a wide range of advertising types for advertising its products. This is a large number of direct advertising, which will include mainly video clips on television, advertising on LCD screens, various brand inscriptions located in each city in large numbers, and various pieces of furniture, appliances, and utensils in cafes, bars and branded stores (The Coca-Cola Company, 2021). The company takes part in various events, is a sponsor of many games, and also organizes various tournaments. In addition to sports participation, the company holds regular entertainment promotions, allowing, for example, to exchange can cap for gifts with company symbols and toys. These can also be various kinds of photo contests, implying the receipt of prizes, certificates and subscriptions, and stocks of the company’s products. Another strategy of the company is to provide consumers with maximum proximity to the product and accessibility. To achieve this goal, the company is trying to constantly increase the number of outlets where one can purchase their products.
An important point for the implementation of these strategies is that the company is constantly releasing new products with new flavors or original packaging, which reflects the exacting mood of consumers. A good example is the recently launched Fanta Citrus and Dr Pepper and the following product designs: selling Coca-Cola in ice bottles on the beaches. This company was launched in Colombia in 2013; its result was as follows (Hsu, 2017). About 256 bottles were sold on the beaches within an hour; the sale of Coca-Cola drinks in cans, which are divided into two parts; “gift bottle” New Year’s packing is done according to the principle of “gift bow”.
Further, one can note the design of the can with cold activation technology. At a temperature of minus 10 ° C, three blue ice cubes and a white outline in the form of frost appear on the red can; this idea was realized only in the US market. One can also note the sale of Coca-Cola with unique packaging made by famous graphic designers and Coca-Cola aluminum cans with personalized messages (Makrides et al., 2020). In order to analyze the company’s external environment, the PESTLE will be conducted. Coca-Cola is a non-alcoholic beverage empire serving customers around the world. In order to supply them with carbonated drinks, the company follows strict regulations, meets consumer requirements and uses the best technology available to do so (Guha et al., 2018). It seems reasonable to explore activity of the enterprise by the analysis of factors of various categories.
The most important political factors for the Coca-Cola Company are as follows. The first one is that Coca-Cola is accountable to the FDA. The business must comply with government regulations regarding product placement on store shelves. Changes to established laws could prevent a company from distributing its drinks (Koch & Orazi, 2017). The two countries following countries worth mentioning – Cuba and North Korea, in which Coca-Cola cannot be bought or sold due to the political state of these countries.
The presentation of economic factors implies an emphasis on the fact that the organization in question dominates the market while occupying almost 50% of the entire carbonated beverage market. The company develops new methods of handling its products or changes existing ones by creating new flavors to meet the needs of its customers (Cheng et al., 2021); Coca-Cola has a net worth of over $80 billion (Statista, 2022). Most of this amount comes from the beverage industry.
Then, social factors are that the organization distributes most of its products in cultural countries. At the same time, they meet the requirements of customers in these countries. In Japan, 30 alternative flavors have been created that satisfy Japanese consumers. China is beginning to make similar efforts. In addition, Coca-Cola has always run social campaigns to connect with its consumers (Ellis & Leopkey, 2021). For example, in 2014, it launched a fairly successful #shareacoke campaign. People found bottles with a name where they feel connected to themselves and then gave it to family or friends and shared it on social media.
While providing technological factors, it should be stated that the Coca-Cola Company has always experimented with its product line. For example, in Japan it was the first ready-to-drink frozen drink. The company has a culture that is focused on innovative development. Consumers can play online games and make associations with Coca-Cola products (Gaither et al., 2018). The company actively uses social networks and allows its customers to create their own drinks in various combinations through a special computer interface. It stores data for market research, which will later be used by the company to understand the tastes and preferences of consumers.
Legal factors do not press on the company a great extent – the corporation reserves all rights that are associated with its business, including both past and future products that have been developed using a proprietary process. However, ecological aspects represent a little bit different situation. Coca-Cola is a manufacturer of carbonated beverages and therefore relies on significant water availability. But if something happens, for example, climate change occurs or there is a lack of water, the company may suffer losses and acquire a flurry of criticism in its address (Dekhil et al, 2017). For example, in 2014, a factory in northern India was ordered to close because local farmers accused it of using too much water. A similar situation was in 2019, when an organization that put pressure on the environment called Coca Cola the worst company that pollutes the whole world with its plastic.
To summarize, it would be reasonable to note that the above PESTLE analysis of Coca-Cola highlights the various elements that affect the efficiency of a company’s business. This understanding helps to appreciate the importance of external business factors both for the organization in question and for any other brand where this analysis method was applied.
At this point, it seems rational to conduct the SWOT analysis of Coca-Cola to explore its internal environment; the corporation’s strengths are as follows. First, it is a brand – Coca-Cola, with its global presence in the world market and unique products, is certainly one of the most valuable brands. Second, it is the company’s valuation. One of the most valuable companies in the world, Coca-Cola, is valued at about $80.1 billion (Moorman, 2020). This amount includes the value of the brand, the numerous factories and assets that are distributed around the world, as well as the total cost of production and sales profit. Third, it is global presence – sales of Coca-Cola occur in more than 200 countries around the world.
Fourth, it is the largest market share – there are only two major competitors in the soft drinks segment: Pepsi and Coca-Cola. Of the two, however, Coca-Cola is the clear winner and thus has the largest market share. Fifth, these are marketing strategies – it should be noted that Pepsi often changes its targets to target young people. In turn, Coca-Cola is always trying to win people’s hearts and directs its goals to people of all ages and, first of all, to the family (Hannan et al., 2020). Also, Coca-Cola often involves celebrities in its advertisements to promote the product more. Sixth, it is customer loyalty, given that Coca-Cola drinks have a huge circle of fans. Because of the good taste and pleasant aroma, the search for substitute products becomes difficult for consumers.
Then, the most pressing weaknesses of Coca-Cola are presented below. First, it is low product diversification – where Pepsi made the smart move to diversify into snacks with products like Lays and Kurkure, Coca-Cola fell behind. Such a move could contribute to a greater promotion of the product on the market. Second, it is high sugar content in the drink. If one follows the news, one can find out that today obesity is becoming a serious problem that affects hundreds of thousands of people (Kiefner-Burmeister & Burmeister, 2021). Carbonated drinks are one of the main reasons for the consumption of fat, and Coca-Cola is the largest producer of this product. The outcome is that the consumption of beverages in different countries may decrease as people opt for a healthier alternative. Third, it is water resources management – a few years ago, a lawsuit was filed against the company due to the huge consumption of water resources, especially in areas with water scarcity. The company is also accused of using pesticides to clean water.
The opportunities of Coca-Cola may be formulated as follows. First, diversification in food and health will improve Coca-Cola’s offerings; in turn, this can boost profits (Chiu et al., 2019). Second, it is the exploration of developing countries. Although Coca-Cola has a large presence in developed countries, these countries have begun to prefer healthier drinks. However, developing countries still have a lot of interest in soda. Cold refreshing drinks are especially relevant in hot areas, such as African countries, India, etc. Thus, higher consumption in developing countries will promote the product. Third, it is packaged drinking water – today, packaged drinking water is in great demand, as it is a product that meets hygiene standards. It follows that the Coca-Cola Company needs to focus on expanding the supply of drinking water and bring it to the level of the brand.
The following aspects can be considered as threats to the Coca-Cola Company; first, it is Competition with Pepsi. The latter is a dangerous competitor in this market segment. If not for this company, Coca-Cola would unequivocally be the clear leader in the field of non-alcoholic carbonated drinks. The competition between these two brands is very serious and intense, and it cannot be said that Pepsi plans to retreat (Knoebel & Larson, 2018). The second threat is raw materials – water is an essential threat to the company because water scarcity is growing (Ashton, 2019). Due to climate change, various regions of the world facing water scarcity may start serious litigation. If water consumption is restricted or rationed, then Coca-Cola could suffer serious losses. The same awaits the competitor of Coca-Cola – Pepsi.
In summary, the PESTLE and SWOT analyses were conducted to explore the internal and external environments of the company. They allowed revealing the significant and adverse factors under which the corporation is functioning. At this point, referring to their results, recommendations for the Coca-Cola Company will be given.
Recommendations
The following recommendations may be suggested taking into account the discussion above. First, it seems reasonable to keep adhering to the policies of brand recognition and maximum proximity, given the stable incomes and market share. The PESTLE analysis has shown that there are no considerable issues for the company in terms of legal, technological, economic, political, or social factors. They seem to be a foundation for the revealed primary strategies of Coca-Cola. However, the company is to pay more attention to ecological external and internal aspects. In this vein, the corporation should develop its sustainability affairs. For example, it can collaborate with more organizations that are involved in maintaining environmental balance.
Then, referencing to the SWOT analysis, the Coca-Cola Company has spent a lot of money and time to become a giant in the carbonated beverage industry. However, it overlooks some of the food-related perspectives, which makes it easy for competitors to take over other segments of the market. The Coca-Cola Company is well known around the world and can use its brand to distribute products to developing countries that will appreciate the drink and increase sales profits, especially on hot and humid days. Moreover, the opportunity of distributing packaged drinking water is a basis for the next recommendation. The company could elaborate on factories that would filter and produce mineral water. Such an action can help it deal with ecological threats and become a more environmentally-friendly firm, enhancing its sustainability and corporate social responsibility.
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