PEST Analysis for the Coca-Cola Company

PEST Analysis
The PEST analysis identifies changes in the market caused by political, economic,
social, and technological (PEST) factors.
Below is the PEST analysis for the Coca-Cola Company, a global enterprise that has
ranked as one of Fortune's top ten most-admired companies for the past consecutive
five years.

Political Analysis and Factors

The Food and Drug Administration (FDA) regards non-alcoholic beverages such as
Coca-Cola as within the food category. The government regulates the manufacturing
procedure for these products. Companies that fail to meet the government's standards
are subject to fines. Coca-Cola is also subject to the Occupational Safety and Health
Act and to local, state, federal, and foreign environmental regulations. Following are
some of the factors that are influencing Coca-Cola's operations:
1. Changes in laws and regulations: changes in accounting standards, taxation
requirements (tax rate changes, modified tax law interpretations, the entrance of
new tax laws), and environmental laws either in domestic or foreign authorities.
2. Changes in the non-alcoholic business era: competitive product and pricing
policy pressures and the ability to maintain or earn a share of sales in the
worldwide market compared to rivals.
3. Political conditions, specifically in international markets: civil conflict,
governmental changes, and restrictions concerning the ability to relocate capital
across borders.
4. Ability to penetrate emerging and developing markets: This also relies on
economic and political conditions, such as civil conflict and governmental changes,
as well as Coca-Cola's ability to form effectively strategic business alliances with
local bottlers, and to enhance their production amenities, distribution networks,
sales equipment, and technology.

Economic Analysis and Factors

During the recession of 2001, the US government took aggressive actions to turn the
economy around by 2002. Coca-Cola took note of this and realized that loan interest
rates would likely rise as the economy returned. Thus, they took out low-cost loans in
2001 to fund growth in 2002. They used the loans for research and development on
new products to capitalize on in a strong 2002 economy.
Currently, as global growth is slowing, Coca-Cola may be watching for a similar
opportunity

Social Analysis and Factors

Social factors that affect the sales of Coca-Cola's products include the following:
1. The majority of people in the US are showing increasing interest in healthy
lifestyles. That has strongly influenced the sales within the non-alcoholic beverage
sector as many customers switch to bottled water and diet colas such as Coca-
Cola Light or Zero.
2. Time management is a concern for 43 percent of all households, a percentage
that has increased over the years.
3. Customers from ages 37 to 55 are concerned with their nutrition. Also, a large
portion of the population is baby boomers. As they become seniors, they are more
concerned about life choices that will impact their life expectancy. That will continue
to affect the non-alcoholic beverage sector by increasing the demand for healthier
drinks.

Technological Analysis and Factors

Some factors that cause a company's actual results to vary from expected results
include:
1. The efficiency of a company's advertising, marketing, and promotional
programs: For example, television, web, and social media advertising are
constantly evolving. The ability of a company to effectively promote their products
through these channels impacts sales.
2. Packaging design: In the past, the introduction of cans and plastic bottles
increased sales volume for the company due to how easy these containers were to
carry and dispose.
3. New equipment: Because technology is continuously advancing, new
equipment is constantly being introduced. Because of these new technologies,
Coca-Cola's production volume has increased sharply compared to that of a few
years ago.
4. New factories: Coca-Cola Enterprises (CCE) has six factories in Britain that use
modern technology to ensure the quality and speedy delivery of the product. In
1990, CCE opened one of Europe's largest soft drinks factories in Wakefield,
Yorkshire. The factory has the ability to produce cans of Coca-Cola at a faster rate
than a machine gun can fire bullets.