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Fazaia College of Education For Women: Submitted To
Fazaia College of Education For Women: Submitted To
SUBMITTED TO
Ma’am Maimona
SUBMITTED BY
Rabia Khan
SUBMISSION DATE
13th, Oct,2020
DISCIPLINE
BBA(Hons.) – 5th Semester
SUBJECT
Strategic Management
PESTAL Analysis of COCA COLA
Introduction
The Coca Cola Company is a leading non-alcoholic beverage brand. It is operating in more than
200 countries with owned and independent bottling partners, retailers, wholesalers and
distributors. This leading beverage brand has more or less 500 licensed brands of soft and energy
drinks, bottled water dairy and sports drinks. The company has a loyal customer base and sells
1.9 billion severing on daily basis.
Despite all the success Coca Cola has declined revenue in 2018 which shows the negative impact
of dynamic external environment in those markets where it is operating. This pestle analysis of
Coca Cola explains how various political, economic, socio-cultural, technological, legal and
environmental factors that affects it in the current global market.
The 6 factors make up the acronym PESTEL. Each letter represents one factor. It is often called
PESTLE. You may these factors using other tests too. PEST, STEEP, and STEEPLE are similar
analyses.
The rising cost of raw materials is a reason for alarm. Coca Cola uses some very basic
ingredients to produce its products, and these ingredients are always rising in prices. The
company can be seen shifting its production base to various countries where the raw material
costs are lower.
One of the ways in which the brand has reintroduced itself is through products such as ‘Coke
Zero’ and other low-calorie products. Since the current generation is quite health specific, these
aerated drinks have been accepted by them. However, looking at matters globally, soda and
aerated drinks have faced a staunch decrease in sales across the world.
There are also cultural issues that are associated with Coca Cola. The brand has been considered
quite destructive towards environments and livelihoods in many third world countries and is thus
not accepted by people. Many Middle Eastern countries still continue to disallow the launching
of the brand due to it being an American product. Coca Cola still pursues developing markets to
be its primary zone of expansion.
Technological advancements such as AI bases analytics and big data operations have also served
the brand in deciding markets trends and service chain management processes. Coca Cola
actively uses the latest technological innovations to help increase its target market and
production base. Other technological processes that are being used by Coca Cola are various
smart farming methods and water harvesting processes. These are crucial for the company to
maintain its low price of raw materials and also to ensure that it does not lead to water crisis as a
result of its high-water demand.
Some of these steps have been taken by the brand. It has promised a mission to reduce its carbon
footprint to near zero in the coming years and is also being looked at as a model corporation by
many. Water smart farming methods such as RAIN and CARE are also applied by Coca Cola
that tries to use as little water-based resources as possible and harvest the maximum amount of
water possible.
The development of humid climate across the world as a part of the climate change has proven to
be beneficial for the company. It can now successfully increase its operation capacity in
countries where it was not possible before. However, low resource efficiency still continues to be
a problem for Coca Cola.
Another legal issue that shows possible problems is their labor practices. The company has been
known to treat its employees in unfair manners and also pay wages that are less than the standard
in their operating country. As a result, Coca Cola has faced protests from various labour unions.
Its corporate ethics are of primary concerns to the company right now.
Conclusion
In conclusion, PESTLE analysis is an invaluable business tool that analyzes six different
groups of external factors, all of which can affect businesses.
From political ones to environmental ones, each of these categories presents a wide range
of variables which can impact a business.
However, PESTLE analysis (and its derivatives) is not an exhaustive technique that
considers every type of factor, especially as some just can’t be categorized — so don’t be
too concerned if you don’t get an even spread of different factors in your analyses!