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Title: Coca Cola Case Analysis

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Coca Cola
Contents
About the company:....................................................................................................................................3
PESTEL analysis:...........................................................................................................................................3
Porter’s five force analysis:..........................................................................................................................6
Management recommendations:................................................................................................................9
Conclusion:................................................................................................................................................11
Bibliography...............................................................................................................................................11

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About the company:

Coca Cola is the world renowned company that has its headquarters in Atlanta, Georgia. The

company is an American multinational and nature of the business is beverage industry. The

company was founded in year 1886 about 136 years ago. The company was founded by John

Pemberton. The area served by the company is worldwide. The company has its business spread

around the world. There are different products including soft drinks, mineral water, soda, juice

drink etc. Coca cola has been making aggressive advertisement ever since its inception. Due to

this reason it has various rivals around the globe. The closest competitor to Coca Cola is Pepsi

Cola which is also an American Multinational. At present there are about 123,200 numbers of

employees of the company that are spread throughout the world. The key people of the company

include Muhtar Kent who is the existing chairman of the company. Also James Quincey is the

president and CEO of the company. Consistent efforts are made by the management of the

company to diverse its business and spread over various countries. The strategic partnership has

also been applied by the company with various distributors and wholesalers in different countries

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so that the business could accomplish consistent growth and development in the long run (Coca-

colacompany.com, 2018).

PESTEL analysis:

The PESTEL analysis of Coca Cola Company can be done as follows.

P-Political:

1. The company after facing high competition in developed economies is now targeting

underdeveloped economy.

2. Corrupt Governments of some underdeveloped countries are affecting the business

performance of the company.

3. The introduction of Soda tax is various cities of the United States has been affecting the

consumption of the company products.

4. The chairman of the company Muhtar Kent has joined hands with other 1000 CEOs who

are condemning the Donald Trump ban on the Muslim travel which is indirectly affecting

the diversity policy of the company.

E-Economical:

1. Coca cola has been offering soft drinks and other products at competitive prices in the

international economies.

2. Efforts are made by the company to overcome the issue of inflation rate and offer their

products and services at lower costs.

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3. The company is indirectly dealing with the international bottling organizations and trying

to step in and expand its business in almost all countries of the world.

4. Low growth of the United States economy has become another feature for fall in the

revenue and earnings of the company in year 2016.

5. Huge decline in the consumption of soda in the broader US market has affected the sales

of the company.

S-Sociocultural:

1. Consumers of the company products are highly concerned about the nutrition value of the

products.

2. The new age customers prefer low calorie drinks so that they don’t gain weight after the

consumption of company products.

3. The company products have affected the sales of non-alcoholic beverage industry by

increasing overall demand of healthier beverages.

4. The consumer focus on the healthy beverages has led to the decline in the consumption of

soda has resulted in the steady fall of consumption of company products.

T-Technological:

1. Due to technological advancement applied in the business process, Coca cola is now in a

position to develop new products and services that does add to the concerns of the

consumers.

2. The online system has helped the company maintain control over expanded business in

different countries.

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3. The marketing of the products of the company are now made through social media which

has become an effective mode of information exchange.

4. The growing acceptance of bots, driverless delivery network and 3-d printing has

revolutionized the way the company used to interact with its customers.

E-Environment:

1. Local, national and international laws are followed so that the environmental impact can

be taken care of.

2. All the factories of the company apply world class methods of disposal of wastage.

Therefore environment pollution is avoided.

3. The new age technological advancement is made in the production process so that the

environmental issues do not rise due to any reason.

4. The transition of the company to a low carbon and resource efficient future is affecting

the whole business process of the company.

L-Legal:

1. Different legal aspects of countries having business of the company are followed.

2. The company has been successful in receiving all the rights applicable in the nature of

their business.

3. The local laws of different regions are followed with the purpose to avoid any issue that

may crop up with the local authorities.

4. The company is also facing different law suits in the United States about the misleading

information to the information about the health risks of drinking sodas. The success of

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the law suit will result in display of public health warning on the sodas as that of

cigarettes and other products.

Porter’s five force analysis:

The porter’s five force analysis for Coca Cola can be done as follows.

Threat of new entrants:

1. The number of entrants is low.

2. Although there are new entrants in every country trying to make their way to the fight

competition with the brands, there is still low profit for bottlers. Therefore there entrant’s

levels are low. Also high preference for the company brands has affected the preference

of the customers in making purchase of non-branded or new products from the market

(Bordean et al., 2010).

3. The making of new distribution is hard and expensive and the new entrants cannot attain

this expertise in the short time span. Therefore it is really hard for them to achieve this

level of expertise.

4. The number of bottlers is decreasing continuously because the earnings are highly

competitive in this business.

5. The entrance guidelines and rules are so strict that the entrance of new entrants has

become quite difficult.

Bargaining power of buyers:

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1. The number of buyers is high.

2. The CSD market in the United States seems to be saturated. This has actually increased

the bargaining power of buyers (Collins & Winrow, 2010).

3. Switching cost is somewhat low, due to which people could easily shift between any of

the brands.

4. Rivalry between Coca Cola and Pepsi is heavily severe. Due to this reason, the pricing is

done in a competitive way. This helps the buyers to select any of the two major brands.

5. The retail price of CSD has increased a little or been maintained. This has affected the

sales and people choice and preference for soft drink.

6. Price is bit concern for some of the consumers.

Bargaining power of Suppliers:

1. There are medium numbers of suppliers as the product is homogenous and most of the

raw material is manufactured by the company itself. Due to this reason, the bargaining

power of suppliers is limited to certain extend.

2. The concentrate producers have obtained small bottlers.

3. Bottlers have maintained relationship with more than suppliers (Gonzalez-Benito &

Suarez-Gonzalez, 2010).

4. Concentrate producers often maintained relationships with more than one supplier. But

concentrate producers sales figure depend on bottler’s competitiveness in the market.

Threat of Substitutes:

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1. There is low number of substitutes. Even being a homogenous product only few brands

are producing bottled products.

2. Bottlers cannot be easily replaced by other marketing channels. Coca Cola has created

such loyalty and brand name in the market that the threat of substitute is limited to little

number of other global brands such as Pepsi.

3. Selling soft drinks through bottlers still has a big portion of Concentrates sales.

4. Even with the rise in number of substitutes coming to market every now and then, the

customer’s preference is still towards the company brand.

Industry competitors:

1. There is high rivalry among existing firms which is adding to the cost of operation and

affecting sales.

2. There is limited number of industry competitors among them the top is Pepsi.

3. The other industry competitors are around the globe that is making attempts by making

low quality products and substandard outputs. However the customer loyalty is towards

the global brands and therefore industry competition is limited.

4. As the sector is growing various established brands are entering into the segment.

Management recommendations:

There are number of management recommendations that can be given to the company to achieve

success in future. These include the followings.

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a. Considering public concerns:

The Coca Cola Company should concentrate on considering public concerns about health that

the drinks of the company could cause. The health concerns include the nutrition value that the

product does not carry at all. Thus the company should avoid selling those products that does not

add any nutrition value to the consumer and shift to selling of new range of products that could

benefit the consumer.

b. Improving existing products.

Attempts should be made to improve the existing product quality so that it contains some

nutritional value along with the taste that it’s already carries. This can be done by testing new

drinks that are using the base of juices of different kinds. The use of sugar base should therefore

be avoided as it will only add to the weight and cause health damage to the consumer (Bordean

et al., 2010).

c. Developing new products:

Efforts should be made towards developing such products that are healthy and carry nutrition

values. That is the juice or other drinks that carry vital nutritional values should be sold by the

company. Although the company has already made investment and diversification in selling

different kinds of juices, but the sale of juices as primary product is needed so that the soda

drinks could be avoided by the public. This will take care of the concerns of the people around

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the world, and the consumption of the company products will increase rapidly. The nutritional

facts should also be printed on the package so that the customers could get to know what exactly

the new drink carries and could make a wise decision of its consumption.

d. Meeting the requirements of the health concerns of government bodies and legal formats:

Coca cola should try to meet the requirements of the health concerns of government bodies and

legal formats by improving the product quality and ingredients. The company has already facing

law suits in United States and various other countries regarding the health hazard that the

consumption of its drink carries. If the case against company got successful than the drinks

package will carry statutory warnings for the people like that in the case of cigarettes. Therefore

before such things actually happen, the company management should decide on the guidelines of

health concerns of government bodies and legal formats and made changes in its product (Akan

et al., 2006).

Conclusion:

In a nutshell the pestle analysis reveals that the different external factors support the

development of the business of Coca Cola in different countries. Although there are various

other factors that are affecting the development and growth of the business, still the business of

the company is diversifying and expanding at a high rate specifically in developing countries.

Also the porter’s analysis reveals there is low number of sellers of company products. Although

the product is homogenous the cost factors and earning potential affects the decision of the new

entrants in making investment in this business. The porter analysis displayed the high

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competition between the two global brands that is Coca Cola and Pepsi that has been at large.

The bargaining power of buyers is high because there are various other products that are made by

other companies and are homogenous in nature are available in the market. The bargaining

power of sellers is moderate as most of the raw material is made by the company itself. The

recommendations are therefore given to the company so as to overcome existing drawbacks and

achieve high end gains and profits through improved business process.

Bibliography
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