Introduction
SWOT analysis is a strategic planning technique that is useful in identifying an organization's weaknesses, strengths, opportunities, and threats related to business competition. The technique operates by peeling back layers of the particular company useful in the preliminary decision-making process. Furthermore, the technique is useful as an evaluation tool for the various organization's strategic positions. The analysis is intended to identify the business's objectives and favorable and unfavorable internal and external factors to achieve those objectives. On the other hand, a company's grand strategies identify the approach to a company's growth. This paper's main aim is to do a SWOT analysis of the Coca-Cola Company and uses the derived information to determine the specific grand strategies the company may optimally pursue.
Coca-Cola Company SWOT
Strengths
Strong brand identity . “The Coca-Cola Company” is a well-known company globally, having a “highly popular brand with a unique identity” of the brand. Historically, the company’s drinks are have been the most selling drinks.
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Highest brand equity. The company is among the most popular brands having the highest brand equity.
Extended global reach . The company's products are sold in more than two hundred countries. Besides, it has also introduced more than five hundred new products used globally.
Dominant market share. Coca-Cola Company has the highest soft drink share market in the globe.
Unparalleled distribution system . The company enjoys the most efficient network of distribution across the globe, with nearly 250 bottling partners.
Weaknesses
Product diversification . The company is lagging within the segment of diversifying its product. It has very low diversification compared to its primary competitor, Pepsi.
Health concerns . Coca-Cola is the biggest carbonated beverage manufacturer. While on the same note, carbonated drinks are considered primary sugar intake sources resulting in obesity and diabetes. That has resulted in the prohibition of these drinks.
Opportunities.
Introduction of new products and segment diversification . The company enjoys introducing its new products in the market in the health and food segments. The company can contribute to these segments' revenue and branch out of the carbonated drinks it produces today.
Heightens its presence in the developing nations . The company has the opportunity of increasing its presence in the regions with hot climatic conditions since such regions have the highest consumption rates for cold drinks.
Introducing improved supply chain . The company has the opportunity to come up with some advancement and improved supply distribution system to help curb the problems of the rising cost of transport and fuel rise.
Drinking water packaging . The company may expand its packaged drinking water brands such as Kinley. There is an opportunity for the company to expand and introduce more healthy drinks in the market.
Threats
Controversies over water usage . Many people have been criticizing the company over the usage of water. People are claiming that it consumes a vast amount of water in the water-scarce regions. Many people have claimed that the company is polluting the water by mixing pesticides in the water while clearing the contaminants.
High competition with Pepsi . Coca-Cola faces increased competition from Pepsi Company, which is also the more prominent soft drink company globally.
Direct and indirect competition . In addition to the direct completion the company faces from Pepsi, other companies also offer indirect completion in the market against the Coca-Cola Company. For instance, Nescafe, Lipton juice, and Costa Coffee are among the significant competitors threatening its market position.
Coca-Cola Company SWOT
SWOT analysis of the company shows that it falls in cell 1 of the SWOT analysis diagram. That is due to the company's numerous strengths compared to its threats in the market. Furthermore, the company also enjoys more substantial internal strengths in the market than the weaknesses it may face in the market. In this cell, the company is in the most favorable situation. That is due to the several opportunities and numerous strengths that encourage the company to pursue those opportunities. The situation then suggests strategies that are oriented to the company's growth to explore a good match.
Application of the Grand Strategy Selection Matrix
The Coca-Cola Company should pursue an internal orientation grand strategy in which the company should maximize the various strengths it enjoys in the industry. The company has several strengths in the competitive market. Using these strengths would bring a good opportunity for the company's growth within the market (Wilson, 2015). Furthermore, the company should also use externally directed grand strategies such as using the available opportunities to maximize its product segments. Moreover, the company may also use internal orientation strategies to maximize external orientation strategies. For instance, the company may use its various strengths, such as the extended global reach, to invest in its segment diversification strategies such as introducing new products in the widely covered market base.
Application of the Model of Grand Strategy Clusters
Using the grand strategy cluster model, the Co-Cola Company may use its strong market position and operate in a rapidly growing market. That is, the company has several competitive strengths, and the industry is growing very fast. As a result, the company falls in the first quadrant of the “grand strategy cluster model.” Under this quadrant, the company may either use “unrelated or related diversification, horizontal or vertical diversification, conglomerate diversification, or joint venture” strategies.
In that effect, the best strategy that the company may use is a related diversification strategy. The Coca-Cola Company may decide to move into a new industry with significant similarities with its existing industry. Firms that may engage in this type of diversification always have the objective of o developing and exploiting a core competency to be more successful in the market. A core competency is a particular skill that other competitors cannot imitate easily ( Mastering Strategic Management , 2011) . For instance, the company may decide to produce fast food products that may be used together with soft drinks such as chips, cakes, and homemade products.
However, the Coca-Cola Company may also employ a vertical integration strategy in which the company may get involved in the new portions within the value chain. The strategy is good for the Coca-Cola Company since several suppliers enjoy too much power over the company (Dahlin et al., 2016). As a result, they are enjoying more profit at the expense of the company. Entering the supply chain will help the company will reduce the leverage the suppliers have over the company.
Application of the BCG Matrix
Applying the BCG matrix to the company's main strategic choices, the Coca-Cola industry enjoys highly stable earning and high growth in the industry. That is due to its larger market share that it enjoys compared to other competing companies. Furthermore, its strong brand identity has also enabled it to enjoy a larger portion of the soft drink market. Besides, the company is also operating in a highly growing industry. Using these factors, one can determine that the Coca-Cola Company is a Star. That is due to the high market share units, which has a bright prospect, making the company the right candidate for growth. Therefore, being a star, the Coca-Cola Company should be given funds and encouraged to grow more within the industry.
Comparison of Results
Comparing the above results from the “grand strategy selection matrix, model of grand strategy clusters, and the BCG Matrix,” the results auger well since they depend on the Coca-Cola Company's several strengths it enjoys in the market. Enjoying several strengths such as better brand identity and the global market's highest reach are significant advantages that the company enjoys in the soft drink product market. In that effect, it has resulted in using externally directed grand strategies, using related diversification, and therefore classifying the company as a Star within the BCG matrix.
The Grand Strategy Coca-Cola Should Choose
Finally, the Coca-Cola Company should use three strategies in its operation and quest for growth. The selected strategies reduce its investment in soft drinks by 30% while increasing its investments in the fast-moving product used together with the soft drinks by the same 30%. The company should also diversify its production by partnering with other companies to reduce the issue controversies over water usage and cope with the changing customer needs. By implementing these strategies, the company will avail its opportunities and avoid its threats by gaining more competitive advantages.
Conclusion
In conclusion, being one of the most successful companies globally, the paper has identified some of its ins and outs responsible for its competitive advantages and weaknesses in the industry. The paper has also formulated the strategies that the company may use to better grow and maximize its opportunities in the market from the SWOT analysis. All in all, the company still needs to change its focus of investment by investing in other products and partnering with other companies for a better investment.
References
Dahlin, E.; Nelson, G. M.; Haynes, M.; Sargeant, F. (2016). Success rates for product development strategies in new drug development. Journal of Clinical Pharmacy & Therapeutics , 41(2), 198-202. Retrieved from EBSCO-Academic Search Complete.
Mastering Strategic Management. (2011). (pp. 246-270). M. Libraries Publishing.
Wilson, N. E. (2015). Local market structure and strategic organizational form choices: Evidence from gasoline stations. International Journal of the Economics of Business, 22(1), 119-140. Retrieved from EBSCO-Business Source Complete.
