The Coca-Cola Company boasts of leading the world's beverage market with a portfolio featuring more than 500 sparkling and still brands. The brands include Coke, Fanta, Sprite, Vitamin water, and Minute maid among others. Coca-Cola has the most extensive global distribution system which covers more than 200 countries that enjoy a market share of 3% of beverages serving every day. It has accomplished great notoriety through planning, strategy and effective execution of their business plan. This discussion explores and analyses the effectiveness of the strategies the company has employed in its business.
From 2005, there has been a large campaign against most of the soft drinks due to health concerns such as diabetes. The campaigns threatened Coca- Cola’s sales forcing it to make new strategies. Some of the new strategies include diversification of products to include energy drinks, fruit juices, bottled tea, and sports drinks. The company further acquired Innocent ltd in 2010 and Honest Tea.
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Analysis of the company’s performance to a period up to 2014 reveals several points about the performance of the strategies employed.
Coca-cola has maintained a fairly consistent gross margin of 61% over the last five years although it dropped from 64.5% recorded in 2005. It is an indicator that the new strategies has enabled it to control its purchasing cost and maintaining its pricing of the goods sold;
It is also evident that the price per share has increased from $1.02 in 2005 to 1.70. However, the share has registered a slight drop from $1.85 to $1.70 this is an indicator of the company’s ability to control the value of its shares prices despite the negative publicity its major brands are facing;
The return on assets has dropped from 11.2% in 2011 to 7.8% in 2014 this is a significant drop that reveals a reduction of the firms profitability however the drop is gradual and given that the company made new acquisitions in 2011 and 2010 it i s a probable indicator of their adjustment in the market. Additionally, it indicates that the new acquisition have cushioned against loosing profitability.
In conclusion, The Coca-Cola Company enjoys its global success in the beverage manufacture and sales because of its strategies. The strategies have worked because it has maintained a fairly constant gross margin of 61%. Secondly the firm’s price per share has registered a slight drop. Finally, it is evident that the firm is still profitable despite the negative publicity and health concerns soft drinks brands.
