In the selection of a grand strategy, the company should consider the SWOT analysis and focus on its market share. At present, various strategies exist but this paper will look at the Grand Strategy Selection Matrix, the Model of Grand Strategy Clusters, and the BCG Matrix in the context of the coca cola company. Nevertheless, the SWOT analysis of the company forms a major determinant on the chosen strategy.
Coca-Cola Company SWOT
Large market share-The Coca-Cola Company enjoys massive brand loyalty from its customers thus keeping an upward trend in its market share. In fact, coca cola has dominated the soft drink industry since over the 20 th century to date which gives it an edge over its competitors.
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A wide range of products- the company has the highest number of brand varieties that are sold in various outlets in more than two hundred nations globally. Moreover, it enjoys brand loyalty especially of its Fanta, sprite and coke brands both locally and internationally.
The high advertising power of the coca cola company enables it to compete through advertising and promotions. In turn, the company gains more market share from competitors who cannot match the massive advertising.
Coca Cola Company has a huge financial base that enables it to run massive ventures in the global market. The company also has massive facilities for the production of their wide range of products. Coupled with a highly efficient distribution network, the company keeps its profits soaring.
Another major strength came with the formation of partnership with nestle company forming the beverage partners worldwide (BPW). This joint venture makes the company to retain and gain more market share in the nonalcoholic beverage industry.
The company has restricted its ventures to non-alcoholic beverages only. Thus, it is unable to explore new and promising markets in other production lines
The discontinuation of certain brands such as coca cola with lime and other such like brands hurt the reputation of the particular brands.
The company has the opportunity of increasing g its production of bottled water as the market has expanded by more than 10 percent.
The company has the opportunity to diversify its products into the non-carbonated beverages especially after now that it has partnered with nestle. Thus, the company could explore other beverages such as coffee, which has potential to become a major brand.
Another opportunity is in increasing its market share through partnering with restaurants and other fast food outlets which will increase the consumption of it products.
The company has opportunities of exploring new markets in countries that do not have their products yet. With its strong advertising power, the company could achieve an impact in exploring new markets.
Due to the low rate of growth rate in the market for carbonated drinks in particular sections of America, the company faces a threat of having a reduction in its market share of the beverage market.
Prevalence of various substitute products such as juices, beer, coffee and so on which threaten the consumption of coca cola products
The increasing trends in health consciousness of consumers threatens the carbonated drinks as consumers are opting for the non-carbonated drinks.
Regulations from various countries restrict the coverage of the market for coca cola products thus putting them at a disadvantage.
Application of the Grand Strategy Selection Matrix
The grand strategy matrix looks at the potential strategies that companies could embrace depending on their position in the four quadrant matrix. The structure is equally divided along the x-axis by the competitive position of the company with the extreme left being weak competitive position while the extreme right marks a strong competitive position. In the y-axis, the lower end marks a low market growth while the upper end marks a rapid market growth. From my perspective, the coca cola company falls in the quadrant 4.The reason is that coca cola has a strong competitive edge but the market growth in the carbonated beverage industry is low. Therefore, the company could make use of “overcome weaknesses” vs. “maximize strengths” approach to maintain as well as increase its market share.
This approach has been chosen since the company has few weaknesses and massive strengths. In its weaknesses, the company has restricted its ventures to non-alcoholic beverages only. Thus, exploring new and promising markets in other production lines could rid of this weakness. The weakness on discontinuation of certain brands could be eliminated by getting rid of those particular brands and thus restore the brand image.
On the other hand, the company could use the massive brand loyalty strength to explore new markets. Moreover, through its high advertising power, the coca cola company could increase advertising and promotions in new markets thus increasing its market share. Furthermore, the company could form more partnerships with other companies in joint ventures. They could also buy other beverage companies through its financial strength and thus reduce competition while increasing market share.
Application of the Model of Grand Strategy Clusters
The model of grand strategy clusters looks at a company’s position based on its competitive power in the market and the rate of market growth in the industry ( Pearce, 1982) . In the case of the coca cola company, the growth in the carbonated drinks market is slow. On the other hand, company is in a strong competitive position against other competitors in the market. With these assumptions, the company could forge joint ventures in marketing and making alliances that strategically meet its marketing demands and formation of mergers with other brands to increase market share ( Pearce, 1982) . They could also acquire other companies in the market as well as engage in related and unrelated diversification to ensure a gain in market share.
Application of the BCG Matrix
The BCG matrix categorizes products into four categories namely; stars, cash cows, question marks, and dogs. The second category in the BCG matrix are products deemed as cash cows. They have a high share of the market which has a low rate of growth. As a result, the products generate high inflow of cash but low offsetting costs. Majority of the products in this category are the mature brands which have stayed in the market long enough to command massive brand loyalty. The coca cola company falls in the cash cow category as its brands have been in the market long enough to achieve customer loyalty. Moreover, the company has a large market share which is up to 70 percent of the non-alcoholic beverage market. Although the market has slow growth, the dominance of coca cola keeps it a notch higher than all its competitors in both local and international markets.
Comparison of Results
In comparing the results from the Grand Strategy Selection Matrix, the Model of Grand Strategy Clusters, and the BCG Matrix, it appears that the approaches take diverse approaches of looking at the same company. On the one hand, the Grand Strategy Selection Matrix and the Model of Grand Strategy Clusters base their arguments on the competition and market growth of the industry to determine the best strategy for the coca cola company. On the other hand, the BCG Matrix lays emphasis on the rate of market growth and the product’s share in the market to determine the best strategy for the company. Nevertheless, the use of the two approaches could benefits a company as they complement each other.
The Grand Strategy Coca-Cola Should Choose
From the analysis, the coca cola company should choose the “overcome weaknesses” vs. “maximize strengths” strategy to achieve a greater share of the market. The reason for choosing the strategy is that the company has massive strengths that could offset all its weaknesses and thus keep an upward trend in their profits.
In conclusion, the Grand Strategy Selection Matrix, the Model of Grand Strategy Clusters, and the BCG Matrix look at the potential strategies that companies could employ in furthering their market share and increase their profit margins. In the case of the coca cola company, the best strategy would be overcome weaknesses” vs. “maximize strengths” strategy as its SWOT analysis show more benefits for the company as compared to other strategies.
Grand strategy matrix. Retrieved on May 8, 2017 https://www.youtube.com/watch?v=fYWHaOjWnN8
Pearce, J. A. (1982). Selecting among alternative grand strategies. California Management Review , 24 (3), 23-31.
The BCG Matrix explained. Retrieved on May 8, 2017 https://m.youtube.com/watch?v=tKO5TpR2UwE