The Coca-Cola Company is doing well and it needs to keep on improving its decision-making process. For over a century, the company through its management has made great decisions that have made it one of the largest companies in the world. However, it has also made poor decisions that have made it stuck in a perpetual war of survival with other global players such as PepsiCo and Unilever as well as thousands of smaller companies spread across the USA and around the globe. The company needs to exponentially improve its decision-making processes to create a better corporate strategy and improve its competitive advantage. Corporate strategy can be defined as the strategic plan at the highest echelons of a company (Puranam & Vanneste, 2016). Coca Cola’s corporate plan includes its plans at the headquarters in the USA and at a global level. Conversely, competitive advantage refers to the ability of a company to develop some level of immunity to competition. The dynamic and extremely competitive environment that Coca-Cola operates in demands that the company perpetually remains on its toes; hence the need to keep on innovatively improving on its decision-making processes and corporate strategy to improve its competitive advantage .
Coca-Cola is among very few exponentially large companies who can also be said to be in such a competitive environment that their efforts to thrive are also combined with an effort to survive. Among the legends of capitalistic competition in the USA is the over a century old competition between Coca-Cola and PepsiCo, Inc. As the company expanded into other market niches, it attracted other global players as competitors, including Nestlé, Dr. Pepper Snapple Groupe Danone, Mondele-z International, Inc., Unilever among others (Coca Cola, 2018). Being the predominant player in most of the industries that the company plies makes it a target for other players to the extent that other competitors will gang up against Coca-Cola. Other than fellow global giants, Coca-Cola also faces extreme competition from tens of thousands of global players both in the USA and across the world. Almost on a daily basis, a small company will arise in a remote country or region and try to eat into Coca Cola’s market.
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According to the company, pricing is among the most critical areas of competition between it and its competitors, as each tries to lure customers by providing quality drinks at lower prices. Advertising is also another important area of competition with the war to get better publicity costing the company fortunes every month globally, in its efforts to better the competition in advertising (Coca Cola, 2018). Sales promotions is another area of competition where in some cases, the company will compete by giving a large portion of its goods for free. Coca-Cola also fights with its competitors for space and prominence within retailers with the company having to invest heavily in dispensers, chillers, and shelves to avoid being obscured by the competition (De Mooij, 2018). Finally, the company has to continually fight to grow its brand and also protect it from infringement, more so from the smaller regional competitors.
Whereas Coca-Cola operates within a large number of industries, most of its major products fall within the nonalcoholic beverage concentrates and syrups industry, and the bottling industry. As a company, Coca-Cola owns thousands of brands and trademarks which it operates as a franchise using thousands of subsidiaries around the world. Among the bottled products include soda, under which most of its flagships operate, water, coffee, fresh juices, industrial juices, milk, energy drinks and a variety of other beverages. On the other hand, Coca-Cola is a manufacturer and marketer of specialized beverage concentrates and syrups through which most of the products and bottles are made (Coca Cola, 2018). The primary flagship in the beverage concentrates and syrups is Coke, whose name is synonymous with that of the company. The tens of thousands of products either made or marketed by the company are all soft drinks.
In most parts of the world, except in the Middle East, almost all retailers operate as Coca-Cola Vendors while many of its subsidiaries are also direct vendors. Normally, Coca-Cola does not have a direct relationship with retailers but relies on its subsidiaries across the world, including in the USA, to act as vendors, (Coca Cola, 2018). Bottling companies connect with a convenience store, saloons clubs, shops, and kiosks or even large chain stores to act as Coca-Cola vendors. Coca-Cola tries to ensure that its customers can always access a Coca-Cola product whenever they need it, and even when they do not need it yet.
Coca Cola’s corporate strategy as far as customers are concerned is relational in nature, in an effort to make customers feel as if the company is an ever-present friend. Whereas most of the products marketed by Coca-Cola as a company is meant for the general market with the target being end consumers, most of the company’s customers are B2B (Coca Cola, 2018). Despite the extremely indirect form of market, Coca-Cola uses advertising, public relations and other marketing techniques to maintain a direct connection to the customers to an extent that most customers feel directly connected to company in spite of the myriad go-betweens.
As it is too big to directly connect with individual customers, Coca-Cola uses the community level as the critical point of connection with its customers. Connecting with the customer at the community level adheres with the same formula where Coca-Cola connects with customers indirectly through subsidiaries. In almost all global sports competitions and tournaments, Coke is a major sponsor. It helps marginalized communities get water, poor farmers get better markets and improve their skills and even offers direct assistance to poor communities (Melton, Damron & Vernon, 2017). The good reputation that comes with community programs gives Coca-Cola a marketing edge over the competition. Shareholders are also another community that benefits from Coca-Cola. The company’s dividends have risen three years in a row, from US$ $5.741 billion in 2015 to US$ 6.32 billion in 2017 hence maintaining a positive image among its shareholders.
SWOT Analysis
Strengths 1. Massive Size: Coca-Cola is one of the largest companies in the world and also the largest non-alcoholic marketer by volume of sales and revenues (Coca Cola, 2018). The sheer size of the company gives it an advantage over any competition due to the concept of economy of scales. The company can buy more raw materials thus being able to negotiate lower prices. It can also incur fewer costs per unit product from its supply chain system due to the same concept of economies of scale (Bhasin, 2018). The massive size also reduces costs per unit product in advertising, warehousing, licensing and other costs. The size will thus also provide a pricing advantage for the company. 2. Powerful Brand: Coca-Cola is one of the most recognizable brands in the world. It features prominently in every corner of the USA with the same being replicated everywhere in the world save for the Middle East. The fact that the brand is easily recognized, familiar and respected gives the company an edge over any and all competitors. Advertising Coca Cola products are also cheaper even for newer products because any target market will recognize the brand and be more inclined to try the new product. The brand gives the company an edge over any of its competitors globally and locally (Bhasin, 2018). 3. Board of Directors Coca-Cola boasts some of the best business minds as members of its board of directors, as led by James Quincey. Many of its Board members also double up as major shareholders and representatives of major shareholders. The powerful board of directors gives the company an edge in its core business of B2B relationships. The massive subsidiaries that Coca-Cola has to deal with, unlike ordinary customers, will undertake due diligence to understand who they are dealing with. Such corporate customers will be more inclined to deal with a company whose board members are not only knowledgeable but also vested in the company as shareholders. 4. Market Share in the Beverage Industry The market share of Coca-Cola has been built gradually for more than a century, making the company tops in the USA and around the world except in the Middle East where PepsiCo is the main player. Having the majority market share provides a company with a marketing edge as people tend to trust the market leader. The B2B customers that Coca-Cola focuses on are also heavily influenced by the fact that Coca-Cola is the market leader in most of the countries and regions where it operates in, including the USA (Coca Cola, 2018). 5. Technology-driven marketing: Coca-Cola has been a trailblazer and pioneer when it comes to using technology in marketing, more so social media (Holt, 2016). The company has built a global social media network, inter alia through Facebook, Twitter and YouTube for marketing and advertisements thus improving efficacy and cutting costs contemporaneously. 6. Customer Loyalty Coca-Cola has a powerful market base made up of loyal customers, many of whom have enjoyed Coca-Cola products for most of their lives (Coca Cola, 2018). The intense competition between Coca-Cola and PepsiCo has also been a bearing factor in the development of the Coca-Cola loyal customer base as some customers are loyal to Coca-Cola out of dislike for the said primary competitor. 7. Distribution Networks In the USA, Coca-Cola has an established multi-level distribution network that covers every corner of the nation. Hard as it may be, Coca-Cola has been able to replicate the network globally including in the Middle East where the company has a 25% market share (Bhasin, 2018). The powerful and elaborate distribution network exponentially reduces supply chain costs and also acts as a marketing tool. 8. Ample and committed human talent: millions of people in the USA and around the world work directly or indirectly for Coca-Cola. The company has been able to attract top human talent and also to motivate their commitment and engagement to the company (Coca Cola, 2018). The human talent not only increases the potential to deliver but also augments the company’s marketability. | Weaknesses 1. Health Concerns Cardiovascular disorders have gradually become major killers in the modern world, both in the USA and across the world with fast foods being closely associated with them. Coca-Cola products, most of which are carbonated beverages are closely associated with fast foods. Further, most Coca-Cola products including the flagship Coke have high amounts of sugars (Narain, Kwok & Mamas, 2016). The relationship between Coca-Cola products and ill-health is a major weakness for the company. 2. Bloated Product base According to Coca-Cola, 20 of its brands have global retail sales of over a billion dollars a year, yet the company has over 500 different brands (Coca Cola, 2018)! With the company’s total revenues being less than 40 billion dollars, it means that only a few brands earn most of the money while hundreds of brands are joy riders. Having so many different brands takes the focus away from the really successful brands. 3. Environmental Scandals In spite of its relatively positive corporate culture, Coca-Cola also has a number of environmental scandals more so when it comes to the consumption of water (Banks et al., 2016). Water is a major component of Coca Cola’s bottling segment and the scandals create the potential for a lot of negative publicity more so since the company cannot function without high amounts of water. 4. Lack of a specialized product Niche Most of the successful global corporations base their competitive advantage on having something that the rest of the world does not have. Unfortunately for Coca-Cola beverages are everywhere, easy to produce and easy to market. The lack of an extremely specialized product base weakens the Coca-Cola brand. |
Opportunities 1. Opportunities for Expansion to different products. Coca Cola’s corporate strategy has included expanding the market base by creating different products including products for small geographical markets. The beverage industry is so dynamic that there is always room for new products to be developed. Focusing on healthier products, for example, provides massive room for Coca-Cola. 2. Developing economies market potential Some economies that were struggling at the turn of the century are not only growing rapidly but also having massive potential for the future. As a global brand, Coca-Cola has the potential to rapidly expand sales in these emerging economies in South America, Africa and Asia (Ahmed & Zlate, 2014). The company can increase both revenues and profits in this emerging economies. 3. Expanding market for bottled water Health concerns more so with regard to drinking water is rapidly rising with more people, even in developing countries preferring to take bottled water as opposed to tapping water or water in its natural sources. The market for bottled water thus keeps on expanding creating more markets for water bottlers like Coca-Cola (Coca Cola, 2018). 4. Better supply chain theory and practice Researchers have continued to develop better and effective supply chain theories and best practices more so for global companies like Coca-Cola. The company, therefore, has the opportunity to take advantage of the innovative supply chain approaches to increase its net income and profits and also its pricing-based competitive advantage. 5. Growth potential for newer products. Coca-Cola has 20 massive brands with retails sales of over a billion dollar annually and over 400 lesser brands each of which has a potential for growth to attain the billion-dollar sales mark (Coca Cola, 2018). These brands provide a massive growth opportunity for Coca-Cola. 6. Legalization of Marijuana Recently, Canada and South Africa joined a number of countries and US States where recreational use of Marijuana has been legalized (Hancock, 2018). The popularity of marijuana provides a massive potential market for beverages that Coca-Cola can exploit. | Threats 1. Competition from multinationals. PepsiCo, Nestle, and Unilever are global behemoths just like Coca-Cola with the power to provide a massive competitive threat to Coca-Cola more so if they were to gang up. Further, PepsiCo has maintained dominance in the Middle East over Coca-Cola and if other behemoths take over dominance in other regional markets, the global dominance of Coca-Cola may be under threat. 2. Competition from regional players The nature of the beverage industry makes miniature companies with regional connections a major competitive threat to Coca-Cola (De Mooij, 2018). The smaller companies pose no direct threat but if tens of thousands were to provide a coordinated global front, they can pose a monumental danger to Coca-Cola. 3. The threat of replacement by healthier drinks The association of Coca-Cola with health problems creates a threat of replacement with healthier drinks or even drinks that may not be healthy per se but market themselves as such (Coca Cola, 2018). 4. The potential for stricter regulation due to health concerns The continued complaints about health also have a potential for triggering policies, legislation or even informal regulations relating to health that would be hostile towards Coca-Cola flagships such as Coke, Fanta, and Sprite. |
As evidenced above, Coca-Cola is an extremely successful company that is the largest beverage manufacturer and marketer in not only the USA but also across the entire world. The monumental success of Coca-Cola can only be attributed to the company’s corporate strategy as it plies in some of the most competitive market niches. The company is not driven by a powerful invention that the competition is unable to match like other global giants such as Google and Apple do. Instead, it relies on careful strategic plans and business models that have been very successful for over a century now. Secondly, Coca-Cola as a brand is not limited to a single product or a few main products that operate as flagships. Instead, the company has invested in reacting to the market and its needs, expanding to new areas and outmaneuvering local and global competitors. According to the company, it has over 500 brands under which tens of thousands of different products are sold. Out of the 500 brands, over 20 have global retail sales of over a billion dollars, hence the monumental success of the company. However, the dynamic and extremely competitive environment that Coca-Cola operates in demands that the company perpetually remains on its toes; hence the need to keep on innovatively improving in its strategies and decision-making processes.
References
Ahmed, S., & Zlate, A. (2014). Capital flows to emerging market economies: a brave new world?. Journal of International Money and Finance , 48 , 221-248
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Bhasin, H. (2018, May 25). SWOT of Coca-Cola - SWOT analysis of Coca-cola. Retrieved from https://www.marketing91.com/swot-coca-cola/
Coca Cola (2018). United State Securities and Exchange Commission Washington, D.C. 20549 FORM 10-K. The Coca-Cola Company and Subsidiaries .
De Mooij, M. (2018). Global marketing and advertising: Understanding cultural paradoxes . Washington DC: SAGE Publications Limited
Hancock, E. (2018, September 19). South Africa has legalised cannabis use. Retrieved from https://www.thedrinksbusiness.com/2018/09/south-africa-has-legalised-cannabis-use/
Holt, D. (2016). Branding in the age of social media. Harvard business review , 94 (3), 40-50
Melton, A., Damron, T., & Vernon, J. (2017). A Marketing Strategy from Corporate Social Responsibility: Lessons from Unilever and Coca-Cola Enterprises
Narain, A., Kwok, C. S., & Mamas, M. A. (2016). Soft drinks and sweetened beverages and the risk of cardiovascular disease and mortality: a systematic review and meta‐analysis. International journal of clinical practice , 70 (10), 791-805
Puranam, P., & Vanneste, B. (2016). Corporate strategy: Tools for analysis and decision-making . Cambridge, United Kingdom: Cambridge University Press
