Identification of the Direction of Coca-Cola Company in the Next 10 Years Using SWOT Matrix - Case Study Example

IDENTIFICATION OF THE DIRECTION OF COCA COLA COMPANY IN THE NEXT 10 YEARS USING SWOT MATRIX Name Course title Name of tutor Institution name Department Date of Submission Table of Contents Table of Contents 2 Introduction 3 Key Threats and Opportunities in the current environment of the company 3 Threats 3 Opportunities 4 What the findings indicate about the future competitive trends 5 Perceived Strengths and Weaknesses of the Company 5 Strengths 5 Weaknesses 6 Company competitive analysis in the perspective of innovation 6 Company Direction in the Next 10 Years 7 Conclusion 8 Introduction There is an extensive agreement among business experts that planning is an integral element of a successful management and governance. It helps guarantee that a firm stays relevant and responsive to the needs of its community, and contributes to organizational stability and growth. As argued by Brown (2010), strategic planning itself acts a basis for assessing progress, results and impacts. Most marketing managers understand the need for annual market objectives and a market-centered strategy. However, formulating overall and marketing strategy must be based on understanding the market (including present and possible future market trends) and how these influence the organization directly or indirectly. SWOT analysis (an acronym for strengths, weaknesses, opportunities and threats) is a vital part of market-versus-organization analysis. This paper is a SWOT analysis of the Coca-Cola Company, with the aim of showing the role of the market on Coca-Cola’s abilities and capacity (weaknesses) and how the organization can utilize its strengths to beat threats and exploit available opportunities. Key Threats and Opportunities in the current environment of the company Threats Despite being a leading player in the soft drink market, Coca Cola faces stiff competition in the soft drink market, from both international companies and regional and domestic companies in the various countries where Coca Cola operates. The major brands in the soft drink market include GlaxoSmithKline Plc’s Lucozade, Wild GmbH & Co KG’s Ribena, Ferrero Group’s Estathe, Tine SA’s Sunniva and Heineken NV’s Hartwall. The company also faces stiff competition in specific segments. For example, Pepsi Co. poses a major obstacle in the aerated drinks segment. The company’s overreliance on carbonated drinks exposes it to risks of downturn. This is because more and more people are becoming negative about carbonated drinks, aware of the health risks associated with it. This also poses a risk of tarnishing the image of the company. Thankfully, though, the company has also invested in health drinks. It is, for instance, leading in the low calorie carbonates. This partly works as a counter-effect on the image-associated risks. PASSPORT (2013) refers to this as spreading risks. Seasonal inflation, economic slowdown and instability are also some of the macro-environmental factors that can affect Coca-Cola. During the 2007/2008 financial crisis and the recession that followed, for example, all companies felt the impact due to lower consumer spending. Coca Cola also faces challenges of the various government policies in different nations. Context plays a big role in a country’s regulatory framework, so this framework differs in certain ways from country to country. For Coca Cola, that means coping with all these different regulatory frameworks. But, with its footprint in every country across the globe, Coca Cola has the experience of working in diverse geographic areas. In other words, this is not a problem for Coca-Cola as it is for other soft drink companies looking to enter new markets, markets where Coca-Cola already operates. Opportunities Coca Cola has great opportunity to improve its reach in emerging markets. There is a distinct developed/emerging market divide in relation to the growth prospects for soft drinks. For instance, prospects are moderate in developed markets in North American and Western Europe. On the other hand, emerging markets are supposed to experience positive growth. For instance, it is predicted that the Africa and Asia Pacific soft drinks are still likely to experience good growth towards 2020. The potential for Coca Cola to exploit these markets is helped by the fact that it has a good geographical spread in emerging markets (such as Mexico, China, Brazil and India) where the company has continued to invest heavily. The low-calorie soft-drink market is also expected to expand further towards 2020. Passport (2013) notes: “low calorie cola carbonates are set to outperform regular cola in both off-trade volume and value growth terms” (p.26) Again, the emerging markets provide considerable opportunity in this regard Consumers in Brazil, China and Mexico are increasingly aware of issues of obesity and accordingly preferring low calorie products. Of these, Brazil is seen as providing the best growth opportunity for low calorie cola carbonates towards 2017. More good news is that Coca Cola dominates this low calorie cola markets in most regions. It acted fast to take advantage of this emerging market, beating Pepsi Co. in the process. The company can also diversify its brand portfolio by making entrants into snack industry to compete with Pepsi Co. The company’s strong brand name can work in its favor as it has for Pepsi Co. What the findings indicate about the future competitive trends Coca cola company is headed to a future where competition in very high. For instance, the rate at which other beverage companies are coming up has heightened. Flavors for the drinks are also changing over time. Further, the increasing standard of technology has lowered the cost of production in the competing companies. This implies that Coca cola has to adopt cheap, but efficient technologies, in order to offer competitive prices to its billions of customer. Perceived Strengths and Weaknesses of the Company Strengths Coca Cola has a strong brand and market presence. Coca – cola is the number one beverage brand in terms reach and sales, controlling more than 2 percent of off-trade RTD volumes in the soft drink industry. The company has improved its business through both organic growth and acquisitions. Further, Coca - Cola has been committed to improving its investments in key emerging markets while making small-scale acquisitions in explored markets in order to heighten its brand portfolio (Coca – Cola 2014). Packaging re-franchization and re-organization is in terms of its corporate activities also a worth mentioning. Coca - Cola Company holds reputable financial muscle. Coca Cola’s improved acquisition capability and funds for marketing have been integral for growth and retaining consumer loyalty even during economical downturn. Besides, it enjoys a strong global geographic mix. This has been facilitated by the company’s diversity of products, with over 600 brands to offer, including popular subsidiary brands like coca cola, Fanta, Kinley, Limca, Dasani, Minute Maid, Maaza. The company’s long association with international sports events, sponsorships has helped further the building of the brand. The company now has a global reach with presence in more than 250 countries. Sizable volumes of sales are made outside main developed markets. Coca Cola’s ability and capacity to attain a wider market has also been helped by its strong and proactive supply chain network in the regions where it operates, ensuring that all products are made available even in the most remote locations. This has immensely heightened the firm’s resilience to regional economic downturns (BPP Learning Media 2010). Weaknesses In recent times, people are becoming increasingly health-conscious. Many have, therefore, become concerned with the impacts of the ingredients of soft drinks. In this regard, carbonated drinks are increasingly having a negative image. Although Coca Cola has continued to expand its soft drink portfolio globally, the company remains too dependent on carbonates. With more government regulations and even individual retailers (such as a number of UK retail shops) restricting the sale of carbonated drinks (FSA 2014), Coca Cola is exposed to downturn risks. Company competitive analysis in the perspective of innovation It has taken the company years to attain a lot of revenue from its sale. This makes Coca cola a cut above other companies, most of which are mainly small scale and the home based businesses. However, the fact that innovation is bringing into the market new products should not be overlooked. The company can, therefore, buy more patents for producing alternative drinks, and improve the taste and flavor of its current products. Company Direction in the Next 10 Years Coca-Cola Company has the current state-of-the-art technology. However, the rate at which other beverage fields are coming up, it alludes to a situation of stiff competition in the next 10 years. This, therefore, demands the company up upgrade its systems in order to meet the challenge of competition. The company’s portfolio features $15 billion brands including Fanta, Coke, Vitamin Water, Sprite, and Coca-Cola (Coca Cola 2014). The company’s direction for the next 10 years is broadly explained in the company’s mission, vision, goals and objects, which are outlined below: Mission: Mission is the statement of the intention of the organization, person, or company, the reason for its existence. It guides the organization actions, spells out the overall goal, avails a path and guidance to decision making. Coca-Cola mission is to refresh consumers, partner with customers, reward stakeholders and enrich lives of local communities. Vision: The vision is the organizational purpose. It focuses on the organizational values and not bottom line measures. It communicates both the value as well as the purpose of the organization while shaping the understanding of customers of why they should be committed to the organization. The Coca-Cola vision is to become the undisputed leader in all the markets it competes. Objectives: Objectives are specific results an organization aims to attain within a given period using the available recourses. Objectives serve as the basis for the creation of policy as well as evaluation of performance. Objectives of Coca-Cola are acting with integrity; authenticity; striving to amaze; excellence; developing natural curiosity to learn; learning and performing through the belief in work with the people. Goals: Goals are the desired results that an organization plans, envisions, and commits to attaining organizationally desired end-point in some kind of assumed development. Most organizations endeavor to attain goals within a fixed time through setting deadlines. Goals should be measurable, specific, realistic, attainable and timely. The goals of Coca-Cola are to care for, invest in, and empower the people and winning with the customers who are the heart of everything Coca-Cola undertakes (Brown 2010). Conclusion No organization is a wholly perfect. Coca-Cola too has its own weaknesses. But these weaknesses have to do with the market situation- if not entirely an intra-organization problem. But the same market is also the source of strengths and also provides opportunities. The most important thing, therefore, is whether the organization has the ability and capacity to exploit available opportunities, and how it employs these. Coca-Cola has proved successful covering its weaknesses and successfully exploiting market opportunities. Ultimately, Coca Cola seems well-prepared for the market in the future and is likely to grow further despite the challenges it faces. Bibliography Brown, LO 2010, Market research and analysis. S.l.: Wildside Press. Coca – Cola 2014, Coca – Cola Company. Retrieved http://www.coca-colacompany.com/brands/the-coca-cola-company (1 September 2014). Food Standards Agency (FSA) 2014, High caffeine energy drinks and other foods containing caffeine. Retrieved http://www.food.gov.uk/science/additives/energydrinks#.U6EbrUArd8Q (1 September 2014) Passport 2013, Coca-Cola, the SWOT analysis, in soft drinks (World). Euromonitor International Read More