Case Study Report of the Coca-Cola Company Samples for Students

Question: Write a Strategic Management Case Study Report. Answer: Company Background Coca-Cola is a company that deals with the manufacture and sale of soft drinks. The company began in 1886 by a pharmacist who had created a soft drink that was later sold at soda fountains that later spread to other parts of the world(Foster, 2012). The company headquarters are based in Atlanta, Georgia, in the United States currently headed by Muhtar Kent, the CEO(Hays, 2010). It is the world largest beverage company dealing in the creation of non alcoholic brands like soda, juice, water, ready to drink coffee and teas and energy/sports drinks. According to the company website, the five beverage brands in which the company owns in the market include; Fanta, Coca-Cola, Sprite and Diet Coke. Company Mission The mission of the company states that; to refresh the world in Mind, Body and Spirit; to inspire the moments of optimism and happiness through our brand actions; and to create value and make a difference. Company Vision The vision of the company is embodied in six categories namely; Inspiring people to the best we can through provision of a better workplace. Offering a portfolio of drink brands to the world, that anticipates and satisfies peoples desires and needs. Nurturing a network of partnership that is winning and building a mutual society. Helping to build and support sustainable communities to make a difference by being responsible citizens. Being mindful of overall responsibilities while maximizing long term return to shareholders. Being a highly effective, lean and fast moving organization in terms of productivity. Coca-Cola SWOT Analysis in Matrix Form SWOT analysis is an important strategic planning mechanism for an organization analysis and identification of its strengths, weaknesses, available opportunities and threats faced in its business plans and objectives(Aaker, 2008). According to the 2016 Annual Report of Coca-Cola Company, a SWOT analysis of the company was done involving all the components of SWOT. In a matrix representation, this is the SWOT analysis of the Coca-Cola Company; Strengths Incredible identity of brands sold worldwide and strong customer loyalty. Robust distribution products. Strong and creativity in advertising and marketing of their products. Its signature logo, with known white and red colors and the jingle resound of the beverages for all ages. Weakness The poor water management system that is a main ingredient in the business leaves the Coca-Cola system with capacity constraints or higher costs that eventually affect the net profitability. The concern of the beverages being carbonated has increased the concerns over obesity and diabetes which they havent found a healthier solution Opportunities Through the brand identity and loyal customers, the company could be able to create newer products to broaden horizons of their current offerings. Threats The possibility of water reducing due to climate change, while water is their main commodity in the beverage business. The health related concerns and obesity threatens their future sales. Increased competition by other beverage companies like PepsiCo, Mondelez and Starbucks. The company strengths lie in; Advertisement and capabilities in marketing. The advertising expenses annually accounts for about 7% of the total revenue and is rated the world largest beverage advertiser(Aaker, Kumar, Day, 2008). The advantages received from advertisements are; The brand is highly promoted hence increased sales. The product features of the brand are well communicated to customers. New products in the market can be introduced effectively. The introduced brands message is well communicated to the public. According to a 2015 company report, advertisement and marketing expenses had generated revenue US$44.3 that translates to around 15.4%. It was rated second after PepsiCo Company in terms of revenue creation. Marketing and advertisement is therefore its secret to large customer attraction and maintenance of the competitive edge in the market. Product portfolio that is extensive and diversified. In over 200 countries, the company offers more than 500 brands in energy drinks, juices, water, diet and regular beverages, tea and coffee drinks. Out of their strong portfolio in brands, they have been able to own the largest beverage brands Of Sprite, Coca-Cola, Fanta and Diet Coke(Adeyemi Salami, 2010). Other brands in which it provides products to consumers include; Schweppes, Minute Maid, Dasani, Coca-Cola Zero, Ayataka among many others. The Competitive Profile Matrix (CPM) The Competitive Profile Matrix (CPM) is used by companies in the identification of its strengths, weaknesses and main competitors with respect to the design and strategic position(Alsem Kostelijik, 2008). For the Coca-Cola Company we shall look into the CPM with all the key success factors as below. Data courtesy of MBA Lectures (2010). Coca cola Pepsi Cadbury Schweppes Key success factors Weight Rating Weighted score Rating Weighted score Rating Weighted score Financial positions 0.08 4 0.32 3 0.24 3 0.24 Market shares 0.12 4 0.48 3 0.36 2 0.24 Brand images 0.10 4 0.04 4 0.40 3 0.30 Advertising 0.12 4 0.48 4 0.48 3 0.36 Product quality 0.12 4 0.48 4 0.48 4 0.48 Customer loyalty 0.10 3 0.30 3 0.30 2 0.20 Distribution 0.10 4 0.40 3 0.30 3 0.30 Product range 0.08 3 0.24 4 0.32 3 0.24 Geographical competition 0.10 4 0.40 3 0.30 2 0.20 Price competition 0.08 3 0.24 3 0.24 3 0.24 Totals 1.00 3.74 3.42 2.80 The data shows that the competitors total weighted score and ratings were lower thereby showing that the Coca-Cola Company enjoys a greater competitive advantage. The data also indicates that the company is strong in all areas in the competitive global market. The External Factors Evaluation (EFE) The External Factors Evaluation (EFE) matrix is also an important strategic management contrivance used for the business evaluation of the contemporary environment. It enables the company to be able to visualize on how to make best use of available opportunities and find factors of working on the threats that face them(Bonel Rocco, 2007). Below is an EFE matrix for the company, data according to MBA Lectures (2010). The External Factors Evaluation (EFE) Weight Rating Weighted score Opportunities Potentiality of growth in Europe and China 0.08 4 0.32 Consumers are conscious about their health 0.10 3 0.30 Food chain partnering with other companies 0.07 2 0.14 Increased percentage of drinking bottled water 0.08 3 0.24 improved usage of other smaller beverages 0.07 3 0.21 Diversity into complementary foods 0.06 2 0.12 Improved economic conditions 0.08 3 0.24 Threats Carbonated drinks has recorded significant low growth rate 0.07 3 0.21 The substitutes availability 0.06 4 0.24 Competition intensity from competitors like PepsiCo. 0.12 4 0.48 Greater demand for non carbonated drinks like juices 0.08 3 0.24 Higher market inflation 0.04 2 0.08 High costs of raw materials for use. 0.04 2 0.08 Competition of smaller competitors in the market 0.05 3 0.15 Totals 1.00 3.05 From the EFE matrix of the Coca-Cola Company, the companys strategies are well placed in terms of opportunity usage in relation to the existing threats. This is due to the total weighted score being above average(Cateora, 2008). In all the types of matrices, the total weighted score on the higher side should be 4 and the lowest 1 regardless of the total number of strengths and weaknesses or opportunities and threats. Internal Factor Evaluation (IFE) Matrix The internal Factor Evaluation matrix is also part of the approaches used in the management of organizations. Its used for the effective appraisal, identification and assessment of both the main strengths and weaknesses of a company in the formulation of strategies(Clow, 2007). The IFE matrix of the Coca-Cola Company is as follows; Internal Factor Evaluation (IFE) Weight Rating Weighted score Strengths Wide variety of products 0.08 4 0.32 Most valued brand in the world 0.09 4 0.36 High values in the market share 0.07 4 0.28 Global leader in soft drink industry 0.06 4 0.24 Demarcation 0.05 4 0.20 Boasts of a wide geographical expansion 0.05 4 0.20 Has a profit and financial position that is strong 0.04 4 0.16 Has distribution and production facilities that are effective 0.06 4 0.24 The company has very effective advertising and promotion approaches. 0.06 4 0.24 Weakness Restriction of beverage production only 0.07 1 0.07 The company has a long term debt that is very huge. 0.04 2 0.08 Bad reputation in India 0.05 1 0.05 The company is less aggressive when it comes global market standings. 0.08 1 0.08 Many products discontinuation 0.05 2 0.10 Wholesale prices disputes 0.06 1 0.06 Inferior debts to assets ratio of 0.99 0.03 2 0.06 Big gap in Iraq resumed set up 0.03 2 0.06 Bad image of coke due to new coke formula. 0.03 2 0.06 From the matrix, it can be concluded that if the total weighted score is below average, then internally, the organization is not strong, but if it is above average then internally, the organization is strong. Therefore, the Coca-Cola Company is strong internally, from the results of the table. The Coca-Cola Companys current business level and strategies The Coca-Cola Company is working very hard to maintain the competitive advantage in the global market despite the bottlenecks faced(Douglas Craig, 2013). According to their report on The 2015 Year Review documented in 2016, the strategies they have put in place to maintain their reputation in the market include; Profit Growth and Revenue Driving From the different market types in which the company operates, strategies are rooted on the segmented revenue growth. This also amalgamates the incentives given to employees in all the different segments(Foster, 2007). Growth is also encouraged in the up-and-coming markets through maintenance of affordable beverage prices and increasing the volumes of the beverages to sustain the markets towards future success. Hence, to achieve this, the company concentrates in balancing price with volume of their offerings. Brands and Business Investment The company had decided that the key to success is continued investment in their already accepted brands and improve their marketing/ advertising in quality and quantity. According to the report, the average value of expenses generated towards the advertisement strategy was increased to $ 2590 million(Hays, 2010). A partnership formed with Monster Beverage Corporation also added in the investment strategies in the category of energy. This partnership enabled the investments in brands like cold-pressed juices, Suja, China Green Culiagwang and the Fairlife ultra filtered milk that was mainly distributed in the United States. Increasing financial flexibility in order to increase efficiency Increasing financial flexibility enables the marketing investments produce good returns, thereby enabling cost reduction and enhanced efficiency. In-store promotion costs have been also cut, which increases the levels of supply chain all around the globe(Heckman, Sherry, Mejia, Gonzalez, 2010). According to the 2016 report about the development strategies documents that financial flexibility enabled the realization of $600 million in 2015 alone. Simplification of the company The Coca-Cola Company took advantage of the evolving consumer preferences and the rushed innovations created by the beverage competitors to realign their strategies and simplify their moves. This enabled the reformation of approaches that has kept them on top of the bar to date. Focusing on the Core Business Model The company focuses in always improving the brands in which they offer all around the world. Maintaining of a good relationship with their bottling partners has also increased their competency levels(Heijden, Driessen, Cramer, 2010). These partners have contributed significantly in the; optimization of systems involved in the manufacture and distribution of products, and the improvement of their overall performance. Bottling system refranchising, as part of their business model, enables the increased volume of bottle production which increases the volume of beverage stocked(Hubert Kenning, 2008). The results are the company being identified as the highest beverage and bottle producer that has given competitors very many sleepless nights. The Coca-Cola Companys current corporate level and strategies The Coca-Cola Company believes in efficiency in all its business through partnering and investments. Some of the corporate level strategies in which it involves itself include; Strategies on Growth The company uses varied growth strategies by investing in huge capital for all the business in over 200 countries. Being a corporation, the strategies have also various business operations that satisfy the different situations for their customers satisfaction(Keller, Parameswaran, Jacob, 2011). Having its own distribution and manufacturing system, has enabled them in curtailing the high expenses used for both manufacture and distribution. This has resulted in corporate horizontal growth especially in newer markets. Another corporate strategy in growth is the diversification of beverages like juices, coffee, mineral water and tea, which were not the original drinks that it was founded to manufacture. The results have enhanced competition with other top beverage industries and improved portfolio in business(Kumar, Teichman, Timpernagel, 2012). The growth strategies have recorded significant achievement of the companys strategic goals such as efficient management and control of the supply chain systems; enhance cost leadership, differentiation and internal management control. Strategies in stability When marketing conditions are not favorable for the company, it takes the decision of suspending its growth strategies, and otherwise concentrates on marketing efforts, quality control and supply chain. Economizing strategies When some departments or sections record little or no growth, then they are cut back for a certain period of time until any significant changes would be required to consider them back into the system. Some of the measure used in the retrenchment purposes involve; complete shutdown, budget cut for marketing and production and/or complete selling of the unit to private shareholders. Recommended strategies for improvement in both business and corporate strategies It is important to know that any business that is good calls for a continuous investment. The Coca-Cola Company should make a strategic decision of investing in more and better marketing for its various brands, increasing both the quality and quantity of its advertising. The company management must increase its spending on media advertising of its products(Lambert Schwieterman, 2012). The Company should use its funds to share very strong and more advertisements that will have some huge impacts on many people around the world. According to the latest reports, soft drinks are said to have moved from just being a niche to now become one of the fastest rising categories of products when it comes to the global soft drinks market today. The growing evident consumer focus on fitness and health has brought the changes in the global soft drinks markets(Malhotra, 2008). It is very clear that the consumption of most of the aerated drinks in the market is now headed for the biggest visible decline in most of the important markets around the world. The energy drinks have now got the greatest opportunity to make a significant mark regarding both revenue and volume sales. It is now clear that the energy drinks are now no longer just a preserve of the sportspeople and athletes as many people are now embracing them. Due to this unstoppable reality, it is expected that new consumers will now join into the ever growing folds of the global energy drinks market. The energy is projected to rise to a double digit by the year 2024 according to many analysts(Mangold Faulds, 2009). With these reports, the Company should now focus on producing energy drinks that emphasize health benefits, coming with the best strategies of branding and marketing its products. The branding and creative marketing strategies will be very crucial for the Coca-Cola company (Popkin Hawkes, 2016). According to latest reports, packaging will surely be one of the most defining trends in the soft drinks market. It will be as important as improving the formulation of a product. Packaging will be the most purchasing influencer to many consumers around the world(Montgomery Chester, 2009). The company should always reassess the product formulas to help in the overcoming of any negative publicity from the customers and other competitors in the market. The Coca-Cola Company has the potential of retaining its reputation in the market as the best beverage industry and maintenance of customer loyalty. According to (Mooij, 2013)l and(Douglas Craig, 2013), the company should improve and maintain their flexible market strategies and work on their innovation strategies to maintain their capacity in the global market. The authors also advice that the company can remove the bad image created by health concerns of junk food related to obesity and high sugared beverages by working on production of non sugared or less sugared drinks. Another recommendation for the company by the authors, (Mooij, 2013) and (Douglas Craig, 2013) , is that the company should diversify its business operations in other products in case the threat of water reduction due to climatic changes comes to happen. The already known brand of Coca-Cola and the overwhelming customer loyalty can be used to back the advertising of the new products they will create. Another recommendation from the authors is that the Coca-Cola Company can also maintain its leadership and market share by taking seriously the investments put on the growth strategies in all its markets. The building blocks of superior efficiency, customer responsiveness, quality brands and innovation capabilities can enable growth and sustenance in the global market. The company can advance its growth, according to Hill and Jones (2010), by maintaining their strategic commitment while diversifying in other fields, having knowledge of the capacity of their competitors; jealously guide their business by making imitation of their resources or strategies difficult(Rani, Maheshwari, Garg, Prasad, 2012). 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