SWOT Analysis for Coca-Cola

SWOT Analysis for Coca-Cola

Coca-Cola is an American company specializing in manufacturing, retailing, and marketing non-alcoholic beverages. The company’s SWOT analysis shows how it uses its competitive advantage to become the world’s second-largest manufacturer of beverages in the world. It identifies the main strengths, weaknesses, opportunities, and threats that have the largest impact on the company (Pendergrast, 2013),

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Strengths

Dominant market share: the company has the largest share globally in the non-alcoholic beverage market. The company serves 3.2% of the world’s 60 billion servings. Coca-Cola owns and distributes more than 500 beverage brands in more than 200 countries.

Economies of Scale: The economies of scale that the company enjoys allow it to share the fixed costs over the billions of servings and hundreds of brands, thus making each drink priced relatively low.

Market power over its competitors and suppliers: Coca-Cola’s large size allows it to exercise its power over its suppliers, which means the company can demand lower prices from the latter. Additionally, the company can use its size to underprice its product, thus affecting its competitors.

Power of buyers: The company enjoys enormous brand recognition across the globe. Therefore, the company has the unique opportunity to influence its customers’ purchasing decisions. It achieves this through its massive marketing and advertising campaigns and brand power compared to its competitors.

A wide reach of the target audience: The company’s products have wide recognition compared to its competitors. Coca-Cola serves more than 1.9 billion drinks daily; none of its competitors comes close to this amount.

Weaknesses

Water management: Water plays a crucial role in the company’s production line. It is a very precious natural resource that the company cannot do without. Water as a natural resource is limited, just like any other natural resource, in most parts of the world. Additionally, the global population continues to increase, increasing the water demand. Therefore, Coca-Cola finds itself in the unusual position of struggling to access water while not infringing on human rights. The company bears high costs to meet the demands of its customers and the environment and, in some cases, finds itself in court battles over water resources (Murphy et al., 2016).

Health issues and core business model: The main business model has served the consumers sufficiently since the company’s inception in 1894. The company’s line of carbonated drinks has sweeteners and diverse flavours. However, today’s consumers are more aware of their health and strive to avoid obesity and diabetes. Sugar-laden drinks pose a health risk for both diabetes and obesity. This affects the company’s revenue, even as other non-alcoholic healthy beverages gain popularity in the industry (Murray, 2010).

Opportunities

New products: Coca-Cola must launch new products in line with consumer preferences. Additionally, the company can increase its advertising and marketing strategies on the current popular brands. The strong and loyal customer base offers the company the advantage that will allow it to introduce new products and enhance its marketing strategies for existing ones.

Acquisitions: The company’s main areas of weakness are water resource access and products that do not meet its consumers’ health standards and expectations. Coca-Cola can look into forming mergers and acquisitions of companies that already specialize in healthy non-alcoholic drinks and partner with local communities in water recycling projects. The latter will seek to save on water as a resource, meet the needs of the communities, thus avert conflict, and preserve the environment while meeting consumer demands.

Advertising products that are not yet popular: The company owns popular brands, such as its line of soft drinks. However, there are over 3500 products under 500 brands, most of which are widely unknown. Coca-Cola can capitalize on these products by advertising them in targeted markets.

Threats

Fierce competition: The Company competes against many other brands internationally and locally. The many small companies that produce substitute products locally and sell directly to consumers at low prices are a major threat to Coca-Cola. Additionally, these small companies minimize their overhead costs by selling via online platforms and delivering the goods directly to the consumers.

Government regulations: Coca-Cola’s business is impacted directly by government regulations and laws and, more so, profitability and productivity. This is because the products fall under the food and beverage categories, which attract special attention from governments. The regulations and laws also vary from country to country; therefore, Coca-Cola is tasked with knowing and maintaining these regulations or risk penalties. One of the areas the company is most vulnerable is the unhealthy nature of its products, which exposes the company to lawsuits.

Taxation: Taxation by governments on sugary products remains a grey area and impacts the company’s business strategy. For example, the UK imposed a new sugar tax on products, which led Coca-Cola to invest 10 million pounds in re-launching the Diet Coke line (Cornelsen & Carreido, 2015).

Health Conscious Consumers: Coca-Cola is a very profitable company based on its wide array yet unhealthy product portfolio sales. Today’s consumer is more aware of the health risks posed by carbonated drinks and sugary non-alcoholic beverages and therefore tries to limit or avoid consumption altogether. Calorie-conscious consumers boycott products such as those produced and marketed by Coca-Cola. This affects the sales and profitability of the company.

Strategy: From the discussed weaknesses and opportunities, the company should focus on manufacturing healthy drinks bottled in reusable eco-friendly packages and advertised in developed and developing countries.

Other Related Post: IBM and Multibusiness Strategy

References

Cornelsen, L., & Carreido, A. (2015). Health-Related Taxes On Foods And Beverages. Food Research Collaboration Policy Brief, 20.

Murphy, P. E., Laczniak, G. R., & Harris, F. (2016). Ethics in marketing: International cases and perspectives. Taylor & Francis

Murray, J. L. (2010). Coke and the AAFP—The real thing or a dangerous liaison? Fam Med, 42(1), 57-8.

Pendergrast, M. (2013). For god, country, and Coca-Cola. Basic Books.

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Strategic Planning

Strategic planning within organizations provides a plethora of benefits to the organization, including meeting goals specified in the plan and contributing to the long-term success of an organization. Refer to Exhibit 8.3: The Strategic Management Process in Chapter 8 of the Management textbook.

For this assignment, select either your organization or one you know enough about to complete a series of assignments related to strategic planning for a proposal you would like to implement. The same organization will be used in the following assignments:
1. Strategic Planning: Strategy Map (Topic 4)
2. Strategic Planning: Action Plan (Topic 5)
3. Strategic Planning: Communication Plan (Topic 7)
4. Strategic Planning: Evaluation (Topic 8)
5. Strategic Planning: Presentation (Topic 8)

Once you have selected the organization, identify a strategic goal by performing a SWOT analysis within your sphere of influence. For example, suppose you are not currently in a management or leadership position. In that case, it is acceptable to focus on a more focused area of your organization you are currently in a position to impact. If you are a classroom teacher, perhaps you see opportunities for improving access to technology in your district. If you are a nurse, perhaps you see opportunities to improve communication processes in your department, etc.

A SWOT analysis is part of strategy formulation that leads to goal setting and then progresses to developing a strategic plan. Be sure to follow the criteria for effective goals illustrated in Exhibit 7.5, Chapter 7 of the Management textbook.

Complete a SWOT analysis using the “SWOT Analysis” template. Consider the following guiding questions as you complete the SWOT Analysis:
1. What are the recognized strengths of your identified area?
2. What does your identified area do better than other companies?
3. What unique capabilities or resources does your identified area possess?
4. What do other companies consider to be your strength?
5. What are the recognized weaknesses of your identified area?
6. What do competitors do better than your identified area?
7. What areas can be improved in your current position?
8. What do other companies consider to be your weakness?
9. What trends or conditions positively impact the company?
10. What opportunities exist for the identified area?
11. What trends or conditions impact the identified area negatively?
12. What is the competition doing that may impact your identified area?
13. Does your identified area have solid financial support?
14. How does your weakness impact the threats your identified area faces?

These questions are samples of what you may need to address in your SWOT Analysis. Using the SWOT analysis results, develop at least one strategic goal. Submit both the completed SWOT analysis document and the strategic goal.

APA format is not required, but solid academic writing is expected.

This assignment uses a rubric. Please review the rubric before beginning the assignment to familiarise yourself with the expectations for successful completion.

You are required to submit this assignment to LopesWrite. Please refer to the directions in the Student.