INTRODUCTION

The Coca-Cola Company is an American historical multinational beverage corporation

and manufacturer, retailer, and marketer of nonalcoholic beverage concentrates and syrups,
which is headquartered in Atlanta, Georgia. The Coca-Cola was founded in May of 1886 and
continues for more than a century through the times of war and peace, prosperity and depression
and economic boom and bust. As late as the 1990s, Coca-Cola was one of the most respected
companies in the world, building and known as a very successful management team.
The Coca-Cola Company operated as an independent, local business until it merged
with John T. Lupton and BCI Holding Corporation. Collectively, they became known as the Coca
Cola Enterprise Incorporation (Inc.). They began to offer stock, and stales instantly increased.
Additionally, it merged with the Johnston Coca-Cola Bottling Group, Inc. and combined teams
for operations and management in 1991. By 1992, the incorporation successfully generated over
$5 billion dollars in revenue.
Its products can be found in over 200 countries around the world. Its product portfolio
consists of roughly more than 400 brands; this includes soft drinks, energy drinks, and bottled
water and as well as juice products. The company is most well-known for its soft drink, coke.
Actually, the beginnings of Coca-Cola go further back than the company merging. The original
idea to make coke and its inventor, John Pemberton, created a concoction by simply being
curious of how a mixture of certain ingredients would taste. Being a pharmacist, he knew to use
a fragrant to appeal to the masses that would consume it, use a caramel color which appeared to
be luscious, and to make sure the ingredients would be safe. He added carbonated water, got
customers to try it, and begin to sale 5 glasses.
As December 31, 2006, Coca-Cola operated through eight segments which are: Africa;
East, South Asia and Pacific Rim; European Union; Latin America; North America; North Asia,
Eurasia and middle East; Bottling Investment and Corporate.

COMPANY FOCUS
The company is best known for its flagship product Coca-Cola, invented in 1886 by
pharmacist John Stith Pemberton in Columbus, Georgia. Coca-Cola is one of the worlds leading
non-alcoholic soft drink manufacturers.

EXTERNAL ENVIRONMENTAL ANALYSIS

Political

Coca-Cola is subjected to strict regulations since its products is food category product. However,
few changes in law are expected to impact Coca-Cola. The factors that impact are:
The issue of negative impact of Coca-Cola manufacturing plants on environment has
been highlighted in many countries. Laws for environment protection and stringent
regulations in this regard can impact the production process. Coca-Cola can work
towards minimizing this impact by improving the efficiency of its process and
reducing wastage.
Government changes, civil unrest, military takeover and other disturbances in a
country can effect sales and operations of Coca-Cola in the country.
Expansion to a new country depends on the political conditions of the area. For
example like Coke abstained from Israel for many years because to protect the Arab
market, which quite large.

Economic

Every business in every industry is affected by economic factors. A growth or loss in the
economy affects the industry either negatively or positively. The following economic variables
can impact Coca-Cola:
Economic downturn in a country is going to have a negative impact on sales of CocaCola. The impact on the company would be huge since its product are non-essential.
So, people will buy the essential product that they need first rather than buy CocaCola which is just non-essential product.
Various macroeconomic factors such as inflation and labor price would impact
operations of Coca-Cola.
Countries with high income per capita would have more to spend on products such as
beverages.

Social

The pursuit of healthy lifestyle and increasing level of consumer health concerns towards obesity
fuelled by sugar and carbonated drinks can be specified as the most important social change that

has direct and significant effect on Coca Cola performance. Due to this shift the users of soft
drinks are shifting to water or diet drinks and thus the need to adapt and launch products
accordingly have come up. Nowadays the middle aged consumers are getting very nutrition
conscious and regarding the longevity of their life so want to have healthier option availability in
terms of beverages. So, social and culture of a country has a huge impact on food habits of its
citizens and this would impact the portfolio that Coca-Cola can introduce in the country.

Technology

Technology is a major factor for the industry. It has the ability to improve the performance and
profitability of a company. Technology is used in every step of Coca-Colas value chain which
are syrup manufacturing, bottling operations and storage at retail shops. Technological factors
have an impact on:
Coca-Colas marketing, for example, television, web, and social media
advertising are constantly evolving the technology. It is important for the
company to connect to the customer through different channels. The ability of a
company to effectively promote their products through these channels impacts
sales.
Technology is used for packaging. Different type of packaging has helped CocaCola drive sales. Apart from the original glass bottle, the beverages are now
available in plastic bottles and cans. These are easier to store and transport.
Technology also use in manufacturing operations. Because of these new
technologies, Coca-Cola's production volume has increased sharply compared to
that of a few years ago. Adopting of new technology allows the company to
manufacture more efficiently, with better quality and in greater quantity.
The refrigerator need in order to be cooled the product before consumption.
Therefore, consumption is limited to the places that can provide the facility of

cold storage.
Environment

Environmental factor is climatic conditions. For example during winter people usually do not
consume anything cold. And then, during summer or hot season, people consume a lot of drinks
and this help increase the sales of Coca-Cola. Because the weather condition of various countries

is different like Indonesia which is only has two seasons while US has four seasons, so the level
of sales is different in each country based on people who take cold drinks like Coca-Cola.

Legal

The main legal factor that affecting Coca-Cola may be seen as changes in legislation
and regulation of the country. For example is the tax. If the tax is high, the price of the product
will be higher than the price in other countries which the tax is lower. The law of the country also
can affect the decision making of the company in some specific areas. So, it means the legal
factors will give the effect to the company.

INDUSTRY ANALYSIS

The soft drink industry is very competitive for all corporations involved, with the greatest
competition being that from rival sellers within the industry. All soft drink companies have to
think about the pressures; that from rival sellers within the industry, new entrants to the industry,
substitute products, suppliers, and buyers.
Factors such as competitors, market size, and trends in the industry affect Coca-Cola and its
strategic decision making. Globally, Coca-Cola is more dominant and has a majority of the
global market share.
Michael Porters mentions that there are five forces that affect profitability in an industry which
are competition, threat of new entrants, supplier power, power of customers and threat of
substitutes. These forces impact Coca-Cola and affect its decisions based on the industry and as
well as competitors.

Competition

Competition in the beverage industry is very hostile. PepsiCo and Coca-Cola are the main
rivalries. Both these companies have the majority market in the industry. In the beverage industry
brand identity is a huge factor, competitors spend a lump sum on advertising in order to
differentiate their products. Differentiation is significant because both competitors have the same
8 products so the only way they can get competitive advantage over each other is through
product differentiation. A high degree of competitive rivalry makes the industry as a whole very
competitive.

Threat of New Entrants

The threats of entry for the beverage industry are low, for example, entering the industry requires
high fixed costs, immense labor and extensive marketing. New entrants have limited to no access
to distribution channels such as stores. Due to the fact that there are limited bottling companies
new entrants to the industry will have to build their own plants. Since there are already existing
valued name brands such as Coca-Cola, PepsiCo and Dr Pepper Snapple Group any new entrants
will have to spend a large sum of money on marketing and advertising. Due to customers brand
loyalty it will be very difficult for new entrants to gain a significant percentage of the soft drink
beverage market share. With threats of entry low, the degree of competition is low.

Power of Suppliers

The supplier power for beverage industry is low. The ingredients used in to make soft drinks are
very common; there are several suppliers who offer the same basic commodities such as high
fructose corn syrup, food coloring etc. because these ingredients are readily available the
suppliers have no power over pricing. Low supplier power makes the industry less competitive.

Power of Customers

In the soft drink industry, because the main buyers are grocery stores, restaurants and several
independent stores the power of customers is high. They have the power to choose what brand
they want to sell in their stores. Coca-Cola distributes its drinks to major retailers for resale,
these retailers buy beverages in large quantities. This gives them the power to negotiate the price
at which they want to buy. The buyers hold most of the power because they have the ability to
switch to a different company of their choosing. Everyday consumers of soft drinks have high
power because there are several options to choose from. One can choose to buy naked juice
instead of a bottle of coke. Because the power of customers are high the industry is more
competitive.

Threats of Substitutes

The threat of substitutes in this industry is low. Although there are many substitutes for soft
drinks such as beer, milk and water, these products are already in existence and cannot
counterpart each other. Companies in the industry spend large amounts of money on advertising
to build good brand loyalty. This eliminates any threat of new products replacing soft drinks.
Because the threat of substitutes is low the degree of competition of competition is low.

INDUSTRY ATTRACTIVENES
The Coca-Cola Company is known for its marketing expertise and the company has always
followed a great marketing strategy that is responsible for bringing the success to the company
for over a century. The biggest strength of Coca-Cola is its brand. It has taken a lot of effort and
good strategy to create the widely known brand. Apart from this, there are various strategies that
Coca-Cola has followed over the years in order to achieve competitive advantage using its
strategic capabilities. These strategies include:

Marketing and branding strategy

In this world, there are only few companies that have developed a brand as strong as
Coca-Cola. The company has used its marketing resources to create a brand that is widely
known and has become the biggest competitive advantage for the company. Coca-Cola
has been successful in creating brand loyalty among its consumers. This is a result of
sustained marketing efforts starting from early 20th century. Apart from usual advertising
through billboards and newspapers, Coca-Cola focused on organizations, universities and

colleges. The result is increasing sales while promoting the brand name.
Coca-Colas Global Strategy
Coca-Cola has used its organizational capability to adopt a global strategy using a mix of
central and local marketing functions in order to achieve maximum marketing and
distribution effectiveness. Using this, Coca-Cola maintains the strong global brand while
introducing the local elements in the marketing to make sure that the product image is in

harmony with the local culture.

New Product Introductions
Coca-Cola follows out to in approach while developing new products. Coca-Cola has
always preferred taking note of customer preference and designing its products according
to customer, instead of taking an internal approach. Based on these, the company either
introduces a new product or acquires a company producing the suitable product. This is
essential to survive in the changing market and to change the product portfolio according
to customer requirements.

COMPETITORS ANALYSIS

The competitive pressure from rival sellers is the greatest challenging faced by Coca-Cola.
PepsiCo is the main competitor for Coca-Cola and these two brands have been in a power
struggle for more than a century.
Although Coca-Cola owns four of the top five soft drink brands (Coca-Cola, Diet Coke, Fanta,
and Sprite), PepsiCo dominated North America with sales of US$22billion, while Coca-Cola
only had about US$7billion, However, Coca-Cola has higher sales in the global market than
PepsiCo.
Brand name loyalty is another competitive pressure. The Brand Keys Customer Loyalty Leaders
Survey 2010 shows the brands with the greatest customer loyalty in all industries, Diet Pepsi
ranked 258th (the highest ranking of diet soft drink) and Pepsi Coke (the highest ranking of
regular coke) ranked 324th, while Diet Coke, the highest ranking of Coca-Colas products, is far
behind Pepsis soft drinks at the position 336th. From this, Pepsi has a more solid loyal customer
base which can make itself more competitive than Coca-Cola.

INTERNAL ENVIRONMENT ANALYSIS

Value Chain Analysis

The value chain describes all the activities that make up the economic performance and the
capabilities of Coca-Cola. It portrays activities required to create value for customers. Value
chain is an excellent means by which management can determine the strength and weakness of
each activity and compare it with Coca-Colas competitors.
The value chain of non-alcoholic beverage industries contains five main attributes. They are
inbound logistics or suppliers, operations, outbound logistics, marketing and sales, and service.
Many of these attributes coincide with the Porter Strategy. Inbound Logistics or suppliers play a
huge role in the quality and value of a product. Quality and value are the most important things
to customer. If the value is too high or too low and the product quality is bad then the company
does not profit. Operations are the way a company runs on a daily basis. Outbound logistics
focus on buyers and customers and there satisfaction. Marketing and sales focuses on the way
Coca-Cola is advertised and its profitability. Service is the work by those involved that benefits
the company.

Support Activities

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RESOURCES: TANGIBLE & INTANGIBLE

Tangible
Coca-Cola owns the strong and sustainable financial resources. They use strong financial
resources to invest billions of dollars in major markets such as India, China, Russia and a
few potential markets such as Vietnam. Investment money is used to build the brand,
infrastructure and to develop close partner to expand distribution network. Coca-Cola owns
the modern head office is divided into four department including sales, HR, marketing and
ICT. Each department is equipped with the appropriate facilities for the work of that
department. Besides, Coca-Colas factory contains two main parts production and
ICT. ICT department only serves to check product quality. Otherwise, in the Production
department, modern machineries were invested (Olkarinaite, 2010).

Intangible
Technological resources and reputation of Coca-Cola are considered as intangible
resources. In term of technological resource, Coca-Cola invest to modernize machinery. All
steps in the production process is almost fully automated. Coca-Cola can accelerate the
production process, to keep the product quality stable and secure working environment.
Moreover, Coca-Cola keep expand its network of hybrid engine truck .It not only helps CocaCola saves fuel costs but also help reduce harmful emissions to the environment.
Coca cola researched and produced the PlantBottle " the greenest bottle. This kind of
bottle more eco-friendly due to high decomposition and recycling capabilities.
In term of reputation, Coca-Cola Company has existed for more than 127 years. It has
become one of the top 3 most valuable brands in the world. Coca-Cola products are popular
and widely used in more than 200 countries Coca-cole is the product of the most consumed
beverages.

CAPABILITIES
Resources or

Worldwide Distribution

Secret Formula

Consumer

Capabilities
Valuable (exploits

Network
Yes Coca-Cola exploits

Yes Coca-Cola has

Marketing Skills
Yes effective use of

opportunities and

this network effectively

made it work to its

advertising to differing

neutralizes

for entering global

advantage in many

demographics in many

threats)

markets

markets around the global

locations around the

Rare (possessed by Yes forever worldwide

Yes only Coca-Cola has

world
Yes

one of a few firms

it

in the industry)
Inimitable (costly

Maybe Coca-Cola can

Yes only handful know

Yes It is hard for

to imitate)

shut out Pepsi with

the formula and it has a

Pepsi to exactly copy

exclusive agreements

long history of keeping it

this skill and in many

so

case the Coca-Cola

brand name is well
known globally and

Non-substitutable

Yes hard for Pepsi to

fairly well respected

Yes hard for Pepsi to use Yes it is unclear if

(there is no

use another capability to

another resource or

Pepsi could use

equivalent

replace Coca-Colas

capability to beat Coca-

another resource or

resource of

advantage in this aspect

Cola

capability to

capability that

counteract this core

could be used by a

competency

competitor)
Core competency

No only a temporary

that provides a

advantage at best since

sustained

Pepsi may imitate it

competitive

without bearing too much

advantage

cost

CORE COMPETENCIES

Yes who has to copy it

yet after 120 years?

Yes

SWOT ANALYSIS
SWOT analysis would give a good insight of the strategic capabilities and resources available
and the way these capabilities strengthen the competitive advantage as well as allow the
company to exploit new opportunities (Kotler, 1991). SWOT framework analyzes both internal
factors (strengths and weaknesses) as well as external factors (opportunities and threats) that
define the market environment as well as the capability of a firm to respond to the market
conditions. At the same time, distinction is also made between positive factors (strengths and
opportunities) and negative factors (weaknesses and threats). Here is the SWOT analysis of
Coca-Cola Company
Strengths:
- Brand Equity
- The Supply Chain System
- Strong Marketing Strategies
- Worldwide Distribution Network
- The Good Taste
Opportunities:
-

Acquisitions
Developing Nations
The Weather of Country

Weaknesses:
-

Criticisms

Regarding

Health

Environmental Issues
Lack of Popularity of Many Coca-

Cola Product
Threats:
-

Changing Trends
Competition
Threat of New Entrants
Threat of Substitute Product
Supplier Power

and

Strengths
-

Brand Equity
One of coca colas strength is its brand equity. Coca cola has a strong presence in several
countries across the globe. It is one of the world's most recognized brand which has been
recognized as one of worlds leading brands by various studies conducted by Interbrand,
Businessweek and other experts. The company has spent huge amount of money over
more than a century to build a brand that has a high customer recall and is the most
recognized one. It has over 16 million customers that it serves directly. Its current
consumers are very loyal and it has nearly 6 million potential customers that are suitable

and willing to consume Coca-Colas line of product.

The Supply Chain System
The whole supply chain of Coca-Cola and its bottling system is a big strength for the
company. It allows the company to target various markets globally and take the bottlers
help to gain knowledge about the local market. It also allows the company to expand

rapidly to new markets without a big upfront investment.

Strong Marketing Strategies
Coca-Cola has several strengths but its biggest strength is its strong marketing strategies.
It has several campaigns that attract customers. It targets its campaigns to people of all
ages and backgrounds. Coca-Colas campaigns are diverse and reach out to several
people around the world, unlike its competitor Pepsi that doesnt do much global

advertising.
Worldwide Distribution Network
The other strength of Coca-Cola is their worldwide product distribution network. Coca
cola has the largest distribution network because of the demand in the market for its
products. Coca-Cola is currently sold in over 100 countries. It has been fortunate to be
able to expand its non-alcoholic beverages worldwide to bring in billions of dollar in
revenues (Khan 7). There is constantly a positive growth in the company due to
innovation and improvisations, and part of its success can be traced back to its effective

bottling and delivery affairs (Khan 10).

The Good Taste
With such strong products, it is natural that Coca cola has a lot of customer loyalty.
People will prefer this soft drinks over others because of the good taste of Coca cola
which makes finding substitutes becomes difficult for the customer.

Weaknesses
-

Criticisms Regarding Health and Environmental Issues

A major weakness that Coca-Cola is facing right now is its lack of beverages that meet
the need of health conscious consumers. Products of the Coca-Cola Company are
considered to be high in calories and harmful for health. Various groups have advocated
healthier drinks over carbonated ones. Trying to brand itself as a healthy option is really
difficult for Coca-Cola. Because of most of its products being known as junk and
unhealthy, the healthy beverage market has proven difficult to be penetrated by Coca-

Cola.
Lack of Popularity of Many Coca-Cola Product
Another aspect that could be viewed as a weakness is the lack of popularity of many of
Coca Colas drinks. Many drinks that they produce are extremely popular such as Coke,
Fanta and Sprite, but actually this company has approximately 400 different drink types.
Most are unknown and rarely seen for available purchase. These drinks do not probably
taste bad, but are rather a result of low profile or non-existence advertising.

Opportunities
-

Acquisitions
The Coca-Cola Company has been acquiring various local beverages companies
aggressively over the last decade. Also, the company has increased its stake in major
bottling operations. This has given the company more control over the entire value chain
and allows it to align the goals of these bottling operations with those of the company.
The company acquired other companies in almost all major markets around the world.
These acquisitions gave head start to Coca-Cola on the international markets and allowed

the company to diversify its revenue stream.

Developing Nations
Although developed nations have a high presence of Coca cola, these countries are
slowly moving towards healthy beverages. However developing countries are still being

introduced to the delight of carbonated drinks and soft drinks.

The Weather of Country
Countries like Indonesia and India which have hot summer, find the consumption of cold
drinks almost doubled during summers. Thus the higher consumption in developing
business environment can be a good opportunity to capitalize for Coca cola.

Threats
-

Changing Trends
Nowadays, the trend id move towards healthier drinks and there is a big threat of
substitution facing Coca-Cola. Possible substitutes include coffee, tea, milk, juices and

energy drinks.
Competition
There is competition between the other companies that sell soft drinks like Pepsi and Big
Cola. These companies are the competitors of Coca-Cola Company because they also sell
carbonated drinks. From these two competitors, the largest competitor of Coca-Cola
Company is Pepsi Co. Coca-Cola and Pepsi compete in almost all the markets

worldwide.
Threat of New Entrants
There is always possibility of new entrants because Coca-Cola Company business is very

successful, people will think to open the same business too.

Threat of Substitute Product
The threat of substitution is high for soft drink industry with products like bottled water,
juices, tea and coffee readily available. For people who take soft drinks for its caffeine,
tea and coffee can be easy substitutes as well. Many people are moving towards healthier
drinks and substituting soft drinks with juices and other drinks. It costs nothing for a
customer to substitute soft drink with another drink and hence there is a high threat of

substitution.
Supplier Power
There is a threat from the supplier such as if the supplier is out of stocks or increase the
price. But for Coca-Cola Company, supplier power is low because raw materials such as
sugar and water are standard materials and the suppliers can be easily replaced without
any problems. For bottling equipment manufacturers, they are suppliers for Coca-Cola
since the company own stake in many bottling units. These equipment can be supplied by
many companies.

TOWS MATRIX
Opportunities:
-

Acquisitions
Developing Nations
The
Weather
of

Threats:
-

Changing Trends
Competition
Threat
of
New

Entrants
Threat of Substitute

Product
Supplier Power

Country

Strengths:
-

Brand Equity
The Supply

System
Strong

Chain

Marketing

Strategies
Worldwide

Distribution Network
- The Good Taste
Weaknesses:
-

Advertise

Coca-

Launching products in

Criticisms Regarding

Colas less popular

the

Health

product

healthy drinks.

and

Environmental Issues
Lack of Popularity of
Many

Coca-Cola

Product

BCG MATRIX

RECOMMENDATIONS

REFERENCES

Reference:
-

McWhorter, et all. (n.d). Marketing Study of The Coca-Cola Company

Baah, Sandra. 2015. The Coca Cola Company
http://coca-cola-remodel.tripod.com/id21.html

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