Strategic Issues Related to Business and Marketing Management in Coca-Cola

Introduction

The Coca-Cola Company enjoys the leading position as manufacturer, distributor and marketer of non-alcoholic syrups and beverages concentrates across the globe. The company either owns or  has more than 4000 brand licensed which includes diet and light beverages, juice and juice drinks,  coffees, tea and energy drinks. The globally expanding firm Coca-Cola gets affected by environmental issues and through this report we want to analyse these environmental issues which have impact on the global marketing and business strategy of the company.

TASK 1. Provide a detailed assessment of the environmental issues affecting Coca Cola global business and marketing strategy. Given guidance in terms of opportunities or threats they may pose for the company in the future.

Environmental Issues affecting Coca-Cola Business  and Marketing Strategy can be analysed form the statement given by  manager of Environmental Affairs in Coca-Cola,  Jeff Seabright, who said that Water is to Coca-Cola in the same manner as Clean energy is to BP , while talking about the firms new global water strategy (Strategic Management Coca Cola, 2012).

 Coca-Cola has also been targeted by environmental activists for the issues of water and it has been hit very badly on Indian turf. Experts from the Delhi’s Centre for Science and Environment tested various soft drinks and found out that they contained very high levels of pesticides. Although Coca-Cola was not the cause of problem but the way it responded to the accusations, the company had to bear severe damaging allegations like it is aggravating the growing problem of fresh-water scarcity.

Another issue which it had to face in India was that some of Coca-Cola’s bottling plants use excessive amount of water that too in drought-prone areas. This leaves the poor villagers with much less amounts of water.

 Corporate Accountability International (CAI), a well known activist group which organised a noisy boycott of Nestle grilled the Coca-Cola management at the shareholder meeting for the water issue. They also criticised the misleading marketing campaign for the bottled water which undermines the confidence in tap water and accused Coca-Cola of commoditisation.

Opportunities and Threats Posed for company in future

Some of the opportunities which Coca-Cola has created by adopting inorganic growth path are listed below:

• Company has very large domestic market as compared to its competitors
• The company has great export potential.
• The increasing disposable income in the developing nations provides good avenues for Coca-Cola.
• New acquisitions like Keery Beverages (KBL) has given it new markets in Hong Kong and it provides manufacturing and distribution opportunities in the nine provinces of China too.
•  Strong international operations provide the company to penetrate international markets.
• Growing Hispanic population in U.S.  will lead to higher consumption and revenues for Coca-Cola.

Threats

• Coca-Cola has to face intense competition in the non-alcoholic segment or beverages where PepsiCo is its major competitor.
• High dependence on the bottling partners who make their own business decisions and they can devote more resources to business opportunities which are less beneficial to Coca-Cola which increases the business risk  and these third parties act as  weak link in the operations of Coca-Cola.
•  Sluggish and detrimental growth of carbonated beverages because the consumers are becoming health conscious.

TASK 2. Select and highlight the business and marketing practices which Coca Cola has adopted when tapping into global markets.

 Business and Marketing Practices Adopted by Coca-Cole to tap Global Markets are Mixed marketing strategies and is operational in more than 200 countries globally. The arch rival of Coca-Cola is Pepsi especially in Asian countries. Some of the strategies adopted by company are:

Standardisation

 In case of globalisation the driving force behind successful global markets would be a universal product which will have brand recognition and global appeal (Prendergast, Eammon and Stephenson, 1996). Therefore Coca-Cola has made changes in its red and white logo along with the bottles of glass over the years.

 Coca-Cola enjoys economies of scale through its effectual global franchise system which it adopts both for distribution and bottling. In order to provide all its customers with the same taste globally Coca-Cola has adopted standardisation strategy for the process and product. This has resulted in enhanced cost efficiencies and streamlined procedures.

Arguments in Favour of  Adoption There exists differences in terms of tastes  of customers , their habits,  shopping levels , customer attitudes, income levels and product preferences and that is why Coca-Cola adopts Adoption strategy which helps it in establishing these differences in careful manner and gives it  competitive advantage. Global Branding Strategy has been adopted as a good plan for every individual local market (Sebastianelli and Tamimi, 2002).

 Therefore traditionally Coca-Cola uses standardised marketing strategy and uses advertisements which accommodate all the local needs and preferences. To target the local markets they print local languages; like Arabic or Chinese and also has changed the size of bottles to accommodate the market local standards.

Since it is Multi-Local Company it should adopt standardisation strategy to reduce cost as well as to build brand image considering the local laws and regulations.

TASK 3. Apply the strategic concepts and analytical techniques which you have studied relating them to practical examples. You should use recognized theories and models to support your arguments.

In order to analyse its strengths and weaknesses Coca-Cola should conduct a Pestle Analysis, a tool which is being used for conducting the external analysis of business along with the environment where it operates (Cooper and Schindler, 2001).

Political Analysis

 It helps in analysis the current as well as the potential influences from the political pressures. The non-alcoholic beverages fall under the FDA. Thus the government plays important role for the manufacturing operations of these products. Talking about regulations the government can impose potential fines on the companies which do not meet the standard requirements of the Law. Coca-Cola keeps on continuously monitoring the policies and regulations which are set by government (Ricci, 2004).

Economic Analysis

It helps in analysing through examination of local, national as well as world economy impact including the impact of recession and the inflation rates (Prendergast and Leyland, 2007). The sales of non-alcoholic beverages are huge in the countries which are outside U.S. According to a survey conducted by Standard and Poor’s major soft drinks companies have seen improvements in their international markets especially in Brazil, Germany and Japan. However the growth is lower for the carbonated drinks in the markets especially in the main market for Coca-Cola that is North America.

 Socio-Cultural Analysis

 It helps in analysis how the changes in society affect the carbonated drinks market for example the changing lifestyles as well as altering attitudes of people across the globe. The consumers of soft drinks falling in the age group of 37-55 have become very much bothered about nutrition. The size of Baby Boomers is increasing and many people are growing old so they are more concerned about longevity. Thus the non-alcoholic beverage industry will be affected due to increasing demand overall and also in the healthier drinks sector. The demand of carbonated drinks has reduced and this led to decreased revenues for Coca-cola. Coca-Cola realises education is very important so it promotes education across the globe like  youth in Brazil to first generation scholars promote educational programmes in local communities

Technological Analysis

 The main focus of analysis is technology and innovation because it leads to emerging technology driven techniques which are highly valued in the soft drinks sector. This helps in creating marketing and production opportunities as Coca-Cola has new opportunities to launch new products bring-in product improvements too. With the advancement of technology new products enter the market that is how the new product cherry coke was introduced in the markets in 1985; however the consumer still prefers the traditional taste of Coke.

Environmental Analysis

 Coca-Cola has always been very sensitive to the environment and it has significantly used its resources and capabilities towards corporate social responsibility and has shown active leadership regarding the environmental issues. Coca-Cola believes in preserving their environment by spending around $ 2 Billion every year to recycle the supplier, content and the environment (Unsupported source type (Report) for source Ann09.).

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