Topic:Primary business strategy employed by the Coca-Cola Company
Executivesummary
Coca-Colais a leading force within its industry and is making continuedattempts to maintain a huge part of its market share. Nevertheless,the company risks losing its market share to competing companies withPepsi being the strongest rival. Presently, most of the revenueearned by Coca-Cola, approximately seventy percent, depends on itssoda product line and this has a negative effect on the company whenthe market takes an undesirable turn. Furthermore, the company hasachieved a reputation within some markets as utilizing substandardwater in manufacture of its products or removing drinkable sources ofwater from poor communities so that it can manufacture its beverages.
Thispaper presents a formal assessment and identify the generic strategyfollowed by the Coca-Cola Company. Further seeks to address theeffects and make a comparison while at the same time evaluating themanner in which the adopted strategy impacts strengths and weaknessesthus make conclusions on the basis of these results. Ultimately, itprovides some recommendations on how Coca-Cola can improve thestrategy founded on the aspects that will arise from the assessmentof various features.
Thecompany is supposed to make more investments in other lines ofproducts in order to get more revenue. Concentrating on one line ofproducts may possibly hurt the company considering the marketconditions that are not favorable. The Coca Cola company shouldfurther take part in more business practices that are sociallysustainable in order to ensure that they do not lose the loyalty oftheir consumers. Increased focus on product lines dealing withnon-soda beverages will allow the company to main its profit marginsduring periods when the market conditions are not favorable.
Thispaper is an assessment of the manner in which Coca-Cola hasstrategically positioned itself in soft drinks market of the globewhile specifically focusing on the generic strategy that is followedby the Coca-Cola Company. Considering the company is in operation inmore than 200 companies, it experiences a clear decision on whetherit should make its product offering standard all over the globe.Further, it benefits from the possible advantages of economies ofscale, adjust their products to specific markets, which may result inincreased penetration, or embrace an integrated strategy that usesthe two approaches at the same time.
Accordingto Porter, three generic business approaches include differentiation,overall focus strategy and cost leadership. The Coca-Cola Company isa recognized trade name in the US from 1886. From that time, it hashad the capacity to differentiate itself through its classificationas the biggest manufacturer, distributer and marketer in the globe inregards to syrups and non-alcoholic drinks (Faarup, 2010). More thanthree thousand products carry the famous Coca-Cola trademark, whichis currently being sold in over two hundred countries. Coca-Colautilizes the differentiation strategy through dedicating asignificant amount of funds to advertising as a means ofdifferentiation and creating an exceptional image for its products.It offers different products for the consumers, has achieved a lot ofsuccess, and attained a leading position within the soft drinkindustry.
Porter’sstrategy followed by Coca-Cola
Asfar as Porter’s four generic strategies are concerned, theCoca-Cola Company follows the differentiation strategy, as it is afamous brand, which is prominent all over the world. As aconsequence, the brand is present across different forms ofmerchandise including beverages and products, while at the same timebeing involved in sponsorship of key sporting events such as Olympicsand the FIFA World Cup. Therefore, the Coca-Cola brand is the mainsource of differentiation. Additionally, the Coca-Cola concentrate issupplied over the globe through its nine hundred manufacturing andbottling facilities. Moreover, the formula utilized in creation ofthe Coca-Cola brand is closely guarded and has never been made publicto ensure competitors do not copy it (Keillor, 2011). The firmfurther differentiates its products through advertisements whileclaiming the drink is unique and cannot be compared to what itcompetitors offer. The company’s products bear the symbolic redlabel along with cursive lettering that can be recognized anywhere onthe planet.
Integrationand leveraging of differentiation with SWOT analysis and alignmentstrategy
Inthis assessment, three aspects associated with each of the factors ofSWOT analysis can be identified. Therefore, an analysis of theaspects of SWOT analysis will be integrated with the differentiationstrategy derived from the four generic strategies model that wasdeveloped by Porter. Strengths of the Coca-Cola Company presented inthe SWOT analysis included financial foundation and strength, brandrecognition as well as its international bottling and distributionnetwork all of which support the generic strategy of differentiation.The company’s bottling network is exceptional and is not easy forcompetitors to emulate as a consequence of the sheer magnitude of itsoperations. Pepsi remains the only competitor that has come close toattaining a comparable bottling network nevertheless, it still hasrelatively fewer global locations. Financial strength has continuedto assist Coca-Cola in maintaining its differentiation and the valueof the company increased twofold in the last decade. Furthermore, thebrand enjoys global recognition with the famous logo along with theproducts being found relatively easily.
Someof the identified weaknesses included competition from Pepsi,diversification of products together with lack of sport beverageproducts. The weaknesses, particularly rivalry from Pepsi, do notnegatively affect its differentiation strategy. Its rivalmanufactures similar beverages but they are not fundamentallycomparable. A discrepancy arises since Pepsi is very similar to thebeverages made by Coca-Cola and research has demonstrated that asignificant percentage of drinkers do not have the capacity todifferentiate between the two drinks solely based on how they taste.
CocaCola’s mission and vision subject to this strategic analysis
TheCoca-Cola Company uses its vision to determine what it is required toachieve in order to maintain and attain quality and sustainablegrowth calling it the 2020 Vision and Roadmap for Winning Together.As far as people are concerned, the organization strives to become anexceptional place to work where the employees will get inspiration tobecome the best (Griffin, 2012). In regards to portfolio, the visionof the company entails offering the world a variety of qualitybeverages, which anticipate and satisfy the needs and desires of theconsumers. The vision further entails nurturing a winning network ofsuppliers and customers so that together, they can establish andlasting value. In terms of the planet, Coca Cola’s vision is tobecome a responsible citizen with the ability to make a differencethrough assisting in supporting and building sustainable communities.The company further seeks to maximize its long-term returns to itsshareholders while at the same time remaining mindful of its generalresponsibilities. Ultimately, the vision of the firm is to become anexceptionally effectual and fast-moving company that deliversproducts to its consumers in a timely manner.
Coca-ColaCompany’s mission is to continue refreshing the world, createinstances of happiness and optimism and making a difference whilecreating value. Based on the differentiation strategy Coca-Cola seeksto achieve these objectives through its operations. Throughout itsoperations, and in light of the differentiation strategy thatCoca-Cola has embraced, the company has adopted a number of valuesthat include leadership, which is the capacity to inspire and shape asustainable future collaboration, which entails keeping the leverageof possessing collective genius and integrity, which involves beingreal(Morrison & Morrison, 2011). Other values includeaccountability passion, which is commitment in mind and heartquality, which involves doing things exceptionally and divert.Further, subject to the differentiation strategy, Coca-Cola seeks toutilize its assets that include the strong commitment of itsassociates and management, talent, worldwide reach, unrivaled systemsof distribution, financial strength and brands to increase its rateof growth and competitiveness in a way that will create value for itsshareholders.
Consideringthat Coca-Cola is already a prominent company all over the globe, itdoes not have to adopt an overall cost leadership approach. It doesnot have to decrease the prices of its products relative to itscompetitors so that it can gain competitive advantage since the wayit is differentiated already gives the company an advantage over itsrivals. Further, the Coca-Cola does not have to adopt the focusstrategy since it manufacturers numerous different beveragesincluding bottled water, fruit drinks and different carbonatedflavors, which it markets to a large variety of consumers.
Whilelooking at the strong competitive position of the company within amarket that is highly attractive, it is considered that theorganization should safeguard its position (Griffith & Jain,2011). This may be achieved through concentration of efforts onmaintaining the existing strength through investment in growth at themaximum digestible rate. The firm must maintain the policy it appliesin regards to marketing in its strategic approach as well as in itstactical daily operations. Further, it should consistently carry outmarket research to assist it in understanding the environment whereit operates and enable it establish products that will meet the needsof the consumers. This is aligned with how marketing is definednationally and internationally, which is concerned withidentification, anticipation and satisfaction of requirements ofconsumers.
Conclusion
Thefirm’s profitability and effectiveness has clearly been integral insupporting its market share and strong competitive position in itsmain product market. Other brands such as Fanta, Sprite and Diet Cokehave also been profitable and recognized all over the globe. CocaCola’s international successes can be attributed to its approachesand strategies that work together with each other harmoniously toprovide most favorable returns as well as efficiency. The company issuccessful since it has been efficient and effective at the same timeand continues to embrace differentiation. In regards todifferentiation, the firm seeks to be different from its rivalsthrough improving its products in a way that provides exceptionalvalue to the consumers. This is realized through marketing activitiesthat are well managed and designed, leading to increased recognitionand brand image as well as superior products. Additionally, costleadership is attained through experience in production, knowledge,learning, effective distribution networks, and economies of scale aswell as efficient manufacturing systems.
References
Faarup,P. (2010). Themarketing framework.Aarhus: Academica.
Griffin,R. (2012). Fundamentalsof management.Mason, OH: South-Western Cengage Learning.
Griffith,D. & Jain, S. (2011). Handbookof research in international marketing.Northampton, Mass.: Edward Elgar.
Keillor,B. (2011). Internationalbusiness in the 21st century.Santa Barbara, CA: Praeger.
Morrison,J. & Morrison, J. (2011). Theglobal business environment.Houndmills, Basingstoke, Hampshire: Palgrave Macmillan.