External Threats That Face Coca Cola Commerce Essay

External scourges That Face Coca Cola Commerce try onThe discoer provides a detailed analysis of the external environmental threats of coca locoweed as well as how it monitors its environment to deter all the practical threats that may exist /arise there from, to enable it maintain a competitive position over its key competitors in the persistent shrinking railway cable system world with its attendant intense and unbridled competition.This report, in a bid to review of the current monitoring system of coca-cola, will take a business/solution approach. This approach will help find out threatening environmental factors that affect decision making, and outline formulation and the actualisation of the strategic mark of the coca-cola, such as economic regulations, tax changes, new-sprung(prenominal) laws, condescension barriers, demographic change, and reinment activity policy changes among others.Books, articles, journals and periodicals were reviewed, internet sources w ere also visited, to elicit information. The major threat set were more of environmental, arising majorly from its scoop which was alleged to chair a high level of toxic chemicals, including cadmium and lead, both of which plenty be harmful to human and plants. The compositors case of coca-cola plant in Perumatti in the southern state of Kerala in India was used as a case study.Amidst these threats, key areas of opport building blockies for coca-cola were also identified. An epitome of this is its partnership with foreign Olympic Committee ( IOC) since 1928 and its late renewal till 2020, covering a 12 -year pact from the Beijing 2008 Olympic Games through the Vancouver 2010 Olympic Winter Games, the capital of the wholeed Kingdom 2012 Olympic Games, the Sochi 2014 Olympic. (http//www2.coca-cola.com/ )Considering the level of uncertainty and changing circumstances in the international business arena, especially in the face of the looming economic down-turn, the report, proffe red the following recommendationsThe use of environmental impact assessment , both in the lead building a plant and afterwards.development of daily/weekly/monthly reports which will keep it abreast of whats new and significant in the market especially at the street level.the use of scenario planning which will constantly keep the company informed about what is occurrent in its marketplace as well as the chap between where they are, and where they intend to be.The use of bench marking, to be able to find out the gap between what they are doing and those of their competitors.development of essential competitor information which includes statements on strategy, new product development, marketing initiatives and key appointments and expansion plans and capacity variations.development of snatch pattern/ trends that will be able to identify weak signal and thus keep ahead of its competitors.INTRODUCTIONNot only is coca cola the worlds largest beverage company, but in 200 nations ( wit h consumers enjoying an average of 1.6 billion servings a day), sells about 500 coruscate dishonors, including 4 of the top sellers (coca- cola, diet one C, sprite and fanta), sparkling beverages, juices, and ready to drink teas among others. (http//www2.coca-cola.com/ )Established 1886 with its official headquarters in Atlanta, GeorgiaCompany Associates 92,400 worldwide (as of December 31, 2008)New York Stock Exchange Ticker symbolic representation KOSupporting Communities In 2007, The Coca-Cola Company and The Coca-Cola Foundation made charitableContributions of $99 gazillion to community initiatives worldwide. . (http//www2.coca-cola.com/ )2008 Financial HighlightsOur portfolio includes 13 billion dollar brands.Unit case volume grew 5% to 23.7 billion unit cases worldwide.Net operating revenues grew 11% to $31.9 billion.More than 70% of our net operating revenues and more than 75% of our unit case volume were generated outside of North America. (http//www2.coca-cola.com/ )Wi th reference to SWOT analysis, PESTLE analysis and Porters five competitive strategy, I am analysing the precarious regulations, tax laws, trade restrictions, tariff, demographic changes ,in the business environment of coca-cola and a review of the current monitoring system of the external environment as well as proffering a recommendation, with regards to what coke could do better, to maintain and its competitive rim over its competitors.THE outside(a) ENVIRONMENT OF COCA-COLA USING SWOT ANALYSISITS STRENGHTSAt the heart of strategic planning, is environmental examine a process of studying the environment of the organization to pinpoint opportunities and threats(Mathis, R.L, and Jackson,J.H47). To analyse coca-colas environment, i am going to use SWOT and PESTLE analysis tools as well as the Michael porters five of competitive strategy. This is so because, it is the developments in the macro business environment , relating to political, social, technological, etc that automatica lly create opportunities or threats and in turn, impact on the strategic development of coca-cola which may either bring success or mar its strategic intent.For coca-cola, matchless opportunities abounds, which cannot be delinked from its forcefulnesss in innovation and product line expansion aggressive advertisement and promotions. According to Morrison, J.(2006130-1) coca- colas strength has been in the carbonated soft drinks market, served by its flagship brand, coke, and promoted by global advertising campaigns.This has helped it build a pixilated brand recognition and brand loyalty, which is created by sets of positive associations that links the collector to the brand, thus building a relationship of trust, likability and loyalty(Jones, J.P 1999263).Coca-cola has built around all its brand some personality characteristics(ibid253) which is not only unique but timeless. Coca-colas brand name is well known throughout 90% of the world today. Also of strength is the multi- local anaesthetic strategy which is in keeping with the companys changing markets. Through this, local managers are enabled to devise their own marketing strategies and choose the products from the cokes portfolio that are best suited to local tastes. Morrison, J.(2006132) Its implication is that every community of consumers is recognized and carried along, and this goes a long way to make them more loyal to coca-cola amidst other producers of similar product.Another unequalled chance that coca -cola has is the long lasting historic bond with International Olympic Committee (IOC (the organizers of the Games of for each one Olympiad, and approximately 200 National Olympic Committees around the world)) since 1928 and its recent renewal of this historic bond, through 2020 to cover the Beijing 2008 Olympic Games through the Vancouver 2010 Olympic Winter Games, the London 2012 Olympic Games, the Sochi 2014 Olympic. (http//www2.coca-cola.com/ )salt lake 2002www.thecoca-colacompany.comThe Coc a-Cola Company is proud to be the longest continuous corporate partner of the Olympic GamesWEAKNESSESAmidst coca-colas reputation of innovation, and recent product line expansion, it is riddled with some weakness factors that pose some threats that can be detrimental to the organization if unchecked, such as lack of continuity of workforce, negative publicity and communication among others.Negative publicity Cokes flagship product coca-cola classics is known to contain high levels of sugar and caffeine, contributing. In the recent times, this is causing uproar on the increasing health conscious world.Communication gap Due to the complex sizing of the organization, there exists a communication gap between the superiors at the top of the hierarchy and their subordinates at the bottom of the ladder. In effect, conveying ideas about fixing problems that may occur on the street level may be delayed.Continuity of workforce According to a 5 year employee of Kyle Hughes, Coke has a preclud e high turnover rate of retraining, averaging about 1, 600 sessions per annum.A PESTLE analysis will be done for a more understanding of the external environment of coca-cola. This will specifically look at how other external factors such as political, economic, social, technological, legal as well as environmental affect coca- cola.EXTERNAL ENVIRONMENT OF COCA-COLA, USING PESTLE ANALYISThe analysis of coca-cola, using the PESTLE cannot be duly separated because these factors are inter-locked, and as such, a development in the environment, could affect the economic situation and as such call for political decisions to be taken, and vice versa.The political aspect of PESTLE looks at what is happening politically in the environment, the constraints the government has imposed or is promising to impose in future, Morrison, J.(200630) This may also include tax laws, trade restrictions, government reforms and tariff. According to a report on Guardian of August 7, 2006, government policy affected coke in Guyarat, Madhya, Pradesh and Rajas in India as the selling of coke was banned in government offices and educational institutions which was estimated to deprive coke of a potential market of 30 million house hold.The above assertion cannot be delinked from the environmental factors in which, it was perceived that the presence of coca-colas plant in perumatti in the southern Indian state of Kerala had brought untold hardship to the host community as it was estimated that coca-cola uses an average of 1 million liters of water for its production on daily basis, thereby bringing about drinking water scarcity in the area. This consort to the Guardian report, the waste sludge from the cleaning of its bottles was also satisfym by local farmers as detrimental to their farm lands as it was perceived to contain high levels of lead and cadmium. And lead according to Paul Brown an environmental correspondent, in Guardian of 25th July,(2003), is particularly bad for children, a ffecting their nervous system and cadmium if taken up by plants, is toxic to the kidneys and liver and can cause cancer. In the light of this therefore, the government resolved in public interest, not to renew its license which we can see has a political undertone.The economic aspect looks at what is happening within the economy, example, economic growth/decline, interest rates and inflation rates, etc.albeit, there has been an economic recession, coca-cola has been making constant profit as can been in the recent fourth quarter report that was published in some periodicals.Profit- $6.82bn (4.36bn) for 2009- a rise of 17% on the previous yearSales increase 4% on coca-cola, 10% cokes zero brand55% profit and 5% global sales. (http//news.bbc.co.uk/1/hi/business/8506495.stm) andNet operating revenue-5%,$7.51 billion topping analyst forecast of 7.22 billion. (http//www.nytimes.com/2010/02/10/business/10coke.html)PORTERS FIVE COMPETITIVE FORCESAnother strategy used by coca-cola to monito r its environment is the use of Michael Portes five theories. Michael Porter (1980) considers the external factors, that can impact upon an organizations competitive positioning, and thus identifies five competitive forces that govern the rule of competition and how the rules prevail in any organisation , both at home and at the global market.A comprehensive understanding the nature of each of these forces gives organisations the necessary insights to facilitate them to create the suitable strategies to be successful in their market. Porter further suggested that the relative strengths of these forces also determines the intensity of competition.These five forces areThreat of new entrantsthreat of substitutes/ replacement productsbargaining power of buyersbargaining power of suppliers, andrivalries between firms of the same sector. flagellum OF NEW ENTRANTSConsidering the brand loyalty, economies of scale, access to channels of distribution, etc, which coca-cola has acquired over th e years, there is little or no threat for its products from new entrants into the non-alcoholic beverage sector. In the light of this, Coca-cola is place in a good competitive position.THREAT OF SUBSTITUTES/ REPLACEMENT PRODUCTSBargaining Power of SuppliersThis is very low for coca-cola considering the fact that there are variety of sources from which it can source inputs from. In other words, the supplier bowed stringed instrument for its raw materials is reliable, fast, and prices are negotiable.THREAT FROM COMPETITIONCoca-cola is a matured and dominant player in the worldwide soft drink industry , with a good brand loyalty. Albeit, there exist the cola wars, between coke and Pepsi,both of them basically share the entire soft drink market, making use of boisterous marketing, advertising and promotion tactics and this often lead to hampering profits between the two soft drink war-lords.HOW DOES COCA-COLA MONITOR ITS EXTERNAL ENVIRONMENT?An understanding that coca-cola does not op erate in a vacuum has made it to continually scan its environment in order to find out or foresee likely environmental threats and thus develop appropriate responses to them. This has helped it to take advantage of its opportunities, and minimize threats and again, determines how it will achieve a sustainable competitive advantage.Certain models and frameworks that can be used for this purpose includes Scenario planning, customer surveys/ opinion polls, bench marking, among others.Customer Surveys /Opinion polls This is a strategy coke uses to find out the opinion consumer redeem about is products or other changes especially as it concerns its activities and those of its competitors. Over the years, coca-cola and Pepsi have been locked in fierce battles, sometimes described as the cola wars Shimp, T.A (200743). One yellow(prenominal) battle began in 1975 when the traditional coke was tested against Pepsi.( ibid) The result gotten informed a change in the cokes formula for more swe etness, the result was that the folks who desire old Coke went crazyso crazy that the Coca Cola Company decided to bring it back as Coke Classic.(http//www.highbeam.com/doc/1G1-3961611.html)Scenario Planning Scenarios are true-to-life(prenominal) descriptions of the organisations possible futures that allow the scenario team to set aside its individual and organisational assumptions about how the external environment will operate and explore new ones (Ralston, B.2006141) Coca-cola is constantly awake(predicate) of the link between its strategy and the changing future, thus, itself for the ifthen probable future. This is exemplified it its mission statement, thusthe world is changing all around us. To continue to thrive as a business over the next ten years and beyond, we must look ahead, understand the trends and forces that will shape our business in the future and come to swiftly to prepare for whats to come. We must get ready for tomorrow today. Thats what our 2020 Vision is all about. It creates a long-term destination for our business and provides us with a Roadmap for victorious together with our bottler partners (http//www.thecoca-colacompany.com/ourcompany/mission_vision_values.html)Benchmarking is the comparison of performance in one organisationor part of an organization against that in another, with a view to finding ways of astir(p) performance. (Needle, D.2004433) This avails the company the opportunity to take corrective measures actions.RecommendationIt is recommended that coca- cola should take immediate action to launch and promote environmental impact assessment of locations before citing their plants for operations.coca-cola should alsoThe International Association for Impact Assessment (IAIA) defines an environmental impact assessment as the process of identifying, predicting, evaluating and mitigating the biophysical, social, and other relevant effects of development proposals preliminary to majordecisions being taken and commitmen ts made.1