Coca Cola External Analysis

Executive Summary The North American Industry Classification System (NAICS) code for the Coca-Cola Company is 3121 (U.

S. Census Bureau, 2012). This NAICS code is used to identify Soft Drink Manufacturing. However, the icon Coca-Cola is not in this industry alone. The data of 2002 identifies 2,908 competitors in this category (U. S.

Census Bureau, 2002). This NAICS code encompasses establishments primarily engaged in manufacturing soft drinks and artificially carbonated waters.Although Coca-Cola has made its global footprint as a leading competitor in this market and they continue strategizing for long-term sustainable growth, Coca-Cola is innovative in their methodology and application to maintain one-step ahead of their competitors and is aware of the market’s increasing demand of product substitution. Introduction The Coca-Cola Company, now over 125 years in existence, continues to maintain its competitive stance in the global market of beverage consumption.

The goliath company’s continued growth may be demonstrated by its ability to 1) identify global awareness of market trends and consumer demand, 2) identify and comply with environmental and regulatory requirements/enhancements, 3) analyze the impact of innovative projects and identify how these external influences directly impact the strategies implemented thus reducing competitive rivalry and competitors ability to take the lead in product substitution.Threats of Competitive Rivalry Socio-Economic Concerns Two major detriments to Coca-Cola’s strategy of expansion into non-carbonated beverages may be the impact of society’s recent economic uncertainty and increased health awareness. Such beverages may be considered luxuries. Although pricing might be competitive, in today’s economic uncertainty individuals may prefer a variety of beverages that offer better nutritional value vice purchasing Coca-Cola’s soda beverages.

It is my opinion; Coca-Cola has strategically identified this possible impact by expanding their product line to include over 3,500 beverages in their portfolio to include coffees, energy drinks, juices, sports drinks, teas and waters (The Coca-Cola Company, 2010). Michael Porter believes the competitive edge one company has over another is its ability to think about the company on a broader level (HarvardBusiness, 2008). This ability allows companies to communicate their strategies with employees, stakeholders and even competitors.The expectations, rules of engagement, and deliverables are made clear. One may ask why competitors should know the competitor’s strategy. The answer to that may be if they know exactly what it is you have to offer and how you are going to deliver the product they may defer their quest to compete and seek competition elsewhere.

It is my feeling transparency is also complimentary to supporting industries, citizens and agencies.Such sub-groups as transportation, where housing, bottling distributers, environmental agencies, and skilled personnel can complement the organization if such subgroups can promote services that support the organization. Transparency in a successful organization is also reflective of its quality selection of such sub-groups. This could also lead competitors to believe the best of the best have already defined their loyalty by providing services and collaboration with its competitor of choice.

Defending its reputation of being a globally responsible leader in the beverage market, Coca-Cola has taken large strides in addressing obesity. Coca-Cola prides themselves on their efforts to support these health concerns providing positive involvement by defining six commitments. These six commitments include, using evidence-based science, innovated development, educating consumers, provide transparent nutritional content, market responsibility to include parent/caregiver information of products, and promote healthy living by collaborating with communities and governing agencies.It is through the sustainable market of offering a variety of beverages that Coca-Cola has been able to deflect product substitution. Coca-Cola’s ability to maintain a strong global competitor over the last 125 years is evident of the company’s knack to foster success by being flexible, broad in thought, and provide transparency of and within the organization. They continue to collaborate with bottling distributors, seek environmental solutions to waste and recycling, and maintain competitive pricing and products all while seeking to understand consumer demands.

Porter’s 5-Forces AnalysisHigh • Competitive Rivalry: advertising, high entry barrier, number of competitors, brand recognition, market share • Threat of Substitution: minimize with mergers, brand loyalty, current trends, switching costs, perceived price/value Moderate: • Supplier Power: number of suppliers, cost of changing suppliers, size of suppliers, raw materials • Buyer Power: number of buyers, pricing, brand loyalty of buyer, bargaining leverage, buyer volume • Threat of New Entry: capital requirements, fixed costs, distribution access, patents and proprietary knowledge, government regulations QuickMBA. com, 2009-2010) Opportunities Taken to Create Product Substitution Coca-Cola can set itself apart from competitors such as Pepsi Co. and Cadburry Schweppes without limiting there consumer support. These competitors also dabble in the distribution of food and snack products. Coca-Cola’s focus is primarily on beverages as they remain the top competitor of the beverage industry.

Focusing on one category also can increase consumer perception of being an organization that knows its business and focuses on providing the best quality product without steering away from what is does best.Some may prefer a master of one than a jack of all trades. Decreasing the threat of substitution, Coca-Cola has gained momentum in the expansion of beverage production. Coca-Cola operates in more than 200 countries, markets more than 500 brands and 3,500 beverage products, and sells 1.

7 billion servings of beverages each day (The Coca-Cola Company, 2010-2011). As society becomes more health-conscious Coca-Cola continues to focus on fewer calories, water, and sport drinks. If Coca-Cola does not continue such awareness, it could risk falling in the ranks below competitors. PEST AnalysisPolitical Environment factors: Leading the beverage industry Coca-Cola continues to increase awareness on obesity by offering lower and zero calories products. These efforts are in collaboration the government’s efforts and concern of increased health cost due to obesity.

Economic Environment factors: By creating opportunities throughout our value chain, we increase our access to local procurement and are able to penetrate hard-to-reach markets through local entrepreneurs. By investing in local economies and being a good corporate neighbor, we also earn our “social license” to do business in those places. (The Coca-Cola COmpany, 2010-2011)Social Factors: Coca-Cola products are offered globally. Their products are appealing to various ages, genders, cultures, and ethnicities. Although a consumer created the Coca-Cola account of Facebook, it continues to participate in the global social network.

Technological Factors: Coca-Cola is increasing consumer awareness by the use of I-phone and Android applications. Programs include accepting payments for products by downloading programs that enable users to establish a pre-paid balance on cellular phones. The use of beverage dispensers in restaurants that offer more than 100 of Coca-Cola’s products. (ValueBasedManagement. et, 2009) Conclusion The Coca-Cola Company continues to demonstrate social responsibility, identify with consumer’s demand for healthier yet enjoyable products, and continuously produce innovative techniques setting them aside from their competitors. Product characteristics are enticing to all genres of consumers and customer loyalty remains strong.

The competitive rivalry may also exist but the ability for Coca-Cola to produce a quality product line in one category and remain at the top of the ranks for 125 years is validation of the company’s mature response and receipt of political, environmental, social, technological impact.Resources HarvardBusiness. (2008, June 30). http://www.

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html. The Coca-Cola COmpany. (2010-2011). 2010/2011 Sustainability Report.Retrieved January 2012, from http://www. thecoca-colacompany.

com/sustainabilityreport/TCCC_2010_2011_Sustainability_Report_Full. pdf. U. S. Census Bureau.

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