Strategic management is the field dealing with the major initiatives taken by managers for the company and brand or product on the behalf of the organization. The process of strategic management involves utilization of resources that enhance the performance of organization in the external environment (Nag& Hambrick, 2007). The strategic management approach taken by a company often involves organization mission, vision and organization objectives, organization’s policies and plans for the development of company’s products or services. Different programs and projects are designed to achieve organizational objectives by allocating resources to implement the policies and plans (Papadakis& Chambers, 1998). Thus, a balanced scorecard is utilized to evaluate the performance of the business and its progress towards the set objectives. Studies have shown that requirements assessment of strategic management must start with the fulfillment of expectations of the stakeholders. Strategic management is a level of managerial activity under the set goals and tactics. It provides direction to organization and related to organizational studies. There is strategic consistency when the actions of organization are consistent with the management expectations thus strategic management does not only include the management team but also includes stakeholders of the organization and largely depends on the stakeholders of the organization.
This paper aims to identify and examine the business strategy of Coca-Cola International using theoretical models and perspectives relating to strategic management of the company. Coca-Cola is the world’s largest soft drink maker, operates in more than 200 countries and owns 400 brands of nonalcoholic beverages (Dransfield, 2004). The company has been facing challenges in the current market as a result of market driven changes, regulatory and socio-economic changes (Amason, 2010). The internal analysis of Coca-Cola Company is performed to know the company’s internal capabilities. Order best writing paper for your research proposals.
As it is already mentioned what strategic management involves it is worth mentioning here that there are different perspectives and models used to identify the strategic management in the company. The iceberg model of organization presents the surface based on the deeper and bigger reality that is usually unexamined. Thus, iceberg model of organizational culture portrays two aspects of organization; at first formal organization and secondly it informal organizational aspects. However, both aspects of organization have great influence on the success and failure of the company but their strategic approach is different in terms of application. This paper aims to examine and evaluate the strategic management of Coca-Cola using SWOT Analysis model and Five-Forces Analysis.
The Evaluation Criteria for Strategic Management of Coca-Cola
SWOT analysis and Five Forces models have been chosen to evaluate the strategic management in the Coca-Cola Company. According to Johnson, Scholes and Whittington (2008), the strategic options chosen by companies can be evaluated against three success criteria: suitability, feasibility and acceptability. According to them, suitability involves the question if the strategy would work for the company or its product; feasibility involves the question if it is applicable; and acceptability involves the question if the strategy will be acceptable to implement.
SWOT Analysis of Coca-Cola
Before analyzing the company’s strategy and strategic management, it is important to mention the goals and objectives of the company upon the success of which the strategies are formulated.
Goals and Objectives
The goals and objectives of Coca-Cola are to provide drink that satisfies consumers’ needs and also provides profit to its shareholders by increasing the market share. Thus, the strategic management plan of the company will be evaluated if it is suitable, feasible and acceptable to achieve the goals and objectives of the company.
In order to evaluate the strategies the factors of SWOT model can be paired in this way:
- SO Strategies (Strengths and Opportunities Strategy)
- ST Strategies (Strengths and Threats Strategy)
- WO Strategies (Weaknesses and Opportunities Strategy)
- WT Strategies (Weaknesses and Threats Strategy)
SO Strategies (Strengths and Opportunities Strategy)
The values incorporated in the company’s business strategy present the organizational culture of the company according to which the company’s set values are leadership, integrity, accountability, collaboration, innovation and quality. The strategic vision of the company is to change the business needs with the changing market needs and its vision to create great place for the people to be inspired, to become responsible global citizen, to build network and mutual loyalty, to provide the world with wide range of beverage brands for satisfying their needs and desires and earn maximum return to shareholders. The company being the world’s largest soft drink maker and having existence in more than 200 countries and with 400 brands of nonalcoholic beverage possesses largest opportunity to execute the strategy to achieve the organizational goals.
ST Strategies (Strengths and Threats Strategy)
However, the strength of strategy identified is the approach that is adopted to achieve the goals of the organization. In order to achieve the goals, the company has strategized to provide good and effective environment to its employees that helps the company to increase the productivity and efficiency of the product. Moreover, the networking approach aims to show the mutual collaboration with the community members that further helps to satisfy the consumers by providing quality products and in result provides good return to shareholders. The external threats present with the internal strength include the existence of other soft drink brand in the market with which Coca-Cola has tough competition and as a result consumers have option to use other brand in case of dissatisfaction. Thus, this external factor of competition creates threat for the company.
WO Strategies (Weaknesses and Opportunities Strategy)
The Coca-Cola Company is global brand and with the global existence it can be difficult to maintain the application of in-depth strategy to achieve the organizational goals. Since Coca-Cola has long been in the beverage market and possesses large share in the global economy, with large market share in the global economy and global existence company has enough resource that could help to maintain the application of strategy of the company.
WT Strategies (Weaknesses and Threats Strategy)
The weakness identified is the global application and maintenance of the strategy because the company already faces tough competition both in local and international market. However, it is identified that maintaining the global application of strategy could be difficult for the brand there is also threat of facing heavy cost on the resource and resource management.
Since soft drink industry is very profitable industry Coca-Cola has been identified as one of most valuable and recognized soft drink beverage supplier in the world. The five-force analysis is used to evaluate and demonstrate the each force presents in the internal and external environment of the company.
Barriers to Entry
There are numbers of factors that make it difficult for the competition to enter is the bottling network. Bottling network of soft drink industry like Coca-Cola is applicable due to franchise agreement with the bottlers and these agreements prohibit the bottlers to have new competing brands. Such agreement with bottlers also assists the Coca-Cola to achieve its mutual network building.
Bargaining Power of Suppliers
In order to produce soft drink, the raw material required is basic commodities such as color, flavor, caffeine and additives, sugar, packaging. However, the producers have no control over the pricing of the material therefore the suppliers are weak in the industry.
Bargaining Power of Buyers
The key channels used by Coca-Cola are fast food center and food stores and market places. The company’s profitability in each segment demonstrates the power of buyer and the way buyers pay different prices on the basis of their power to negotiate.
Threats of Substitute Products
There are numbers of substitutes of Coca-Cola available in the market such as coffee, tea, water, juices and others. Threat of substitutes makes the Coca-Cola to consume more money in the advertisements and marketing that increases the expenditures of the company. However, Coca-Cola offers wide range of drink that reduces the intensity of the threat, yet it is difficult for the brand to maintain large variety of products.
Coca-Cola faces large rivalry competition such as PEPSI, NESTLE and DR PEPPER. These competitors make intense competition for Coca-Cola as the company has to share market share with its competitors. Moreover, the upheaval of pricing also gives threat to competency of the company. For example, Coca-Cola has long been facing competition with Pepsi on the differentiation and advertising. This competition, however, does not influence the pricing of the products and prevented big dent in the profits of the company.
Evaluation of Business Strategy of Coca-Cola
The strategic management of the company aims to develop sustainability in the product brand and this strategy has impacted four core areas including workplace, market place, environment and community. Since the company has always attempted to conduct the business responsibly and ethically, to the company sustainability can be achieved by evolving business for success, identifying the business health and health of community. For this purpose, the company has been promoting open workplace environment that recognizes human rights and working with highly motivated, productive and committed workforce. The provision of products and services to meet the needs of the consumers of soft drink is the most important of the strategic management of the company and it always attempts to conduct the business in protective and preserving environment.