Week 6 External and Internal Environments
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Strayer University
BUS499 Business Administration Capstone
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Introduction
Coca-Cola is among the global giants that have established itself, taking its part in the beverage industry, enjoyed and recognized globally. Coca-Cola was established in 1986, yet it has continued to build roots and dominate the market over the last few decades. The present paper will carry out a comprehensive review of Coca-Cola, its business environment, as well as strategy. Further, the essay will also exploit the general environment and its path to success while suggesting the inclinations toward the future. The essay will also address the biggest threat that is faced by the Coca-Cola company, its greatest opportunity, as well as set in place strategies to leverage its strengths while addressing its weaknesses.
General Environment
Under the general environment, the concept that is most applicable in the case in question is Technological factors. Technology has the highest impact on Coca-Cola. In a world of digital age, technology has reshaped many things from how people and individuals carry out their issues. Issues like smartphones, social media, and e-commerce have become of concern in recent days, and this has revolutionized how Coca-Cola conducts its business. It has shaped how the organization carries out its business as well as how it interacts with other businesses.
Five Forces of Competition
Bruijl (2018) recognizes the threat of new entrants as one of the components of the five forces of competition. This can be seen to be one of the significant factors for Coca-Cola. Even though the beverage industry is highly competitive, the barriers to entry are relatively low, which allows new entrants either use innovative products or come in with new distribution strategies. Over the years, Coca-Cola has defended against this by prioritizing brand loyalty, investment in research and development of new products, and having strong relationships with various distribution partners. Further to this, Coca-Cola has gone ahead to differentiate its products introducing healthier products and adapting to consumer preferences has kept the company ahead of time. This shows the entity's commitment to staying ahead of time. Guo & Wen (2021) have shown that Coca-Cola has low customer switching costs and high capital requirements. This has allowed the entity to knock out excessive requirements in the market.
Future Improvements
Coca-Cola should be able to deal with several issues to bolster its ability to address the threat of new entrants over the course of 5-10 years. Such efforts would place the entity at the forefront in the implementation of an innovative entity, hence creating a higher barrier and making it difficult for other entities to join the industry. This would begin by having an agile product that would place Coca-Cola in a place where it can rapidly respond to changes and trends in the market. It will be able to test and refine concepts depending on real-time feedback. Another is investments in research so as to understand the customer preferences and hence have in place products that align with the needs of the customer (Aashish,2023). It is also important to have in a place open innovation and partnerships so that they can foster information sharing and research with other local start-ups. Leveraging the creativity and agility of external partners places Coca-Cola at the forefront of innovation in the beverage industry. It also needs to diversify the categories of beverages by moving beyond the traditional soft drinks and adopting the trends of the present times, and creating products that work as per the needs of the customers. Diversification of the new products will enable it to capture markets that had not been captured by competitors.
Greatest External Threat
The most significant external threat to Coca-Cola is the increased concern about environmental sustainability and plastic waste. The single-use plastic bags and bottles have been a major cause of scrutiny for a number of companies. This is so seen for Companies like Coca-Cola.Russ(2022) has indicated that Coca-Cola was the world's world plastic polluter in 2021. This bad reputation for being an environmental polluter may be a big issue for companies. To reduce the pollution associated with Coca-Cola, the company should emphasize investment in support of recycling initiatives, as well as engagement in partnerships that bring about responsible waste management. Wang et al. (2021) have indicated that there is a relationship between the reputation of an entity and its efforts toward environmental degradation. Coca-Cola can practice mitigating such issues and hence deal with the reputational risk that results from the same and align itself with evolving consumer values.
Greatest Opportunity
The biggest opportunity for Coca-Cola is the expansion into the regions that have middle-class and that which have increasing disposable incomes and which issue is a representation of significant growth opportunity for Coca-Cola. The new markets and the untapped areas of the world bring with them a great opportunity to be a vast consumer base ready to take on global brands like Coca-Cola. The best way in which Coca-Cola can deal with this is by having strategies that resonate well with the cultural preferences of the said markets. Customizing its products to different regions, it will be possible to establish stronger connections with customers and hence unlock new frontiers in revenue potential. This will be a strategy of product differentiation as per the needs of the customers of different regions.
Strengths
The biggest strength of Coca-Cola is its strong brand recognition in the market, extensive distribution networks, and global market presence. Zahair(2022)has reported that Coca-Cola is the strongest brand in the US, with a brand strength of 93.3. The launch of coca zero and Sugar Zero caffeine drinks have even put them higher as compared to other brands and making it stand out in the market. The best way to maximize these strengths is by investing in innovative marketing to reinforce the brand identity of Coca-Cola. It can take advantage of its distribution channel stability and ensuring consistency in the distribution of its goods. A focus on its global footprint would allow it to cater to diverse tastes and preferences over the world. Another is a cultural adaptation, whose global presence presents the opportunity to tailor products to individual preferences. Localized product adaptation would enable it to maximize this strength.
Weaknesses
The major weakness of Coca-Cola is the concern about the safety of many of its products (Flynn & Okuonzi, 2016). The company also has its weaknesses. The first is the overreliance on sugary beverages and the associated weaknesses needing strategic mitigation. They need to address a healthier product portfolio in which they should expand and provide more healthier choices for their portfolio. The introduction and marketing of these products would help in the diversification of its offerings as well as bring about health-conscious consumers. The next is education campaigns, where they need to collaborate with research nutrition and other relevant organizations to address the health issues in its products (Flynn & Okuonzi, 2016). Research is key to being aware of how their product affects lifestyles and how to improve them. It is also important to finance innovations in sugar reduction. That is to invest in sugar reduction without compromising on the quality of the product they are offering. They need to maintain the same flavors but reduce the sugar levels to keep the product appealing and have value for money.
1. Michael A. Hitt. 2020. Strategic Management: Concepts and Cases: Competitiveness and Globalization. 13th ed. Cengage Learning.
3. Wang, M., Liao, G., & Li, Y. (2021). The relationship between environmental regulation, pollution and corporate environmental responsibility. International Journal of Environmental Research and Public Health, 18(15), 8018.
4. Flynn, A., & Okuonzi, S. A. (2016). Coca-Cola's multifaceted threat to global public health. The Lancet, 387(10013), 25.
5. Zahair, A. (2022, June 24). Coca-Cola is the Strongest Brand in the US, With a Brand Strength of 93.3. New World Report.
https://www.thenewworldreport.com/coca-cola-is-the-strongest-brand-in-the-us-with-a-brand-strength-of-93-3/
6. Russ, H. (2022, February 15). Coca-Cola, criticized for plastic pollution, pledges 25% reusable packaging. Reuters.
https://www.reuters.com/business/sustainable-business/coca-cola-criticized-plastic-pollution-pledges-25-reusable-packaging-2022-02-10/ m
7. K C, Aashish. (2023). Report - Marketing research and competitive analysis. 4000 words. 10.
8. Guo, X., & Wen, M. (2021, December). Research on Competitive Strategy of Coca-Cola Company. In 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021) (pp. 2879-2885). Atlantis Press.
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