Coca Cola's Adaptation of Porter's Generic Strategies: A Strategic Analysis

Coca Cola has developed long-run goals that align with the company's strengths and weaknesses. The goal is to maintain sales in established markets, double revenue by 2020, and capitalize on the wellness and health trend. To achieve this, Coca Cola uses a differentiation strategy to create value for customers by providing high-quality products and maintaining a strong brand image. The company also utilizes cost leadership by producing and distributing products at a low cost, which allows it to maintain stable prices and increase market share. Overall, Coca Cola's strategic approach is focused on creating value for customers while maintaining its competitive edge in the market.

Strategic Management

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Contents
Executive Summary.........................................................................................................................2
Introduction......................................................................................................................................4
Mission.........................................................................................................................................4
Vision...........................................................................................................................................4
Issues faced......................................................................................................................................4
Application of Generic Strategies by Coca Cola.............................................................................5
Differentiation..............................................................................................................................6
Cost Leadership............................................................................................................................7
References........................................................................................................................................9

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Executive Summary
Coca Cola was established in the year 1886 by John S. Pemberton. Coca Cola is a leading soft
drink manufacturer of the world. The company is distributing its products in around 200
countries across the globe. Portfolio of the company consists of 400 brands, which involves soft
drinks, bottled water, juice and energy drinks. Coca Cola is well known for its soft drink i.e.
coke. This report aims to analyse the application of generic strategies in the soft drink
manufacturer Coca Cola. The report will discuss how the organisation have utilised the porter’s
generic strategy in order to achieve the goals that have been set. The organisation is using cost
leadership and differentiation strategies in order to tackle the issue of decreasing sales because of
the rise in the concerns regarding obesity and health. The company have utilised the strategies
effectively for overcoming these issues which is discussed in detail in the report.

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Introduction
Coca Cola is carbonated soft drink manufacturer established in 1886. It is the leader in the soft
drink industry across the world, and sells products in more than 200 countries, consisting of
product portfolio having around 400 brands, which consists of juice, energy drinks, soft drinks
and bottled water. Mostly the organisation is recognised for coke. Since its presence, Coca Cola
have utilised diverse and extensive advertisements for increasing the share in the target market,
which have led the company to be one of the well-recognized brands around the globe.
Mission
Coca Cola’s mission is to stimulate moments of happiness and optimism, for creating value and
making a difference (Coca Cola. 2017).
Vision
Coca Cola’s mission is to become a great place for work for the employees. Besides the
company’s vision is to create a portfolio of superior beverages, which will fulfil the requirements
of the customers. The company aims to create a network of suppliers in order to create value for
its customers. Coca Cola wants to socially responsible by building sustainable communities. The
company’s vision also includes long term returns for the stakeholders while being socially
responsible. It also wants to be highly effective and dynamic organisation.
Issues faced
Products of Coca Cola are sold in around 200 countries all over the globe, and the company’s
portfolio have 400 brands, which consists of soft drinks, juice products, bottled water and energy
drinks. Coca Cola is well recognised for its brand coke and from the time Coca Cola have
introduced this brand, the company have become one of the renowned brands in the beverage
industry across the globe.

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Coca Cola as a brand is well recognised and valued by the customers, in all the countries it
distributes its products. In the year 2015, Coca Cola had captured around 42% share in the
market of non-alcoholic beverage industry. In the last decade, multinational beverage giant is
facing the challenge of decreasing sales, because of the changes in the taste and preferences of
the consumers in the target market.
Consumers are now becoming more aware and active towards the health concerns and regarding
obesity. Due to these changes in the taste and preferences of the consumers, Coca Cola have set
long term objectives in order to overcome the challenge of declining sales and change in the taste
and preferences of the customers. One of the significant objective that Coca Cola have set, is to
increase the revenue twice as it is now by the year 2020. Besides this the company also wants to
attain and cultivate scalable and state of the art first class brands (Ghoshal, S., 1987).
In the last few years, profitability of Coca Cola is on decline. In the year 2015, Coca Cola earned
net income of the revenues around 15.4%, as compared to the last year income it was 18.3%.
Decrease in the numbers do not signifies that the company is having losses and is not able to
operate effectively and efficiently, these numbers are the outcome of the overall breakdown of
the carbonated, non-alcoholic soft drink industry. Coca Cola is facing the above discussed issue
by the acquisition and diverging into other beverages which are heathier as compared to the
carbonated drinks like Vitamin water.
Application of Generic Strategies by Coca Cola
After the evaluation of the external and internal environment, international beverage giant have
developed long-run goals, which are in line with the strengths and weaknesses of the company.
Coca Cola’s long run goal is to maintain the level of sales in the markets where the company is
well established, with special emphasis on the diet carbonated drinks, in order to double the

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revenue amidst 2010 to 2020, and to enhance its share in the market which have upcoming
wellness and health trend (Ashish Sharma, M. 2017).
Differentiation
Coca Cola in order to defeat other market players in the market place and give them tough
competition, the company have adopted differentiation strategy amongst the generic strategies, in
order to create value for the customers. By emphasising the value to the customers and providing
them with superior quality products, Coca Cola was able to build brand loyalty in the process.
Coca Cola implemented the differentiation strategy by providing the customers with high quality
products and thus enhancing the overall brand image of Coca Cola. While implementing the
differentiation strategy, advertising plays significant role in the organisational development and
differentiating the brand from the other players in the market. Coca Cola utilizes huge amounts
on the money on the advertising of its brand. It utilizes the promotion in order to capture the
value and for creating the customer loyalty. Coca Cola as a brand is capable of differentiating the
brand from the other competitors in the market by maintaining huge and diverse portfolio, where
every product give the customers unique value. In the past few years the organization have
established itself as a leading manufacturer of the soft drinks in the carbonated beverage
industry, as compared to the other players in the market such as PepsiCo, Coca Cola is
recognized across the world (Porter, M.E., 1997).
By the use of differentiation strategy, Coca Cola wants to position the products in a way, which
will make the products stand out as compared to the other similar products. Coca Cola is one of
the oldest soft drink manufacturer and from that time, the company is utilizing the differentiation
strategy in order to make the products stand out from the others. Coca Cola is spending 20% of
the overall budget on the advertisements for the maintenance of differentiation strategy.

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Other differentiating factor which the company is utilizing is the logo, which is helpful in
differentiating the company’s existence from the other in the market. From the establishment of
the logo in 1923, the logo have not changed much and which helped in the maintenance of the
brand image of the company. In order to have effect on the customers mentality the company
utilizes the strategy of making the bottle slimmer, like it have been shaped in the curve, and thus
packaging of the product is done various shapes. Besides this Coca Cola is also using the
freestyle machine by which the people can add and match various flavors in their drink (Kim, E.,
Nam, D.I. and Stimpert, J.L., 2004).
Cost Leadership
By the use of low cost strategy, Coca Cola is aims to place its products much cheaper as
compared to its competitors, and to do so Coca Cola try to decrease the production cost (Eldring,
J., 2008). In order to decrease the cost of production, Coca Cola manages the cost in an effective
way. Company administers the operating expenditures and also manages the cash flow. The
company produces the products on the large scale, in order to reduce the operating cost and
achieve economies of scale and further the benefit is also extended to the customers in the form
of low prices of the products. This way it becomes win-win situation for the organization and the
consumers as well. Besides this another positive factor of the Coca Cola is that it do not keep on
changing the prices of the products with the increase in the popularity of its products. Coca
Cola’s stable price feature, have helped the company to become a cost leader in the market.
The company is able to maintain the low cost of the products by producing and distributing and
having ownership of the majority of the bottling companies. The strength of the Coca Cola
underlies in its extensive bottling capacity, which is the core of the success of the company. It
also maintains this capacity across the world, by having a network organization owned and

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controlled distributing and bottling operations. Besides this the company also owns independent
bottling distributors, partners, retailers and wholesalers. This have allowed the organization to be
focused on the expansion of the brand and thus enhancing the share in the market, which will
further increase the revenues earned by the company (Parnell, J.A., 2006).

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References
Ashish Sharma, M. (2017). Coca-Cola - Porter's Generic strategies. [online] Brainmass.com.
Available at: https://brainmass.com/business/porters-five-forces/coca-cola-porters-generic-
strategies-610123 [Accessed 21 Jul. 2017].
Coca Cola. (2017). Coca Cola. [online] Available at: http://cocacola.co.il/ [Accessed 21 Jul.
2017].
Eldring, J., 2008. Porter ́ s (1980) Generic Strategies, Performance and Risk: An Empirical
Investigation with German Data. diplom. de.
Ghoshal, S., 1987. Global strategy: An organizing framework. Strategic management
journal, 8(5), pp.425-440.
Kim, E., Nam, D.I. and Stimpert, J.L., 2004. The applicability of Porter’s generic strategies in
the digital age: assumptions, conjectures, and suggestions. Journal of management, 30(5),
pp.569-589.
Lemak, D.J. and Arunthanes, W., 1997. Global business strategy: a contingency
approach. Multinational Business Review, 5(1), p.26.
Parnell, J.A., 2006. Generic strategies after two decades: a reconceptualization of competitive
strategy. Management decision, 44(8), pp.1139-1154.
Porter, M.E., 1997. Competitive strategy. Measuring Business Excellence, 1(2), pp.12-17.Porter,
M.E. and Advantage, C., 1985. Creating and Sustaining Superior Performance.