Competitive Advantage: Coca-Cola's Internal and External Analysis

This report provides a comprehensive analysis of Coca-Cola's internal and external environments, focusing on the factors that contribute to its competitive advantage and entrepreneurial activities. The internal analysis includes a SWOT and VRIO analysis, examining the company's strengths, weaknesses, opportunities, and threats, as well as the value, rarity, imitability, and organization of its resources. The external analysis utilizes the PESTLE framework to assess the political, economic, social, technological, legal, and environmental factors impacting Coca-Cola. Furthermore, the report evaluates the competitive forces within the industry using Porter's Five Forces, including the threat of new entrants, the threat of substitute products, the bargaining power of buyers and suppliers, and the intensity of competitive rivalry. The analysis aims to provide insights into the key drivers of change and their impact on Coca-Cola's profitability and strategic decision-making.

Internal and External
environment
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Contents
Internal and External environment...................................................................................................1
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Critically analyse the internal resources and capabilities that give the organisation a
competitive advantage.................................................................................................................3
TASK 2............................................................................................................................................6
Identify the key drivers of change in the external environment and evaluate their impact on
the entrepreneurial activities of an organisation. In your response, use an appropriate
framework and any relevant tools such as mind map to analyse the external environment (i.e.
you may present your work in the format of self-designed diagram, a mind-map or a mini
poster which you include in your report.....................................................................................6
TASK 3............................................................................................................................................7
Using Porter’s five forces network and any other relevant tools, evaluate the impact of the
main competitive forces that are influencing the entrepreneurial activities and profitability
within the industry......................................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10
Books and journals....................................................................................................................10
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INTRODUCTION
Environment plays a very important role in a healthy living and maintaining the balance of
life. It is the study of interactions between all the individuals with the environmental
surroundings and in the interests of solving very typical problems. Internal environment is a type
of environment which is directly connected to the organisation which contains various elements
like current management of employees. External environment contains all the outside factors
which affect the operations of a firm like changes in technology, socio-economic factors etc.
Coca cola has been taken as a base company for this report which is a beverage company
founded on 29 January, 1892 by John Stith Pemberton and Asa Griggs Candler at Atlanta,
Georgia. This is a larger producer of a syrup concentrate, which is then sold to various bottlers
throughout the world. This file covers analysis of internal environment and external environment
for the selected organisation. This will also cover the analysis of all the competitive forces within
the industry by using Porter’s five forces framework (Haskell, 2017).
TASK 1
Critically analyse the internal resources and capabilities that give the organisation a competitive
advantage.
An internal analysis of an organisation is the exploration of the company’s competency,
position of a cost and competitive viability in the market. Conducting this analysis gives useful
and important information about the firm’s strength.
SWOT analysis of Coca cola:
STRENGTH:
It describes the positive attributes, characteristics of the business or project that give it an
advantage over its competitors.
 The biggest strength of Coca cola is its brand image as this company itself has its position
because of providing the quality of the products to its customers.
 Also the multichannel presence of the company as it has both brick and mortar and online
stores and also offer franchising options.
WEAKNESS:
It describes the negative attributes, characteristics of the business or project that give it a
disadvantageous over its competitors.
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 The biggest weakness of Coca cola is their inability to enter successfully in foreign
markets which is because of their untraditional designs because of the competition in the
market like Pepsi, lays and kurkure (Castro-Martinez and Diaz-Morilla, 2020). The
lacking of mobility to manage global workforce in future and absenteeism in health
beverages which has a major problem for various health related diseases.
OPPORTUNITY:
It describes the elements in a company's internal environment which will permit it to
formulate and apply all the strategy to increase the profit.
 Diversification in health and food business will increase the offering of coca cola to their
consumers. This will make sure that a customer is getting better revenue from existing
customers. Supply chain which is distributing beverages will also provide snacks by
sharing supply chain costs.
 Global expansion can also be an opportunity of coca cola has opened its stores in many
foreign countries but it has to work actively by increasing its branches. Supply chain can
play a major role in transportation and distribution of coca cola by strictly watching the
supply chain cost.
THREAT:
It is described as the elements in the external environment that could harm the cohesion and
profit of the business.
 The main threat of this company is sourcing of raw materials like water. With the rising
of changes in climate, countries which are facing problems regarding the scarcity of
water. Coca cola can experience a major downfall in the revenue and a capacity if its
distribution.
 Various competition in the market include Starbucks, cafe coffee day and energy drinks
like red bull etc. offers a healthy competitiveness in a market.
VRIO analysis of coca cola:
 VRIO analysis is an analytical technique for the evaluation of the resources of an
organisation and its abilities (Kouran, 2017).
It is used to help a firm by protecting the resources and abilities that gives a long term
competitive advantage.
Value:
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Competencies which are valuable that aids the selected organisation in using the available
opportunities in the market. These competencies allow a business in the growth and development
to expand it further.
Social responsibility: In context to coca cola, it is regularly engaged in social responsibility
actions and makes them transparent. In CSR activities, it allows this company to make a non-
substitutable competency as it is connected with business objectives and developed in a strategic
manner.
Brand image: The brand image of a coca cola is very unique and has high brand integrity. It has
been developed over a long time from a regular effort and a quality product offering in the
selected organisation (Roberg, 2017).
Rare:
Competencies which are rare in nature and developed by the industry aids in making
competitive advantages for the selected organisation.
Global presence: Coca cola has an international presence and work in the multiple countries and
areas. Presence of the selected organisation has built an expanded consumer base and earns
revenues through various regions.
Problem solving approach: This Company forces the culture of an organisation as a problem
solving approach between its employees and its management which allows a higher teamwork
and creativity in a company.
Inimitable:
This will help in adding value to the competitive profit and long term sustainability for an
organisation.
Offering quality products: Coca Cola Company offers very good quality commodities to
customers which has a source of a brand. The consistent quality leads to the purchases in repeat
and increase in the consumption of a selected organisation.
Marketing communications: Coca cola has made a utilisation of marketing communications
strategically to convince higher consumption in the market. The main concentration of a business
enfolded by the culture of an organisation and a vision of a business.
Organisation:
These resources are uniquely developed for this company and cannot be used by
competing players in the industry (Calvelo, Granja and Garcia-Fandino, 2019). These sources
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have no substitutes and so cannot be employed by the firm to exploit the opportunities and make
use of resources efficiently for a growth and development of coca cola business.
Technological advancement: It allows the coca cola company to maintain the affectivity in a
business process and its operations. This will allow a smooth management of global operations
for a firm which is important to maintain the efficiency of logistic management.
This approach is helpful in developing new strategies of a business by facilitating a systematic
analysis and assessment of all the present resources and abilities for generating a long term
competitive advantage.
TASK 2
Identify the key drivers of change in the external environment and evaluate their impact on the
entrepreneurial activities of an organisation. In your response, use an appropriate
framework and any relevant tools such as mind map to analyse the external environment
(i.e. you may present your work in the format of self-designed diagram, a mind-map or a
mini poster which you include in your report.
External analysis is a process by which a firm objectively assess the alterations made to the
industry and a world that impact their present operations of a business.
PESTLE Analysis on Coca cola-
Political Factor: This factor is related to government which may affect an industry or any firm.
In case of coca cola, the government will ban this firm if it does not following with safety and
health related rules and regulations. Coca cola has also the opportunity to enlarge its
multinational business and enhance global supply chains.
Economic Factor: This factor is directly affecting the economic condition of company, growth
or decline, long term prospects in the market (Lee, Jung and Ha-Brookshire, 2020). In context to
coca cola, a little slow but a fix growth and development of countries is an opportunity to grow
and make the increment in stability of it.
Social Factor: This factor refers to the social condition of any organization which can affect the
attitude or behaviour of consumer. In relation to coca cola, it has the opportunity to grow due to
the increasing capability of customer to buy fast food instead of cooking at home which is due to
the busy lifestyles mostly in urban cities.
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Technological Factor: This factor has a direct or indirect influence on the industry or business
as a bit improvement in the technology will definitely impact the organisation (Arel and Thomas,
2017). Success of coca cola depends on technological factor only as this plays a positive role in
the development of any organisation. This company has the opportunity to increase its research
and development investment to develop the efficiency of business. Coca cola has also used
technology as a positive factor in terms of sales which is directly impacting the development of
business to reach more customers via its mobile applications. In this aspect, coca cola has more
opportunities in growing its business.
Legal Factor: This factor affects both internal and external environment of a company. This
environment can affect policies and procedures of an industry and can control safety and
regulations. In case of coca cola, brand can’t hire staff and provide them less than required
salary.
Environmental Factors: This factor mainly deals with the effect of the nearby environment and
the impact of ecological aspects. This aspect linked with natural environment and how it affects
any business. Coca cola is having a great opportunity in this factor through which it can improve
its environmental program which will allow it to strengthen its business performance.
Improvement in the environmental programs and feasibility to strengthen the brand and business
performance will be an opportunity which can be related with the rising interest for corporate
environmental programs (Gunasekaran, Subramanian and Ngai, 2019).
TASK 3
Using Porter’s five forces network and any other relevant tools, evaluate the impact of the main
competitive forces that are influencing the entrepreneurial activities and profitability within
the industry.
Porter's Five Forces is a model that recognises and examines five competitive forces that
form every industry and assist regulations of an industry's weaknesses and strengths.
Threat of new entrants: The threat of new entry is based on how secure your company is from
being surrounded by competitors. In context to coca cola, Entry barriers are relatively low for the
beverage industry and there is an increasing amount of new brands appearing in the market with
similar prices than Coke products.
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Threat of substitute products: This refers to the possibility that consumers will find a variety of
ways for doing what the selected organisation is doing. In case of coca cola, there are many
kinds of energy drink and other beverages present in the market. Coca cola doesn’t really have
an entirely unique flavour as in a blind taste test; people can’t tell the difference between Coca-
Cola and Pepsi.
The bargaining power of buyers: It is all about a power of buyer over the seller where it
determines the relationship with buyer power which is all about how flexible a person can be on
service while maintaining an authoritative position in your market (Manomenidis, Panagopoulou
and Montgomery, 2019). In relation to the coca cola, large retailers, like Wal-Mart, have the
power of bargaining because of the larger quantity of orders, but the bargaining power becomes
low due to the ending of consumer brand loyalty.
The bargaining power of suppliers: It is all about a power of seller over the buyer where the
greater the number of suppliers available, the easier it is to switch to a cheaper alternative. In
case of coca cola, greater the number of suppliers available in the market; the easier it is to
switch to a cheaper alternative.
Rivalry among existing firms: It is used to analyse the amount of competition a company faces.
Markets with fewer competitors are attractive but can be short-lived. On the other hand, highly-
competitive markets with many firms doing the same work will lessen the power and can push
them to lower the costs and bring new commodities. In relation to coca cola, the main competitor
is Pepsi which also has a wide range of beverage products under its brand. There are other soda
brands in the market that become popular, like Dr. Pepper, because of their unique flavours. And
are failed to reach the success that Pepsi or Coke have achieved in the market (Mansoor, 2019).
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CONCLUSION
It is concluded from the above report that the internal and external analysis of the
organisation is very important for the success of a company. This analysis will give suitable
strategies to handle any predictable situation which helps in identifying the strengths and
weaknesses of a selected organisation.
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REFERENCES
Books and journals
Haskell, C. D., 2017. Institutional research as a bridge: Aligning institutional internal data needs
and external information requirements a strategic view. Higher Education Evaluation and
Development.
Castro-Martinez, A. and Diaz-Morilla, P., 2020. Management of internal and external
communication in private hospitals in Spain during the COVID-19 crisis. Revista de
Comunicacion y Salud, pp.525-547.
Kouran, O. E., 2017. SEAM contribution to meet the internal and external challenges in a
private Lebanese university (Doctoral dissertation).
Roberg, K., 2017. Small Business Participation in Sustainable Tourism Certification: Internal
and External Influences. Arizona State University.
Calvelo, M., Granja, J. R. and Garcia-Fandino, R., 2019. Competitive double-switched self-
assembled cyclic peptide nanotubes: a dual internal and external control. Physical Chemistry
Chemical Physics, 21(37), pp.20750-20756.
Lee, S., Jung, S. and Ha-Brookshire, J.E., 2020, December. A Framework of Perceived
Corporate Social Responsibility Gaps between Internal and External Stakeholders: A
Stakeholder Theory Approach. In International Textile and Apparel Association Annual
Conference Proceedings (Vol. 77, No. 1). Iowa State University Digital Press.
Gunasekaran, A., Subramanian, N. and Ngai, W. T. E., 2019. Quality management in the 21st
century enterprises: Research pathway towards Industry 4.0.
Mansoor, A. K., 2019. The Internal and External Vocational Criteria of Iraqi Journals: An
Empirical Study of the Iraqi Journalists in Al-Sabah and AlMada Journals for the Period from 1-
1-2016 to 1-6-201. Mustansiriyah Journal of Arts, 43(88).
Manomenidis, G., Panagopoulou, E. and Montgomery, A., 2019. Resilience in nursing: The role
of internal and external factors. Journal of nursing management, 27(1), pp.172-178..
Arel, H. Ş. and Thomas, B. S., 2017. The effects of nano-and micro-particle additives on the
durability and mechanical properties of mortars exposed to internal and external sulfate
attacks. Results in physics, 7, pp.843-851.
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