Management Economics: Analysis of Coca Cola Company

Management Economics

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
1. Overview of Coca Cola Company with its products/services description.........................1
2. Demand and market equilibrium including the factors that impact on the products or
services of Coca Cola in beverage sector...............................................................................2
3. Price elasticity of demand of soft drinks with key suggestions on effective pricing policy
for Coca Cola..........................................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Economics management refers to a process of managing finance, resource, income &
expenditure at both small and large level. It helps a firm in treating business enterprise
effectively, so that higher level of profitability can be earned (Thusyanthy, 2018). The present
report is going to various evaluate key concepts of economics, that helps a firm in taking
managerial decisions to run business effectively. It includes demand & supply, cost analysis,
price elasticity and more, by taking soft drinks as an example to analyse impact of government
policy on its business operations. For this purpose, case analysis is done on Coca Cola, which is
well-known company in beverage sector and operates its business at worldwide level. As this
firm also deals in retailing, manufacturing and marketing of non-alcoholic beverages. Therefore,
critical analysis on its economic data that guides to policy making within organisation, national
and international context can easily be done.
MAIN BODY
1. Overview of Coca Cola Company with its products/services description
Food & beverage industry plays an important role in economy and society development,
which combines national reach with the local importance, having diverse range of skills with
effective reliance on migrant workers. This sector also has a hugely diverse, in terms of both
company size as well as subsectors within it, that ranging from the processing of non-alcoholic to
the manufacture of alcoholic drinks (Ciafone, 2019). In context with Coca Cola, it constantly
concerns on innovating its business operations, with willingness to work with subsectors like
retailers, distributors and suppliers, via no. of pre-competitive initiatives. It is one of the
American multinational company, which is headquartered in Georgia and invented by John Stith
Pemberton in 1886. This firm offers a wide range of more than 500 brands that are distributed
over 200 countries, where soft drink like Diet coke, Fanta, Sprite and more, is one of its best
manufacturing products (Zhang, 2019). Coca-Cola in most of the nations, is considered as best-
selling soft drink and recognize as one of the global brand in year 2010. Having wide expansion
of business at global scale, the competitive advantage of this firm can also be measured in terms
of its workforce, which is incorporated with more than 62,600 employees of diverse background
(Jones and Comfort, 2018).
1

In UK, location of Coca Cola is headquartered in London, Coca-Cola Great Britain is
one of local subsidiary of the Coca-Cola Company, where it is responsible for marketing as
well as overall management of its brand (Boumediene and El Houda, 2018). This firm has a large
minority shareholding and it continues to dominate drinks market of UK at large level, where it
accounts for sales of near about £1.3bn, i.e. up 13% of soft-drink market. Fanta, Dr Pepper, Diet
Coke, Schweppes and Sprite, are included in Top Ten carbonated brands of the world, with
almost £495m in terms of sales and revenue. Other key brands of Coca Cola include Buxton and
Monster mineral water, which contributes to more than £1.7bn (UK Food and Beverage Industry
Outlook, 2020). Along with this, food-service outlets of respective firm including quick-serve
restaurants also accounted to £1.5bn, which is equivalent to 45% of market share.
2. Demand and market equilibrium including the factors that impact on the products or services
of Coca Cola in beverage sector
Coca Cola also known as Diet Coke is one of the popular carbonated soft drink, which is
available mostly in each stores, vending machines, restaurants over 200 countries. This has made
Coca Cola Company as one of the widely sold brand in commercial sector, as well as gain
competency over its major rival i.e. Pepsi (LÊ ĐĂNG, 2019). However, it has been targeted by
various brands that offer healthy drink, because its soft drink products contain high amount of
carbonated water, which create life-threatening effects. But still, demand of Coca Cola product is
high in market, due to ethical way of operating business, which is widely accepted in UK and
other international market as dominant soft drink than other brands (Zheng, Huang and Ross,
2019).. Growth of business of Coca Cola can be measured in terms of its income statement, as
shown in below table –
Income Statement of Coca Cola
COCA-COLA CO (KO) Cash Flow Flag INCOME STATEMENT
Fiscal year ends in December. USD in millions
except per share data.
2015-
12
2016-
12
2017-
12
2018-
12
2019-
12 TTM
Revenue 44294 41863 35410 31856 37266 34326
Cost of revenue 17482 16465 13256 11770 14619 13717
Gross profit 26812 25398 22154 20086 22647 20609
Operating expenses
Sales, General and administrative 16427 15262 12496 10307 12103 10971
2