PESTEL Analysis and Porter’s Five Analysis of Coca Cola

This report provides a detailed analysis of Coca Cola's business nature, external environment, and strategic priorities. It includes a PESTEL analysis of the company's political, economic, and social factors, as well as a Porter's Five Forces analysis of the competitive intensity and attractiveness of the business. The report concludes with four strategic recommendations to help Coca Cola tackle the challenges of the market.

Running head: PESTEL ANALYSIS AND PORTER’S FIVE ANALYSIS OF COCA COLA
Introduction to Management Assignment
Submitted by: Seng Yun Jia Erin
Student ID: CT0325436
Class: PTDip1901_MM24

1PESTEL ANALYSIS AND PORTER’S FIVE ANALYSIS OF COCA COLA
Executive Summary
The primary purpose of this report is to elaborate on the company Coca Cola and its business
nature. The report throws light on the external environment of the company by focussing on the
political, social and the economic factors. The report also talks about the PORTER’s five forces
analysis of the company and the strategic recommendations that can improve the position of the
company in the world market. The report states how the company can acquire the bottling
partners that can help in strengthening position of the company.

2PESTEL ANALYSIS AND PORTER’S FIVE ANALYSIS OF COCA COLA
Table of Contents
Company's description, business nature..........................................................................................2
PESTEL analysis of the company...................................................................................................2
Porter's Five Forces analysis............................................................................................................4
Four strategic recommendations......................................................................................................6
Conclusion.......................................................................................................................................8
References........................................................................................................................................9

3PESTEL ANALYSIS AND PORTER’S FIVE ANALYSIS OF COCA COLA
Company's description, business nature
Coca Cola Company is one of the largest manufacturing and the largest distributor in the
non-alcoholic beverage markets. The business deals with the non-alcoholic beverages that
consist of the carbonated soft drinks and various noncarbonated beverages. The company
believes that their business depends upon the company’s ability to connect with the consumers
and also depends upon the capacity of their people, their bottling partners and finding new ways
for reaching the thirsty brands to the people everywhere (Abdullah et al. 2017). The company is
based on the following strategic priorities, those includes the growth of the accelerated
carbonated soft-drink, to expand their family in a selective manner for driving the profitable
growth, developing the system profitability and the capacity of the company with the bottling
partners. Serving customers with the creativity and the consistency for generating growth across
the business market. Directing investments with the highest-potential areas across the business
market, driving the employee’s efficiency and cost-effectiveness everywhere in the business
market. The strategic business units of the company are located in North America, Africa, Asia,
Europe, Eurasia, and the Middle East, Latin America. The company sells the concentrates and
the syrups for the bottled and the canned beverages to the authorized and the canning operators.
The concentrates and the syrups for the soft drink products and the flavored non-carbonated
beverages are also acquired by the company in addition to these. The company also sell the
concentrates for the purified water for making the products like Dasani for the authorized
bottling operations (Reddy 2018).

4PESTEL ANALYSIS AND PORTER’S FIVE ANALYSIS OF COCA COLA
PESTEL analysis of the company
The PESTEL analysis is the framework or the tools that are used by the marketers for
analyzing and monitoring the macro-environmental factors that create an effect on the
organization.
Political factors ( 175 words )
The political factors play the most important role in identifying the factors that could
create impacts on the long-term profitability in the business market. Coca-Cola Company is
operating in more than a dozen countries, also exposes itself to the various type of the political
environment and the political risks. The company is under the mercy of the FDA as they are
needed to meet the regulations as stated by the governments. Coca-Cola is subjected to soft
drinks occupational safety and the healthy acts based on the local, state, federal and foreign
environmental regulations. Jafa, Saba, PepsiCo Inc(2017) mentioned that the alterations in the
laws and the regulations create an effect on the business, the change in the non-alcoholic
business creates the pricing policy laws that imposes pressures on the business and for
maintaining the share of sales in the business market. The disturbed political conditions,
especially in the international business markets, create an effect on the business. The company
needs to focus on the ability to penetrate into the emerging and the developing business market.
Economic factors ( 113 words )
Coca Cola could use the country’s economic factors like the growth rate, inflation rate
and the economic indicators of the industry like the beverages and soft drink industry’s growth
rate. During the recession period of 2001, the US government can take aggressive actions for
turning the economy. Coca Cola noted this and realizing that this would make the loan interest

5PESTEL ANALYSIS AND PORTER’S FIVE ANALYSIS OF COCA COLA
rate high, they took low-cost loans in 2001 to the growth of fund in 2002.Bakan(2016)
mentioned that the company uses that loan for the innovative research and development of
innovative products for capitalizing a strong economy in 2002. The company is looking for the
same opportunity as the global growth is slowing down.
Social factors ( 125 words )
The social factors affect the company’s sales of products that involve most of the people
in the US are showing the growing interest in healthy lifestyles. The customers look forward the
time management and the aged customers are mostly concerned with the nutrition that creates a
great impact on the business. Coca Cola distributes most of the products in the cultured countries
and they try to meet the demands of those customers accordingly. Like in Japan, the company
has created 30 alternative factors for appealing to Japanese consumers and they are making
similar efforts in China. Coca Cola needs to respond to the requirements of people in America by
making the products healthier as they are more concerned with healthy products (Stringer and
Stringer 2015).
Porter's Five Forces analysis
Porter’s Five Forces Framework is the analyzing tools for identifying the business
operations and is based on the five forces for finding out the competitive intensity and the
attractiveness of the business in the terms of the business’s profitability.
The threat of New Entrants ( 61 words )
The new entrants of the business of beverages and soft drinks and the new types of these
products creates pressures on the company by lowering the pricing strategy, mitigating costs and
also providing the latest value proposition for the customers. Coca Cola Company manages

6PESTEL ANALYSIS AND PORTER’S FIVE ANALYSIS OF COCA COLA
every challenge and building effectual barriers for safeguarding the company’s competitive
advantages (Ghosh, Ghosh and Ghosh 2016). Customer loyalty within industry can be said to be
moderate and time would be required by a brand for the building of customer loyalty. The new
entrants would find it difficult to build a big brand like Coca Cola as this would need capital
along with the skilled human resources.
Bargaining power of suppliers ( 78 words )
Most of the company in beverages and the soft drink industry buy the raw materials from
the various suppliers. The suppliers in the leading positions could reduce the margins and the
company can make a profit in the business markets. It has been found that the bargaining power
of Cocacola is weak; this company have many numbers of suppliers. There are various suppliers
and the size of the individual suppliers are either small or they are moderately large. The
suppliers cannot take recourse to forward integration and this makes the bargaining power of
suppliers weak for the brand Coca Cola. There does not exist any substitute pertaining to the raw
materials like that of sugar yet number of the suppliers can be said to be high. The powerful
suppliers of the goods sector of customers could use their bargaining power for extracting more
prices in the beverage and soft drinks firms. The supplier bargaining power lowers the
profitability of the beverage companies (Subramanian 2017).
Bargaining power of Buyers ( 109 words )
The buyers mostly comprised of high demands and they mostly want to buy the products
on which the best offers are applied and paying the least price as much as possible. This imposes
pressure on the organization’s profitability in the lengthy future process. As stated by
Busk(2016), the excessive bargaining power of the clients makes the advanced ability for the

7PESTEL ANALYSIS AND PORTER’S FIVE ANALYSIS OF COCA COLA
company’s seeking rising discounts and offer. Coca Cola Company can undertake the bargaining
powers of the buyers by establishing the great base for the customers, by bringing rapid
innovative products and the new products will be able to reduce the defections of the existing
customers (Donath et al. 2016).
Threats of the substitute products and services ( 70 words )
The new products and the services are able to meet the customer requirements in various
ways, the industry’s profitability may suffer. The threats for the substitute products are so high
that it offers the value propositions that affect the present offerings of the business industry.
There are different products made by other companies;like fruit juices, cold and hot beregaes and
other similar health drinks as well. Also switching costs of these products are low in the market.
There are many other emerging companies offering the same products and the beverages with
new flavors makes more business competition for Coca Cola (Komańda 2017).
Rivalry among the existing competitors ( 94 words )
When the competition among the active customers is excessive then this will force down
the prices and decreases the overall success of the business production. The Coca Cola company
also operate in the tough competitive business market of the beverages and the soft drinks
production. This rivalry creates an effect on the long term success of the association
(Muthulakshmi 2017). Pepsi is one of the first rivals that comes first in the competition with
Coca Cola. From the 19th century, these two companies are competing and their product offerings
are similar to each other.

8PESTEL ANALYSIS AND PORTER’S FIVE ANALYSIS OF COCA COLA
Four strategic recommendations
The following strategic recommendations would help the organization to tackle with the
challenging threats of the business. The company can undertake those threats of the new entrants
by producing the innovative goods and services as the new goods not only accumulates recent
customers but also provides a good cause for the existing customers to buy the product. The
company building up the economies of scales for lowering the fixed cost per unit. The company
is also able to build up the capacity and spend money on the development of research work. The
latest entrants are not motivated in entering the dynamic industry, where the other established
companies can keep defining the standards in the regular manner (Guolong and Junyan 2017).
Coca Cola can tackle the bargaining power of the suppliers by building an effective supply chain
with various suppliers. The company could experiment with the product designs of using various
materials so that if the prices of the raw materials go up and developing the dedicated suppliers,
those whose business is dependent upon the firm. In this way, Coca Cola will be able to manage
the negotiating supplier’s power by establishing the effective supply chain along with various
supplier (Shara 2018).
Coca Cola Company can undertake the threats of the substitution by becoming service-oriented
rather than becoming only manufactured goods oriented, by accepting the basic needs of the
customers rather than their customer buying and by raising the switching customers to cost. Coca
Cola can lay focus on their business model that can help the company in removing threat of
substitution. The company can acquire bottling partners that can help them in optimising
manufacturing and improve the performance of the company. Coca Cola can refranchise bottling
territories that can help in spreading the influence of the company in the market.

9PESTEL ANALYSIS AND PORTER’S FIVE ANALYSIS OF COCA COLA
The company can tackle the excessive rivalry among the competitors by building the sustainable
differentiation, building scale for competing better and collaborating with the competitors for
increasing the market size than competing for the small business market (Kocabıyık and
Morsümbül 2017). Coca Cola can compete outside that of the carbonated sector of the soft drink
that can help the company in staying competitive and adapt to needs of the new generation. It can
help the company in catering to the demands of health conscious consumers that can help them
in getting ahead of the competitors. It can help the company in being well-positioned that can
help the company in facing challenge pertaining to future needs of the customers.
Conclusion
It can be concluded that as Coca Cola Company believes that the major part of the
business depends upon the ability of the company of connecting with the consumers and
depending upon the people’s capacity, the bottling partners and finding new ways for reaching
the thirsty demands of the people everywhere. The company mostly focuses on the growth of the
soft drinks, expanding the family in the selected manner leading towards the profitable growth,
developing the system profitability, serving customers efficiently, directing investments and
driving the effective employees and the effective cost everywhere in the business market. The
PESTEL analysis provides the framework, which is used by the marketers for examining and
monitoring the external factors, that creates an effect on the organization. The Porter’s Five
Forces analysis of Coca Cola identifies the business operations and is based on the five forces for
finding out the competitive intensity and the business attractiveness in terms of the business
profitability. The company are in stiff competition as the new companies are emerging in the

10PESTEL ANALYSIS AND PORTER’S FIVE ANALYSIS OF COCA COLA
business market and providing the similar products. The emerging companies are also bringing
new flavoured drinks that make the competition hardest in the business market.

11PESTEL ANALYSIS AND PORTER’S FIVE ANALYSIS OF COCA COLA
References
Abdullah, A., Gohar, A., Khan, M.J. and Majid, A., 2017. Operation Management Analysis:
Coca-Cola Beverages Pakistan.
Bakan, J., 2016. Social marketing: thoughts from an empathetic outsider. Journal of Marketing
Management, 32(11-12), pp.1183-1189.
Busk, D., 2016. How Coca-Cola Journey transformed corporate communications. Journal of
Digital & Social Media Marketing, 4(1), pp.6-16.
Donath, D., Lagarde, L., Pearson, L., Swaine, K., Syrianos, S. and Tchakarova, K., 2016.
Integrating the Crowd into Trade Marks. Managing Intell. Prop., 261, p.32.
Ghosh, M.M., Ghosh, A. and Ghosh, M., 2016. Impact and Influence of Culture on Brands in
Indian Market. IOSR Journal of Business and Management (IOSR-JBM), 18(7), pp.54-60.
Guolong, L. and Junyan, D., 2017. A Study on Efficient Management and Protection for
Company’s Intangible Assets. INNOVATION AND MANAGEMENT.
Hosamani, S.M. and Jadhav, V.S., 2017. Brand Awareness of Beverages in Urban and Rural
Areas of Dharwad. Int. J. Pure App. Biosci, 5(5), pp.145-156.
Jafa, E. and Saba, M., PepsiCo Inc, 2017. Cooler merchandiser with customizable graphics. U.S.
Patent 9,572,436.
JOHN, M.D., OMOLAYO, E.T. and IMOUDU, M.A., 2017. PERFORMANCE APPRAISAL
IN ORGANISATION: BUILDING COMPETENT EMPLOYEES. Asian Journal of Current
Research, 2(3), pp.89-94.

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Kocabıyık, T. and Morsümbül, R., 2017. Performance of Dow Jones Stocks According To
Springate Model. CIEP 2017 PROCEEDINGS BOOK, p.279.
Komańda, M., 2017. Brand sponsorship and social media. Coca Cola and Carlsberg illustrated
with an example of the European Football Championship 2016. Trends Economics and
Management, 11(28), pp.37-46.
Muthulakshmi, S., 2017. A STUDY ON CONSUMER PREFERENCE FOR HEALTH DRINKS
IN THANJAVUR TOWN.
Reddy, K.C., 2018. A STUDY ON CUSTOMER AWARENESS AND SATISFACTION
TOWARDS COCA COLA BRAND IN GUNTUR CITY. Editorial Board, 7(12), p.46.
Shara, K., 2018. Corporate Social Responsibility in Beverage Industry A Comparative Study of
Coca Cola and PepsiCo.
Stringer, G. and Stringer, F.F.U.G., 2015. Case of Study: Coca Cola Integrated Marketing
Communictions. Consultado el, 5.
Subramanian, K.R., 2017. Marketing and Promotion of a Single Product in Different
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