Strategic Management: Industry Analysis and VRIO Analysis

This document discusses the concepts of industry analysis and VRIO analysis in strategic management. It focuses on the competitive potential of Coca Cola and evaluates its available resources. The document also examines the threat of new entrants, the threat of substitutes, the bargaining power of buyers and suppliers, and the competitive rivalry in the beverage industry.

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Business strategy means the decisions and actions
that company usually takes to achieve its goals and
objectives and become competent in the prevailing
industry. It tells what business need to do to reach
the goals set for the success of the organisation. The
concept of strategic management refers to setting
objectives, then analysing the external and internal
environment, evaluating the strategies and finally
ensuring that the management has rolled out the set
strategies (Teece, 2019). The organisation chosen
for this report is Coca Cola, manufacturer of soft
drinks which was established in 19th century by
John Stith Pemberton. This report shall cover the
strategies of the organisation through industrial
analysis, business environment analysis and at last
the competitive advantage of the business
(Kruszynski and Pawlowski, 2020).
Threat of new entrants: The barrier for entering in
beverage industry for new companies is low due to low cost
of setting up production unit as well as low cost on
marketing due to easy availability of products. Coca Cola is
globally recognised company with customer loyalty so it
does not have threat of new entrants (Wellner and Lakotta,
2020).
Threat of substitute: This threat level is moderate for Coca
Cola as customers tend to shift to other substitute easily but
people prefer the taste of soft drink offered by Coca Cola so
its threat level is moderate depending on switching decision
of customers (Abalkhail, 2019).
Bargaining power of buyers: The buyer power is high
when it is about retails and food outlets due to easy
availability. But bargaining power is limited so there is
moderate bargaining power (Okumus and et. al., 2019).
Bargaining power of supplier: There is limited scope to
price shift due to contracts with large companies like coca
cola so its bargaining power is low because of high
influence of company on supplier (Schilling and Shankar,
2019).
Competitive rivalry: The rate of this force is moderate. The
biggest competitor of coca cola is Pepsi. The small business
does not have potential to affect coca cola's market share so
there is moderate threat of competitor (Darling and et. al.,
2019).
Strategic Management
Introduction Industry analysis
VRIO analysis is a technique which is used to evaluate the resources of the
company and its competitive advantage. This technique will be used to analyse
the competitive potential of Coca Cola by asking four questions which are-
value- the brand image of Coca Cola is the valuable resource as its goodwill
depends upon the brand image it has created globally (Indartono and Wibowo,
2017)
Rare- the resources of the company help the Coca Cola to increase its competitive
advantage to capture larger market share by having unique formula for
manufacturing drinks to which it has patent over it (Lopes and et. al., 2018)
In-Imitable- the human resource of Coca Cola is in imitable as all employees are
different and their style of working also differs. For instance, creative marketing
skills of each employee differs which brings advantage to the company (Widodo,
2019)
Organised- the global distribution network of the company is organised which
gives advantage to the Coca Cola company (Nam and Yi, 2020).
VRIO Analysis
Resources
and
capabilities
V R I O Implications
Brand
image
Yes - - - Goodwill
Unique
formula
Yes Yes - - Larger market share
Human
resource
Yes Yes Yes - Creative marketing skills
Distribution
network
Yes Yes Yes Yes global distribution
network