Coca-Cola: Business Environmental Analysis, Strategy, and Competitors

This report provides a comprehensive analysis of Coca-Cola's business environment and strategy. It begins with an introduction to the company and its product offerings, followed by a detailed business environmental analysis, including SWOT and PESTLE analyses. The report evaluates Coca-Cola's strengths, such as its large market share and brand power, and weaknesses, like its limited presence in the food segment. Opportunities for product diversification and expansion into emerging markets are also discussed. Threats, such as health concerns and water scarcity, are addressed. A competitor analysis examines Pepsi, Red Bull, Nescafe, and Lipton. The sustainability of Coca-Cola's competitive advantages, including its large distributor base and brand image, is assessed. Finally, the report offers recommendations for strategic improvements, such as expansion into non-carbonated categories and addressing food safety issues. The analysis is supported by relevant references.

Running head: Strategy
Strategy

Strategy 1
Contents
Introduction.................................................................................................................................................2
Business Environmental Analysis...............................................................................................................2
SWOT Analysis of Coca –Cola...............................................................................................................2
Strengths..................................................................................................................................................2
Weaknesses.............................................................................................................................................3
Opportunities...........................................................................................................................................3
Threats.....................................................................................................................................................3
PESTLE Analysis of Coca-Cola..............................................................................................................4
Political Factors.......................................................................................................................................4
Economical Factors.................................................................................................................................4
Social Factors..........................................................................................................................................4
Technological Factors..............................................................................................................................4
Legal Factors...........................................................................................................................................4
Environmental Factors.............................................................................................................................5
Competitor analysis of Coca-Cola...............................................................................................................5
Sustainability of the competitive advantage of Coca-Cola..........................................................................6
Recommendations.......................................................................................................................................8
References...................................................................................................................................................9

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Introduction
Coca –Cola is a fizzy soft drink produced by The Coca –Cola Company. It was introduced on 8th
May, 1886, approximately 131 years ago in United States. The company also produces other
nonalcoholic drinks under the Coke name viz. Caffeine –Free Coca –Cola, Diet Coke Caffeine-
Free, Coca –Cola Zero Sugar, Coca –Cola Cherry, Coca-Cola Vanilla with special versions of
lemon, lime and coffee .It has a strong employee base of 1,23,200 as in 2016 (The Coca –Cola
Company, 2018).
The purpose of this paper is to analyze the specific business environment of Coca –Cola and
conduct a critical analysis of the firm’s core competencies and the sustainability of the
competitive advantages in the long run.
A specific strategy would also be suggested and recommended to match the strengths and
distinctive competence of Coca- Cola. Also, the business activities of its main competitors
would be evaluated and compared.
Business Environmental Analysis
SWOT Analysis of Coca –Cola
Strengths
The Coca-Cola Company has large market share in the beverage industry. It is the biggest
amongst the non-alcoholic beverage companies in the world. It operates in more than 200
countries and sells 500 brands of nonalcoholic drinks. In the year 2015, it was declared as the

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third most valuable brand after Apple and Google in the world. Its revenue was US$ 41.90
Billion in 2016.
The Company can influence the buyers through its brand power and marketing campaigns. The
company is not dependent over its one or two brands for its revenue. Rather with its vast variety
of brands and flavors it is capable to satisfy each and every customer’s needs and tastes (Sarich,
Zaman & Misra, 2015).
Weaknesses
Unlike Pepsi which has developed its food and snack segment, Coca-Cola is yet to develop its
food or snack section. This puts it behind Pepsi in terms of competition. Since the buyers are
now aware of their health. The company has not addressed to a healthier solution yet.
Opportunities
Coca –Cola can create new products and diverse its present offerings. It has a brand identity,
strong customer and supplier base to back this up. It is feasible for the company to find
untouched segments to develop the products, especially in the healthy food spaces. Apart from
this, the company can focus on the developing countries with humid temperature (Anojan &
Subaskaran, 2015).
Threats
The Coca-Cola Company was suspected of using pesticides in their water. With the increasing
scarcity of water, the company can face problems in future. The need for creating new, healthier
and ecofriendly products has been raised in the current scenario. Since the buyers are looking for
healthier options for less sugar, it can hamper Coca-Coal’s sale if it doesn’t act quickly.

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PESTLE Analysis of Coca-Cola
Political Factors
Coca-Cola products are regulated under the Food and Drug Administration. The variations in the
current laws can prevent the company from distribution of the drinks. The laws related to
accounting, taxation, internal marketing and labor provisions can influence Coca –Cola in any
ways.
Economical Factors
Economic recession is one of the most crucial factors affecting Coca – Cola. During recession,
the consumers have less resource to spend and they tend to cut down their personal spending in
response to the overall deterioration in the economic activity.
Social Factors
Since the company operates in diversified cultures, it has adjusted its production and marketing
systems to meet the needs of each and every customer. In the present scenario, when people are
becoming aware of the health issues, the company should produce healthier products to cater to
their needs so that it can survive in the market (Hassan, Amos & Abubakar, 2014).
Technological Factors
Technology has helped the company to a large extent to connect itself to its buyers. The
company has implemented the latest machineries to ensure fast delivery of its products and
quality product development.
Legal Factors
Coca-Cola retains its rights related to the business which comprises of the past and future
product development with the patent processes (Cross & Miller, 2016).

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Environmental Factors
The company has to adhere to the environmental laws as the soft drink manufacturing process
requires water to a great extent. Also, the company can take the advantage of the humid climate
in developing countries, where it has fewer competitors.
Competitor analysis of Coca-Cola
Coca-Cola is one of the most reputed beverage brands in the world due to its strong distribution
and marketing strategies. It competes against many of its competitor’s viz. Pepsi, Red Bull,
Nestle and Lipton. The details of these companies are as under:
1. Pepsi: Next to Coca – Cola is its competitor PepsiCo Inc. It is one of the leading
beverage brands operating in more than 200 countries around the world. Its portfolio
includes wide range of foods and beverages comprising of 22 brands .As of December
31, 2015 it have employed around 264000 people all over the world. Its core
competencies are its diversified products catering to the need of health conscious
customers in its beverage and food segments. Unlike Pepsi, Coca – Cola has focused only
on its carbonated soft drinks which can be a major factor of the sharp fall in the demand
for its products in the near future (PepsiCo, n.d.).
2. Red Bull: Red Bull is one of the strongest emerging energy drinks and a largest
competitor of Coca-Cola because of its brand value. It is a pioneer to popularize energy
drinks to the massive audience. It has large distribution channels and a strong employee
base of 11, 865 employed all over the world (Red Bull, 2017).
3. Nescafe: Countries like USA are major coffee drinking nations so Nescafe give immense
competition to Coca-Cola in terms of nonalcoholic beverages. Nescafe is a product from

Strategy 6
brand Nestle. It is among the top most brands selling coffee and breakfast snacks such as
Maggie, breakfast cereals etc.
It has emerged as one of the strong competitor to the company because of its taste and
distribution strategies. Its distribution setup is larger than Coca-Cola because it si sold at the
medical shops apart from being sold at the groceries. It has employed around 328,000 all
over the world as in 2016 (Nestle, n.d.).
4. Lipton: It is known for its green tea and various flavors of tea. It is one of the top most
competitors of Coca – Cola especially in the tea drinking countries such as UK, China
and India. It operates under its parent company Unilever with a strong employee base of
Unilever is 169000 as in 2017.
With the raising awareness of the health issues, the people are more inclined towards
brands providing healthy drinks such as Lipton (Unilever, 2018).
Sustainability of the competitive advantage of Coca-Cola
The important factors for competitive success within Coca-Cola have being derived from the
SWOT and PESTLE analysis. Their analysis is listed below:
1. Large Distributor base: The Company has large distributor base which is its core
competency. Since large distributors have the capability of negotiation thereby making
them exclusive supplier for a specific period of time. Also, they have the ability to
purchase in bulk, which lowers the cost of sales. It can help the company to hold its
market share in the long run (Butler & Tischler, 2016).
2. Quality: Quality attributes to two factors viz. the ability of the product to satisfy the
wishes and needs of the customers and products which are free from flaws. The

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personnel working in Coca-Cola is dedicated for working towards highest standards of
quality in products, processes and relationships (Boone & Kurtz, 2014).
3. Brand image: Establishing a brand loyalty is an important aspect of the beverage
industry. Coca –Cola has been the largest selling soft drink company and of the most
identifiable brands in the world. It is offering 500 brands to its buyers in more than 200
countries.
4. ‘Zero -based work’ strategy: Due to its ‘Zero -based work’ strategy , the company was
able to realize more than US $600 Million in productivity improvement which was used
to invest further in business and also to increase the shareholder returns( The Coca –Cola
Company, 2016).

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Recommendations
The recommendations for improving the strategies of Coca-Cola for its survival in the long run
are as follows:
1. Expansion for the non-carbonated category: The non-carbonated beverage sector is an ever
growing dynamic segment of the beverage industry. The company should strategically
increase its market share in fast growing segments such as energy drinks and juice- based
beverages.
Also the company can enter into the healthier drinks segment since the customers are more
conscious towards beverages which are not harmful for their health (Gomez,2012).
2. Growth in the emerging market: Russia, China and Brazil are the emerging markets for
Coca-Cola. The demand for food and beverages has increased due to the increased
economic growth in these countries.
3. Food Safety Issues: The issues related to food and beverage safety are getting intense day by
day. Negative publicity related to high levels of pesticides in the beverages can affect the
brand value of Coca-Cola. So, the company should adopt appropriate strategies towards its
quality management (Edelstein, 2018).

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References
Anojan, V. & Subaskaran, T. (2015). Consumer’s Preference and Consumer’s Buying Behavior
on Soft Drinks: A Case Study in Northern Province of Sri Lanka. Global Journal of
Management and Business Research: E Marketing, 15(2).
Boone, L.E. & Kurtz, D.L. (2014). Contemporary Marketing, Update 2015. Cengage Learning.
Butler, D. & Tischler, L. (2016). Design to Grow: How Coca-Cola Learned to Combine Scale
and Agility (and How You Can Too). Simon and Schuster.
Cross, F.B. & Miller, R.L.R. (2016). The Legal Environment of Business: Text and Cases.
Cengage Learning.
Edelstein, S. (2018). Food Science. Jones & Bartlett Learning.
Gomez, M.B.B. (2012). COCA-COLA: International Business Strategy for Globalization. The
Business & Management Review, 3(1).
Hassan, D.N., Amos, A.A. & Abubakar, O.A.(2014). An evaluation of marketing strategies
undertaken by Coca Cola Company as a multinational corporation in Nigeria. IOSR
Journal of Economics and Finance, 3(2), 5-10.
Nestle (n.d.). Nescafe. Retrieved March 4, 2018 from
https://www.nestleusa.com/brands/coffee/nescafe

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Pepsico (n.d.). Performance with Purpose. Retrieved March 4, 2018 from
http://www.pepsico.com/About
Red Bull (2017). The Company behind the Can. Retrieved March 4, 2018 from
http://energydrink-in.redbull.com/the-company
Sarich, R., Zaman, R. & Misra, C. (2015). Discussion and analysis of the marketing strategy of
Coke Zero in the US market. Merici, 1(2015), 45-63.
The Coca –Cola Company (2016, April 27). Five Strategic Actions. Retrieved March 4, 2018
from http://www.coca-colacompany.com/stories/five-strategic-actions
The Coca –Cola Company (2018). Who We Are. Retrieved March 4, 2018 from
http://www.coca-colacompany.com/careers/who-we-are-infographic
Unilever (2018). Lipton. Retrieved March 4, 2018 from https://www.unilever.com/brands/food-
and-drink/lipton.html