Strategic Management Report: Coca-Cola's Global Competitive Position

This report offers a comprehensive strategic analysis of Coca-Cola, examining its current market position, competitive advantages, and the external and internal factors influencing its global operations. It utilizes various marketing models, including Porter's generic strategies and value chain analysis, to identify Coca-Cola's sources of competitive advantage, such as cost leadership and differentiation. The report also includes a competitive analysis to assess Coca-Cola's position relative to its rivals, particularly Pepsi. Furthermore, it explores market trends, analyzes the company's strengths, weaknesses, opportunities, and threats (SWOT), and provides strategic recommendations to enhance its competitiveness in the market. The analysis covers political, economic, social, and technological factors, offering insights into Coca-Cola's brand value, product portfolio, and market challenges. The report concludes with actionable steps to improve Coca-Cola's market performance and adapt to evolving consumer preferences and industry dynamics.

Running head: STRATEGIC MANAGEMENT
Strategic management
Name of the student
Name of the university
Author note

1STRATEGIC MANAGEMENT
Executive summary
The aim of this report is to discuss about the current strategic position of Coca cola along with
determining the competitive advantages of them. In order to so, this report used different
marketing models in identifying the sources from where Coca cola is gaining competitive
advantages. Competitive analysis is also being done in order to determine the position of Coca
cola against their competitors. This report concludes with few recommended steps, which will
further help them in enhancing their competitiveness in the market.

2STRATEGIC MANAGEMENT
Table of Contents
1. Introduction to the paper..........................................................................................................3
1.1 Introduction to the organization.............................................................................................3
2. Analysis of the external environment..........................................................................................4
3. Analysis of the internal environment...........................................................................................6
4. Analysis of the market trend and external forces........................................................................9
5. Identification of the sources of competitive advantages............................................................10
5.1 Cost leadership.....................................................................................................................10
5.2 Differentiation......................................................................................................................11
5.3 Market focus........................................................................................................................12
6. Strategic group diagram.............................................................................................................12
7. Value chain analysis..................................................................................................................13
8. Analysis of sources of competitive advantages.........................................................................16
8.1 Valuable...............................................................................................................................16
8.2 Inimitable.............................................................................................................................17
8.3 Rarity...................................................................................................................................17
8.4 Organizational capability.....................................................................................................17
9. Recommendations......................................................................................................................18
10. Conclusion...............................................................................................................................19
Reference.......................................................................................................................................20

3STRATEGIC MANAGEMENT

4STRATEGIC MANAGEMENT
1. Introduction to the paper
Contemporary business organizations have to face different and diverse external and
internal factors in their business operations. Moreover, due to the fact that majority of the
contemporary business organizations operates in the global scenario, the business factors faced
by them is more varied and complex in nature1. In this case, business organizations initiate
strategic management concepts in order to deal with these organizational challenges2. However,
it is also important for the business organizations to effectively determine the external and
internal factors in order to identify the strategic issues and align their competitive advantages to
that.
This report will discuss about the internal and external factors faced by Coca cola in their
global business operation. In addition, their sources of gaining competitive advantages along
with identification of the competitive advantages will also be done in this report3. Competitive
analysis will also be done in order to position Coca cola in terms of the competition in the
market. Different strategic management tools will be used in order to determine their competitive
advantages along with providing a few recommended steps to overcome the strategic issues.
1.1 Introduction to the organization
Variation and diversity in the business factors are more applicable for the large
multinationals such as Coca cola due to the reason that these organizations are having their
1 Stringfellow, Lindsay, and Mairi Maclean. "‘Space of Possibles’? Legitimacy, Industry Maturity, and
Organizational Foresight." Strategic Change 23.3-4 (2014): 171-183.
2 Vogel, Rick, and Wolfgang H. Güttel. "The dynamic capability view in strategic management: A bibliometric
review." International Journal of Management Reviews 15.4 (2013): 426-446.
3 de Oliveira Teixeira, Eduardo, and William B. Werther Jr. "Resilience: Continuous renewal of competitive
advantages." Business Horizons 56.3 (2013): 333-342.

5STRATEGIC MANAGEMENT
facilities in different countries around the world. In the present time, Coca Cola is one of the
leading soft drink manufacturers in the global scenario. They are founded in 1886 and are based
in the United States and are having their facilities in huge number of countries around the world4.
However, in the recent time, they are facing the challenges in terms of intense competition
mainly from Pepsi cola and other soft drink brands. In addition, various environmental factors in
terms of internal and external stakeholders are also being faced by them. It is becoming urgent
for them to effectively align their competitive advantages in line to their internal and external
forces. It is a publicly traded organization with having number of shareholders from around the
world.
2. Analysis of the external environment
Political  One of the key issues being faced by them is the difference
in the political and legal regulations in different countries5.
Thus, it becomes difficult for them to adhere with all the
regulations for their daily business operation.
 Another key strategic issue being faced by them in terms of
the political factor is the issuance of the stringent norms
regarding the carbonated soft drinks. This is proving
challenges for them changing their entire product portfolio.
 Coca cola has faced various issues in terms of the unethical
business practices. This is due to the reason that in different
4 "The Coca-Cola Company", in The Coca-Cola Company, , 2018, <http://www.coca-colacompany.com/history>
[accessed 16 March 2018].
5 Knoke, David. Changing organizations: Business networks in the new political economy. Routledge, 2018.

6STRATEGIC MANAGEMENT
countries, they are accused for unethical business practices.
This is creating negative impression of them in the market.
Economical  As discussed earlier, Pepsi cola is the main competitor of
the Coca cola. They are also having huge market presence
globally.
 There are number of local competitors in different
countries, which are posing challenges for Coca cola in
different countries. With the increase in the competition,
the profitability of them is reducing.
 However, having the affordable product portfolio is
helping them to cover more number of customer segments.
 However, more concentration on the carbonated drinks
only is restricting their expansion potentiality.
Social  One of the key issues in terms of the social factors is the
reduction in the preferences of the customers towards
carbonates drinks. Thus, the demand is falling.
 Taste and preferences pattern of the global customers are
rapidly changing with the introduction of new products.
Thus, it is becoming difficult for Coca cola to retain their
existing customers6.
 In the recent time, customers are more preferring fruit juice
6 Çal, Betül, and Richard Adams. "The effect of hedonistic and utilitarian consumer behavior on brand equity:
Turkey–UK comparison on Coca Cola." Procedia-Social and Behavioral Sciences 150 (2014): 475-484.

7STRATEGIC MANAGEMENT
and other energy drinks over the carbonated soft drinks.
 Brand loyalty among the younger customers is less due to
the having the presence of number of options in the market
and less switching cost.
Technological  Coca cola is having huge access to the capital and thus they
are having larger capability to invest more in the latest
technologies.
 However, in the food and beverage sector, technology is
witnessing rapid change. It is a challenge for them to stay
updated with the technology.
 In the recent time, technology is also being initiated in
order to have less impact on the environment7. Thus, it is
an extra cost for Coca cola to maintain in different
countries.
 Due to the fact that Coca cola is selling customer products,
they should also have to invest in enhancing and frequently
upgrading their product packaging.
3. Analysis of the internal environment
Strengths  Brand of value of Coca cola is huge and has presence in
each and every corner of the world. Thus, it is beneficial
for them to push their new products in the market
7 Martinez, Marian Garcia, ed. Open innovation in the food and beverage industry. Elsevier, 2013.

8STRATEGIC MANAGEMENT
effectively8.
 Enhanced brand value of them also helps them in
effectively dealing with the authorities in different regions.
 Huge product portfolio of them helps to target diverse
customers with different requirements.
 Majority of the products of Coca cola is affordable and
mass market. Thus, the volume of the sales is more for
them.
Weaknesses  Due to having the negative social impression regarding
carbonated soft drinks, Coca cola is finding it difficult to
increase their sales revenue.
 Though they are having diverse product portfolio, but
majority of them is carbonated soft drinks9.
 Profit ratio from the products is low and thus, profit is not
increasing with the increase in the sales volume.
 Accusations of number of unethical issues created negative
word of mouth about the brand image of Coca cola.
Opportunities  Market for fruit drinks, energy drinks and other forms of
nutritional drinks is rapidly increasing. Thus, Coca cola
with their expertise will be able to tap in these markets.
 Coca cola is having own packaged drinking water and the
8 Habib, Salman, and Saira Aslam. "Influence of brand loyalty on consumer repurchase intentions of Coca-Cola."
European Journal of Business and Management 6.14 (2014): 168-174.
9 McNally, Regina C., Serdar S. Durmuşoğlu, and Roger J. Calantone. "New product portfolio management
decisions: antecedents and consequences." Journal of Product Innovation Management 30.2 (2013): 245-261.

9STRATEGIC MANAGEMENT
market for it is increasing.
 Pepsi has already forayed in the snacks market and thus it
is a huge opportunity for Coca cola to enter in this market
and increase their sales potential.
 Coca cola is already having their facilities in different
countries. However, having the major facilities in the
developing countries will help them to reduce the cost of
production.
Threats  The key resources for Coca cola are water and exploitation
of the water resources will have negative impact in their
future business operation10.
 Emergence of more number of competitors will further
reduce the profitability of Coca cola.
 Change in the taste and preference pattern of the customers
will further create uncertainly in the business.
10 Basu, Sanjay, et al. "Relationship of soft drink consumption to global overweight, obesity, and diabetes: a cross-
national analysis of 75 countries." American journal of public health 103.11 (2013): 2071-2077.

10STRATEGIC MANAGEMENT
4. Analysis of the market trend and external forces
Threat of new entrants  There is huge cost involved in entering in the beverage
sector. Moreover, to achieve the global operation and
market presence such as Coca cola, new entrants will face
difficulties.
 Moreover, the new entrants in the market will not being
able to match with Coca cola in terms of production cost.
 However, the local competitors who have newly entered
can pose challenge in the limited market.
 Thus, the threat of new entrants is moderate11.
Threat of substitutes  Beverage market is highly competitive in nature with the
presence of similar kind of organizations.
 All the players in the market are offering similar products.
 Thus, customers are having more number of options along
with low switching cost.
 Thus, the threat of substitutes is high12.
Bargaining power of the
customers
 Huge number of customers in the global market.
 Less dependence on particular customer segments.
 Huge brand value and brand loyalty helps in retaining the
customers.
11 E. Dobbs, Michael. "Guidelines for applying Porter's five forces framework: a set of industry analysis templates."
Competitiveness Review 24.1 (2014): 32-45.
12 Dälken, Fabian. Are porter’s five competitive forces still applicable? a critical examination concerning the
relevance for today’s business. BS thesis. University of Twente, 2014.

11STRATEGIC MANAGEMENT
 Thus, the bargaining power of the customers is low.
Bargaining power of the
suppliers
 Coca cola is less depended on their suppliers due to the
reason that their syrup is being made by them.
 Coca cola is having much more brand value and influence
compared to their suppliers.
 Huge number of suppliers present in the market.
 Thus, the bargaining power of the suppliers is low.
Industry rivalry  Good number of competitors present in the market.
 Having similar product portfolio.
 Innovative and aggressive marketing activities are being
initiated by them in order to stay ahead in the competition.
 Thus, the industry rivalry is high.
5. Identification of the sources of competitive advantages
Coca cola is having different sources from where they are gaining competitive
advantages over their competitors. In this case, Porter generic strategies will be used in order to
identify these sources13. According to this model, there are three key sources of gaining
competitive sources for the business organizations. These are cost leadership, differentiation and
focus.
5.1 Cost leadership
13 Batra, Kaushik, and Kalia. “System Thinking: Strategic Planning.” SCMS Journal of Indian Management (2010).