Strategic Management Report: Coca-Cola Company's Performance

This strategic management report provides a comprehensive analysis of the Coca-Cola Company within the soft drink industry. It begins with an executive summary and an introduction outlining Coca-Cola's historical background and market position. The report then delves into an analysis of the so...Read More

STRATEGIC MANAGEMENT REPORT: COCA COLA COMPANY 1
Strategic Management Report: Coca Cola Company
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Institution
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STRATEGIC MANAGEMENT REPORT: COCA COLA COMPANY 2
Executive summary
This report has presented the ecosystem analysis of the soft drink industry. Coca-Cola
Company falls in the soft drinks industry, providing various soft drink brands globally. The
report has also discussed the internal environmental variables that dictate the performance of
companies in the soft drinks industry, with a specific focus on Coca-Cola Company by using the
VRIOS framework. Furthermore, the five forces analysis has been conducted to evaluate the
forces that affect Coca Cola's operations in the soft drinks industry. The last part of this report
has provided a summary of strategic evaluation and a discussion of a strategic action plan. The
sample action plan has been presented as Appendix II. Coca-Cola Company should diversify its
product portfolio by practicing corporate diversification as a key strategy to become more
competitive.

STRATEGIC MANAGEMENT REPORT: COCA COLA COMPANY 3
Table of Contents
Executive summary.......................................................................................................................2
Introduction....................................................................................................................................4
Analysis if the soft drink industry................................................................................................4
Strategic implications................................................................................................................5
Competitive forces analysis...........................................................................................................6
Coca-Cola VRIOS Framework....................................................................................................7
Strategic implications................................................................................................................9
Strategy Description and evaluation Summary........................................................................10
Conclusion....................................................................................................................................13
References.....................................................................................................................................14
Appendices....................................................................................................................................17
Appendix I: Porters Five Forces Model.................................................................................17
Appendix II: Strategic Action Plan Template.......................................................................17

STRATEGIC MANAGEMENT REPORT: COCA COLA COMPANY 4
Introduction
Coca-Cola Company was crowned in 1886 by John S. Pemberton in Atlanta Georgia.
Since then, this company has grown to be the leading soft drink company in the world, with a
variety of brands some of which include, Dasani, Minute Maid, Sprite, Fanta, Ciel, Powerade,
Fresca and Coca-Cola among other brands (Coca-Cola. 2018). The success of this company in
the competitive soft drinks industry can be linked to its proper competitive strategies and
adequate value chain.
Analysis if the soft drink industry
No firm operates in isolation. Companies interact with their external world, most
commonly their clientele. Coca-Cola Company operates in the soft drinks industry. This industry
serves as an essential part of the company’s external environment (Williams & Nestle, 2017, p.
62). Within this environment, periodic events and trends occur that may impact negatively or
positively on the company’s prospects and actions. Changes in the external ecosystem relate to
technological improvements, market, and economic changes, political advancements, social and
cultural values, legal and environmental factors.
Enterprises including those in the soft drinks industry must be alert to the macro
environmental influences whose possible consequences may fall into three primary groups-
opportunity generation, cost and threat generation and resource access and provision (Njambi,
Lewa & Katuse, 2016, p. 417). Technological developments in the soft drinks industry have
made Coca-Cola Company more competitive resulting in many new opportunities for growth and
expansion. The development of social media technology has also enabled companies in the soft
drinks industry to adequately market their products through Twitter, Facebook, and other social
platforms.

STRATEGIC MANAGEMENT REPORT: COCA COLA COMPANY 5
In a society, the influence of some stakeholders may be either weak or powerful in the
form of pressure groups. Companies must adhere to the interests of the society to operate
profitably (Keupp, Palmié & Gassmann, 2012, p. 367). In the soft drinks industry, most
companies distribute their products in their cultural states. For instance, companies like Coca-
Cola prepare different alternative flavors to suit the preferences of different cultures. The
interests of society may act as a threat or an opportunity to a firm or the whole industry.
Therefore, companies must diversify their product portfolios to include different tastes and
flavors that suit the preferences of different societies.
The external environments also act as a disposing place for waste materials and discarded
products. Therefore governments oblige different companies to behave responsibly (Chen et al.,
204, p. 897). Specifically, in the soft drinks industry, regulations relating to environmental
conservation and sustainability pose restrictions to the nature of operations of different
companies. The operations of companies in the soft drink company are also primarily influenced
by environmental factors as companies have to adhere to environmental laws. When a company
does not respect the relevant laws, then it may pose a threat of legal proceedings against it.
Political systems may change to the advantage or disadvantage of a firm. When it
changes favorably, then it may be regarded as an opportunity (Wheelen et al., 2017, p 52).
However negative political impacts can be treated as threats to a firm. These political impacts
may range from changes in taxation laws to labor laws. Therefore, the companies in this industry
are at the mercy of political regulations as they must meet them to remain in the market.
Strategic implications
In an attempt to adjust to the varying ecosystems, companies in the soft drinks industry
formulate different competitive strategies which range from diversification, focus, and
differentiation to cost leadership and acquisitions. However, to better curb the threats forced by

STRATEGIC MANAGEMENT REPORT: COCA COLA COMPANY 6
technological changes, economic variables, political differences and environmental pressures,
companies should diversify their operations. For Coca-Cola Company, diversifying its product
portfolio will enable it to tap new technologies in other industries, generate more funds by
expanding its target markets and avoiding negative impacts from societal preferences by
expanding its market presence in different societies and producing a variety of flavors.
Competitive forces analysis
In terms of the Porters five forces, new entrants pose a medium pressure on the soft
drinks industry as there are relatively low barriers to entry of new players. There no costs
associated with switching of brands. Furthermore, there is increased number of new brands that
are getting into the market with similar or close prices. This acts as a threat to Coca-Cola
Company. Therefore, if the company practices corporate diversification, it will be able to enter
other industries such as snack production, meals and dines. There are also a variety of energy
drinks and juice products that may act as substitutes in the industry. Therefore, threats of
substitute products are quite high. The companies in this industry should, therefore, diversify
their product portfolio to include products from other industries to remain competitive. The soft
drinks mainly contain phosphoric acid, carbonated water, caffeine, and sweetener. The suppliers
of these products are not differentiated or concentrated. This results in the low supplier
bargaining power.
The buyer bargaining power largely depends on the brand loyalty of a firm (Porter, 2008,
p. 25). Some companies in the soft drinks industry like Coca-Cola have developed strong brand
loyalties among their customers. Therefore, this possesses a competitive advantage as the
customers' bargaining powers are weakened. Coca-Cola can treat this as an added advantage to
use its brand loyalty to diversify its product portfolio and still win customer trust. Besides, there

STRATEGIC MANAGEMENT REPORT: COCA COLA COMPANY 7
is a high rivalry and competition among different companies in the soft drinks industry.
Therefore, there is the need for companies to expand their product portfolios by entering into
new markets. For Coca-Cola Company it will enable it to gain access to new market segments.
Companies have a variety of strategic options to tackle the pressures posed by new
entrants, buyers, competitors, and customers. These may include, mergers and acquisitions,
differentiation, cost leadership, and diversification. However, strategies like cost leadership may
be influenced by budget constraints. Furthermore, changing societal concerns impact largely on
the consumers’ buying power. Therefore Coca-Cola should diversify their product portfolio and
come up with other innovative products to remain competitive.
Coca-Cola VRIOS Framework.
According to this model, a company's resources should be valuable, inimitable, rare,
effectively exploited by the organization, and also not substitutable (Pitt & Koufopoulos, 2012,
p. 234). The resources and capabilities of Coca-Cola Company are valuable because they
contribute to the satisfaction of the needs of its customers at prices that the customers are willing
and ready to pay. Also, Coca Cola’s resources and capabilities cannot be easily imitated. This is
due to the cost asymmetries in the soft drinks market, meaning that the companies without the
capabilities and resources find it expensive to obtain them as compared to the company which
already holds them.
Coca Cola's resources and capabilities are in limited supply, establishing a competitive
advantage and moving beyond competitive parity. The rarity of the company's resources and
capabilities have existed for a long time hence enabling a sustained competitive advantage (Baah
& Bohaker, 2015, p. 17). The company also has an organized structure which has been optimized

STRATEGIC MANAGEMENT REPORT: COCA COLA COMPANY 8
to exploit the competitive potential of its key capabilities and resources. The table below shows
the competitive implications of Coca Cola’s VRIOS model:
Each element can be ranked on a four-point scale
A= outstanding generate of advantage and value (of genuine strategic significance), B= Valuable
but not a critical source of advantage, C= Critical but of possibly declining importance, D=
Unlikely to be sustainable (Already declining significance)
V R I O S COMMEN
TS
Strategic Assets
1 Brand
Capital
Yes- the
firm’s
brand acts
as its
primary
marketing
tool
Yes – The
Brand is
solely for
Coca-Cola
No firm
can
imitate
Coca
Cola’s
brand
Very
Organization
al as Coca-
Cola owns it
No
substitute
for the
brand
capital
A
2
Financial
Capital
Yes-Vital
for its
operations
No- Other
firms like
Pepsi have a
strong
financial
base
Yes- there
is a
variety of
sources of
finance
Yes Very
organizationa
l
Yes, There
are other
alternative
sources of
capital
B
3 Human
Capital
Yes-
Coca-cola
has a pool
of
motivated
staff
No- Other
firms also
have pools
of
employees
Yes-
Other
firms may
acquire
workers
Yes- Very
Organization
al
Yes- Other
Organizatio
ns may use
machines
C
4 Physical
Capital
Yes-
Inform of
Yes- Unique
to Coca-
Yes- other
firms may
Organization
al
Yes- A
variety of
D

STRATEGIC MANAGEMENT REPORT: COCA COLA COMPANY 9
Machiner
y and
Equipmen
t
Cola purchase equipment
have same
functions
Distinctive capability
1 Brand
Loyalty
Yes-
Preferred
by
Customer
s
Yes- Only
for Coca-
Cola
No-
cannot be
imitated
Yes-
Organization
al
No- No
other Brand
looks like
Coca
Cola’s.
A
2
Consumer
Marketing
Skills
Yes-
Coca-
Cola
makes
effective
use of
advertisin
g
Yes- It
makes
unique
decorations
and adverts
No- It is
difficult
for
competito
rs like
Pepsi to
exactly
imitate
the skill
Yes- Very
Organization
al
No- It has
maintained
its
advertising
skills for
more than
120 years
A
3 Secret
Formula
Yes- Its
unique
and
enables
the
company
to
maintain
a
competiti
ve edge
Yes- The
secret
formula is
rare and not
possessed
by other
firms in the
industry
No-
Cannot be
imitated
as
competito
rs do not
know it
Yes-
Organization
al.
No- No
other
company
knows it
B
4 Global Yes- The Yes- forever Maybe Yes- it is This can be C

STRATEGIC MANAGEMENT REPORT: COCA COLA COMPANY 10
Distributi
on
Network
Company
utilizes
this
network
to
international
ly
the
company
can shut
up other
competito
rs through
acquisitio
ns
hard for other
competitors
like Pepsi to
utilize
another
capability to
replace it.
substituted
as other
companies
also operate
globally
V (Value creation), R (Rarity) I (Imitability), O (Organizational Appropriability), S=
(Substitutability)
Strategic implications
Coca Cola’s brand is well-established and cannot be imitated by other firms. This poses a
great opportunity as the company can use its brand reputation to diversify its operations and
extend into other markets such as snacks. However, since there is a high competition in the soft
drinks industry, the company cannot favorably adopt and maintain a cost leadership strategy as it
may dilute the company’s profits (Reeves & Deimler, 2011, p. 134). Furthermore, the company
can utilize its large financial base, creative human capital, brand reputation and creative
marketing skills to introduce a new product line through corporate diversification and promote it
in the market.
Strategy Description and evaluation Summary
The Best strategy for Coca-Cola Company is corporate diversification. Corporate
diversification will enable the company to expand into other product lines and expand its market
target. The company has already developed a unique brand, has adequate financial resources and
motivated human resources. These are key resources that can be used by the company to
diversify its product portfolio by introducing new product lines like snacks. Many organizations

STRATEGIC MANAGEMENT REPORT: COCA COLA COMPANY 11
formulate strategies that are never implemented, due to strategic failure (Schulz & Hofer, 1999,
p. 52). Strategic failure occurs when a strategy is not properly evaluated. Coca-Cola Company
must, therefore, develop a way of finding out the feasibility of the strategy and whether the
strategy will guide it towards the expected objectives.
As explained by Crittenden & Crittenden (2008, p. 305), through the process of strategic
control and evaluation, the strategists in the company are expected to answer a setoff questions
like, whether the managers are doing the right actions to support the strategy, whether the time
schedules are being adhered to, whether there is a need to reformulate the strategy and whether
the strategic resources are being utilized optimally. Strategic evaluation is a critical aspect of
every organization as it serves as a control, feedback, rewards and review process.
Furthermore, it enables the managers to obtain strategic feedback. When evaluating the
strategy, shareholders, chief executives, financial controllers, the board of directors, audit
committees and middle-level managers among other personalities should be involved as key
participants (Mantere, Schildt & Sillince, 2012, p. 174). Strategic evaluation is a process that
entails four processes- fixing of performance benchmark, performance measurement, variance
analysis and strategic correction. Coca-Cola Company should use a quantitative approach which
includes determination of ROI, net profits, earning per share, employee turnover rate and cost of
operation and production to set its strategic performance benchmark.
After setting the performance benchmarks, the company must measure the performance
and compare it to the set standards. This will enable the organization to examine the deviations
from the expected results. Ideally, the standard performance is treated as a benchmark with
which the actual performance is to be ranked (Santos & Laczniak, 2015, p. 42). Therefore, the

STRATEGIC MANAGEMENT REPORT: COCA COLA COMPANY 12
company must prepare appropriate financial statements like profit and loss accounts and balance
sheets on an annual basis and compare them to the expected financial performance.
The third step is variance analysis. After introducing a new product line through
diversification and setting a benchmark for performance. Coca-Cola Company should obtain the
actual strategic performance and the standard performance, compare them and determine the
deviations from the set performance this can be either negative or positive. The company should
also indicate the degree or limits of tolerance between which the variance between the standard
and the actual strategic performance may be allowed.
The final step is taking appropriate corrective action. Once the performance deviation is
identified, it is critical to plan for a corrective measure (Lin et al., 2012, p. 1398). If the
performance is continuously less than the expected the company should conduct a detailed
evaluation of the factors that may be responsible for such weak performance.
Furthermore, the company can adopt various techniques to conduct a strategic evaluation.
These include benchmarking, SWOT analysis, Gap Analysis and PEST analysis (Killen et al.,
2012, p. 526). In a diversification strategy, the most appropriate model of evaluation is PEST
Analysis. Coca-Cola Company must conduct a thorough analysis of its external environment to
identify the political, social, economic and technological factors that may influence its ability to
achieve diversification successfully. For example, when introducing a new product line, the firm
must be aware of the pending legislation regulating the production of such a product in a chosen
country (Kozlenkova, Samaha & Palmatier, 2014, p. 20). Besides, economic factors relate to
shifts in the economy, while social variables may entail changing attitudes and demographics.
Also, it is important to note that technology keeps on improving every day; hence the company

STRATEGIC MANAGEMENT REPORT: COCA COLA COMPANY 13
must evaluate the most technologically effective way of executing its production process and
diversifying its product portfolio.
A company should formulate an accurate action plan to monitor the implementation of
the strategies developed and ensured appropriate corrective action plans are installed (Wee,
2017, p. 36). A sample action plan for Coca-Cola Company's diversification strategy has been
provided in the Appendix section. The Action Plan should indicate the strategic action, the
department responsible, required resources, stakeholders, any constraints, performance metric,
date due the portion completed and the overall comments (Clancey, 2014, p. 343). This
corrective plan’s primary aim is to provide a solution to a problem associated with the strategy
being implemented.
When the strategy implemented is not profitable, the company can revise the strategy, change it
or make some adjustments. As stated by Zamora (2016, p. 116), the company should also
evaluate its processes to identify the right cause of strategic failure. Sometimes, this may be
caused by poor control processes, inappropriate allocation of resources and poor strategic
management.
Conclusion
In a nutshell, the strategic implementation process should properly be evaluated and
monitored to examine whether it is enabling the firm to achieve the desired goals. Coca-Cola
Company should diversify its product portfolio by introducing a new product line to be more
competitive in the market as the soft drinks industry is highly competitive with many players.
The company has unique capabilities and resources. These include financial resources, human
capital, management and organizational capital which it can use to diversify its product portfolio.
However, in conducting corporate diversification as a strategy, the firm must properly evaluate

STRATEGIC MANAGEMENT REPORT: COCA COLA COMPANY 14
and control its strategy. The evaluation process begins immediately after the strategy
implementation and will enable the firm to monitor the performance of the strategy against a
specified benchmark and then perform variance analysis and administer the appropriate
corrective plan.

STRATEGIC MANAGEMENT REPORT: COCA COLA COMPANY 15
References
Baah, S., & Bohaker, L. 2015. The Coca-Cola Company [online]. Available from:
https://sandrabaah.weebly.com/uploads/4/9/9/3/49933149/strategic_analysis_of_coca-cola.pdf
pp. 17. [Accessed 1st May 2018]
Chen, Y., Jiang, Y., Wang, C. & Chung Hsu, W., 2014. How do Resources and Diversification
Strategy Explain the Performance Consequences of Internationalization? Management Decision,
52(5), pp.897-915.
Clancey, W.J., 2014. Acquiring, Representing, and Evaluating a Competence Model of
Diagnostic Strategy. The nature of expertise, p.343.
Coca-Cola. 2018. about Us Coca-Cola History. Retrieved May 1, 2018, from Co-Cola [online]
Available from: https://www.worldofcoca-cola.com/about-us/coca-cola-history/ [Accessed 1st May
2018]
Crittenden, V.L. & Crittenden, W.F., 2008. Building a Capable Organization: The Eight Levers
of Strategy Implementation. Business Horizons, 51(4), pp.301-309.
Keupp, M.M., Palmié, M. & Gassmann, O., 2012. The Strategic Management of Innovation: A
Systematic Review and Paths for Future Research. International Journal of Management
Reviews, 14(4), pp.367-390.
Killen, C.P., Jugdev, K., Drouin, N. & Petit, Y., 2012. Advancing Project and Portfolio
Management Research: Applying Strategic Management Theories. International Journal of
Project Management, 30(5), pp.525-538.
Kozlenkova, I.V., Samaha, S.A. & Palmatier, R.W., 2014. Resource-based Theory in Marketing.
Journal of the Academy of Marketing Science, 42(1), pp.1-21.

STRATEGIC MANAGEMENT REPORT: COCA COLA COMPANY 16
Lin, C., Tsai, H.L., Wu, Y.J. & Kiang, M., 2012. A Fuzzy Quantitative VRIO-based Framework
for Evaluating Organizational Activities. Management Decision, 50(8), pp.1396-1411.
Mantere, S., Schildt, H.A. & Sillince, J.A., 2012. Reversal of Strategic Change. Academy of
Management Journal, 55(1), pp.172-196.
Njambi, E., Lewa, P., & Katuse, P. (2016). Relationship between Threat of Substitutes and
Competitive Advantage of Large Multinationals in Kenyan Beverage industry. The International
Journal of Business & Management, 4(7), 412-423.
Pitt, M.R. and Koufopoulos, D., 2012. Essentials of Strategic Management. Sage. Pp. 1-451
Porter, M.E., 2008. The Five Competitive Forces that Shape Strategy. Harvard Business Review,
86(1), pp.25-40.
Reeves, M. & Deimler, M., 2011. Adaptability: The New Competitive Advantage. Harvard
Business Review, 89(7-8), pp.134
Santos, N. & Laczniak, G., 2015. Marketing to the Poor: A SWOT Analysis of the Market
Construction Model for Engaging Impoverished Market Segments. Social Business, 5(2). Pp. 1-
320
Schulz, W.C. & Hofer, C.W., 1999. Creating Value through Skill-based Strategy and
Entrepreneurial Leadership. Pergamon. Pp. 1-350.
Wee, C.H., 2017. Think Tank-beyond the Five Forces Model and Blue Ocean Strategy: An
Integrative Perspective from Sun Zi Bingfa. Global Business and Organizational Excellence,
36(2), pp.34-45.
Wheelen, T.L., Hunger, J.D., Hoffman, A.N. & Bamford, C.E., 2017. Strategic Management and
Business Policy. Pearson. Pp. 1-450.

STRATEGIC MANAGEMENT REPORT: COCA COLA COMPANY 17
Williams, S.N. & Nestle, M. 2017. Big Food: Critical Perspectives on the Global Growth of the
Food and Beverage Industry. Routledge. Pp. 1-320.
Zamora, E. A. 2016. Value Chain Analysis: A Brief Review. Asian Journal of Innovation and
Policy, 5(2), 116-128.

STRATEGIC MANAGEMENT REPORT: COCA COLA COMPANY 18
Appendices
Appendix I: Porters Five Forces Model
Appendix II: Strategic Action Plan Template
Strategic action 1
Introduce a new product class
Strategic action 2
Achieve corporate diversification
Key action. Why is
this a good starting
point?
It will improve the
competitiveness of the firm and
open up new market segments
Improved sales caused by large
customer segments
The
threa
t of
new
entry
Supplier
power
Buyer power
Thre
at of
subs
tituti
on
Competitive
Rivalry
The threat of New players
Economies of scale
Cost of entry
Technology
Barriers to entry
Competitive rivalry
Quality Differences
Customer interest
Customer Loyalty
Power of Suppliers
Size of suppliers
Number of suppliers
Power of Buyers
Price sensitivity
Number of customers
Cost of changing
Ability to substitute
Threat of substitutes
Cost of substitution
Quality of substitute

STRATEGIC MANAGEMENT REPORT: COCA COLA COMPANY 19
Timeline. When
will you accomplish
it?
2018 2019-2022
Small steps. What
are the smaller
actions you will
need to take to do
it? When will you
do those?
Market analysis
Product development
Manufacturing
Brand awareness
Marketing and promotion
Sales.
Record keeping
The setting of standard
performance benchmarks
Performance analysis
Variance analysis
Corrective measures
Roadblocks. What
are the likely
roadblocks?
capital Product Awareness
Customer preferences
Resistance to change
Switch framework.
What are the
strategic
opportunities
(motivators)
Improve sales
Enter new marketing segments
Adopt a new technology
Win customer preference.
Expand production
Improve brand awareness
Allies. Who are the
key stakeholders?
The Managers, Employees,
Shareholders
Government, customers,
community
Results. How will
you determine when
the strategy is
accomplished
The successful introduction of
the product, expansion of the
product portfolio
Improved sales, enlarged market
segment, improved brand loyalty.