Macro Environment Analysis: PESTLE of the Coca-Cola Company

This report provides a detailed PESTLE analysis of the Coca-Cola Company, examining the macro-environmental factors impacting its operations. The analysis covers political factors, such as government regulations and trade policies, and economic factors, including economic growth, exchange rates, and consumer income. Social factors, such as changing consumer preferences towards healthier drinks and cultural impacts, are also discussed. The report further explores technological advancements in production, packaging, and distribution, as well as environmental concerns and the company's sustainability initiatives. Legal factors, including compliance with labor laws and product quality regulations, are also considered. Finally, the report examines ethical factors, such as the company's anti-corruption policies. The analysis highlights the importance of adapting to these external factors to maintain market share and achieve desired growth. The report also includes references to relevant academic sources.

Macro Environment -
PESTLE analysis of Coca-
Cola Company

Table of Contents
INTRODUCTION ..........................................................................................................................1
MAIN BODY...................................................................................................................................1
PESTLE analysis of Coca-Cola..................................................................................................1
REFRENCES...................................................................................................................................5

INTRODUCTION
Macro environment is a situation that influences the entire economy, instead of affecting
a particular sector or region. In more simplified term, It involves the associated trends in GDP,
monitory and fiscal policies, investment, rise in price and spending etc. Macro environment
influences the performance of the firm in a greater extent. PESTLE analysis, is a concept which
is used by the firms to analyses the environment in which they are working or preparing to
introduce a new service (Bennett and Chorley, 2015). This present assignment is based on Coca-
cola which is manufactured by The Coca-Cola an America based company, situated in Atlanta,
Georgia. This report involves the PESTLE analysis of Coca-Cola by which the firm will be able
to identify several external factors like political, Economical, social, technological,
environmental and legal factors. Along with it, Ethical factors that impacts the company are also
discussed.
MAIN BODY
PESTLE analysis of Coca-Cola
A PESTLE analysis is considered as a framework or tool which is used by the marketers
to examine or check the external marketing factors. These factors affects the working and
productivity of the firm. Along with this, PESTLE analysis helps in identifying the weakness and
threats associated with the product or organisation. In the context of Coca-Cola, PESTLE
analysis is discussed below:
Political factors: This factor is related with the interference of government within the
economy. Different government policies, Stability of government, trade and taxation policies and
various laws are part of it. In the case of Coca-Cola, the most essential factor which have impact
on company is government regulations and laws for food items (Bertozzi, Ali and Gul, 2016).
For example in US, company needs to follow food and drug regulations. Laws varies from one
country to another. Coca-Cola must follows the relevant laws of different nations in which they
are serving. Company is offering its products through out the world so they must follow every
tax and trade laws associated with the concerned countries. Threats that can originate are related
with the change in laws. This can impact the revenue and profit margins of the company. For
example, in nations like Dubai which faces water scarcity, Coca-Cola is facing lawsuits due to
over consumption of resources especially water. Even in India, protests are carried out against
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the firm because of water crisis which originates due to the industry is over consuming water. In
some countries, several law suits are also filed due to harmful ingredients used in the drink.
These factors can influence the market position of the firm in a bad way. By taking care of their
quality and optimal utilization of resources these threat can be eliminated. Stable government
formulating stable policies also helps the company in performing well.
Economic Factors: It impacts the business performing efficiency of the company and
profits associated with it (Czinkota and Skuba, 2014). These factors includes economic growth,
exchange and interest rates, disposable income of clients, inflation etc. Due to financial crisis
that takes place worldwide, large organisations faced several issues where Coca-Cola manage to
remain unaffected by the event. But the profit margins has decreased at some extent. Products of
Coca-Cola are distributed in almost all countries. These nations has varied culture, taste, custom
and desires. Company is introducing new flavors so that growth of the brand can reach a new
heights. In total, the company posses more than 80 billion dollars worth of assets. More than
three forth of their income is from nations outside US. Different countries have different
exchange and interest rates. More rates will affect the company's revenue as they have to pay
more to government in that case. In countries like Bangladesh and Iran where per capita income
of people is low, company can face a low in market shares. To tackle these issues, company can
reduce its cost of product so that more and more people can purchase them. More sales will
improve the market growth of the company. These factors can poses a big impact on profit
and market share of Coca-Cola.
Social factors: These factors care about the social atmosphere within the market and
involves determinants such as demographics, population and trends of culture. As in case of
beverages and drinks, people are shifting their preference towards healthy drinks. It can results in
the decline of sales and brand popularity. Change in taste and needs of customers can impacts the
profit margins of Coca-Cola drastically. This company is popular for their different flavors, but
due to peoples shift toward healthy drinks they needs to improve their quality standards also.
These drinks are considered as “loaded with calories” because of which people has started
avoiding it. This has reduced the market shares and company faces a decline in sale. To
overcome these problems, company needs to introduce drinks with low calories (Gill, Millar and
Deb, 2017). This will help the firm in maintaining their customer base. Relations of America
with other countries also impacts the business of Coca-Cola. For example, due to issues between
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Iraq and America, the revenue of Coca-Cola is reduced in other nations also. Impact of culture
on the shares of company can not be underestimated. Company needs to incorporate strategies in
according with the local culture and norms before introducing their drinks. This will help them in
achieving their desired growth and solve the various issues that take place in proper functioning
of company.
Technological factors: These aspects effects the management and marketing of the
company by providing new ways of producing and distributing product into market. These
factors also involves the new manner in which company can communicate with the targeted
market. In present scenario, the company is treated as a pioneer in implementing latest
technology. Coca-Cola's packaging, production and distribution highly depends on advanced
technology (Goad and Akihisa, 2012). Company needs to invest more in technological aspects to
increase its profit margins. Technological efficiency assures production at time and better
management of supply chain. These aspects has sizable impact on the working environment of
Coca-Cola and revenue generation. If company is not capable to use latest technology, it will
increase manual labor due to which working potential of overall company will reduce and sales
will also affected. Along with it, several merits can also be gained if new technology is given
proper consideration. For example, company can promote their product through TV, social
media, radios etc. more advertising results in increased sales (Paquot, 2013). New technology
also take cares of the quality standards by reducing the share of harmful ingredients as
substitutes are found in their place. If improvement in product is not figured out this will results
in decline in sale.
Environmental factors: These factors are related with the impact on environment due to
the operations and activities carried out by Coca-Cola. Environmental concerns plays a vital role
in determining the success of a particular company. If company doesn't not implement these
programs, different governments associated with different countries will ban the product due to
environmental risks. Reduced impacts on environment helps Coca-Cola in maintaining better
image of brand. Company is investing more to utilize water in an efficient way and also prepares
sustainable plans for the year 2020. To improve environmental concerns, Coca-cola invests in
programs like RAIN and CARE which promotes water smart agriculture (Hassan, et. al., 2013)).
For example, In Ghana and Africa several Programs are launched by Coca-Cola that helped the
farmers of to learn new and productive methods of farming. These places faces water scarcity but
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due to these programs farmers are able to yield more. IN UK, company have initiated schemes
that uses recycled material for packaging and also collaborated with soft beverages sector to
formulate common tactics for sustainable production. This will helps the firm in expanding their
presence in a wider context.
Legal Factors: Laws vary from one country to another and it is must for a company to
follow these laws so that firm can manage their business appropriately. Noncompliance can
results in billion of fines and reduce brand value which can severely affects the growth and
market shares of the Coca-Cola (Hassan, Amos and Abubakar, 2014). If they will not take care
of laws like labor, minimum wage act and some others company needs to pay huge fines which
will decrease the revenue of company. Agreement of laws is important for labor, environment
and product quality. Coca-cola needs to focus more on corporate government, compliance and
ethics. To solve issues associated with legal aspects, the concerned company need to follow their
own compliance procedures which will help the company in maintain their position throughout
the world.
Ethical factors:These factors determine the behavior, attitude and feelings of the
consumers as well as employees regarding the company. To manage their business with integrity
and honesty, Coca-Cola has introduced anti-corruption laws. Company is required to study ,
understand and adhere to the codes of business conduct. Not following it will leads to several
problems which will disrupt the working within company (Jacobes, 2013). These ethical aspects
helps the firm in following healthy business practices.
SUMMARY
PESTLE analysis of Coca-Cola shows that several political, economic, technological,
social, legal and environmental factors are vital for business management. Even if the
technological factors are under the control of company, other factors like social and political
changes as per changing situations. Over consumption of water is a big barrier in the growth of
company. This is the most important aspect with which company needs to deal. Even after
company has moved toward healthy drinks by encouraging low calorie concept, there are several
other aspects that the company must consider to achieve desired growth and results.
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REFRENCES
Books and Journals
Bennett, R. J. and Chorley, R. J., 2015. Environmental systems: philosophy, analysis and control
(Vol. 1448). Princeton University Press.
Bertozzi, F., Ali, C. M. and Gul, F. A., 2016. Resource Based View of an Organization and
PESTEL Analytical Tool; An Analysis of Hotel Corallo, Rimini. EPH-International
Journal of Science And Engineering (ISSN: 2454-2016). 2(11). pp.57-71.
Czinkota, M. R. and Skuba, C. J., 2014. Contextual analysis of legal systems and their impact on
trade and foreign direct investment. Journal of Business Research. 67(10). pp.2207-
2211.
Gill, R., Millar, B. J. and Deb, S., 2017. Properties of a Bulk-Fill Flowable Composite Resin with
High Depth of Cure. Open Journal of Stomatology. 7(09). p.377.
Goad, J. and Akihisa, T., 2012. Analysis of sterols. Springer Science & Business Media.
Hassan, D. N., Amos, A. A. and Abubakar, O. A., 2014. An evaluation of marketing strategies
undertaken by Coca Cola Company as a multinational corporation in Nigeria. Journal of
Business and Management. 3(2). pp.5-10.
Jacobes, M. B., 2013. The chemical analysis of foods and food products. Van Nostrand Reinhold
Company; New York; Cincinnati; Toronto; Lndon; Melbourne.
Paquot, C., 2013. Standard methods for the analysis of oils, fats and derivatives. Elsevier.
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