Coca-Cola's Strategic Management: An Analysis of Resources & Industry

This report provides a comprehensive strategic analysis of Coca-Cola, evaluating its competitive position and internal resources. It utilizes Porter's Five Forces to assess industry dynamics, highlighting the high threat of substitute products, low threat of new entrants and bargaining power of suppliers, medium bargaining power of buyers and competitive rivalry. A PESTLE analysis examines the political, economic, social, technological, legal, and environmental factors impacting the company. The report also explores Coca-Cola's tangible and intangible resources through a VRIO analysis, determining their contribution to sustainable competitive advantage. The analysis concludes with reflections on the effectiveness of the models used in assessing Coca-Cola's strategic landscape. Desklib offers a wide range of similar reports and study resources for students.

STRATEGIC
MANAGEMENT
(ASSESSMENT 2)
1

TABLE OF CONTENT
COMPANY PROFILE....................................................................................................................3
INDUSTRY ANALYSIS................................................................................................................3
BUSINESS ENVIRONMENT........................................................................................................5
RESOURCES AND CAPABILITIES.........................................................................................7
Tangible v/s Intangible Resources...............................................................................................8
VRIO Analysis.............................................................................................................................9
CONCLUSION..............................................................................................................................11
REFLECTION...............................................................................................................................11
Reflection on the environment and competitive analysis models.............................................11
REFERENCES..............................................................................................................................14
2

COMPANY PROFILE
Strategic management is going to make the objectives and goals be achieved so that there
is going to be effective working. There are a lot of objectives and targets which are present of
companies so that there is going to be higher performance and profitability. Coca cola was
introduced in 134 years and the company originated in United States. There are a lot of products
which the company has expanded themselves in Diet coke, Coca-cola zero sugar, coca-cola life,
coca-cola mango, etc. The company’s related products are Pepsi, RC Cola, Afri-Cola, Kola Real,
etc. The company is ranked as NO. 87 as of 2018 Fortune 500 in US which is having a good total
revenue. There are a lot of theories and models which can be used by the organization like
porters five forces, PESTLE and VRIO. There is going to be better functioning and operations
for that there has to be good performance and there is going to be higher revenues as well which
the company can have. The company has to have a good planning and structure for themselves
so that there is going to be effective working which is going to make the functioning of the
organization is going to be better.
INDUSTRY ANALYSIS
The company is going to use porter’s five forces to be able to get competitive analyses of
the organization so that there is going to be a better planning which can be done by the
organization for the future. The competition in the market is increasing therefore it is important
for the organization to be able to make the right decisions which is going to help the organization
to maintain the market share and profitability in the market.
 Threat of substitute products (High)
There are a lot of substitute products which are present in the market for Coca cola which is
going to make the organization have low sales. The substitute products of Coca cola is having
tea, coffee, juices, water, beer, etc which is going to take the sales and demands of the products
of firm lower which is going to impact on the productivity and operations of the organization.
Coca cola is not a healthy drink as compared to the substitute products which are present in the
market and the customers are also opting for healthier products which are going to impact on the
profitability in the market (Certo and et.al., 2016). There have to be a lot of decisions which the
3

organization has to take so that there has to be good sales and brand image of the organization
can be maintained in the market which is going to make the consumers opt for these products.
Due to promotions and investment in making the customers get impacted of by the product is
going to make the sales of the organization be higher which is good for a long run.
 Threat of new entrants (Low)
Coca cola has already made a lot of investment in the working of the organization which is why
it is going to be difficult for any new business to be able to come in the competition with Coca
cola. Business has made a strong base by promoting and recognition of the organization is high
which makes the company be able to operate effectively in the market which is a great factor for
the organization to have. There is a set target which the firm is having for themselves in the
market and the company is working very hard to be able to achieve those factors so that the
organization will be able to have a better customer share (Competitive analysis of Coca Cola,
2019). There are a lot of barriers which have come in front of the organization due to which the
organization was banned as well for years but due to strong reputation and branding techniques
the company has maintained their reputation and brand image which is making other competitors
not to enter this industry.
 Bargaining power of suppliers (Low)
The suppliers are going to provide Coca cola with basic commodities like sugar, caffeine,
flavours, and other important ingredients which are required for manufacturing. These basic
requirements can be got in the company from a lot of suppliers which is going to make the
organization have cost saving. The company has good networks which is why they can find it
easier to be able to shift from one company to the other so that they will be able to operate
effectively (Peppard and Ward, 2016). Agriculture is present in all the countries as well which is
why the company will be able to expand themselves as well according to the demands so that the
organization is going to have more sales. The raw material for production has to come in
regularly so that the organization will be able to have a good functioning and the production is
going to be higher. There has to be good bargaining with the suppliers as well so that the
company will be able to have good functioning.
 Bargaining power of buyers (Medium)
4

Soft drinks is a product which customers need in all food stores, restaurants, college
canteens, and other eat out places for them which is a great advantage which the organization is
having in the market (Michael, Storey and Thomas, 2017). Fast food is what human beings
consume and with that there is a need of soft drinks as well which is going to make the
profitability of the organization increase which is going to make the productivity and sales of the
organization increase. The buyers have a say in making the organization get banned but if the
company is following all the rules and regulations then there is nothing to worry about and the
customers are going to be continue consuming the products of Coca cola which is a very good
factor for the organization to have. Intensity of rivalry among competitors (medium)
There are a lot of beverages which are present in the market which is going to be better
competitive rivalry. There are a lot of soft drinks, bottled water and juices so that there is going
to be higher performance and the organization is going to make the organization producers have
good profits (Garrido-Lopez and et.al., 2018). The company is having a decline in the sales
because the coffee houses in the world are increasing and they have to be controlled otherwise
the organization can have negative impact which is not good for the loyalty of the customers.
BUSINESS ENVIRONMENT
There are going to be internal and external factors which are going to have an influence
on the planning and decision making of the organization. Coca cola will have to analyse the
external factors of the organization so that right decisions can be taken which are going to be
beneficial for the organization to have for a long run in the market.
 Political factors
There are a lot of laws and regulations which Coca cola has to pass to be able to operate in
the market smoothly which is there are a lot of issues which the company has faced in the past.
There was an issue of sanitization because of which the company was banned in a lot of
countries which has to be monitored by the organization to be able to operate. Due to US and
China tiff there has been a great impact on the organization with the trade war which is making
the pricing of the canned products been affected and that is not good for the revenue generation
5

of the organization. There is a lot of improvement which the organization has made in their
products in order to be able to operate effectively (Frue, 2016).
 Economic factors
The water which is being consumed by the organization has made a lot of impact on the
products of the organization which is why the company is investing a lot on solving this factor so
that there is going to be higher demands of this product (Barros, Hernangómez and Martin-Cruz,
2016). There is a lot of investment which the company is making on promotions as well so that
the brand image and reputation of the company can be higher in the market again so that the
company is going to find it easier to be able to function effectively. The raw material which the
company is using is low which is making the revenue and economic stability of the company
higher.
 Social factors
The company is majorly operating in the cultured countries and focusing on matching the
demands of the customers so that there is going to be higher sales. Obesity is a long term disease
which the customers are facing which the company is responsible for but there are no actions
which were being taken but now the company has come up with different flavours as well as
zero sugar and diet coke in the market for the customers. It is important that the organization
thinks for the customers so that there is going to be better reputation which the organization can
have in the market (Georgiev, 2017).
 Technological factors
Coca cola is having more than 108 million followers on Facebook and 3.34 million followers
on Twitter which is a great brand image which the organization has made for them. There is a
target method which the company is using for them to be able to achieve the goals. The demands
of the products are increasing in the markets which have to be achieved so that there is going to
be higher sales and the company will be able to operate effectively in the market (Hill,2017). The
raw materials are coming in rapidly in the company since they are easily available in nature and
that is going to make the company have more sales.
 Legal factors
6

There are a lot of caffeine input which is present in the products of the business which needs
to be limited so that there is going to be better brand image and reputation of the organization in
the market. The company, having to pay lawsuits which have been put on the company which
needs to be monitored so that there is going to be higher standards of the company which is
going to make the organization have higher profits (Kunz, Siebert and Mütterlein, 2016). The
company will have to get in the right revenue as well so that they will be able to take care of the
lawsuits as well as make investment in improving on the research and development department
which is going to make the company have unique identity which would make the reputation and
brand image of the organization increase in the market for a higher reputation. There are a lot of
protests which the employees are putting out of the firm because of the unfair treatment as well
which is going to have a negative impact on sales of the business.
 Environmental factors
The water management operation of Coca cola is very good and there are more investment
which the organization is making in the market so that there is going to be higher sales which is
going to be present. There is a brand image which the company has to match which is going to
make the company have more raw materials (Rosenberg Hansen and Ferlie, 2016). Rain water
and also well harvested by the company to be able to have good farming for their raw material
and there are carbon footprints measures also being adopted by the organization so that there is
going to be higher sales.
RESOURCES AND CAPABILITIES
Resources are the assets, skills and knowledge of the organisation. Capabilities are the
abilities of the organisation to make use of the resources effectively. These are used as the
drivers of the organisation which drives the strategic opportunities in the emerging markets.
Studying them can help in analysing the potential of the company. Resource mainly deals in the
money, facilities and the network used by the companies for its product distribution (Gehani,
2016). Capabilities are something done by the company better by others mainly its competitors.
Resources can be classified as Tangible, Tangible and Human. Capabilities of the company helps
it to perform better than its competitors by gaining competitive advantage and also to lead among
the competitors (Alahi and Bass, 2018).
7

Tangible v/s Intangible Resources
Tangible Resources
Tangible and Intangible Resources are the major resources which are represented by the balance
sheet of the company. Tangible resources mainly represent the chances and the opportunities to
be facilitated from the economic benefits through the manufacturing or distributing the goods.
These are visible resources and are used in measuring the monetary resources such as material
and the financial resources (Sam Rockwell, 2018). These can be purchased so they can be valued
according to the cost. These can be buildings, machines, depreciation over time and facilitating
with the social treatment regarding the accounting perspective in order to match the cost of the
asset with the revenues generated from the resources (Gazzola, 2018). They cannot be sold to the
customers instead they are used in the operations of the business in order to produce goods or
providing the services. These are sometimes used by the companies to obtain the loans or sell
these resources to enhance the cash flow of the company. They help in increasing the market
value of the company.
In case of Coca-Cola, these are the financial as well as physical resources. The financial
resources of the company are strong and sustainable which can be used by the company to make
larger investments in billions of dollars in high growth markets like India, China, Russia etc.
This money helps in building the brand, infrastructure and to build stronger relationships with
the partners which can help in expanding the distribution networks. The company Coca-Cola
consists of four departments- HR, Sales, ICT and marketing. Each department is fulfilled with all
the facilities and resources they need and the employees in respective departments also have all
the required resources they need to work in that department (Bellia, Pilato and Seraphin, 2017).
The HR department works for hiring the best talent and to provide welfare to the employees and
the company. The sales department is responsible to make the products of the company
accessible to large number of people and helps in selling the products. The ICT department’s role
is to check the quality of the product (Jawed and Siddiqui, 2019). The marketing department
helps in promoting the products to maximum customers which increases the customer base and
aware the people about the need of the company’s products.
Intangible Resources
8

These resources lack the physical form. These include technology, marketing and many
other aspects. Under technology, the patents, copyrights and the industrial secrets are involved
while under marketing, branding strategy and marketing expertise is involved. For example,
patents for hand-held technologies of radio and telephone and the brand name of the company
can be considered as the intangible resources which cannot be seen in the physical form but is
responsible for the overall progress of the company. These help the companies to earn significant
revenues and optimal profits over the time. The other intangible resources can be intellectual
property and the goodwill (Lynch, 2019). These all the resources which are considered as
intangible are basically assigned a market value which is based on the economic benefit it can
provide to the company. The economic benefit refers to the anticipated income which can be
generated by using the respective resources. The intangible resources such as trademarks, patents
and the copyrights do not contribute in the products’ or service’s production but plays a major
role in continuing the operations of the company. The value of the intangible resources such as
brand names, equity patents and customer loyalty can be represented by the difference in the
price paid for the company and the tangible resources’ value (Galpin, 2019).
In case of Coca-Cola, the intangible resources are the technological resources as well as its
reputation. In terms of technological resource, the company modernizes its machinery. The
company focuses on making all the production process automated by making them accelerated
which can help in keeping its product quality stable and working environment more secure.
In order to make its production process more sustainable, the company researched a lot and
produced the Plant Bottle which is considered to be the greenest bottle. This product is
considered to be completely eco-friendly due to the qualities and capabilities of high
decomposition and recycling (Kamasak, 2017).
On the basis of its reputation, the existence of the company is more than 127 years which helped
in making it as one of the three most valuable brands in the world. The products of the company
are much popular and are expanded in more than 200 countries. The products of Coca-Cola are
considered to be one of the most consumed beverages in the world.
VRIO Analysis
VRIO is basically a framework which is used to analyse the competitive potential of the
resources of the company which contributes in gaining the competitive advantage. It gives
9

answers to four major aspects- Value, Rarity, Imitability and Organization. Value ensures that
the resource is allowing the firm to exploit the opportunity or helps in neutralizing the threat.
Rarity tells that a resource is available to only few firms (Bitange, 2018). Imitability states that
the other firms feel costly to imitate or it becomes difficult to imitate for others. Organisation
tells that the procedures and policies of the company are enough organised which can help in
exploiting the valuable, rare and imitable resources.
The VRIO analysis helps the Coca-Cola to gain competitive advantage of any type such as
competitive parity, sustained competitive advantage and Temporary Competitive advantage and
to lead among the competitors like PepsiCo and Dr Pepper (Galpin, 2019).
Resources/
capabilities
V R I O Implications
Brand image YES YES NO YES Competitive
Parity
Marketing skills and
Expenses
YES YES NO YES Competitive
Parity
Research and
Development
YES YES NO YES Temporary
advantage
Large product range YES NO YES YES Temporary
advantage
Secret Formula YES YES NO YES Sustainable
competitive
advantage
Summary of the VRIO analysis of Coca-Cola
Brand Image: It is valuable which helps in managing the impressive place in market. It is
difficult to build a strong brand image like Coca-Cola. Impossible to imitate but can be a threat
by the competitors’ strong brand image. It is organised.
Marketing Skills and Expenses: It helps in connecting with its audience better along with
expenses around $4 billion which is far higher than competitors. Difficult in copying due to high
expenses of marketing. Yes, organised.
10

Research and Development: It helps in bringing innovation. Yes, it is rare but Pepsi too has
focus on R&D. Not imitable as other firms too can invest. It is organised (Krishnaswamy, 2017).
Large product range: It helps in serving the global audience with different preferences. Not
rare as Pepsi and Dr Pepper has also large variety of products. Pepsi also has large range of
products. Yes, organised.
Secret Formula: It exists only in the Coca-Cola. Yes, rare but Pepsi also serves unique flavours.
Not possible to imitate. It is organised.
CONCLUSION
The above report described the major aspects of Coca-Cola. The Porter’s five forces was
used to analyse the industry of beverages. The PESTLE analysis of Coca-Cola was done in order
to analyse the impact of these factors on the company. The resources and capabilities were
discussed in context of Coca-Cola company. The explanation of tangible and intangible
resources was done in relation to the organisation. VRIO analysis was done for analysis of the
competitive advantage of Coca-Cola. The overall report focussed on leading the company among
its competitors.
REFLECTION
Reflection on the environment and competitive analysis models
On the basis of the applied models in the report I want to share my feelings while doing the
report would they effectiveness in a detailed manner to present my views on it.
Description: I wanted to describe on how the environmental and competitive analysts work, all
the models which have been used for identifying the factors of the industries and the
environmental factors. While doing Ansoff metrics I get to know that it plays a very important
role in the company when the company wants to expand their business and want to become the
leader in the market with majority of shares. The metrics have food stages and strategies under it
which can help company in the development of their product and services in the new market or
the existing market to focus a new product. I found that this strategy is Coca Cola made a deep
end on the trends of market and the situation of the availability of the resources the companies
having at the current time. The VRIO analysis helped me in understanding that it helps the
company to protect they’re working to provide competitive advantage to the company. Porters 5
11

force analysis Also help the organization to find the current intensity which is going in the
competition off market.
Feeling: After providing a description about all the models which I used, I learn a lot of thing
which includes that how a company can make changes by utilizing the tools in the models. I
understood that all the models are very important for the organization because they help the
companies in achieving their goals in the competitive market. Porter 5 force model helps a
company in understanding not only the competition market but also provide additional help in
understanding the power of customers suppliers and the chances of new people entering in the
competition and market.
Evaluation: I understood a lot of about how a company works in how the tools and the models
which are used in the organizations can affect. The utilization and implementation of tools and
models in the organizations can provide both negative and positive impact on the working and in
profitability of the business. Models help us understand the market and the situations the
company facing and I understand that it can also help in making better decisions regarding the
expansion of the business. Porters 5 force models can also lack in many places while working in
Coca Cola and the VRIO analysis can help in effectiveness of the resources but cannot change
the resources.
Analysis: The analysis shows that all the models which are implemented in the industry can
provide a lot of advantages in the competitive market and they helped companies in knowing the
values and effectiveness of the resources they are utilizing and how they can improve the
resources and the need of changes. Analysing the model helps the organization in understanding
the strategies and how to perform all the working and how to develop the process of expansion
and product development. An amazing help in understanding both positive and negative effects
of the models and the ways find the solutions (Shikhmurzaev, 2020).
Conclusion: I found that the conclusion of overall, it can be concluded that every model and
tools helps the industries and plays a very important role in Coca Cola. It helped the organization
in understanding the positive and negative aspects and where the company is lacking and
analyzing the competitive factors and environment can help in better decision-making’s and
extending of their business.
Action plan: After discussing I can say that every model is important for the organization to
understand both positive and negative impact and it is very important to use all type of models
12