Essay on Key Strategy Development Tools - HI6006 Competitive Strategy

This essay provides a comprehensive analysis of several key competitive strategy models, including the Ansoff Matrix, SWOT analysis, PESTEL analysis, and Porter's Five Forces, using Coca-Cola as a practical example. The Ansoff Matrix explores Coca-Cola's market penetration, market development, product development, and diversification strategies. The SWOT analysis identifies the company's strengths, weaknesses, opportunities, and threats. The Five Forces model assesses the competitive intensity and attractiveness of the beverage industry, considering the threat of new entrants, bargaining power of suppliers and buyers, and competitive rivalry. Finally, the PESTEL analysis examines the political, economic, social, technological, environmental, and legal factors affecting Coca-Cola's operations. The essay concludes that these strategies are essential for companies to sustain and grow in competitive markets, providing valuable insights into how Coca-Cola navigates its industry landscape.

Competitive strategy
Trimester- T1 2019
Unit Code- HI6006
Unit Title - Competitive Strategy
Assessment Type- Individual Assignment
Assessment Title- Essay – Key Strategy Development Tools
Competitive strategy models with an examples
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Competitive strategy
Introduction
The report discusses about the several competitive models which can be used by
the company to sustain in the market. The report includes the Ansoff model, PESTEL,
five forces – diamond model and SWOT model with respect to Coca cola.
Ansoff model
What is Ansoff matrix?
It is observed that one has to prepare best possible growth, development, and
penetration strategy for organisations to sustain in the market. The Ansoff model guides
the corporates to prepare such strategies considering the market demand, resources,
risks and capabilities. Coca cola is one of the most well known brands across the globe
and operating in beverages industry from almost past 100 years (Evangelia, 2017).
Market Penetration
The intent of market penetration strategy is to sell the existing goods to existing
markets. Coca-Cola has adopted the market penetration out of four developmental
strategies. Moreover, company has got measurable profit due to this strategy and its
incredible brand name in the market.
Market Development
The strategy of market development refers the process where the company aims
to enter in a new market with existing products. Coca Cola initially captures the US
market and then entered successfully in different countries. Moreover, the company is
operating in almost every country across the world. Recently vanilla coke was
introduced in USA, after getting enough favorability for the product; it now plans to enter
in United Kingdom (habib, 2016).
Product Development
The strategy of product development refers to the activity where the company
targets existing market with introducing new product. Here, the company innovates or
renovates the existing product to capture more market share. Coca cola came up with
diet coke, lemon icy and cherry coke to increase market share and penetrate in the
market with diverse products.
Diversification
Diversification refers to the strategy where the company targets new market with
introducing new product. Diversification enables market to capture more market share
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Competitive strategy
by introducing the new product as per customers’ expectations. Coke came up with
mineral water and related products other than coke. Moreover, the company has
introduced diet and energetic soft drinks (Ahmed, 2017).
SWOT analysis
Let us discuss the SWOT of Coca Cola. The internal environment anlaysis
includes strength and weakness of the Coca Cola. The external environement analysis
includes the factors of opportunity and threat (Simpson, 2014).
Strength
The company is valued around 80 billion dollar with a considerable market share
in 200 countries. The company has been awarded the highest brand equity awards. The
company has executed largest distribution networks across the industry with highest
brand loyalty from consumer point of view (Ahmed, 2016).
Weaknesses
The company does not have enough product diversification to retain its market
share in the industry. Coca cola has been confronting competition from Pepsi Co. If
Pepsi Co. had not been in the market, Coca cola could have become market leader in
the beverages industry.
Opportunity
Coca cola has an opportunity to diversify its business to food supply chain. With
the existing supply chain, the company can start distribution of snacks based foods
such as wafers. The supply chain can be more efficient that would decrease the overall
cost of the distribution network.
Threats
The Coca cola company has list of strong indirect competitors such as starbucks
and barista. The indirect compeitiors list even includes the companies that sell energy
drinks and fresh fruit juices. Customers may choose juices over the soft drinks.
Moreover, the Coca Cola company was accussed of using pesticides in their products.
It has affected their brand equity (marketing91.com, 2019).
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Competitive strategy
Five force model
Let’s discuss about the five force model for Coca-Cola. It is one of the biggest
beverage retailer and supplier. The five force model has five parameters to assess the
brand (Jannoun, 2011).
Analyzing the threat of New Entrants/Potential Competitors in the industry:
Medium power
It is observed that entry barrier for Coca-Cola is comparatively low as compared
to other FMCG goods. The switching cost of the product is zero and comparatively
needs less investment amount. Numerous beverages brand is coming in the market but
Coca cola is having substantial market share in the industry. Loyal customers tend to
drink Coca-Cola and fewer chances to drink any other beverages.
Analyzing the in the market: Medium to High bargaining power
As such in case of Coca cola, it has medium to high bargaining power. There are
number of juices and energy drinks are available in the market, customers can choose
these products over coca cola. However, because of brand loyalty, customers stick to
the product since its inception. It was observed that when the blind test was taken, an
individual could not differentiate the taste between Coca cola and Pepsi.
Analyzing the Bargaining Power of Buyers in the industry: Low pressure on coca
cola
The bargaining power of buyers is comparatively low in case of Coca cola. Large
super markets like Wal-Mart and D-mart have measurable bargaining power because it
sells large quantity and places bulk order with Coca-Cola. But still there is minimal
pressure on Coca cola because the end customers are loyal with the brand.
Analyzing the Bargaining Power of Suppliers in the industry: Low pressure on
coca cola
The basic ingredients such as carbonated water, phosphoric acid, sweetener,
and caffeine are used to prepare the soft drink. These products and suppliers are not
differentiated. Coca cola is considered as one of the largest customer for these
products. Hence the bargaining power of supplier is low.
Analyzing competition Among Existing Firms in the market: High Pressure on
coca cola
We can see that there are number of companies that are introducing such soft
drinks and beverages and they are even involved in sponsoring big events which helps
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Competitive strategy
them to spread positive word of mouth in the market. Also, this helps them to be in the
customers mind for a longer period of time (Kyle, 2018).
PESTEL analysis
Let us now discuss the PESTEL analysis of the country, which includes the
feasibility analysis of the country in relation with our product. The political, economical,
legal, social and technological backgrounds of India are being assessed in relation with
coca cola (Sameli, 2018).
Political and Legal factors
The political factors include the political background of the economy. It aims to
analyze the list of policies that are favorable for coca cola. Moreover, it is essential to
study the tariff and trade policies of a particular country such as India. It has
comparatively stable economy which is suitable for the Coca cola Company
Economical factors
Economic factors analyze the parameters of inflation, GDP, employment rates,
interest rates etc. It has been analyzed that the prices of raw material which are being
used to prepare Coca-Cola drinks have increased.
Social factors
Social factors includes the fashion, trends, customes, norms and values of an
individual country. These factors are esential because the lifestyle of an indiviudal within
the country affects the usage and acceptability of your product such as people in india
are getting health conscious, hence zero and diet cokes are on more demand than
normal cokes.
Technological factors
The thechnological factors of the country includes production and packaging
techniques that are being used durng manufacturing process in particular industry. For
instance, India is importing technology from western countries and setting its high
standard in terms of technological expansion and adaptation. Coca cola needs to work
accordingly to enhance their manufacturing processes. The new bottling plant must be
set up by executing new technolgy which may lead to have a competitive advantage in
future.
Enviromental factors
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Competitive strategy
The environmental factor discusses how much the company is environment
friendly. Coca cola has optimised its processes and helped India with environmental
innovation. The company has also taken initiatives to reduce pollution and carbon foot
print. (Sinha, 2018).
Conclusion
Hence we can conclude that company can use either of the strategy to retain,
sustain and grow in the market. The compeitive strategy enables company to compete
in the market by analysing the industry backgorund and product portfolio.
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Competitive strategy
References
Ahmed, R.R., 2016. Strategic Marketing Plan for Coca-Cola. Ali Bhutto Institute of Science and
Technology.
Ahmed, Z., 2017. Understanding Ansoff matrix – an example of Coca-Cola. [Online] Available
at: HYPERLINK "https://www.howandwhat.net/understanding-ansoff-matrix/"
https://www.howandwhat.net/understanding-ansoff-matrix/ [Accessed 23 April 2019].
Evangelia, T., 2017. Application of Ansoff’s. Greece: SCHOOL OF ECONOMICS.
habib, A., 2016. Ansoff matrix for coca-cola , Blackberry and Apple company.
Jannoun, R., 2011. Coca-Cola Porter's Five Forces Analysis and Diverse Value-chain Activities
in Different Areas. N.A.
Kyle, 2018. Porter’s Five Forces In Action: Sample Analysis of Coca-Cola. [Online] Available
at: HYPERLINK "http://valuationacademy.com/porters-five-forces-in-action-sample-
analysis-of-coca-cola/" http://valuationacademy.com/porters-five-forces-in-action-
sample-analysis-of-coca-cola/ [Accessed 24 April 2019].
marketing91.com, 2019. SWOT of Coca Cola. [Online] Available at: HYPERLINK
"https://www.marketing91.com/swot-coca-cola/" https://www.marketing91.com/swot-
coca-cola/ [Accessed 24 April 2019].
Sameli, I., 2018. PESTLE Analysis of Coca Cola. [Online] Available at: HYPERLINK
"https://pestleanalysis.com/pestle-analysis-of-coca-cola/"
https://pestleanalysis.com/pestle-analysis-of-coca-cola/ [Accessed 25 April 2019].
Simpson, B., 2014. Coca Cola® Research Paper and SWOT Analysis. [Online] Available at:
HYPERLINK "http://www.technologylearner.com/Business/Assignments/SWOT/Coca
%20Cola%20SWOT%20Analysis.pdf"
http://www.technologylearner.com/Business/Assignments/SWOT/Coca%20Cola
%20SWOT%20Analysis.pdf [Accessed 23 April 2019].
Sinha, P., 2018. Pestel Analysis of Coca.
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