Strategic Analysis of Coca-Cola: Performance and Recommendations

This report presents a strategic analysis of the Coca-Cola Company, examining its business environment and performance using various strategic analysis tools. The report begins with an overview of Coca-Cola, including its mission, vision, and culture, followed by an identification of the company's problem: adapting to changing consumer preferences and the rise of e-commerce. The core of the report involves applying strategic analysis tools such as SWOT, PESTEL, ratio analysis, Porter's Five Forces, Value Chain Analysis, and VRIO framework to assess Coca-Cola's strengths, weaknesses, opportunities, and threats. The analysis covers internal and external factors influencing the company. The report also includes a debt-to-equity ratio analysis. Finally, the report concludes with recommendations for Coca-Cola, including expanding into non-carbonated drinks, improving HR practices, and setting clear objectives to enhance its market position and productivity.

Running head: COCACOLA STRATEGIC ANALYSIS
1
Strategic analysis
Name:
Institution

COCA COLA STRATEGIC ANALYSIS 2
Abstract
Strategic analysis involves a firm coming up with different methods which it can use to assess
and evaluate its strategies to improve its productivity. This paper explains some of the various
tools used by different companies to analyze their plans. Also, the paper discusses the advantages
and disadvantages of each stated tool. The paper goes ahead to use the various tools to conduct
an analysis on Coca-Cola company after which it gives recommendations on proper actions to be
implemented by the company. The paper concludes that Coca Cola Company should apply an
excellent strategic model for their company. In this case, quite a good number of tools are worth
to be implemented by the company. The company should consider expanding its markets by
producing more non-carbonated drinks to satisfy their customer’s health concerns and hence
better their performance. The company should also focus on improving its HR practices to hire
more competent and skilled individuals to help it improve its productivity. They should also
conduct training to existing employees to update them with the advancements in technologies
and equip them with appropriate skills to handle specific tasks. Their management team should
work on setting particular objectives and attainable goals to be achieved within a suitable period.
By doing all the above, the company will be able to reach a significant number of customers both
locally and internationally.

COCA COLA STRATEGIC ANALYSIS 3
Table of contents
Abstract.......................................................................................................................................................2
Introduction.................................................................................................................................................4
About the company..................................................................................................................................4
Company’s mission, vision and culture...................................................................................................4
Company problem...................................................................................................................................5
Strategic analysis.........................................................................................................................................6
Strategic analysis part1................................................................................................................................7
SWOT Analysis.......................................................................................................................................7
PESTEL Analysis....................................................................................................................................8
The ratio analysis tool..............................................................................................................................8
Porter’s five forces analysis...................................................................................................................10
Value chain analysis...............................................................................................................................10
VRIO Framework..................................................................................................................................11
SWOT analysis-Cola Cola Company........................................................................................................11
PESTEL analysis (COCA-COLA COMPANY)........................................................................................14
VRIO analysis- Coca Cola........................................................................................................................17
Alternatives...............................................................................................................................................20
Recommendations.....................................................................................................................................23
Conclusion.................................................................................................................................................24
References.................................................................................................................................................26

COCA COLA STRATEGIC ANALYSIS 4
Introduction
About the company
The Coca-Cola Company is a multinational soft beverage and drinks producer. The company was
established in 1886 by Candler Asa Griggs and is now existent in more than 200 nations globally.
The company produces, promotes and vends more than 3,500 brands under 500 different product
names. The most well-known brands of the company are Coca-Cola, Sprite, Fanta, Minute Maid
and Dasani mineral water (Andini & Simatupang, 2014). The firm enjoys a robust brand image,
large user base and colossal financial position internationally. The company's mission states that
the company promises to build value for their shareholders and generate exertions to construct a
reliable product in the international community. The firm also aims to create value for all of its
stakeholders which have a direct or indirect duty in its victory, and prosperity globally
(Pendergrast, 2013).
Company’s mission, vision and culture
The company missions are to refresh the world, inspire the moments of happiness and optimism,
and build values and make differences. The company framework serves as a roadmap and
directions on every aspect of the business, defining what the corporation requires to stay
achieving quality development and sustainability. The main elements of the company’s vision
are people, product portfolio, partners such as customer and stakeholders, planets, profit, and
productivity. The company’s winning culture describes the behavior and attitudes that will be
needed to make the vision 2020 a reality. The corporation's values encompass their routines and
explain how the action will be operating field. Some of the values of the company are leadership,
collaboration, integrity, accountability, diversity, passion and quality (The Coca-Cola Company,
2017).

COCA COLA STRATEGIC ANALYSIS 5
From its mission and vision statement, Coca Cola Company is all about satisfying the consumer
experiences. Its success widely depends on creating products which match customer needs to
fulfill their desires, preferences and lifestyle requirements. The company's vision statement is too
lengthy and only tries to capture the current needs of consumers. It should be re-stated to win the
future needs of its customers. The goal of coca cola is to use our company's assets- our brands,
financial strength, unrivaled distribution networks, global reach, and the talent and strong
commitment of our management and associates – to become more competitive and to accelerate
growth in a manner that creates value for our shareowners. With its bright and comfortable to
understand the mission and vision statements, the company wants its clients to be in an excellent
position to understand what it does as well as it recognizes the requirements of the customers by
satisfying their needs. The above alternatives fit very well to the company's mission, and vision
statements hence are worthy of being implemented to better their operations which will lead to
increased productivity.
Company problem
The world is ever changing and for the business to succeed over the next decades, they ought to
look ahead and comprehend the forces and trends that will design the industry in the future and
move swiftly to embrace what might occur (Hill, Hult, Wickramasekera, Liesch & MacKenzie,
2017).
First, many food and beverage companies are currently facing challenges due to the consumers
being health conscious on what they eat. Consumers are currently more inspired to buy
foodstuffs they consider to be more strictly lined up with the well-being and health such as
foodstuffs lacking of artificial constituents and GMO. It has given rise to a cleaner levels and an
upsurge of foods in the organics and non-GMO sections which have piled more stress on the

COCA COLA STRATEGIC ANALYSIS 6
typical diet and drinks for the firms to embrace these developments. With many organizations
such as FDA and WHO coming out against high sugar intake, more users are revolving ways
from foodstuffs that are high in sugar, especially, soda. The concerns are that several produce
add sweeteners such as sugar to produces and with more user reading the products tags
nowadays, which might increase the worry to the producers.
Secondly, Industries such as consumer applications, toys, electronics and gamers, and other
domestic goods are by now definitely well-known in the e-commerce arena. However, the food
and drink producers have sluggish on the commitment, Coca-Cola Company included. As
consumers toward preferences for online buying, producers are discovering ways to embrace e-
commerce as portion of their transaction and selling approaches (Mendenhall, Reiche, Bird &
Osland, 2012).
Strategic analysis
Strategic analysis is a routine that comprises studying an organization's business surrounding
within its area of operations. Strategic analysis is vital to formulate strategic planning for
decision making and the smooth running of the company. With the assistance of the strategic
plan, the goals that are set by the firm can be realized. To continually strive to grow, the
company ought to periodically perform a strategic analysis which will, in turn, assist them in
determining what require improvement and zones that are already performing well. For the
company to operate actively, it is essential to comprehend about how favorable variations need
to be executed.
Strategic analysis is vital if an organization has aims and missions. Strategic planning is a long
term task comprising a continuous and organized system and resource venture. The critical

COCA COLA STRATEGIC ANALYSIS 7
questions that a firm ought to deliberate when doing a strategic analysis is: in what way is the
market founded? How are the potential clients in the industry? While performing an imperative
examination, firms ought to comprehend their rivals and therefore, be capable of describing an
approach that will assist them to be an undefeated market leader. One of the most significant
operations of strategy is to help to anticipate future project occurrences and deduces substitute
approaches if a specific plan does to functions as expected (Caligiuri & Tarique, 2012).
Strategic analysis is a process that entails researching on factors on the internal and external
surroundings that affect the performance of an organization. It is essential in the planning
process to come up with important decisions for an organization (Brunswicker & Vanhaverbeke,
2015). Strategic analysis tools come in handy in helping to understand the factors from the
business environment that affect the organization (Burgelman, 2016). The following are the
commonly used strategic analysis tools in many organizations:
Strategic analysis part1
SWOT Analysis
It is a useful tool to identify the strengths, weaknesses, opportunities, and threats that an
organization faces, and it helps to carve a sustainable place in the market (Hales & Mclarney,
2017). The tool is appropriate because it can be used at little or no cost. It also can be used in
complex situations when there is a limited time. However, it does not offer solutions to any
problems. By using SWOT, a manager can understand his business well, attend to his
weaknesses, check on available opportunities and grab on them, make good use of the company's
strengths and develop goals to achieve their set targets. The tool is however limited since it does
not prioritize matters, it gives many ideas but does not provide recommendations on which
approach is the best, and at the same time, it can produce information which might not be useful.

COCA COLA STRATEGIC ANALYSIS 8
PESTEL Analysis
PESTLE can be expanded to mean P. political, E. economic, S. social, T. technological, L. legal
and E. environmental. It gives a view of the surroundings in all angles that affect a company. It
focuses on external issues in the macro environment that affects the performance of an
organization (Vermeulen, & Sivanathan, 2017). The tool tends to identify and assess the impact
of the factors identified on the company’s performance. PESTLE analysis gives a deeper
understanding of the company, its cost effective; it makes the company alert on the issues that
are affecting its operations. PESTEL also provides the company with a chance to exploit the
opportunities and explain ways in which the possibilities can be reached. The use of PESTEL has
the following limitations; factors identified by PESTEL change very fast hence making a bit
complicated to make predictions. Findings from its presentation may not have so much value
because the performances are straightforward. Planning disasters can arise due to many
assumptions that are made from its analysis. Also, the review gives insufficient information
since it only scans the external environment.
The ratio analysis tool
Capital structure
The company maintains a debt level that is prudently centered on cash flows, interest coverage
ratio, and fraction of debt to capital. The firm uses debt financing to lessen the total costs of
assets, which grows the profit on shareowners’ equity (Said, 2013).
The corporation's global present and robust capital rank offer access to become a critical
financial market around the globe, assisting the company in raising money at a small cost
effective. This stance, linked with effective managerial blending short and long term debt and a

COCA COLA STRATEGIC ANALYSIS 9
mixture of variable and fixed rate debt, it effects in a less total cost of borrowing (McNeil, Frey
and Embrechts, 2015).
The tool is used to describe the monetary position power of the fiscal statement. The monetary
statement comprises an income statement, balance sheet, profit, and loss account (Hoskin, Fizzell
and Cherry, 2014). The above proportions offer in detail the reflection of the trade to improve the
usability of the fiscal statements.
Debt to equity share is to compute the solvent level for the long term venture such that it
pinpoints if the business can meet its long-term duties or not (Chua, DeLisle, Feng and Lee,
2015). As described, the debt-equity quotient ought to be 1:1 to outline the style of good
solvency point to the company. As presented in the below, Coca-Cola is doing well in realising
its long-term commitments. Conversely, in 2014, proportion were 2.01:1 alongside 1.59:1 in
2012, which is great in the Coca-Cola but then again superior to PepsiCo, which come out to be
3.01:1 in 2014 versus 2.33:1 in 2012.
Debt-to-Equity Ratio
Coca-Cola PepsiCo
Years 2014 2013 2012 2014 2013 2012
2.011125 1.693032 1.598107 3.0180647 2.17676 2.332202
Debt-to-Equity Ratio = Total Liabilities / Shareholder’s Equity (Boyd, 2016)
Interest coverage ratio

COCA COLA STRATEGIC ANALYSIS 10
The primary aim of interest overage ration is to assess if the firm can realize its interest payment.
The evaluation of interest coverage ration describes the quantity of time a company could make
the interest payment (Das, 2015). In this instance, Coca-Cola is the firm with an optimum worth
that denotes that is accomplishing its responsibilities and too secure to be questioned. On the
other hand, Pepsi is realising its interest duties but not as much as Coca-Cola Company.
Coca-Cola PepsiCo
Years 2014 2013 2012 2014 2013 2012
Interest
coverage
ratio
19.30642 24.78834 29.74559 7.2145215 7.450055 6.912125
Interest Coverage Ratio = Net Income before Interest and Tax / Interest Expenses (Goodhart,
2013)
Porter’s five forces analysis
The tool is used to analyze and assess the competitive ability of a company and evaluate its
position in the market (Mboya & Kazungu, 2015). The five forces are supplier power, buyer
power, and competitive rivalry, the threat of distribution and risk of new entry. It helps a
company to understand the factors affecting its profitability. With this, it will be able to know
when to increase its size by developing specific strategies to do so.
Value chain analysis
Value chain analysis is a strategic tool that is used to analyze the internal activities of a firm. It
tends to recognize the most valuable activities including the company’s competitive advantage
(Vermeulen, & Sivanathan, 2017). It performs its analysis by using a cost or differentiation
advantage. The study creates a competitive advantage for a firm since it ensures that costs are

COCA COLA STRATEGIC ANALYSIS 11
minimized to create a value for a firm. The tool breaks down a company’s activities into smaller
units which may sometimes misplace the company’s mission and strategies.
VRIO Framework
The tool used is to examine the internal environment of a firm. VRIO stands for four types of
questions that an organization should use: these are the question of value, the question of rarity,
the question of imitability and the question of organization. According to this model, tangible
resources, intangible resources, and organizational capabilities are used to evaluate the
competitive advantage of the organization (Porter, 2011). The framework occupies a broader
structure of the organization's strategies. The model is widely used because of its simplicity and
clarity, and it also evaluates the organization's capabilities in a more detailed way. It is also used
to assess a company’s financial information.
SWOT analysis-Cola Cola Company
Strengths
Coca Cola Company has an exceptional brand identity. The specific taste of their drinks makes it
easier to be identified hence building customer loyalty. Many individuals buy coca cola products
not only because they taste good, but also because of the brand name. They do believe every
drink that is manufactured from Coca Cola Company is suitable for consumption and very sweet.
Coca-Cola as a company makes a lot of money from the sale of its products all over the world.
They are making some good profit in return which is used to develop the company as it keeps
opening more and more branches worldwide. Customer loyalty is passed from generation to
generation as parents who are addicted to these products teach their children to love coca cola
products because it never disappoints. Its logo is also widely recognized which in some way it is
an excellent way to market the company. With these strengths, it will be very hard for a new

COCA COLA STRATEGIC ANALYSIS 12
company to emerge and compare itself with coca cola. It will take it centuries to rise to where
coca cola is at the moment.
Weaknesses
The major weakness Coca Cola is facing is competition from its rival company Pepsi. However,
this cannot be seen as a challenge because Pepsi is a smaller company compared to Coca Cola
only that it tends to wipe away some of the customers who used to purchase products from Coca
Cola. Another weakness is that people are shying away from buying their drinks because of
feared health issues. Many of Coca Cola drinks are carbonated for preservations, and people are
afraid because carbonated drinks cause obesity. Quite a good number of Coca Cola drinks lack
popularity because many people do not know about them. They only know of Coca Cola and
Sprite drinks. The above issue may be because of poor marketing and advertising of those other
drinks that have a low profile. When analyzing the company, these weaknesses should be put
into consideration.
Opportunities
Coca Cola has the chance to advertise its many other drinks which are not known to the public.
These drinks can be sweeter hence attract a pool of more customers which will turn out to be
loyal buyers of the products. At the moment, we will assume they are not purchased frequently
because people do not know about them and that they are afraid to try them. The company has an
opportunity to create new products from the profits its making since their brand name is widely
recognized. Coca Cola has stretched its roots to hundreds of countries; it can consider moving to
countries known for experiencing high temperatures and market their drinks there, and by doing
this they will make more sales. For the company to cut down on competition, coca cola has the