MGT5STR Strategic Management: Coca-Cola North America Analysis

This report provides a strategic management analysis of Coca-Cola Corporation, focusing on its North American business unit. It defines key marketing terms such as corporation, product and service portfolio, strategic business unit, revenue, product and service line, PESTLE, operating environment, sustainable competitive advantage, and strategic direction. The analysis includes an examination of Coca-Cola North America's product and service lines, revenue generation, and external environment using PESTLE analysis. The report identifies the sources of sustainable competitive advantage for Coca-Cola in North America and considers the resource-based view. The report concludes with recommendations for the company. Desklib offers a platform to explore similar solved assignments and study resources.

Running head: STRATEGIC MANAGEMENT
Strategic Management
Name of the Student
Name of the University
Author note

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Executive summary
The purpose of this report Is to analyze the strategic management of a corporation. The selected
corporation for this report is the Coca-Cola Corporation. The chosen business unit of the
mentioned organization is North America. Apart from the analysis of the strategic management
of Coca-Cola, this report also contains the definition of various crucial marketing terms that
include a corporation, product and service portfolio, revenue, product and service line, strategic
business unit, PESTLE, operating environment, sustainable competitive advantage and strategic
direction.

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Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
Definition of Corporation............................................................................................................3
Definition of product portfolio and service portfolio..................................................................3
Definition of Strategic Business unit...........................................................................................4
Definition of product and service line.........................................................................................4
Definition of Revenue..................................................................................................................4
Definition of PESTLE.................................................................................................................5
Definition of operating environment...........................................................................................5
Definition of strategic Direction..................................................................................................5
2. Business Unit Research:..........................................................................................................6
a. Business Unit Identification.................................................................................................6
b. Identification of Product or Service Lines of Coca-Cola North America...........................6
3. Business Unit Revenue:...........................................................................................................7
a. Largest revenues created for the corporation by Coca-Cola North America.......................7
4. External Environment Analysis:..............................................................................................7
5. Source of Sustainable Competitive Advantage:......................................................................9
Source of sustainable competitive advantage for CocaCola in North America......................9
6. Resource base view................................................................................................................10

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7. Conclusion and recommendation..........................................................................................10
Reference List................................................................................................................................12

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Introduction
Strategic management can be defined as the formulation as well as the implementation of
the chief goals and initiatives taken by the top management of a company pr a corporation on the
basis of resources and after accessing the external and internal environment in which the
organization or a business unit of the corporation competes. The chief roles of strategic
management involve providing a proper direction to the organization, specifying the objectives
of the organization and helping the management to develop plans and policies so that the overall
objective can be gained. Along with that SBU helps the managers to allocate resources so that
the plans can be implemented efficiently. In this report, the strategic management analysis of the
Coca-Cola Corporation has been done.
Discussion
Definition of Corporation
The term corporation can be defined as a group of organizations or individual who acts as
a single entity. Unlike the companies that are owned by a specific founder, a corporation is
owned by a group of stakeholders, who shares both profit and loss faced by the corporation
(Allen 2017). Corporations can be considered as one of the most powerful as well as profitable
business entities due to their public control and high influence over the government (Perlmutter
2017).
Definition of product portfolio and service portfolio
A product portfolio can be defined as the collection of all products that are offered to the
consumers by an Organization. Effective analysis o a product portfolio can provide a clear view

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of the stock type, profit margin drivers, growth prospects, income contribution and operational
risks of a company (Schuchmann and Seufert 2015). The service portfolio, on the other hand, can
be defined as the core repository for all services and information of an organization. In a service
portfolio, each of the services provided by the company is listed along with its current status as
well as history (Fernhabe and Patel 2012).
Definition of Strategic Business unit
A Strategic business unit can be defined as a fully functional business unit of a
corporation that posses its own set of goals, vision and direction. In spite of the fact that a
strategic business unit operates as a unit separate from an organization, the performance of each
strategic business unit is highly crucial for the overall growth and development of the
organization. All the business units are subjected to report to the headquarter about their
operational status (Williamson et al. 2013).
Definition of product and service line
A product line can be defined as a group of products that are sold by a specific company.
Organizations are found be selling several numbers of products under their various brands.
Similarly, service line s defined as a series of services delivered by a particular division of
business (Bilbiie, Ghironi and Melitz 2012).
Definition of Revenue
Revenue in business can be defined by the amount of money earned by an organization
on a yearly or monthly basis (Li and Yao 2013). Revenue includes the discounts as well as the
deductions for returned products. In order to determine the net profit, costs are subtracted from
revenue (Armstrong et al. 2015).

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Definition of PESTLE
PESTLE sands for Political, Economic, Social, Technological, Legal and Environmental
analysis. The political analysis includes determination of the degree to which the government the
economy of a country. Economic analysis access the economic growth, exchange and interest
rates, inflation and disposable income of the consumers residing in a specific country. Social
factor includes the attitude and shared beliefs of the populations. Technological factor
determines the degree of technological advancement of a country (Newton 2014). Legal factors
include the regulation related to product levelling and safety, consumer rights and advertisement
standards. Finally, the environmental factor includes laws of regulation of a company associated
with the environment of the company.
Four factors of sustainable competitive advantage (SCA)
The four factors of SDA are valuables resources, rare resources, imperfectly imitable resources
and non-substitutable resources. While valuable resources are resources that allow the company
to gain competitive advantage, rare resources enable the company to sustain it (Hillary 2017).
Imperfectly imitable resources are too costly to duplicate and non-substitutable resources can be
defined as resources that possess the quality of all the three above mentioned resources.
Definition of operating environment
Operating environment can be defined as the internal and external factor that impose an
impact on the overall revenue of a company (Finlayson et al. 2012)
Definition of Strategic Direction
Strategic direction can be defined as a course of action that leads the company towards
the achievement of its goal (Bilbiie, Ghironi and Melitz 2012).

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One of the most popular corporations across the world is the CocaCola Company, an
American Multinational Beverage Corporation. The business of the company chiefly includes
manufacturing, retailing and marketing non alcoholic beverages and syrup to the global
consumers. When it comes to product portfolio of the mentioned corporation, CocaCola offers
more than 350 brands in about 200 countries apart from the name of Coca-Cola beverage. Some
of the globally celebrated soft drinks manufactured by the coca cola company include Sprite,
Fanta, 7 Up and Valpre. Apart from manufacturing soft drinks, the company also manufactures
healthy beverages that includes Minute Maid, Powerade sports beverage, Nestea flavored tea,
Frutopia fruit drink and Vio which is flavored milk. Apart from the food assets, the mentioned
organization also owns the Columbia Pictures as a part of its non-food assets.
2. Business Unit Research:
a. Business Unit Identification.
.Being a vast corporation, CocaCola has divided its business into 5 strategic business units across
the world. The five business units of the mentioned company are North America, Pacific, Latin
America, Europe, Eurasia and Africa. Among the five business units of the Coca-Cola
Corporation, the discussion about the business unit in North America will be performed in this
report (The CocaCola Company 2018).
b. Identification of Product or Service Lines of Coca-Cola North America
In North America, the Coca-Cola Company has two product line, one of soft drinks and
another of juices. Some of the popular soft drink products of the company include Fanta,
Powarade, sprite and flavoured coke, some of the popular product of the juice product of the
company include Minute Maid, Bacardi Mixers Fruitopia and Splice.

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3. Business Unit Revenue:
a. Largest revenues created for the corporation by Coca-Cola North America
The largest revenue created by the Coca-Cola business unit situated in North America is
183.08 billion dollars in 2017 (Shenkar Luo and Chi 2014). Considering the fact that in North
America, the company holds 222 present of the market share, I 2017, CocaCola has beat its
major competitor Pepsi Co. by refranchising its retail operations.
4. External Environment Analysis:
.in order to understand the external environment of the Coca-Cola business unit situated in North
America, PESTLE analysis is performed below:
 Political Environment
Considering the fact that the government of US has decided to impose tax over artificially
sweetened beverages, the Beverage companies situated in the US are currently embroiled in a
battle with the US Government. The soda tax was first imposed in 2015 at Berkeley and by 2017
several states of North America has adopted it. According to researchers, if by 2018, the majority
of the states accept the soda tax, the tax will be imposed by the government permanently
(Newton 2014). This will impose negatives impact on the company since the consumption of soft
drinks will get reduced. Already, a drop of 26 percent in the consumption of carbonated drink
has been evidenced in Berkeley. Besides that, the ban of Muslim travel in early 2017 by the US
Prime Minister Donald Trump has imposed a negative impact on the company’s policy which
values mobility and diversity of its consumers as well as its employees.
 Economic Environment

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Due to various social as well as economic trends, the soda consumption in the beverage market
of US is decreasing since 2010. In 2016, the company has recorded its lowest revenue of 41
billion dollars in the US market. Two of the chief reasons behind this drastic change is the health
consciousness of the citizens of North America and the decision of the company to cut 1,200
jobs in the year 2016. As a result of this decision, the percentage of employees in the Coca-Cola
North America business unit has reduced by 22 percent.
 Social Environment
Considering the fact that North America is a developed nation, the majority of the
citizens are inclined towards the healthy lifestyle. The high concern about health is the result of
increased amount of obesity rate along with diabetes type 2 among the consumers. This factor is
imposing a negative impact on the business of the mentioned company since carbonated soft
drink and juice contains a lot of fats. Majority of the consumers are found to be substituting high-
fat juices and soft drinks with healthy beverages. However, consumption of bottled water seems
to rise since the year 2014. It can be predicted that within the year 2020, bottled water overtake
soda water market and will become the largest beverage category by volume.
 Technological Environment
Being a developed nation, the states of North America are highly technologically
advanced. This imposes a positive impact on the Coca-Cola Company since the availability of
technological facilities enables the company to use modernized machines for manufacturing and
packaging purposes (Rumelt 2012). Not only that, the company enjoys all the facilities
associated with digital marketing in North America. Usage of social media allows the company
to gain a more competitive advantage by enhancing their consumer loyalty. Highly advanced

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communication technology enables the Coca-cola Company to seamlessly operate retail
channels.
 Legal Environment
Unfortunately, the mentioned business unit is currently under a lawsuit filed by the California
Court. The company is alleged of deceiving its consumers by misleading them about health risks
associated with their carbonated drinks and sugared juices. This has imposed a high negative
impact on the yearly revenue of the company and if the lawsuit is successful the company will be
highly fined which in turn will result in a further decrement in the revenue.
 Environmental Factors
In order to reduce environmental issues, the governments of a majority of states in North
America have imposed environmental regulation related to waste management. Considering the
fact that the Coca-Cola business unit in North America generates more than 100bn plastic bottles
per year, the company has recently implemented waste recycling to cope up with current
environmental trends.
5. Source of Sustainable Competitive Advantage:
Source of sustainable competitive advantage for CocaCola in North America
Two of the chief sources of sustainable competitive advantages of the CocaCola Company
include its Brand value and its distribution network in North America.
 Brand Equity
Being a highly popular brand in the global beverage industry the position of coca cola is pretty
high and firm in the beverage market of North America compared to its competitors like

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PepsiCo. However, the management of the Company in North America needs to develop
effective strategies to maintain the brand value (Shenkar, Luo and Chi 2014).
 Distribution network
Considering the fact that in North America, Coca-Cola Company owns an unrivalled
distribution network that connects all the major states of North America, the distribution network
of the company is definitely a major source of the sustainable Competitive advantage of Coca-
Cola (Bilbiie, Ghironi and Melitz 2012). The infrastructure of Coca-Cola’s distribution network
is highly costly and is nearly impossible to be imitated by new entrants in the North American
Beverage market.
6. Resource base view
Tangible resource of CocaCola Intangible resource of CocaCola
Market value: 158.8 billion dollars Technological Resources
Brand Value
7. Conclusion and recommendation
From the above discussion, it can be clearly understood that being a globally celebrated
beverage company, the market value of CocaCola in North America is pretty high. Moreover, in
developed nations like North America, the company also gain some added advantages due to
highly advanced technology and a vast distribution network. However, recently the company is
suffering from certain downfalls due to health consciousness of the consumers in North America
and huge production of plastic bottles. In order to eradicate these issues, CocaCola business unit
in North America must follow the bellow mentioned strategic directions.

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 Since the consumers of North America are getting inclined towards a healthy lifestyle,
the company should incorporate the production of healthy beverages in order to retain its
consumer loyalty.
 In order to deal with the environmental regulations of North America, the company must
recycle it wastes along with replacing the usage of steel and glass containers with
containers made of glass and paper.
 The company must enhance its product lines and diversify its market as its chief
competitor PepsiCo.

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Reference List
Armstrong, G., Kotler, P., Harker, M. and Brennan, R., 2015. Marketing: an introduction.
Pearson Education, 12-14
Bilbiie, F.O., Ghironi, F. and Melitz, M.J., 2012. Endogenous entry, product variety, and
business cycles. Journal of Political Economy, 120(2), pp.304-345.
Fernhaber, S.A. and Patel, P.C., 2012. How do young firms manage product portfolio
complexity? The role of absorptive capacity and ambidexterity. Strategic Management
Journal, 33(13), pp.1516-1539.
Finlayson, R.D., Mitsumori, N.M. and Reddington, F.X., International Business Machines
Corp, 2012
Hillary, R. ed., 2017. Small and medium-sized enterprises and the environment: business
imperatives. Routledge, 12-16
Li, X. and Yao, A.C.C., 2013. On revenue maximization for selling multiple independently
distributed items. Proceedings of the National Academy of Sciences, 110(28), pp.11232-
11237.
Newton, P., 2014. What is the PESTLE Analysis?, 23-25
Rumelt, R.P., 2012. Good strategy/bad strategy: The difference and why it matters. Strategic
Direction, 28(8).

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a conceptual framework and service portfolio for the learning function in banking
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Shenkar, O., Luo, Y. and Chi, T., 2014. International business. Routledge, 12-23
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business analysis. Routledge, 123-125