Coca-Cola Company in-depth analysis of strengths and weaknesses

Executive Summary

Coca-Cola Company has been in operation for the last 125 years. The company has grown from strength to strength due to strong management and organization structure. The rich history of the soft drinks producing giant company has elevated it to cement its market leadership. The company has managed to dominate the market despite of stiff competition from other non-alcoholic producing companies in the market.

The greatest competitor is Pepsi. Pepsi is a strong beverage manufacturing firm that has a global outlook. The success criterion that forms the foundation of Coca-colas’ success is its endeavor to meet the needs of customers at all times. The company mission is designed in a way to cater for the customer’s needs and to anticipate future consumption trends.

The ability to project future market trends is a positive tool that enhances customer’s retention as well as fostering loyalty. The other factor that has contributed positively to the success of the company is the ability to design realistic strategic plans.

These strategic plans assume a rolling nature where the short term goals are designed on the perspective of the long term goals. The goals are revised every 3 to 5 years to make amendment to fit the existing market trends. Investing in competent human resources has contributed significantly to the company growth.

Company Analysis

Introduction

Coca-Cola is the leading soft drink producers in the world. The company was established in over 125 years ago, throughout its long history the company has become a world leading soft drinks producers. The Company is known for producing world beaters brands such as Coca-cola, Fanta, Diet Coke, and Stoney.

The company’s success is bestowed on steady leadership and value for human resources. However, maintaining steady market leadership has not been easy because of the large number of competitors in the soft drink industry. The main competitors of Coca-Cola Industry are Pepsi, Nestle, Cadbury Schweppes and other minor companies.

Fig 1: US Soft drink percentage market share in volume term (Bullock, 2011)

Coca-Cola industry is classified at in the class of soft drinks manufacturing. This categorization includes those companies which produce pure soft drinks without having any other product line. According to North American Industry class system (NAICS), all soft drinks falls under the NAICS code 312111.

Companies that fall under this category contribute significantly to the economy by contributing up to 47.2 per cent (Jain). The high valuation reveals that significance of the industry in contributing to the economy. Apart from the direct contribution to the economy through employment, Coca-Cola contributes to the society through its reliable Corporate Social Responsibility (CSR). In this report, we will discuss Coca-Cola Company’s performances, strengths, weakness, and its strategic plan.

Coca-Cola Company Profile: Identifying Strengths & Weaknesses

Coca-Cola Company has benefited immensely on rich operational history that has remained a stronghold for the company’s success. In addition, the company is customer oriented; it strives to provide the best value to its customers (Zegler, 4). Despite of the rejuvenated completion from other soft drinks producers, Coca-Cola has still managed to retain its market leadership by exerting operation expertise and strong strategic plan.

Coca-Cola company success story is vested on the management hunger to improve and tap its potential. During the 125th Company’s anniversary, Dr. John Pemberton reveals that the company has always remained energized to providing the best services to its clients (Zegler, 4).

The desire and hunger to conquer the role has been rolling over from one generation to the other. The company’s management knows it very well that getting to the top is not all there is but remaining at the top is the real thing. The company, however, has managed to remain on the twilight by designing viable strategic plans and setting realistic goals that have challenging margins (The Coca-Cola Company).

Marketing Strategy

The Coca-Cola company marketing strategy is based on its mission statement that aims at maximizing shareowner value. As a requisite to realize the above mission, the company has designed a strategy that adds value to all the constraints they serve. For instance, the company accords high value to their consumers, suppliers, bottlers, and customers.

The pillar of the strategy is creating demand and fulfilling it profitably. The market demand determines the company’s actions. The company is also building other products under the brand coca-cola since it’s the leading market seller. Currently, the company has 16 million customers and it is appealing other 6 million globally (Khan, 7).

Company’s strategic plan

The company strategic plan is growth oriented with specific attention on sustainable growth (Olsen). The company’s short term and medium term goals are designed in a way that permits investing in the company’s long term goals. The company has increased its brand that it delivers to 3500 beverages that are distributed in over 200 countries. The increased brand expansion includes juice, juice drinks, sport drinks, water, coffee and milk on top of its traditional soft drinks brands. Each day, the company designs, creates and share beverages to rejuvenate, unwind, nourish, hydrate, and enjoy its clients.

The company endeavors to retain its market share by focus on customers evolving needs and investing on innovations. Coca-Cola Company maintains a trusted local presence in every community by they serve. This is achieved through participation in Corporate Social Responsibility and anticipating future customer needs and mobilizing resources to meet their needs. The ability to increase annual market budget, design new products and delivering them, develop models to capture and retain customers on continuous basis has established the company’s brand name (Certo, 99).

Over the years, the company has invested heavily on human resources. In US, the company has 92,800 employees (Datamonitor). The large pull of human resources has helped the company to serve its rich customer base sufficiently. The company’s workforce constitutes of highly skilled, ambitious, experienced professionals with entrepreneurial mindset and embraces the team spirit.

Coca-Cola Strengths and weaknesses

Besides enjoying a vast market share in the provision, marketing, distribution of non-alcoholic drinks, ready to drink beverages and syrups, the company is not devoid of its challenges. To better understand the company’s operational situation, a SWOT analysis is conducted to determine the company’s current financial position.

Strengths

Coca-Cola is the leading non-alcoholic drink producer in the world. The strong brand name is a fundamental pillar through which sustainable growth is vested on. With revenue of $30,990 Million, the company is financially sound to pursue any of its goals. With over 3,300 products, a customer cannot think of soft-drinks without thinking Coca-Cola. Amazing global market survey indicates that 54 billion beverages are traded daily out of which 1.6 billion have Coca Cola trademark.

Furthermore, the company enjoys robust manufacturing and distribution mechanism through which it reaches out its customers. To underline this logistical stronghold, the company franchised manufacturers in almost all operation country, thus, customers needs are met promptly. Finally the company enjoys strong global footprint emphasizing on emerging countries and new markets (Datamonitor).

In 2009 the Coca-Cola brand ranked first, with a 3 per cent increase in the turnover, the brand was valued at $68,734 million. This shows that despite increased competition, the company popularity is increasing. The other brands such as Fanta, Sprite, Diet Coke are also world ranked highly. Hence, the company’s strong brand name enhances customer recall, and allows Coca-Cola to penetrate new markets and strengthen its presence in the established ones.

Weakness

The legendary nature of Coca-Cola brands is slowly withering away as customers are shifting their attention to new brands. Recently, the company is experiencing brand recalls. For example in 2010, the company was forced to abandon the production of Smart Water with concern that the product didn’t meet FDA’s quality standards. Similarly, in 2009, an Israel Coca-Cola Company was forced to withdraw several brands such as 1.5 L of Coca-Cola and Diet Coke after the discovery of benzenes and sulphur traces in the drinks.

As similar cases continue to emerge, the once faultless brand name is becoming stained and is no longer faultless. A section of consumers are concerned over the nutritious aspect of the popular drinks since are purely made out of artificial materials. As the popularity of the products erodes, customer confidence is strained which in turn is reducing the company revenues margins (Wiggins).

The global market is also experiencing a shift in the consumption trend with a preference to value products. The conservative nature of Coca-Cola Company to alter its legendary brand has seen massive exodus of its customers to consume alternative beverages in search of value. For instant, in 2009, the company Costco stopped restocking Coca-Cola products in its stores country wide since the company decline to reduce retail prices. This prompted Pepsi, Coca-Cola main rival to grab the opportunity and increase its revenues.

Market analysis

Coca-cola Company has been revising and discovering new marketing strategies to augment its financial position (Business Source Complete).

The Company has done this by retaining its traditional brands such as Coca-cola, Diet Coke, Fanta and Sprite. In addition, the company is also developing other brands such ready to drink fruit juice, nutrition drinks, beverages such as tea and coffee, water among others. Currently, the company trades in over 3300 brands that serve different ranges of products. In 2001, the US market share battle stood at 31.6 percent for Pepsi and 43.7 percent for Coke (Cook).

The company sells its products in all parts of the world. The company manages this through its regional branches and Franchises. With well laid distribution channels, the company manages to venture it new markets with relative ease.

Corporate responsibility

Coca-Cola Company has been on the fore front in participating in Corporate Social Responsibility. In September 2006, the company was awarded with American Chamber in shanghai. In the same year, the company was awarded with citizenship award for engaging in projects to enhance economic development. Apart from participating in social activities, the company has also invested in transparency to ensure it provides quality services (The coca-cola Company).

Financial analysis

Over the years, Coca-Cola Company has been experiencing increased returns on its revenue due to stable management. As the trend shows, the company revenues are unstable; in 2008 revenue of $ 31,944 was recorded while in 2009 it reduced to 30,990. However, higher revenues of 35,119 were recorded in 2010.

Similarly, the company’s COGS assumed a similar trend Vis a viz $11,374, $11,088 and $12,693 respectively. An increase in COS in 2009 is responsible for a decrease in gross profit for that year. Despite the low gross profit gained in the year 2009, the company managed to offer higher returns per share of $1.64 compared $1.52 in the 2008, while 2010 marked the highest returns (MSN money).

Horizontal Analysis

A fair way of understanding the annual progress of a company is to carry of an horizontal analysis of the company. In this case, the company’s total sales in the 2008 were $31,944 the sales reduced to $.30, 990 due to strong value of the dollar. Similarly, the company experienced reduced profit margin from $.20, 570 in 2008 to $19,902 in 2009.

However, the company manage to scale down expenditure to mitigate increased looses by lowering general expenses and administration expenses from $.6, 079 in 2008 to $.5, 659. In addition, the company’s SGA expenses increased in 2010 to $.7, 199. With stability in dollar value, the company sales increased in 2010 to $.35, 119 while profits rose to $.22, 426.

Taking 2008 as the base year, the following observation is made.

Revenues = 0.97

The company’s revenues reduced marginally by 2.3 per cent in 2009 compared to the previous year.

In 2010, the company record impressive increase in revenues where the company managed to earn $35,119 which is an equivalent of 1.1 percentage increase from the base year as shown below.

Revenues =1.1

The company’s earnings per share increased over the three years: 1052, 1.64, and 1.76 respectively. This was attributed to stable prices of share in NYSE and stable company’s operational.

A Line graph Company’s financial performances against time

As the graph shows all financial indicators seems to move in the same direction across the financial period. This pattern indicates that all variables are affected prevailing economic trend as well as the management strategies deployed by the company.

Human Resources

Coca-Cola Company has invested highly in human resources and the company strives to attract, train, and retain highly skill and competitive workforce. The human resources department embraces diversity by employing people from different geographical region, culture, professions, who share similar interests and passion for improving the company.

Currently Coca-Cola Company enjoys a wide pool of human resources that hails from about 200 countries it operates. The company policy allows integration of local personnel into its management hierarchy to blend and accommodate the global outlook.

This policy allows propagating common human resource into internationally minded mid-level executives for future senior management. Currently the company has 500 high-level managers who learn the company in conjunction with other middle level and low level managers (Amfuso, pp. 112-120).

Advertisement

Although Coca-cola is a multinational company, its rich brand name and good will does not guarantee future prosperity. Thus the company is investing heavily in advertisement and project differentiation to ensure the company is performing at the highest level. The company’s advertisement history is as old as the company itself with the television advertisement pioneered by Charlie McCarthy in 1950.

This formed the basis of what proved to be a rich and very sophisticated venture in product promotion. The television ads have designed with wonderful words such as “signs of good taste”, “be really refreshed” while it has also promoted both the national heritage and pride in their ads tag such as “look up America”.

Conclusion

Coca-Cola Company has been in operation for 125 years. Throughout its rich operation history, the company has invested heavily in human resources, infrastructure, knowledge and research and development. The company success is based on it ability to invested in modern technology and rolling strategic plan.

The desire to remain the best in market is the key in gaining its current milestone. Currently, the company has over 139,000 employees of seventy six nationalities (NYSE). The company human resources strategy requires that 91 per cent of the workforce comes from the country of operation and only 9 per cent is deployed from other countries.

Works Cited

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Datamonitor. “The Coca-Cola Company.“ Coca-Cola Company SWOT Analysis (2010): 1-10.

Jain, Vinod. AMBA 607 Course Materials: Note on Industrial Structure. AMBA 607 Strategy. 2002. 21 Oct. 2011 .

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Olsen, Erica. Strategic Planning for Dummies. New Jersey: John Wiley & Sons. 2007. Print.

The Coca-Cola Company. Our strategy. 2011. 21 Oct. 2011 .

Wiggins, Jenny. “World Food Business Summit.” Financial Times. 2006. 29 Oct. 2011 .

Zegler, Jennifer. “125 Years Young.” Beverage Industry 102.6 (2011): 2-13.