SWOT Analysis Coca Colas External & Internal Environments - 1925 Words

SWOT Analysis: Coca Colas External & Internal Environments (Essay Sample) Content: Coca Colas External and Internal Environments;Students NameInstitution IntroductionBrief HistoryEstablished in 1886, Coca-Cola is a publicly traded corporation that specializes in carbonated soft drink sodas, which sells in major stores, restaurants, and vending machines across the world. Coca Cola Company operates in the beverages industry and it started selling coke, which was invented by an Atlanta Pharmacist, John Pemberton, where a glass was selling at five cents. Coca-Cola Company is located in the United States, and it experienced early growth that spread to become the world most celebrated brand (The Coca-Cola Company 2014). Consumers around the world make choices depending on packaging, taste, and preferences among other external factors. Coca cola packaging innovations entails the use of cans that were introduced in the market in 1960. This paper analyzes Coca Cola strategic competitiveness in the global market considering general environments, forces of com petition, resources, capabilities, and core competencies that have contributed to the overall success.DiscussionGeneral EnvironmentCoca Colas reaching most parts of the world has created a wide base of general external environment that exposes the Company to a variety of threats in exploitation of opportunities as well as global competition. An external business environment affects the way a business is run. In other words, these external business environments are considerations significantly affect an organizations operations. The general environment segment consists of six major elements that affect the operations of a company within a competitive global perspective. These elements are economic, political/legal, technological, global, demographic, and socio-cultural (Hitt, Ireland, Hoskisson, 2007) .It is established that economic, sociocultural, and demographic segments are form s of general environment under the industry environment. In this industry environment, there is a set of factors, which directly affect a firm competitive actions as well as responses. These set of factors include the five forces of competition, which are also referred to as Porters five forces of competition. On the other hand, political technological and global segments are forms of general environment under the competitor environment.Coupled with the above, a prudent external analysis that focuses on the general environments should be conducted as an essential firms strategic competitiveness to ensure that environment changes, opportunities, threats, and trends are identified (Stredwick Kew, 2005). Then there should be a complete match with the firms core competencies as well as resources so that the firm can achieve a competitive advantage and earn an above average earnings and profits. In this sense, demographic segment considers age structure of the target customers, geographic distribution, income distribution, population size, and ethnic mix. Secondly, economic segment is concerned with key macroeconomic variables that affect the general performance of a firm in an industry. These macro economic variables include inflation rate, exchange rate, interest rates, personal and business savings rate, trade deficits and surpluses, as well as the budget deficits and surpluses among others.Thirdly, political segment is concerned with administration laws and regulations that affect the overall performance of industries and individual firms. These laws include labor training laws, tax laws, antitrust regulations and enforcements, and free trade restrictions and protectionism. Fourthly, sociocultural segment is a key driver in a firms competitive landscape as it focuses on the societys cultural values and attitudes towards a firm product or services. The most essential sociocultural factors considered in this segment are workforce composition, and consumer taste and preferences among others. In addition, technological segment is perhaps the most essential segmen t in a firms strategic competitiveness as it is concerned with the innovations and inventions which tend to increase operational efficiency in a firm. For instance, technology is closely associated with the act of increasing plant automation, internet filtration and its application to commerce as well as data storage, and use of wireless technology in communication. Lastly, global segment is concerned with the trends towards the growing global outsourcing, as well as global markets changes. Upon a critical external environment analysis where the above general environments are scanned, monitored, forecasted, and assessed, firms managers are obliged to enhance a prudent strategy that utilizes core competencies and resources to achieve competitive advantage within the industry.In connection to this, Coca Cola has established a harmonious strategy that utilizes some of the general environment segments with an aim of achieving high returns and maximization of shareholders wealth. In this sense, technology and sociocultural segments ranks highest in their influence to Coca Colas overall performance in the global economy. Considering that Coca-Cola serves a massive customer base in over 200 countries, they have invested in over 2,700 beverage products. These beverage products include juice drinks, sports drinks, water, sparkling beverages, tea and energy drinks. The diversity found in these classes of drinks has made Coca Cola to be the most recognized brand in the world as it satisfies sociocultural needs of all customers either vendors of drinkers all over the world. Socio-cultural segment has affected Coca Colas in the beverage industry. This is because studies reveal despite that Coca Cola trademark is the most recognized in the world regardless of the message imprinted on the bottles, and the Company has continuously tailored product development, which upholds customers unique cultures, values, and beliefs. This is because a sociocultural front is concerned w ith different dimensions of consumers based values and cultures. In this sense, Coca Cola has created a unique category of soda to suit Japans cultural preference.Moreover, studies reveal that Coca Cola has carefully considered social factors in its global marketing plan that matches with the 21st century health consumer concerns. For instance, the company has developed a brand called Coca Cola Zero for diabetic consumers thereby capturing a wide range of consumers in the marketplace who are health conscious. In this sense, Coca Cola has established health as a socio concern to many consumers in the world and sociocultural as an external environment affects its product line. Therefore, Coca Cola must continue to address external threat of healthy lifestyle through product development coupled with marketing efforts of healthy brand options made available in their product line. On the other hand, technology ranks high in Coca Colas consideration for external environment as in todays m arketplace, technological advancement is essential in aiding businesses achieve high profitability and competitive advantage in the marketplace. In this sense, Coca Cola has invested in technological research to establish a way of being efficient and becoming a better competitor in the market place. For instance, Coca Cola has established unique trade secrets through technological research that has come up with a mixture of ingredients for its carbonated drinks that are not known to any other competitor in the marketplace. This has made Coca Cola become a better competitor in the beverages industry.Five Forces of CompetitionAlso regarded as Porters five forces of competition, these forces of competition determine the underlying structure of an industry. Michael E. Porter developed these forces in 1979 to analyze industry attractiveness in the marketplace and in order to attain a competitive advantage (Henry, 2011). The five forces of competition include bargaining power of suppliers , bargaining power of the sellers, threats of new entrants, threats of substitutes, and rivalry among the key players in the industry. It is established that each force of competition has both positive and negative effects on the structure of the industry. Michael porter asserted that an assessment of the relative strength of each of the five forces of competition was essential in determining the firms ability to obtain strategic competitiveness and earn above average returns that would eventually lead to maximization of shareholders wealth.Threats of entry occur when it is extremely difficult as well as costly for a new firm to enter an industry. Factors contributing to potential significant entry barriers include economies of scale, product differentiation, initial capital required, switching cost, government policy, as well as access to distribution channels (Chapman, 2005). Threats of substitutes entail existence of similar products that are capable of meeting the same consumer needs. Threat of substitutes becomes intense when price of a substitute product is lower; consumers switching cost is high if any, and when quality performance of a substitute is high that that of the industry.The concentration of rivalry in an industry highly depends on the ability of firms in an industry competing with each other to achieve competitive advantage. Factors affecting market rivalry include market size, level of fixed costs, the intensity of industrial growth, diversity in competition, and barriers associated with exit. On the other hand, bargaining power of suppliers and buyers are similar in the sense that they depend on the importance of a product in the marketplace, degree of standardization and differentiation of products, product prices, as well as switching costs. Coupled with the above fo...