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The Coca-Cola Company, headquartered in Atlanta, Georgia is a market leader in retailing, manufacturing and marketing of non- alcoholic beverage syrups and concentrates. The company is known for its major product Coca-Cola that was invented by John Stith Pemberton, a pharmacist, in 1886. In 1889, Asa Candler first bought the Coca-Cola brand and formula and later incorporated the company in 1892. Currently, the Coca-Cola Company offers over 500 brands in more than 200 countries and supplies 1.6 billion servings daily. The company runs a franchised system of distribution dating since 1889. It only produces syrup concentrates, which it then sells to different bottlers internationally. The Coca-Cola Company owns its anchor bottler Coca-Cola refreshments in North America (Dubé 879). This paper will critically analyze the strategic plan for Coca-Cola Company.
Structure is a basic notion that refers to the recognition, stability and nature of relationships and patterns of entities. A structure can be hierarchy or a network featuring relationships. In 2010, the Coca-Cola Company made various modifications in its structure from top management to the bottom staffs in terms of power. Previously, during the reign of Doug Ivester, the company had a centralized organizational structure which later cramped down to a decentralized one after his resignation. By endorsing a decentralized organizational structure, the company has been capable of putting individuals in the most appropriate leadership positions all over the world and in the United States. This has helped the company grow and may be, happen to be more dominating even in the future. Geographically, Coca- Cola is split into five strategic business units. The company has six functional departments which include marketing, finance, packaging sales, research and development and administration. Thus, the company has a marketing, finance, human resource and operations organizational structures. All these structures, with leaders having key responsibilities work together to assist the company meet its objectives and accelerate its success (Dubé 888).
Company’s Strategy Plans
Despite the existing weaknesses and strengths, Coca-Cola remains a strong brand and a market leader in the soft drinks industry. For instance, Dasani water, one of its products remains the second best selling bottled water in the global markets. The huge investments the company channels to market research and advertisements show the willingness of the company to diversify its products to meet the contemporary changing consumer, tastes, preferences and trends. However, the company faces a stiff competition from other companies such as Pepsi Company, since the company has not been able to fully implement non-carbonated production technologies. Even though, the company has been able to establish a remarkable international presence (Gootenberg 241).
Corporate Level Strategy
The company’s mission is enduring which declares the significance of the company and serves as a measure of decisions and actions. The company has set goals and objectives which it aims to achieve through proper leadership management. These goals include:
- Speed up carbonated drinks growth led by Coca Cola.
- Broaden the beverage brands to induce the profitable growth.
- Grow system capability and profitability together with their bottling partners.
- Drive efficacy and cost-effectiveness all over.
The corporate strategy of the company is aligned at managing and countering risks both at domestic and global markets. This includes dealing with the issue of shortage of the quality adequate water in its regions. Therefore, among strategic plan is to establish sustainable supply of water in order to prevent increased costs of the production.
So far, the corporate strategies have partially succeeded as the company and the brand remains strong and stable in the market. Production of the Dasani, the second best selling bottled water shows the willingness of the company to diversify its products and keeping note of changing consumer trends, tastes and preference (Gootenberg 239). Investment in product testing and fair treatment of workforces has ensured production of the quality products that meets international standards. However, the rate of growth between the Coca-Cola and its competitors is almost equal, as the company has not fully implemented non-carbonated product innovation. Moreover, it has not been able to make use of its international customer base to establish its global presence and create its own bottling plant, which would reduce costs (Dubé 890).
Implementation of the Company’s Strategy
Change has become the main issue for organizational leaders. Change is happening in all places and its complexity is increasing. How well the organizational leaders manage this change will determine the organizations success. Coca- Cola Company has faced a number of changes both in the internal and external environment, which has led to its success. In the external environment, the company changed the tastes and expectations of the consumers. This included adopting the Coca Cola zero and diet coke to deal with obese consumers as obesity was seen to increase especially in United States. The company also introduced the Enviga, a soft drink meant to burn calories in order to deal with the health and fitness of its customers. This change is caused by health and fitness trends and consumer tastes which had a major impact on the company’s business.
Employee motivation is vital for the success of every company. This can be achieved through rewarding the staff by increasing their salaries, increasing their rests days, recognition, career development and promotions among others. The Coca-Cola Company always rewards its staff in order to increase work efficiency leading to the company’s success. The company’s culture affects the industrial relations between the employees and the managers. Poor culture results to disagreements between the top management and the staff, leading to no motivation, thus inefficiencies in production.
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One of the major strengths of the Coca-Cola Company is that it has an added competitive advantage for being a leader in the soft drink industry for more than a century. Besides, the company has also accrued global acceptance by establishing its global presence in new locations and markets worldwide. The company also offers a range of products such as diet drinks, bottled water, coffee and tea, which provides consumers a variety of products to choose on, in over two hundred countries. Furthermore, Coca-Cola handles and controls over 30 beverage producing industries, thus enabling it to develop its sustainable infrastructure in processes, operations and work performance (Gootenberg 236).
Despite being the market leader, Coca-Cola has major weaknesses. One of these weaknesses regards the current harsh criticisms and lawsuits the company has had regarding the quality of its products. India’s products were reported to contain pesticide deposits considered lethal to human health (Gootenberg 240). This allegation contains negative impact on the safety, health, quality and environmental standards of the company, hence degrading its reputation across international markets. The company has also been unwilling and slow to adopt the new product innovation, unlike its competitors who have taken the risk and benefited from the innovation that meets the contemporary changing customer preferences.
A global market provides conducive opportunities the company can take advantage. For instance, the company can invest in alternative bottled waters and healthy drinks. Dasani waters has shown tremendous growth and attained wider market coverage, therefore, Coca-Cola can take advantage of this opportunity and come up with another brand of bottled water. This is accompanied by the contemporary changing preference to healthier products. The company has greater opportunities to grow and develop in acquisitions, which will enable the company to expand and produce more innovate products from the new international markets.
Some of the major threats the company faces include increased competition from both local and international companies. Stiff competition leads to a reduction in the products’ prices and market share. Besides, increased dependence on bottling partners for which the company dose not have an ownership interest infers that actions and decisions settled on by the bottling partners may be unfavorable to the company (Zyman 25).
Since its establishment, the company has recorded a positive growth in terms of introduction of new products in the market, sales, profits and revenues. In the financial year 2009, Coca Cola Company registered annual revenue of 31 billion US dollars, a 3% decrease compared to the previous year, with an operating income of more than 8 billion US dollars. In the same financial year, the company had a net income of not less than five billion US dollars, which was an 18% increase compared to the previous year, total assets amounting to more than 48 billion US dollars and a sum equity of 25 billion US dollars. The company is estimating to double its net profit by 50-60 U.S. billion in between 2012 to 2015, despite the harsh economic environment (Yahoo Finance 1).
According to the CEO, the company should adopt the following recommendations:
- To invest in product differentiation to cater for the health conscious customer i.e. compete in producing and selling the bottled water, teas, coffees, energy and sports drinks.
- To encourage product innovation considerate of promoting the good health and offering nutritional values.
- To make use of modern technological solutions to enhance its competitive advantage.
- Promote effective and functional relationships with its bottling partners.
This case analysis of the Coca-Cola Company has focused on the history and growth of the company, its strengths and weaknesses, its external environment, corporate strategy and the recommendations that the company is using to implement its strategies. In order to succeed in the market, the coca cola company has encompassed all the above and with good leadership, the company has become the market leader of soft drinks globally.