Coca-Cola Macro-Economic Analysis Coca-Cola Is an Extremely

Coca-Cola

Macro-Economic Analysis

Coca-Cola is an extremely effective organization. Nevertheless it has a number of difficulties surfacing at this time. The Coca-Cola Company offers around four hundred various consumer drinks and merchandise. The majority are not known as well as seldom observed with regards to accessible purchase. Furthermore, an additional problem the organization ought to deal with may be the health problems associated with soft drinks since it really is recognized that the well-known Coca-Cola soft drink is not really good for people's health and wellness. Along with modern and continuous change in consumer behaviour towards healthier items, the overall clients for the company may reduce (Brennan, et al., 2008).

Main body -- SWOT Evaluation

Advantages

Planets top brand

Coca-Cola offers and enjoys a powerful brand name reputation around the world. The organization features a top brand name along with a powerful brand name collection. Business-Week as well as Interbrand, identify Coca Cola among the top brand names within their best one hundred worldwide brand names position for 2010.

Customer's loyalty

An additional power which is enjoyed by Coca-Cola is actually client devotion. The actual 80/20 guideline makes impact within this scenario. 80% of the revenue originates from twenty percent of the devoted clients. Numerous people/families are incredibly devoted to the brand of Coca-Cola (Zahorsky, 2009).

Weaknesses

Health problems

The organization continues to be significantly published negatively with regards to the health problems which encompass a selection of their items. The brand new concentration on bodyweight as well as wellness is actually an issue for your Coca-Cola as it is tagged as being bad for both those aspects.

Financial decrease for current operations

The company's cash flow through current operations has dropped throughout financially in the year 2010. Money penetration through the current operations recorded a much lower ration than those recorded in 2009. Coca-Cola's financial investment in 2010 experienced this significant decrease also because of the $216 million that they had to pay to a tax-qualified trust that was financing retirees' medical insurance (Zahorsky, 2009).

Opportunities

Developing drinking water marketplace

Bottled water is among the fastest-growing sections for the global consumer market right now as the world becomes more health-aware and conscious.

Cash out competitors

An additional business opportunity that seldom surfaces is the ability for a company to buy out its competitors. This is one of the biggest opportunities for Coca-Cola as it does, even with its decline in finances, have the ability to still restrain new competition by buying out smaller firms.

Threats

Alternating towards a health conscious attitude

Coca-Cola and Pepsi are the two main beverage monopolies with over 40% market share, the fact remains that the global consumer is changing his/her approach and becoming more health conscious which could directly impact the sales of Coca-Cola which is reputed to be an unhealthy investment (Zahorsky, 2009).

Question 2: Chart

Strengths

Weaknesses

Opportunities

Threats

Develop Drinking water marketplace

Health Problems

Alternating to a health conscious attitude

Cash out competitors

Fiscal fall in operations

Customer's Loyalty

Short-term

/Immediate

Long-term

/Consider dropping

The above chart is based on the SWOT analysis conducted for Coca-Cola. For the strengths, customer's loyalty has been chosen to be the most significant aspect for the brand and the urgency of increasing this is extremely important due to the rising health concerns that are being raised against the brand (these are discussed in detail later in the paper). The biggest weakness chosen for Coca-Cola is again the health concerns that need to be addressed immediately by the company in the short run so as to retain its clientele. Another weakness highlighted is the fiscal decrease in the functional abilities of the brand; this is not really an urgent issue because the entire global fiscal community is on a downward slope and hence the company can make long-term strategies to rectify this weakness and with Coca-Cola's current stature, this won't be hard to accomplish. The two opportunities highlighted include developing a drinking water brand and cashing out or buying out competitors. The former is far more important to accomplish, also attention must be give to the fact that Nestle already has great market penetration when it comes to drinking water and it will be Coca-Cola's main competitor when they want to develop and market the Coca-Cola drinking water, despite its current ventures with the company. The opportunity to cash out competitors can be dropped till the fiscal performance of the company picks up again. The most urgent threat that Coca-Cola needs to adhere to and thus adapt with is the alternating attitude of its clientele to a more health-conscious level and thus Coca-Cola must work hard to not only develop but alos promote and distribute their healthier products as well as successfully penetrate and challenge the current market that exists for healthier products.

Question 3: Ansoff Matrix

The Ansoff Matrix comprise of four tiers: market penetration (important for existing products in the existing markets); product development (important for new products in the existing markets); market development (important for existing products in the new markets); and, diversification (important for new products in the new markets). Each of these are discussed below with regards to the business operations and networking of Coca-Cola.

Market Penetration

The following table shows a much more detailed account of financial investments made by Coca-Cola in the three financial years from 2005-2007. The table also includes investments made in water consumption and awareness programs made in the three fiscal years and also includes the profits and net incomes earned for each year.

2007

2006

2005

Revenue ($ mil.)

28,857.0

24,088.0

23,104.0

Gross Profit ($ mil.)

18,451.0

15,924.0

14,909.0

Operating Income ($ mil.)

7,252.0

6,308.0

6,085.0

Total Net Income ($ mil.)

5,981.0

5,080.0

4,872.0

Diluted EPS (Net Income)

2.57

2.16

2.04

One way that the Coca-Cola Company aims to have a profitable cost benefits ratio is to form international alliances under the guidance of the CEO Water Mandate. These international alliances designed by the CEO Water Mandate supply an opportunity where corporations can contribute to paramount practices and examine the experiments and victories each corporation underwent in accordance to the six fundamentals mentioned in the CEO Water Mandate. "If the communities we serve are not sustainable, than we don't have a sustainable business," said Manley (Water Wide Web, 2010).

To rally the increasing disputes highlighted by the numerous concerns over water consumptions and shortages, the Coca-Cola Company has recognized and implemented numerous procedures to attain the company's international water stewardship objective as well as maintain a profitable cost benefit analysis ratio (Brennan, et al., 2008). Some of these implementations include:

Using the right means and procedures to discard all industrial waste

Identify newer and innovative water management traditions and regulations

Treating all of the company's reproduced wastewater before they use the procedures that will discard it back into the atmosphere (Brennan, et al., 2008)

It was nearly in the mid of the 2010 fiscal year when the Coca-Cola Company was able to effectively and practically treat all of the reproduced wastewater produced from their manufacturing before releasing it into the environment. Hence, when you compare this to the rest of the industrial discharge in the world, the differences are remarkable for both the developed and underdeveloped countries (Munir et al., 2008). Hence, Coca-Cola has an opportunity here to guide all the other industries on the treatment of water before discarding it. The procedure is one that is simple enough for all industries to follow, even those who are not in the beverage industry. The Coca-Cola Company invests in a structure that reduces, recycles, and replenishes the water consumption in the corporate manufacturing procedures which is what makes its treatment least harmful when water is discarded in the atmosphere (Brennan, et al., 2008). The particular process that has helped the Coca-Cola Company establish a very profitable cost benefits ratio includes the following steps:

Decrease the overall use of water as the top beverage consumed by producing an increased number of beverages that can replace water

Recycling and treating water before discarding (Brennan, et al., 2008)

Engaging in activities that replenish water in various communities

Engaging and investing time in activities in many local communities that include watershed protection, water table level protection, rain water harvesting, helping with agricultural use of water by improving use of wells, tributaries, etc. these activities amount to Coca-Cola covering more than 70 countries and over 250 environment-based projects.

Investing in global efforts for preservation of watersheds and community water structures

Improving the water consumption efficiently at a steady rate over the past decade

Establishing the goal that by the year 2012, improve the overall water consumption 20% more than where it stands now (Brennan, et al., 2008)

Water Wide Web (2010) also assert in their recent evaluation of the Coca-Cola Company cost benefit analysis that "the Coca-Cola Company will release their 2009 Sustainability Review. 'Data provided in this review will be verified by a third party', assured Manley. Through strategic partnerships with the World Wildlife Foundation, the Nature Conservancy, and the Global Environmental & Technology Foundation, the Coca-Cola Company has quantified the benefit of their replenishment efforts and the Water Footprint of their production process."

For the structure that Coca-Cola has employed over the years, the cost-benefit analysis when talking about their water consumption and management policies has been balanced out by the corporation's wide and open investment in efforts to create more awareness as well as the overall international water stewardship that they constantly enjoy. The fact of the matter is that the rising population of the world, the decreasing resource, increased hazardous discharge and threat of water deficiency is leading to a very unstable environment in the future (Brennan, et al., 2008). Hence, it is important for corporations like the Coca-Cola Company with huge resource consumption to make sure that they participate in activities that help with the preservation of the raw materials and resources as well because this will not only ensure continued consumerism and health of the world but will also ensure their survival in the future (Murden, 2005).

Product Development

The Coca-Cola Company is reliant on water for the manufacture of all of their drinks, products as well as the constituents utilized to construct them. Water is a vital component of the agricultural procedure that produces other integral components like citrus and sugarcane which are present in large amounts in almost all Coca-Cola products especially their most popular and profitable product -- the Coca-Cola soft drink (Murden, 2005).

The prospect of Coca-Cola Company merchandise and commodities could be seriously below par or deteriorate with time if the water consumption isn't cautiously supervised by the business leaders and shareholders. Valuations and assessments designate that 75% of the total population in the entire world will incline towards living a moderate lifestyle with minimal investment in consumerism if the water shortages are not covered up effectively by the time 2025 comes around (Murden, 2005).

This estimation begs the question if the Coca-Cola Company is actually prepared to manage the component of water in their future manufacturing processes and how its deficiency will impact their profits standings. The question also is if they have an alternate plan for when and if the situation of extreme water shortage and fall in consumerism actually occurs. The fact is simply this that if the water deficiency is not taken care of, the Coca-Cola Company products will barely fill the quota for the grocery shops and distributors.

Hence, the Coca-Cola Company's role in the environment betterment is not only a global effort to help control water deficiency but it is also a matter of survival and sustainability for the company. This is why we see Coca-Cola investing in Environmental Communications Activities. The Director of Environmental Communications for Coca-Cola, Lisa Manley, was amongst the attendees at the 2011 United Nations Global Compact CEO Water Mandate Conference that took place in South Africa. On here return from the conference, Manley in telephonic interview told the Water Wide Web that "at this past meeting in Cape town, we focused much of our conversation around public policy, the human right to water, and water disclosure" (Water Wide Web, 2010).

Market Development

Any and all Strategic alternatives designed at Coca-Cola go through four distinct processes which include: goal setting, strategies formulation, strategies implementation and strategies monitoring (McKay, 2009; Murden, 2005). It is interesting to note here that the strategic management employed within Coca-Cola is reflective of the recommendations made in the paper earlier where the identification of target audience, goals, careful filtration of the use of social media and performance-tracking all coincide within each of the four processes displayed below.

Diversification

Social Media in the modern market structure is such an integral tool of promotion that perhaps it would be the most fruitful approach for Coca-Cola Company to increase their knowledge in the domain. However the important aspect with social media is that it needs to be filtered down to the primary purposes of the company and what social media can be used and in what way in order to bring the most benefit to the company. Hence, the very first recommendation for Coca-Cola would be:

Define your purposes that can be fulfilled through the use of a social media

Of course, when using the social media to your advantage for any promotional activity, there are many aspects that need to be kept in mind for most effective results. The first of these is technology. The technological advances have been one of the major reasons why social media, internet in particular, has grown into such a strong phenomenon that it helped bring about a much needed revolution in Egypt. Imagine the kind of penetration a company like Coca-Cola can achieve if they use the social media to their advantage (Munir et al., 2008).

It is easy to note that there aren't many corporations in the world, especially in the beverage industry, which enjoy the kind of market share, financial upgrade and brand name that Coca-Cola enjoys with its major brands Coke and other brands like Sprite, Fanta and Diet Coke enjoying a household name in terms of soft drinks enjoyed by the masses. The media splash that they can make can be tremendous. Of course, care has to be taken when, where and how to use the social media to their advantage. To most effectively use the social media to their benefit, it will be smart on Coca-Cola's part to first acquaint themselves and their employees with the nature of the media and then train thereof. The training and acquaintance will help the company clearly identify what they want to use the media for. The smarter recommendations to use the social media would me to attain the following:

Consumer penetration i.e. expanding the clientele base

Corporate objective i.e. goals (yearly and long-term)

Increase market share/awareness

Effective benchmarking using complementary mechanism alongside social media.

Question 4: Recommended Alternate Strategies

Strategic Alternatives suggested for Coca-Cola

The first strategic alternative we can suggest, especially after the strategic dissonance playing a part in Coca-Cola's performance this past decade, is that they give all of the 200 companies that they own the right for direct operations. What this will do is that it will allow these franchises to not only develop their own strategies but also simultaneously be able to allow the Coca-Cola Company as a whole to design the opportunity-cost ratio based on each singular project at the localized level. When success is achieved at the local level, the profits and growth will automatically benefit Coca-Cola headquarters.

The next strategic alternative that we suggest for Coca-Cola is to use the strategies employed in the supply chain management (SCM) structure. When the SCM is employed at the localized and global level for the Coca-Cola Company, the result will be that each franchise that the Company own will be responsible for its customized distribution strategy, cash flow, logistical strategy trade-offs as well as the distribution network and suppliers used. This will distribute the work load far more evenly as well as result in accurate and coordinated efforts for the promotion and distribution of the Coca-Cola Company products and merchandises.

The third strategy alternative suggested here will be in view of the cost-benefit analysis done above with regards to Coca-Cola's biggest resource -- water. While Coca-Cola is making efforts globally to spread awareness on water treatment and has managed to improve the cost-benefit ratio to profit the company, there is still a lot that needs to be done at the local level. Hence, we suggest that the Coca-Cola Company along with all of the 200 companies it owns take 'collective action' on the Watershed/catchment front. One way to do that would be to bring together all the communities and keep them engaged in activities that will ensure that water is not wasted and all storage facilities for water are working appropriately. The collective action taken by Coca-Cola will be another positive step taken by the company apart from treating the water before releasing in the environment which will then also promote the brand image amongst the consumers as environment friendly. Once this brand image is established, Coca-Cola will most likely also attain customer penetration and retention in the long run because of the heightened concerns of the masses over environmental damage.

Another strategic alternative that we suggest for the Coca-Cola Company is complete corporate transparency. Currently the company only employs transparency at all political fronts. What we suggest is that they expand this to include transparency at corporate, personal, legal, regulatory as well as social connivance structures as well. What this will achieve for them is that they will be able to help and assist those individuals who want to invest or buy stock with the company to do so with complete knowledge. What this will also do is present the image of the Company as one that has no secrets and has no illegal engagements, hence presenting a very strong corporate and industrial outlook.

Recommendations

One primary recommendation will be in terms of the use of social media. Performance-tracking is very important when using the social media as it is not a conventional source of promotion hence performance and influence of the use of this medium will not be conventional either. This is why it fairly important to first identify the specific social media you want to use, how you want to use it and for what objective. But simultaneously, measures have to be put in place that will help calculate whether the set objectives were achieved or not. This can be done through a number of features like online campaigns, surveys etc. The important thing to note here though is that since the social media is a volatile outlet, the results or analysis of the results might be unpredictable as well. Hence, it is very important for Coca-Cola to clearly understand the level of performance that they want to aim for and attain in a measurable manner. Hence, the second recommendation for Coca-Cola would be:

Track performance and influence of the brand and product before and after use of social media to identify its influence and penetration (Munir et al., 2008)

Identifying the target market is not the easiest task in a social media setting, but if enough time and intellect is spent on the use of social media, a company like Coca-Cola could very easily win the lottery through social media promotions alone. In terms of tangible promotion, Coca-Cola has it target audience clearly and accurately defined with most of the youth hangouts and eating places covered. However, social media is a vast outlet and there are no set rules on what a certain age group of people will incline towards. Hence, researching the outlets of social media will be a very important part of the entire structure. The fact is that when dealing with the likes and dislike in term of the interest of today's youth is a massive task. Hence, while the recommendation to identify the target audience is important it is simultaneously to increase the demographic beyond the age as Coca-Cola has right now. The first step here will definitely be to identify the kind of interest the brand wants to represent and then researching the social media for similar outlets for individuals. Perhaps the company to look towards for direction of the optimum use of social media is the BMW Inc. BMW single-handedly used the media of Facebook alone to increase the fans and followers of the brand. Below is a chart accessed from the social bakers' website that shows how their fan base grew:

Of course, BMW's objective was probably to increase fan base through social media and that alone. With Coca-Cola's objectives being multi-fold with the inclusion of customer penetration, the strategies used will have to far more superior that those used by BMW. Hence, the third recommendation would be:

Identify the target audience's personality that you want your brand to target and then penetrate the social media that best corresponds with that

The next recommendation is fairly simple: to employ the best practical structure and calculate all risks and benefits before and after employment of any new strategy.

To flourish in the competitive world today when a promotional mechanism like social media is in every customer's pocket and the competition is fierce is a tall task even for a company like Coca-Cola. The advantage for Coca-Cola is of course the fact that they have an established brand name, customer recognition and a large market share. However, sometimes maintaining such a high calibre stance can prove to be harder if the company does not continue to innovate and take risks. That is exactly what happened with Sony recently when their appliances didn't match up Apple, 2nd to them till a couple of years ago, became a bigger threat than ever before. Hence the next recommendation is fairly simply to continue keeping your business objectives and profits in mind for the short- and long-term and to design all strategies and logistical operations in accordance to them (Munir et al., 2008).