BUMGT6935 Business Strategy Oz Assignments

BUMGT6935 Business Strategy Oz Assignments

BUMGT6935 Business Strategy Oz Assignments

4. The Market

4.1 Market Analysis

a. Market Size:Coca Cola represents a leading player in the beverage service marketing with close to sixty percent of its shares dedicated to the carbonated segments of soft drinks

b. Market Trends:Coca Cola allowed its firms to go into partnership with other countries thereby exploring the international market. The global market for carbonated beverages not only experienced a growth increase of 3.6 percent between 2004 an 2010 but also is expected to experience higher levels of future growth (Moye, 2016).

c. Market Growth Rate:The worth of the global carbonated beverage market stands at US$ 340 billion as per the reports of 2014 (Malviya & Bhushan, 2017). Coca cola in the same year held overall revenue of 45 percent. Increase in the young population coupled with increase in the disposable income drives the overall growth of the market. Besides, the increasing demand of the beverages and the processed food in combination five major emerging national economies of Brazil, Russia, India, China and South Africa also benefited the market.

d. Distribution Channel:The Coca Cola Company sells their products to thecanning and bottling operations, fountain wholesalers, distributors and fountain retailers. The distribution is carried out either through corner stores, retail outlets, petrol station, corner stores and restaurants (Pfitzer, Bockstette & Stamp, 2013).

e. Profit Potential: The Company currently has an outstanding share of 4.32 billion. With share price of about $43.50 each, the company has a market capitalization standing at $188 billion (Elmore, 2014). However, between the year 2015 and 2020, the beverage industry is expected to experience an increase of about $300 billion with Coca Cola holding a dominant share in the market.

f. Market Demand:Coca Cola experiences a strong market that has enabled the company in generating sales that are beyond expectation. The obesity issues across the world have increased the demand for carbonated drinks with low sugar content. This had led the company in manufacturing newer products to meet the consumer demand. Besides, there has also been rise in the demand for smaller packaged products that encouraged the company in making huge investments.

4.2 External Analysis – Macroeconomic Analysis

1. Political Factors:To carry out political lobbying, the company employs trade associations and undertake direct advocacy. Hence, any change taking place in the established laws related to labor and internal marketing creates hindrance in the smoother operation of the firm.

2. Economic Factors:The global recession, the uncertainty of Brexit and the impacts of the Trump administrations is expected to have an impact on the revenue of the company that finally stands at ‎US$35.410 billion thereby reducing the benefits.

3. Social Factors: To curb the global obesity and meet the increasing demand of a less sugary carbonated beverage, the company launches an improved version of the beverage.

4. Technological Factors:Coca Cola incorporates advanced technology in its production process. In addition the company has also taken up a bridge program for the faster adoption of new technology compared to the competitors.

5. Environmental Factors: To ensure environmental safety the company incorporated smart schemes for boosting recycled materials for sustainable production and packaging. The company also dealt with environmental challenges by undertaking recycled use of the plastic bottles.

6. Legal Factors:The Company faced legal disputes about the health risk it imposes due to the distribution of its sweetened beverages. However, the firm makes political science contributions and undertakes political actions in compliance with the laws.

4.3 Competitor Analysis

 

Coca Cola

Pepsi

Founder

Dr. John S Pemberton found the company in the year 1886 in the United States

The company was started by a young pharmacist, New Bern, in North Carolina

Products

Diet Coke and Coca Cola

Diet Pepsi and Pepsi

Total Sales

450 million on a global scale

324.58 million on a global scale

Management

James Quincey

Indra Nooyi

Sponsorship

Sponsors various events like movies, cricket match, college fest and trade fairs

Sponsors trade fairs, college fest and sports events

Distribution

Through grocery shops, unorganized and organized retail and the retail malls.

Through organized and unorganized retails, grocery shops and the retail malls.

Market Share

57.8 percent

35.6 percent

Number of Bottling Plants

Franchise owned -14 and company owned - 26

Franchise owned – 28 and Company owned- 15

Figure: Tabular Representation of the Competitor Analysis
Source: (Habib & Aslam, 2014)

5. Coca-cola Strategic Approach 

5.1 Business Level Strategy

a. Differentiation Strategy

Coca Cola makes use of differentiation strategy for proving their uniqueness. The differentiation strategy helps the company in creating unique products and services (Tanwar, 2013). The company also makes use of unique advertising and marketing campaigns for enticing the customers in staying loyal to the brand through continued purchase of the coca cola products in comparison to the competitors. The company also has a touch of uniqueness to their bottle shapes which comes with in a curvy slim shape. Coca Cola also added to its differentiation strategy by introducing the Coca Cola freestyle machine. The machine allows the customers in mixing their coca cola beverages with various other flavors.

b. Low Cost Leadership

The company keeps a tab on the marketing and the operational expenditures. The low cost leadership has been one of the vital strategies adopted by the company (Rothaermel, 2015). The strategy emphasizes on the internal efficiency such that the products are manufactured at the lowest minimum cost.

c. Focus Strategy

The company employs the focus strategy in defining both the differentiation and the low cost dimensions. Thus, for defining the focused lower cost strategy the company defined a specific product line by which it not only can target a particular market but also ensure lower manufacturing cost under an efficient manufacturing process.

5.2 Corporate Level Strategy

a. Growth Strategies:The Company makes huge investments on the expansion projects related to its business in all of its six operating regions across the world (Christensen & Raynor, 2013). Presently, the company has its presence in over two hundred companies.

b. Strategies of Stability:The Company makes use of this strategy when it realizes that the growth strategies do not make a feasible choice in presence of either economic issues or economic circumstances. In such cases, the company either completely draws a closer on the current position or proceeds with extra care thereby focusing on the supply chain, marketing efforts and research and development.

c. Retrenchment Strategies:The Coca Cola makes use of this strategy specifically for the business units where it experiences little or no growth for a specific period. The business units are retrenched based on budget cut for the purpose of production, complete shutdown of the operations, marketing and sell out of an entire unit.

References:

1. Christensen, C., & Raynor, M. (2013). The innovator's solution: Creating and sustaining successful growth. Harvard Business Review Press.
2. Elmore, B. J. (2014). Citizen Coke: The Making of Coca-Cola Capitalism. WW Norton & Company.
3. Habib, S., & Aslam, S. (2014). Influence of brand loyalty on consumer repurchase intentions of Coca-Cola. European Journal of Business and Risk Management6(14), 168-174.

4. Malviya, S. & Bhushan, R. (2017). Coca-Cola beats rival PepsiCo with double-digit revenue growth in FY17 Read more at: //economictimes.indiatimes.com/articleshow/61811811.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst. [online] Available at: https://economictimes.indiatimes.com/markets/stocks/earnings/coca-cola-beats-rival-pepsico-with-double-digit-revenue-growth-in-fy17/articleshow/61811811.cms [Accessed 27 Sep. 2018].

5. Moye, J. (2016). Coke's James Quincey on 3 Trends Shaping the Global Retail Industry. Retrieved from https://www.coca-colacompany.com/stories/3-trends-shaping-the-global-retail-industry
6. Pfitzer, M., Bockstette, V., & Stamp, M. (2013). Innovating for shared value. Harvard Business Review91(9), 100-107.
7. Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education.
8. Tanwar, R. (2013). Porter’s generic competitive strategies. Journal of business and management15(1), 11-17.