October 24, 2019 in Research
External and Internal Environments

The Coca-Cola Company is one of the largest producers of non-alcoholic beverages and drinking water. Despite the size of the corporation, it is exposed to the external environment, which has an impact on all, without exception, modern business organizations. This paper will analyze external and internal environments of the Coca-Cola Company. 

Natural recourses and competitors, as segments of the general environment, have the highest rank in their influence on the corporation. Timely supply of the high-quality resources for production is a vital factor for any company operating in the food/beverage industry. Coca-Cola is not an exception. Water is a foundational element for the production of the beverages. Any activities of the Coca-Cola Company would be impossible without establishing a proper water supply. Water should meet international standards and norms of the sanitary and epidemiology surveillance. Managers of the company understand the importance of the proper use and responsible attitude to the natural recourses. That is why the Coca-Cola Company pays considerable attention to the equipment for drinking water extraction, thus ensuring its high quality. The company realizes the importance of the high quality natural resources, in particular, groundwater, because it directly affects further activities of the company.

Competition is another important factor that affects the company. Nowadays, the market of the soft drinks and bottling water producers is very saturated. Saturated market gives a minor possibility for changing the product. The Coca-Cola Company is known for the unique recipe, some ingredients of which are kept as a secret. However, the company has small opportunities for development comparing to its competitors. Changing the taste of the drink will cause negative effects, because the constancy of the taste is one of the main advantages of the company’s products. That is why the company should monitor the activities of competitors and find other ways to get advantage over them.

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Considering the five forces of competition, the threat of substitution and intensity of competitive rivalry are the most significant  for the Coca-Cola Company. Juices and bottled drinking water products are the main substitutes for Coca-Cola drink as a main product of the company. That is why, the consumers can easily replace Coca-Cola with numerous other soft drinks if they are not satisfied with the pricing policy of the company or any other factors. In today’s world, people are increasingly aware of the importance of health. New trends such as the proper nutrition and regular exercise do not include the consumption of carbonated beverages. The Coca-Cola Company held the PR campaign trying to improve the perception of the potential buyers about the soft drinks. In addition, an expansion of the brand helped to improve this situation. Moreover, Coca-Cola introduced a collection of clothes in the USA. Influenced by consumers’ desire to use the same drink, but with fewer calories, the company brought to market new product Coca-Cola Light, which is still in high demand.

The intensity of the rivalry is another competitive force that influences the corporation. The company does not have many competitors, manufacturers of soft drinks, which satisfy the same needs of consumers, as Coca-Cola does. This can be explained by its availability and recognizable brand. The main competitor of the Coca-Cola Company is the PepsiCo enterprise. For example, the history of the drink Coca-Cola started long before the Pepsi and this is the main advantage of the company. The Coca-Cola Company took some measures to overcome such a competitor as PepsiCo. The corporation started production of the Diet Coke in 1982 to extend its assortment. Unity marketing tools regardless of the area of promotion also characterize the company. This contributes to the integrity of the brand and provides advantage over the competitors.

There are few steps the company can undertake in order to improve its ability to address forces of competition, such as threat of substitution and intensity of competitive rivalry. Therefore, the company should try to occupy a market niche of dietary drinks. Development of new sugar-free drinks (with its substitutes) or modifying existing is a necessary step for addressing the forces of competition. In addition, the Coca-Cola Company can participate in the various programs and projects aimed to combat obesity or promote the healthy lifestyle in the society. Activities related to corporate social responsibility will strengthen the company’s image. In order to achieve this, Coca-Cola needs to pay attention to the work of the corporate social responsibility department and develop the long-term strategy for it. Altogether, these measures will establish the image of Coca Cola, as a company that produces heathy and tasty drinks. In order to overcome the competition, the company must develop specific marketing strategies, strengthen relationships with distributors, and timely respond to the needs of consumers.

There are different options for the Coca-Cola Company to improve its ability to address the threat of substitution and intensity of the rivalry in the nearest future.

The increase in competition, understanding the importance of health, the transition to a healthy lifestyle and proper nutrition and strengthening of legislation in the field of non-alcoholic carbonated beverages are external threats affecting the corporation. Threats are the factors that can potentially worsen the situation of the organization in the market. In recent years, the percentage growth in sales of main rival PepsiCo is higher than Coca-Cola. The transition of the consumers to healthier drinks such as juices, nectars, mineral water has a negative impact on the sales of carbonated beverages. There is a possibility of affecting the image of the Coca-Cola and other drinks of the company because of their unhealthy influence on human body. Another step that company can take is to strengthen the legislation related to the production of the non-alcoholic carbonated beverages. For example, the company could introduce new measures to regulate the composition and the allowed level of chemical substances in the produced drinks. That legislation is factor has a strong negative impact on the production of the non-alcoholic carbonated beverages.

Opportunities are the environmental factors, which create advantages for the organization in the market. There are few opportunities available for the corporation. Firstly, the company can use the possibility of installation of commercial equipment in order to attract new customers and thereby destroy the distribution channels of the competing manufacturers. In addition, the company can expand and, thus, create the new working places that will positively affect the company’s image as a socially responsible company.

Talking about the opportunities in the corporate social responsibility sphere, the company can support projects aimed to preserve the water resources. As a result, the company will have double benefit. First, it would create a beneficial effect on the environment. Secondly, it will contribute to the sustainable development of the company, because water resources are a key element of the production.

 Lack of water resources and competition with PepsiCo, can be determined as the main threats of the Coca-Cola Company. If the company does not have access to the quality water recourses, it may affect its further activities. To neutralize the first threat, the company must carefully treat the water resources and participate in supporting the projects aimed to protect the water resources of the planet. PepsiCo and the Cola-Cola Company are the biggest companies at the market of non-alcoholic beverages. To overcome such competitor as PepsiCo, the Coca-Cola Company should focus on improving its strengths and continuously look for opportunities to develop and implement new activities in the non-alcoholic market.

 Strength and weaknesses characterize the internal environment of any company. The strength of the Coca-Cola Company include the popularity of the brand and its recognition, extensive product range, large size of the market and developed network of sales. The high quality of the products and range of marketing activities are also the advantages of the Coca-Cola Company. The products of the company are available for consumers; the brand is widely represented in retail stores and in restaurants. Company is perceived as the founder of the cola drink. Therefore, people often perceive other similar drinks as not original. Interaction with sports is also the advantage of the company. The Coca-Cola Company promotes the brand in a way that it has become associated with sports. Moreover, the company actively works with the media. The corporation is constantly promoted on TV, in print, outdoor billboards and other form of advertising. Another strong side of the Coca-Cola Company is association with the holidays, mainly with the New Year, Christmas, and Santa Claus. Coca-Cola is the best-known and most expensive brand in the world. The Coca-Cola brand occupies the top position in the rankings worldwide.  Logo, shape of the bottle, different colors, memorable melodies and songs made this brand recognizable in different parts of the world. According to the official web site of Coca-Cola, original name registered as a trademark in the US Patent and Trademark Office, and only the Coca-Cola Company has the right to use them.

 Lack of the qualification, unstable financial situation of the corporation, the usage of the standard methods of promoting products for different markets and lack of consumer brand loyalty are the weaknesses the corporation. To fix the most significant weaknesses, the company should take the following measures. Firstly, the company needs to apply new methods to promote its services, to find new channels, previously eliminating disruptions in the supply of commercial equipment. In addition, the company should send its employees for trainings in order to improve theirs qualification. 

To take maximize its strength the company needs to invest in the development and expansion of the brand, also conduct market research to identify the needs of consumers and subsequently exceed their expectations. 

The company’s greatest strengths are the marketing strategy (that is why the company has the most expensive brand in the world) and loyalty of the customers. The Coca-Cola Company is known for the song associated with the New Year and for sponsorship of the huge sports events such as FIFA. Memorable colorful logo, associations with happiness and fun, original form of bottle are the elements of the brand that attract the customers and form their loyalty. Any marketing activities of the company focus on establishing the long-term relationships with the customers. It relates to the company’s competencies and capabilities. Company should continue to invest in the marketing and create new ways of satisfying customer’s needs, thus taking maximum advantage of its strengths. 

The Coca-Cola Company’s greatest weaknesses are the absence of healthy drinks and presence of the powerful competitor, such as PepsiCo. Since the focus on healthy lifestyles constantly increases, the production of drinks, which include artificial components, is disadvantageous for the company. In addition, despite the fact that PepsiCo is relatively new company comparing to Coca-Cola, it constantly and effectively competes with the Coca-Cola Company. The fact that the drinks are very similar only exacerbates competition. To fix most significant weaknesses the corporation should develop new directions of the activities; more precisely, it should develop new concepts for drinks with further production and realizations. Furthermore, if possible, it is necessary to replace synthetic ingredients of the drinks to natural, and to focus on the harmlessness of drink constantly in an advertising campaign.

The availability of the resources of the company is required for the production of the high quality products and its subsequent spreading. The resources available to the Coca-Cola Company are divided into natural, human, material and technical resources, time resources, and financial resources.

The main components of the natural recourses that are important for the production are water resources. The plant pumps water from wells that ensures the absence contamination of anthropogenic origin. Therefore, the plants are carefully protected. The quality of water produced depends primarily on the quality of the wells, including pipes and services. The produced water is already drinking according to all parameters and standards.

Material and technical resources include logistical support of the production. This type of recourses includes production facilities, such as bottling line.

Human resources include all employees who work for the company. These resources include workers of any level of hierarchy, who contribute to the production of the final product. In addition, potential employees who do not work in the company yet are also human resources of the company. More than 90 thousand highly qualified employees work in the company worldwide. 

Time that is available for the company for conducting all needed operations is time recourse of the Coca-Cola Company.

The corporation’s funds that are managed and intended for the fulfillment of certain financial liabilities are financial resources available to the company. Brand Coca-Cola is the most expensive brand in the world, and that is why the company has considerable financial resources. The Coca-Cola Company conducts its financial transactions and distributes its products in 160 countries. Therefore, the company conducts its financial activities with 160 different currencies.

Customer marketing and leadership are the main capabilities of the company. Customer marketing helps to establish long-term stable relationship with customers as the key to sustainable development of the corporation. Leadership is manifested in the constant search for improvement opportunities and finding new and better ways to meet customers’ needs.

The main competencies of the Coca-Cola Company are the strong brand, established effective communications with the distributors and improved sales channels, and corporate culture. Company’s attention to the problems of the external environment, especially to the water resources, is one of its competencies. Mysterious formula of the drink and long history is another significant competency of the corporation. 

 Value chain of the company, which operates in the production industry of the non-alcoholic beverages, includes five elements: Incoming Logistics (Suppliers), Operations, Out-coming Logistics (Consumers), Marketing and Sales, Service. Currently Coca Cola Company works with the following suppliers: IMI Cornelius, Jones Lang LaSalle, Prudential, Ogilvy and IBM, Mather, and Spherion. These businesses supply material and technical resources that Coca-Cola Company needs for producing drinks. The company sets a list of standards called The Supplier Guiding Principles in order to ensure the best quality of the resources.  From time to time, the company assesses suppliers, comparing their activities with the standards. The company’s operations include the production of the concentrate, bottling of the drinks and its subsequent distribution. Out-coming logistics consist of the consumers that buy the production of the company. Establishing effective communications with the distributors as one of the competencies is important for this element of the value chain. The Coca-Cola Company has a very powerful system of the distribution channels that include retails stores, fast-food restaurants network, vending machines and others. That is why the drink is widely available for the consumers all over the world. Professionalism of marketing and sales employees in the company makes it possible to increase selling rates and create a widely known brand. The Coca-Cola brand is the most expensive in the world because of the huge investments put in the advertisement and timely response to changing customer needs. Such capability of the company as customer marketing is closely related to the marketing and sales of the value chain. Furthermore, service offered includes customer support. Both individual buyers and small/large retailers are company’s customers. That is why the corporation highly appreciates the long-term stable relationships with all customers and established customer development and training centers to help them develop their business.

Overall, the Coca-Cola Company is successfully operating in the beverage market. Even though there are some weaknesses and threats, the company has managed to stay on the top. Both external and internal environment could use some improvement. However, the company manages its business very well.


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