The topic for these essay is Coco Cola carbonated brands to examine the political and economical factors in which it carries out its operations and strategies in United kingdom. We will also be carrying out its pest and porters five forces analysis through the essay.
Coco Cola was invented by doctor John Pemberton pharmacist from Atlanta, Georgia In May 1886. John Pemberton mix the coco cola formula in three brass kettle in his backyard. The suggestion of the name was given John Pemberton's book keeper Frank Robinson. (Url2)
(the selling van used during the initial period of its production)
Asa Candler owned the company in the year 1891 after the death of John, his father's first mission was to change the old Pemberton's old formula inorder to change the taste of the product, to ensure its consistency and firmness. It was Candler's hardwork that he was able to promote coco cola beverage into every state and territory in the United States by 1895. It was under woodruff's tenure from the year 1923 until 1981, Coco Cola rose from national to international supremacy(Url2).
Coco cola first arrived in Great Britain in 1900 when Charles Chandler, son of Asa Candler. The first Coke was sold in Great Britain on 31st August 1900 and after that went on regular sale through soda fountain outlets, which included Selfridges and the London Coliseum. In 2004 The Coca-Cola Company's share of the carbonated soft drinks category in Great Britain was 45.3%, and market share of the non-alcoholic beverages was 9.9% (Url3). As in the neo- classical environment in united kingdom it has been facing different humiliation in facing art rival Pepsi. Before we look into the external and internal factors impact on the company lets discuss opportunities and treats.
Opportunities :
- A discounted promotional offer can be useful to attract more customer of any status.
- Seasonal discount on holidays can boost the sales.
- Safety health prevention measures should be taken in production , can help in gain customer.
- Innovation in marketing, production and all other aspect can help in grow the company revenue.
Threats:
Now looking at the threats to company it can be divide into “internal” and “external” threats.
External threats:
- As carbonated drinks are not healthy which can lead to health problem is a major threat to Coco Cola company.
- Consumer's move to healthy products.
- The pessimistic tradition is spoiling the positive brand image.
- Educational institution's ban on coke's drink.
Internal threats:
- The Wakefield site is Coca-Cola Enterprises's largest bottling and distribution centre in the world was under a strike by the employee working there. The Wakefield operation is huge,as it produces 200m cans of Coke a week, employs 517 staff, including manufacturing and distribution technicians and local delivery drivers. (URL 4)
- Centre for Science and Environment as per the tests conducted on more than 50 samples of soft drinks, sold by Coco-Cola India contained high levels of pesticide residues.(URL 5)
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UK student against coco cola, the decision to ban Coco Cola from the university was declared on 19th August 2006, Sussex University has become the first campus in the country to ban all Coca-Cola products as its students' union in protesting for the company's allegedly unethical practices such as ignoring anti-union abuses of workers in its factories in Colombia and other South American countries.(URL 6)
As these issues have a real consideration in the Coca Cola`s Business or have these factors really produce any changes in ways it has been running its business. To further discuss our Arguments we need to analyze its macro environment factors.
To analyze these macro environment we will be conducting pest analysis to see what role of these factors have on Coco Cola.
Pest:
Political
Coco Cola being an American brand. It's been observed recent years Uk and Us share good relationship , this support in becoming these brands popular in the UK, and thus UK consumers treat Coke and Pepsi positively. As non alcoholic beverages fall within the food category under the FDA. The government role within the operation of manufacturing these products in terms of regulations is an important issue. The Government always keep a check on the standard of companies and if they do not meet as per there standard of laws they are fined.
As in the case of Uk and US, the consumer in Uk has accepted coco cola positively The only problem could be as the new generation is being more health conscious. As these drinks are sugar loaded and use of genetically modified food. As the carbonated drinks are not healthy lead to obesity and other health issues. It led to ban in school then later in universities.
Economic
One of the advantage because of which company creates more value is its ability to produce drinks in cheap ingredients such as sugar, citric acid and caramel coloring. Thus the inputs which is required to produce these products is very less, thus it really doesn't depend on economic level of a country. That's the reason Coco Cola and Pepsi start their business in any part of the world and relatively do good business.
The past few years have been booming for the drinks industry, but growth prospects are stagnant for the next few years. A recession is a possibility after so many years of economic stability, but basic saturation is more of a problem. Due to competition in the market Innovations are becoming fewer and consumers could bring growth for healthy drinks, preferably with a move to premium products.
Social
Coke and Pepsi belong to secondary demand products and thus have low output prices allowing people to buy Coke and Pepsi without appreciable pocket damage. This benefits both Coke and Pepsi as the economic recession in the UK decreased Average Household Disposable Income, their low output prices means people can afford to buy their products.
Tuning into the image conscious youth, Coca Cola has branded themselves towards this market. Cola has a good understanding that todays youth have more disposable income than before and are more brand and image conscious. Because it is highly popular among young people, Coca Cola has good opportunities for profitable sales.
Children also enjoy and prefer sweet and sparkling tastes of Coke and Pepsi, and taking into account that students and children belong to low income social status population level, those drinks have good basis to be famous and chosen.
Coke it is fit for long storage, as it doesn't contain any perishable ingredients thus it is convenient for taking too long journeys, for busy people, who can’t frequently buy fresh food.
Technological
As technology advancement brings various changes in production, marketing and over all strategies of a corporation. Innovative scheme during promotion can boost there performance internationally. People can always get attracted to new and innovative products and can become cola admirers.
Technological can help company reduce their cost in production, since the Uk consumers are price sensitive, the scope on the input price also cuts down is a very important for value creation of an organization.
As in all the multinational companies technology is given high preference to compete with the competitors. To make better technology multinational companies outsource their production and services to different companies in various region.
Porter's Five Force Framework model:
Porter's model is analyzed in five fundamental structure:
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1: Barriers to Entry:
- As the brand name has to have good reputation in the international market, thus the Coco Cola has good brand name in the market, highly chances of receiving good response from the consumers.
- Uk's consumer's are keen on consuming sweet products, the ice-cream products are sweeter in the other countries, thus gives them extra benefits as their products are mainly produce with the high contains of sugar.
- Input cost has to be consider while entering in the international market, if you compare the input cost of UK to US it higher than US. Thus the output products also becomes expensive, this can result in lose of consumer's as they move to different products in the market.
2:The power of buyers:
- As the British consumers are very price sensitive and also due to the recession in the economic scale of the country.
- Pricing of the products should be done very carefully, different strategies should be used to save the input cost. Input cost can be save if production, marketing and other factors expense is cut done.
- Coco Cola has tried different strategies such introducing their product in major fast food chains such as McDonald's, Burger king which are highly preferable by the UK consumers.
3: The Power of Suppliers:
- when we talk about suppliers this is when the government is strict with the laws and regulation of different countries are different. Government looks into different benefits for the local benefits to the suppliers and try to avoid the monopolies.
- As in the case of Coco -Cola's supplier issue that's relatively a very small problem as the raw material used to make the product are less .
- Raw material used for the product mainly is sugar.
4: The threat of substitutes:
- As in the modern world everyone tries their best to keep themselves fit and healthy. The major concern for the coco -cola as its drinks are carbonated drinks which leads to various problems such obesity, and much more.
- The biggest threats would be consumers moving to the other superior products which are more healthy then coke.
- As the UK population consume junk food a lot and the fizzy drink goes well with these junk food. That's the reason coco cola is doing well in this market.
5: Competitive Rivalry:
- Coco – Cola's biggest rival is Pepsi which also sell carbonated products like Coco Cola. Which also has its business in many countries. They do a lot of promotions to maintain their existing consumer's and encourage new consumers to consume their drinks. It has also wide range of distributions in UK and other part of the world.
- As Pepsi is the only tough competitors which can affect positively as well as negatively to the Coco Cola corporations.
As we have figured out the pest analysis of Coco Cola Corporation to check its strength and weakness which it handles in comparison to its rivals , for that we will check out the SWOT analysis.
SWOT
The SWOT analysis states organization's strength, weakness, opportunities and threats.
Strength:
- In strength of an organization we look into tangible and intangible attributes, in tangible its been further divided into financial and physical. As we look into the financial structure of an coco cola they are financially very strong. When we look into the physical aspects which talks about the production plants, equipment and location, there was problem at the production plant he Wakefield site is Coca-Cola Enterprises's largest bottling and distribution centre in the world was under a strike by the employee working there. The Wakefield operation is huge,as it produces 200m cans of Coke a week, employs 517 staff, including manufacturing and distribution technicians and local delivery drivers. (URL 4)
- In the intangible attributes organization's reputation is most important aspects where its patent issues coco cola has a good control over its patent issues and the brand name is world famous.
Weaknesses:
- As due to the health issues its lacking behind as the carbonated products are not healthy as compared to the health drinks available in the markets.
- People move to the other healthier drinks increases their product consumption.
Conclusion
It totally depends on the management how do they practice their working style to improve their qualities and satisfy the requirement of their consumers, as we have seen they have the capabilities to make good use of their resources. As in the growing importance of technology advanced and creative products to attract the consumer's. An organization should carry out to steps to attract the consumers. This was all about Coco Cola's economical and political problems in UK.