Definition and rationale for using SWOT
SWOT stands for strengths, weaknesses, opportunities and threats. Strength and weakness are internal to the organization while opportunities and threats are the external aspects of the marketplace. It is one of useful techniques used in business projects or marketing planning. (Ritson, 2008) With a comprehensive survey, it is more likely to compete successfully in the market.
Strengths
Coca-Cola has great strengths to conduct in world-wide scale. This section will focus on its brand reputation and advantageous position of management.
3.1 Strong brand identity and Innovative marketing approach
Coca-Cola has achieved a great brand value across the globe. A key feature of Coca-Cola’s success may be attributed to its marketing strategies. For example, they communicate with consumers in order to evaluate consumer’s satisfaction and meet consumer preferences through social network, which is one of great advertising that enables a brand to stay young and fresh. The company aims to create effective consumer impressions. Coca-Cola seems to believe that brand image is related to brand loyalty. If consumers are satisfied, more consumers may feel connected to the brand. Without doubt, Coca-Cola is the world’s most recognizable brand. It constantly raises consumer’s interests and offers them a clear view of its brand value.
3.2 Global scale of operations and Strong financial reserves
Coca-Cola owns a large portfolio of product brands. In the last decade, Coca-Cola has almost doubled its soft drink beverages market share to 23.9%. One element of continuing success results from its main market of North America. Total revenues accounted from 39.0% in the year 2000 to 46.4% in 2010. (Marketline, 2011) This could mean that Coca-Cola will continually expand its market. With large quantity of capital available for investment, Coca-Cola has great ability to build new plants or subsidiaries all over the world. Global operation allows Coca-Cola to make intensive distribution and maintain its wide economic dominant position.
Weaknesses
Despite the fact that Coca-Cola has successful strategies, it has few disadvantages that need to be addressed. This section will illustrate its high delivery cost and health issues.
4.1 High delivery cost
Coca-Cola has invented the unique syrup which was kept a close secret and only passed down through particular generations. Although the company cooperates with its beverage canning, concentrates manufacturing plants around the world. These raw materials must be sent back to Coca-Cola’s original manufacturing country. (Harvard Business Review, 2011) For this reason, it may cause high shipping cost and increase financial burden. It would have been better if Coca-Cola Company had modified its delivery method. For instance, the company could scale down its transportation cost by reducing factories in remote areas.
Health issues
The ingredients found in Coca-Cola products may be harmful. For example, one can of Coca-Cola contain about 10% sugar. (Brand Health Check, 2012) Large amounts of sugar in a person’s diet can weaken immune system because bacteria and yeast in the body feed on sugar. Another health issue is that the acid in Coca-Cola may contribute to the probability of tooth caries and loss of bone density. An excessive amount of carbonated drinks can lead to serious obesity problems. To some extent, the components in Coca-Cola are not actually harmful to people if they have occasional soft drink. Even so, the products are still labeled detrimental to individual’s health. Coca-Cola should make effort to sway people’s negative views. For instance, the company actively responds to environmental issues by investing money in sustainable business.
Opportunities
For growth and profits, Coca-Cola has developed certain opportunities to improve present conditions in its business. Coca-Cola’s opportunities may include developing eco-friendly concept and investing in potential markets.
5.1 Healthy options and sustainable business
Owing to the growing awareness of health issues, Coca-Cola response to consumer’s interest in new healthy beverages. For instance, the company has opened up a low calorie version and it has been named Coke Zero. Almost 25% of the product portfolio has been labeled as low or no calorie to differentiate their production line. (Marketline, 2011) Moreover, Coca-Cola introduced eco-friendly packaging and up to 30% of their bottles used less fossil fuels. It seems that they are trying to operate business without enlarging carbon footprint. To enhance business’s strategic foresight, many companies have concerned about environmental-concerned issues. Coca-Cola moderately assesses both business and sustainability aims by eliminating waste and investing in recycle programs. Therefore, it could be a great role model for other enterprises.
Investment in potential market
There is a significant demand for nonalcoholic beverages worldwide. The revenue is rapidly growing by about $10 billion annually. Coca-Cola plans to invest more than $1 billion this year in Mexico because of its growing economy and expanding per capita income which attract international corporations. In addition, Coca-Cola is also targeting its less developed markets. The company and its bottling partners will invest $5 billion in India by 2020 because India is one of its fastest growing emerging markets. (Marketline, 2011) Hence, Coca-Cola is probably prepared to rehabilitate its damaged reputation in India as the company has been blamed for polluting groundwater and soil. Furthermore, Coca-Cola seems to be confident about the future business in potential market. The company may offer more job opportunities and improve commercial relations between U.S. corporations and other countries.
Threats
Coca-Cola dominates its market. In spite of this, there are still some external threats present. This section will discuss competitive rivals and barriers when entering new market.
6.1 Competition
Coca-Cola has intensive competition in various sparkling nonalcoholic beverages. Factors that impact the company’s business include pricing, advertising, product innovation and protection. PepsiCo is one of the company’s primary rivals, when one is up and the other is down. For example, Coca-Cola is still mostly seen as a carbonated beverage, whereas PepsiCo has diversity of snacks and other food products to keep the company’s revenue high. (Sellers, 2011) Although Coca-Cola has the strength of recognition that force it dominates in the soft drink industry, the growing number of soft drinks companies may have potential to influence Coca-Cola’s market share and revenue growth rates.
Market entry barrier
Despite Coca-Cola ambitiously expand its production scale around the globe, the company still receives a challenge to reach this goal. For instance, the Chinese government rejected Coca-Cola’s acquisition of the Chinese company Huiyuan juice, even though the company announced a week earlier that it would commit $2 billion to the expansion of China in next three years. (Harvard Business Review, 2011) This failure could be attributed to China’s Anti-monopoly law. However, there was no conflict between these two companies. ‘Coca-Cola just draws from a lesson that China was not ready to evolve the sale of a national brand to a foreign company.’ (Kent, 2011) China would undoubtedly be the vast growth market for Coca-Cola. However, it seems probable that the government legislatively protect domestic firm from a foreign takeover. The government seems to regard that this merger could lead to a vicious competition in Chinese beverage industry.
Conclusion
It is no doubt that Coca-Cola Company is a powerful, globally recognized corporation. Coca-Cola is much more than just a recognized logo or brand name. It has achieved to develop a notion about universal refreshment. Moreover, Coca-Cola’s success mainly results from its proactive management, innovative marketing and global distribution. However, the unhealthy stereotyped image of Coca-Cola is hard to reverse. In addition, the entry barriers and competitors from other brands may hinder the development of Coca-Cola. Therefore, the company is raising its awareness to create sustainable communities for social responsibility. In the next decade, the company and its partners are likely to invest in further development of manufacturing capacity, consumer marketing and brand building, expansion of distribution and innovation. Coca-Cola seems to make every effort to raise its brand image by marketing strategies. Owing to the company has a recognizable image to influence people all over the world. Coca-Cola should be a pioneer to raise other enterprise’s awareness for social sustainability and philanthropic funds. It may give rise to a new business foresight and more innovative possibilities.
Bibliography
Sellers, 2012. The New Coke
Marketline, 2011. The Worlds Most Recognisble Brand
Adi, 2011. Shaking things up at Coca Cola – Harvord Business Review
Hailu and Laurie, 2011. Determining the Value of Coca-Cola Company
Mellalieu, 2011. Brand Health Check - Bubbles pop in the Coca-Cola market
(Database: Business Source Complete)
Strategic management 2008 Neil Ritson/ ISBN-13: 9788776814175
