Category: Analysis papers

Analyze your experience in working with your team for the Team Project on Leadership. Discuss the factors of your team’s virtual communication challenges and successes within the context of the module information on communication, conflict, and negotiation, and your own research as needed.

Address what you could have done to enhance the team’s ability to work together more effectively, and what lessons you have learned about virtual communication and your own abilities for future team participation?. …………….

 

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You are to develop the fundamentals of strategic plans for the Ford Motor Company and the Toyota Motor Corporation, two giants of the automobile industry. You are to develop SWOT analyses and propose strategies for the two multinational enterprises. In doing so, it will be necessary to research, analyze, and compare both firms to understand better their current position and future plans to increase competitive advantage. Common problems facing each auto giant today are the current economy; the competition of the other auto firms; and the demand for a lower cost, more ecologically friendly, alternative fuel vehicle. Your research should include the following issues for both firms (Ford and Toyota). Present your data in the form of a comparative table.

Issues Ford Toyota Legal, Social and Economic Environments Management Structure Operational & Financial Issues Analysis of Strategic Intent Social and External Challenges Current Manufacturing Facilities & Distribution System Market Demand & Demographics Alternative Fuels & Propulsion Systems

Your document must evaluate, compare and contrast Ford’s and Toyota’s current position on these issues. Respond to the following: 1.Take the perspective of Ford’s Director of Strategic Planning to develop a full SWOT analysis of Ford, identifying and explaining at least five factors for each category (strengths, weaknesses, opportunities and threats) and propose a complete strategy (implementation, ramification and evaluation) which addresses one of Ford’s weaknesses and what you would do about it. 2.Take the perspective of Toyota’s Director of Strategic Planning to develop a full SWOT analysis of Toyota, identifying and explaining at least five factors for each category (strengths, weaknesses, opportunities and threats) and propose a complete strategy (implementation, ramification and evaluation) which addresses one of Toyota’s weaknesses and what you would do about it.

 

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Religion and Spirituality in the Workplace
On page 248 of your textbook is an exercise of Religion and Spirituality in the Workplace . Choose two of the four scenarios presented and answer the following questions for each scenario.
•What are the possible explanations for the person’s behavior? •How should management/leadership respond to this situation? •How should the employee respond to this situation? •How should the employee’s co-workers respond to this situation? •After answering the questions for each scenario, discuss a religion that you are familiar with and how that religion could potentially impact the workplace.
Textbook: Canas, K. A., & Sondak, H. (2011). Opportunities and challenges or workplace diversity: theory cases and exercises. Upper Saddle River, NJ: Pearson Education, Inc.

 

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Target Corporation
Corporate Profile Module I: 1) Introduce your company. what does it do? How did it get started? How does it add value? Who are the customers it competes for? What risks confront the company? What type of business is it-goods-producing or service? What industry does it operate in? What is it knowe for? Write an opening paragraph that engages your reader from the outset! 2) State its mission, vision, and values. Define these terms using the definition from Bovee and Thill. The mission: Most companies state their mission on their websit. Use your company’s own words in your paper. The vision: You may have difficulty finding a statement of you company’s vision; if you can’t find it, you should state the vision in your own words based on what you have read about the company’s philosophy and values on its website. 3) Analyze your company’s mission statement. Is it just “vague happy talk” or does it really say why the company exists?

Corporate Profile Module II: 1) Discuss corporate ethics. Define business ethics. How does your company approach corporate ethics and what guidelines does it set forth? Does it adhere to what it says? 2) Discuss the concept of “Corporate Social Responsibility. ” Who are the company’s stakeholders? How does your company fulfill its responsibilities to its primary stakeholders-owners, employees, and customers? What approach does it use to CSR-Minimalist, Cynical, Defensive, or Proactive? 3) Discuss workforce diversity. Define this concept. Why is workforce diversity important? How does your company obtain or try to obtain a diverse workforce? Does it have a diversity policy? What evidence do you find that your company carries out ( or fails to carry out ) its policy?

Corporate Profile Module III: Discuss the marketing concept and why it is important to a business. What factors in the external environment affect your company? (Cosider economic conditions, the natural environment, social and cultural trends, laws and regulations, and technology-p. 293 of Bovee and Thill.) who constitutes your company’s target market? What market-coverage strategy does your company use-undifferentiated, differentiated, concentrated, or micromarketing?) what media does it use to communcate the company’ image and marketing message?

Globalization 1) why do companies engage in international trade? (pp. 49-50) Is your company “global”? If it isn’t, why do you think it has chosen to remain purely domestic? 2) If it is global, what cultural and legal differences does it encounter in the global business environment? (pp. 58-61) 3) what form of international business activity does it engage in? (pp. 62-64) 4) Which strategic approaches does your company use? (pp.64-65) 5) If your company does not engage in international business activity, what country do you think would be good for your company’s expansion, and what strategic approach would you suggest? 6) if your company does have international operations, do you think the selected strategy is working? Would you change anything about your company’s strategy?

Corporate Profile Module IV: Google finance and Yahoo finance are excellent resources for your discussion of the financial performance of your company. Comparisons to other companies in the industry will serve to enhance your paper. Follow your class finance notes for this section. 1) Describe your organization’s financial performance. Insert the financial tables as explained in class. 2) Include and describe the Value Line report for your company. 3) How would you evaluate your company’s performance? 4) What are the prospects for future performance? 5) Perform a brief SWOT analysis on your company

You can use tables to summarize the data in this section.

Corporate Profile Module V: 1) find an article ( or multiple articles) that discusses an important issue currently facing your company. 2) How do you think your company is positioned for the the future? Is your company an industry leader who will continue a position of leadership? Is your company losing market share? Look into the future and predict how your company will perform in the next five years with some justification for your answer……………….

What are the strategic objectives of your organisation? Which stakeholder demands are these strategic objectives intended to address and satisfy? To analyse this question, use the ethics matrix and stakeholder theory to identify the definitive, dominant and other stakeholders, and their demands. Then address the question: do the strategic objectives of your organisation align with, and address, the demands of these stakeholders? You may want to summarise this analysis in table form. What do you conclude if stakeholder demands and strategic objectives align? If they do not align, is there a significant issue emerging for your organisation?

 

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ANALYSIS OF THE CHOCOLATE INDUSTRY IN UNITED KINGDOM

Describe how the Chocolate industry is growing………………..

Introduction

UK Chocolate industry produces with no doubt a wide variety of chocolate brands manufactured by various manufacturers namely; Mars (bars), Nestle (milky bar), Cadbury (dairy milk), master foods (galaxy), Nestle (kit Kat), Cadbury (dairy milk Fruit &Nut), Cadbury (milk mint) and many more brands. These brands are distributed worldwide to regions where their demand is high which is at different levels due to the varying tastes and preferences and the distribution mechanisms applied.

The Current Demand for Chocolate

The demand for confectionary chocolate in the Middle East and Africa is strong within the middle class consumers and the sales have grown with growths in population. The retail sales volume of chocolate consumption has grown by 2% in Iran while the dark chocolate tablets have increased by 10% in Saudi Arabia. In South Africa the Snack bars consumption have grown by 2%. Americans make use of a round £3billion of chocolate every year but Europeans consume more per capita. Most consumption depends on the seasons where more people consume in winter. Most consumed brand is the kit Kat and the Cadbury brands which have markets all over the world. The chocolate is consumed in the form of chocolate bars, powder form, as beverages and other styles (Sarah, Amy, and Scot 2006)

The past demand for chocolate

The chocolate demand in the past ten years has been growing with time where environmentalists claim it’s due to changes in weather conditions. Europe has been leading in chocolate consumption followed by America especially with the hot chocolate drinks. The demand for chocolate depends on price, income, population and population structure and tastes and preferences. As the price rises up the demand goes down, contrarily, as income rises the demand raises. The population structure that has most youth increases the demand compared to the old and as the tastes and preferences of the population goes up for the chocolate brands so does the demand for the products. There has been a higher demand for chocolate products globally for the last 30 years attributed to the changing tastes and preferences due to environmental changes.

The market structure for chocolate

Chocolate has an international market despite its main usage being in North America and Europe. The Asian market is gradually rising with the main companies; Hershey’s Chocolate and Mars Candy Companies commanding a big share of production and supply of candy chocolate. U.S has majorly Oligopoly production of chocolate. Any company can enter the market though the market is very competitive and therefore the local companies have to compete with foreign companies that do a lot of importation. By the year 2005 the total sales showed that Mars Inc led with U.S $9546 million, followed by Cadbury Schweppes PLC with U.S $8126 million, Nestle SA came third with $7973 million; Ferrero came in Fourth with$5580 million and Hershey foods Corp closed the top five with $4881 million in total sales. Kraft Foods Company had total sales of $ 2250 million while Meiji Seika Kaisha ltd had $1693 million $20million more than Lindt. Barry Callebaut AG and Ezaki Glico Co. Had total sales of $ 1427 and $ 1239 million respectively during that the same year. These are the major companies commanding the chocolate market in the world though the market is highly contestable with more than ninety players in the market. The industry is regulated by food and drug administration because it falls under the category of foods. Therefore they give guidelines on the ingredients used in the manufacture of chocolates and its products.

Conclusion

With the rising prices of cocoa, consumers of chocolate in UK are finding it hard to cope with the escalating prices. Despite escaping the worst of the depression due to its affordability, price sensitivity is affecting it immensely. The manufactures are responding by reducing their weights and increasing prices due to a rise in cocoa price. The consumers now prefer to buy smaller packs and they may later substitute to snacks like yoghurt and crisps. The chocolate consumption may be a thing of the past as time goes by in regard to the growing concerns about the future of cocoa production.

The Firm Theory

Introduction

The buyers’ bargaining power is very strong when there is an excess supply of the chocolate products. These in turn lowers the profits level of the firm. These calls for innovation by production of different brands to enhance customer loyalty and producers control of the pricing efforts. On the other side the suppliers may have a competitive force that may weaken the level of profits in a firm. Other factors that affect the pricing mechanism of the chocolate include; availability of substitutes, tastes and preferences, competitors pricing and seasons. For profit maximization, the producer must evaluate keenly these factors to avoid overpricing or under pricing.

The Pricing Mechanism for chocolate firms

The price of cocoa and chocolate is fairly inelastic in the short run. This implies the there is a small effect of price changes on consumption. A typical chocolate firm may hold income of consumers fixed and prices to fluctuate. Let’s say if they let P1 vary and hold P2 and income M fixed, a curve referred to as the price offer curve will be formed by the locus of tangencies. This result into a situation where a lower price for product 1 will lead to a higher demand for the product 2 such that the law of demand is attained (Tian 2011). In the other situation a reduction in price of product 2 will cause a reduction in demand for product 1. To maximise profits they will take the highest curve tangent and determine the price to charge the consumer at equilibrium.

Another way of pricing the chocolate products is by use of participative pricing (Kim, Natter, and Spann 2009) where the buyer is allowed to pay for what he wants. This involves analysis of behaviour of the buyer and the effects for the revenue realized. It was discovered that through the behaviour, a buyer could not pay a zero price for the products. This is caused by the interference within the buyer’s willingness

Conclusion

Pricing of products is of essential importance to any manufacturing firm as this may determine whether or not the firm may make profits. However, firms should consider all the factors affecting demand and supply to prevent overpricing of the chocolate products. Besides, innovation of different products of good quality may be a way of diversifying with the change in the world market supply of the raw materials since the cocoa production is gradually deteriorating. Hence future prices might be too much for chocolate lovers.

Causes of the recent recession

Introduction

Recession is a period of downturn of the economic activities of a country or the world at large. It leads to low consumer confidence, reduction in values of homes, rise in food and fuel prices and generally a financial crisis. The world at large experienced a period of recession in the late 2000 where most affected were the stock markets holders and home owners in the Europe and America and Asian countries. It began in the year 2007 only to end in 2009 though the effect is still being felt till now with the high fuel prices.

The Causes of the recession

Differing debates have been put fourth as to what caused the depression, some economists point out that the origin of the crisis was caused by downfall of the real estate market in 2006 due to huge U.S debts. On the other side some economists claim there was poor regulation structures by Alan Greenspan the U.S Federal Reserve Chairman in relation to financial instruments regulation.

Recession was also caused by the high interest rates which minimized the liquidity increasing the rates by 6.25% in May 2000. The Federal government slugged to increase the interest rates again when the economy boomed in 2004.

The impact on U.K economy

The U.K had to reform its taxation systems through household’s tax rebates in order to support certain sectors like the housing sector. €200 billion was proposed by EU for all the European countries to adapt in 2008. The British government also called for a rescue package for banks which saw the increase in capital markets and setting a side of a liquidity stack for banks. Besides since the pound fell down in value against the dollar value, this made imports expensive and their exports very cheap. The interest rates for foreign debts went up for the U.K economy making the cost of foreign borrowing by the local investors to rise up. Some of their chocolate products had to be sold at cheaper prices reducing the profit margins. Some chocolate firms were to be sold hence posing a threat to the employment rates e.g. Kraft Foods which took over Cadbury. This caused more of cyclical unemployment for the chocolate workers. The quality of the chocolate brands may in turn be jeopardized since the Kraft foods co. is a firm struggling with debts and hence through its greediness it may try to compromise with the quality of chocolate brands through cost minimization.

Conclusion

Inflation affects all sectors of the economy and in valuation of a firm the board of directors should factor this in its valuation before putting forward their ask price. Cadbury in its initial bid did not factor this but later on changed its bid price to £11.5billion resulting into a renegotiation with Kraft foods company. The Kraft company should not be greedy to make profits by a possible layoff of the employees as this may cause further crisis in the U.K.They should rather find a proper way of minimizing the costs to make genuine profits.

Determination of exchange rates

Introduction

Exchange rates refer to the price of one countries currency in relation to another’s currency for example U.S $/K.shs. the exchange rate may be a spot rate where there is trading of currencies for immediate delivery in the interbank market or forward rate where the delivery is done at a quoted future date. The market for currencies can not be seen but rather it’s done electronically through use of foreign brokers and dealers who link the buyers and sellers of foreign exchange.

How the market works

Demand of currency

The foreign exchange market demand for pound arises from the American demand for the pound valued financial assets. If the prices are set in pound in the U.K the Americans have to pay for the pound priced goods of which they have to exchange their dollars for Pounds, thus they will demand the pounds. Higher price for the dollar reduce the U.S demand for Pound rated products. Similarly, as the dollar value for the pound falls the American investors demand more of the pound hence U.K products will be cheap resulting into a down-sloping demand curve for pounds.

Currency supply

The supply of pounds equivalent to dollar demand is commensurate to pound denominated land demand for U.S products/assets. For the U.K residents to pay for their U.S goods they must get the dollars. As the dollar value for the pound increases reducing the cost of pound for U.S assets the higher pound demand for U.S assets results into pound demand for the dollars thereby raising the supply for pounds.

Why the Pound fell against the dollar

Following the recent recession and debt crisis the British pound succumbed to the U.S dollar. This was as a result of higher prices for domestic energy due to inflation that is still being experienced worlwide. Besides, the sterling pound has continued to fall for the last 12 months due to the increasing borrowing rates. The cost for foreign borrowing for British firms from the U.S companies went up which forced the Cadbury to revise its bid price to £11.5 billion due to its £22billion of foreign debt it poses. The Kraft Foods co. immediately announced 840pence as the share price and 10 pence as dividends. The Kraft co. May shed off over 7000 employees at the Cadbury with the interest of making profits.

Conclusion

Exchange rates determination and regulation should be carefully observed by the relevant authority to protect both foreign investors and local investors from price fluctuation. Proper mechanisms should be put in place by the British government to control the falling value of the British pound against the dollar. In most cases it’s the foreign investors who suffer most due to a fall in the exchange value of the British and Sterling pound. Besides, it calls for a collective responsibility between the foreign exchange dealers and the government for effective stability of the Pound.

THE FUTURE FOR CHOCOLATE INDUSTRY

Introduction

Chocolate products have no doubt the highest demand across the world with the continued product differentiation to suite the tastes and preferences of different consumers. The industry as discussed earlier has an oligopoly market structure which implies that any firm can enter and leave the market. It faces extreme competition and therefore local firms with little capital input may be phased out of the market if they are not innovative. With the unchecked rates of inflation some of the industry may find it difficult to control its production costs.

The Future of the industry

In future, say 30 years time the world might run short of chocolate since the cocoa farmers might abandon their crops due to low returns they get from the firm. The prices of the products might continue to escalate as the cost of the cocoa goes up. This is due to the low incentives the farmers get for their crop hence most of them might substitute for other cash crops making the available ones too little for mass production. Besides uncontrolled pests and diseases lowers the quality of the plant requiring the farmers to renew the plant which is tedious and hence possible abandonment of the plant. With the growing upsurge of population the agricultural land is becoming competitive for production of cocoa plant. The weather change is another concern which due to aridity may reduce the production of cocoa for export. We are going to have a serious decline as a result of this phenomenon thereby making cocoa to be a thing of the past.

Conclusion

Despite all the concern about the future of cocoa, there is little hope for chocolate lovers as other continents like South America, Caribbean and Asia who also produce cocoa which may sustain its production for some more time. Though it is not known how long it may last cocoa production still remains a concern among researchers find away of dealing with this possible extinct of cocoa plant to prolong production of cocoa.

References

Guoqiang Tian (2011) Microeconomic theory, Texas A &M university college station Texas

Ju-Young Kim, Martin Natter, and Martin Spann (2009), Anew participative Pricing

mechanism, Journal of Marketing, issue No. 74 Pp 56

Sarah, Scot, and Amy (2006), The market for chocolate, Trinity University

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5
Applied Strategic Management Studies

Carry out an outline strategic analysis for a company/SBU of your choice. The completed project should include the following analysis

1. An appraisal of the relevant business environments and major competitors including the derivation of key success factors.

2. An appraisal of company resources and capabilities, and an assessment of the company financial performance in terms of efficiency, profitability and gearing, including the derivation of distinctive competencies.

3. A review of the options available to the company and recommendations for future strategic direction.

4. Recommendations for structures, systems and policies to implement these strategies successfully.

5 Outline your assessment of the usefulness of strategic management models for your company analysis.

 

REPORT ON STRATEGIC ANALYSIS, CHOICE AND IMPLEMENTATION IN THE COCA-COLA COMPANY

EXECUTIVE SUMMARY

The Coca-Cola Company is one of the leading companies in the beverage industry producing non alcoholic carbonated soft drinks but recently it has moved to production of functional soft drinks because of the increasing demand for these drinks and also because of the increasing competition. A strategic analysis of the company is necessary to determine how future strategies will be developed and how they will be implemented for the company to reach its desired future state.

In analyzing the company’s strategic position the SWOT analysis model was used to determine analyze the company’s internal environment and external environment. The PESTEL analysis model also proved to be a good tool in analyzing the external environment further, while the five forces model was used to assess the industry attractiveness.

Major strengths include its strong brands, introduction of new carbonated products and innovation of some functional drinks, as well as very strong distribution channels around the world. Weaknesses of the company include; a bad reputation among its customers and peers, difficulties in adopting change quickly and also lack of its own bottling facilities.

Opportunities come from the political, economic and technological environment while its threats emerge from the environmental factors, social as well as the technological environment.

Key success factors of the company come from its well-built global presence, strong brand names, good distribution networks, advertising strategies and ability to innovate. Some of Coca-Cola’s competitors include PepsiCo, GSK, Cadbury Schweppes and GlaxoSmithKline

In order to determine the strategic choices available to the company and an appropriate strategy for the company to reach its desired state the Ansoff matrix was used. Recommendations are given on the appropriate strategy and also on ways of implementing these strategies in terms of Coca-Cola’s structure, policies and systems.

STRATEGIC ANALYSIS, CHOICE AND IMPLEMENTATION IN THE COCA COLA COMPANY

INTRODUCTION

The Coca-Cola Company is a market leader in the beverage industry supplying its products worldwide. It has its headquarters in America with branches around the world. With its global presence, and with the need to produce more functional products, it is important to assess the business environment, competitors, resources and capabilities, strategic options as well as ways of implementing strategies in the company. The purpose of the report is to give a detailed analysis of the company’s strategic position, its strategic choice and implementation.

STRATEGIC POSITION / ANALYSIS

This is the first stage in strategic management. It assesses the current state of the company in terms of its internal and external environment, its competition, its resources and capabilities as well as the key success factors (Williamson Cooke and Jenkins 2003).

Analysis of the internal (resources and capabilities) and external business environment and competitors

SWOT Analysis

Strengths

Over the years the Coca-Cola Company has established its brand of products in over 200 countries around the world and most of its products have continuous demand in the countries in which it operates and in countries where it supplies its products. The company’s brand of products, that is Coca-Cola, Fanta, Diet Coke and Sprite have continued to be market leaders and represent one of the major sources of income for the company (Lewis 2007). This is mainly attributed to the loyalty among the company’s consumers.

Even with growing competition from companies such as PepsiCo, GSK and Red Bull, it has managed to have continued growth in sales as more and more consumers are in demand for its products while new products are gaining market as well. New innovations such as Coca-Cola Zero upon its introduction and launch in North America managed to gain a 1% market share in supermarkets, meaning the company has a constant market for its products (Lewis 2007).

The company has continued awareness on the need to shift its Non Dairy Drinks from the typical Carbonated Soft Drinks it is known for to the Functional Soft Drinks category. The major reason for this awareness is because demand for the functional drinks such as energy, sports and hydration drinks is on the rise and it is likely to be overtaken by competitors if it sticks to the carbonated drinks. Major innovations of non carbonated drinks of the company include the minute maid brand which has proven a success in the countries in which it is currently available.

The company through its Coca-Cola Enterprises has great distribution channels from which products are made available worldwide in order to achieve global penetration. Existing distribution channels have been adequately utilized to help in the distribution of other upcoming products (Lewis 2007). For instance, It has been able to utilize the Diet Coke distribution channel to retail the Diet Coke Plus product. This has enabled them to make the Diet Coke Plus brand to reach its customers with ease.

Weaknesses

The Coca-Cola brand of products has over the years been associated with the conventional soft drinks as opposed to the new functional drinks. Even though it is gradually adopting production of the FSD products, it is doing so at slow pace that is not enough to sustain the number of consumers interested in its array of non carbonated drinks.

Shortly after introduction of Dasani, a brand of bottled water in 2004, the company realized that it had used surplus amounts of bromate in the water and it had to recall the product. The company had the option to continue selling the product but it recalled it because it posed great health risks to the consumers (Hindle 2008). If the consumers were to take the water in large amounts then they were at a risk of getting cancer. However, the company’s good intentions were prejudiced by the public who believed that the company had not practiced caution when producing the water. Apart from a large loss which was incurred due to the recall, $32 million, this incident has made its customers have a certain lack of trust in the Dasani water which the company continues to produce to date.

One of Coca-Cola’s weaknesses also seems to be its lack of sufficient bottling facilities. Over the years it has had to rely greatly on other bottling companies where it has limited control over the activities of these companies. Some of the bottling companies are prone to changes in the market and increasing competition from competitors, this has made the company unable to increase their products’ prices because for such increases to be successful, the bottling companies have to convince the consumers to buy the products with the high charges in place. However, the companies have not been able to convince them because they themselves lack funds to compete with competitors and if consumers can not buy the products at high prices they need to lower them to continue having sufficient market. If Coca-Cola can not sufficiently increase its prices in the future, it is likely to suffer revenue impairment while its competitors are making huge amounts of profits (Hindle 2008).

The company’s has in recent years been affected by numerous rumours. In Middle East, targets were not met because the consumers in that region are vulnerable to the rumours about the company being against the Muslim religion. Rumours in India had been that the company’s drinks contained pesticides (Lewis 2007). These falsified statements have affected the company’s reputation and it still has a hard time convincing its customers from those regions.

Since the company’s major source of revenue comes from carbonated drinks, with the global decline in that market, the company is likely to make losses if it can not find sufficient market for its products while it adjusts to producing the functional drinks like its competitors.

Another issue that has adversely affected the company’s image is the increased number of job cuts that the company engages in, in a bid to reorganize and restructure its portfolio (Lewis 2007). In 2000 around 6,000 workers in the company’s headquarters and international operations were made redundant and still the company is contemplating more job cuts in the near future. This has made the company have a bad name in terms of its investments and human resource planning.

Opportunities

With its strong distribution channels around the world, the company has sufficient means for distributing its new functional drinks to consumers. It does not have to create new channels and this is as the existing ones are enough for that purpose. Besides providing a good opportunity for the company products to reach customers, as there are no costs involved, it will have engaged in cost saving measures (Hindle 2008).

Greater growth opportunities for the company are imminent because of the increasing mergers and acquisitions that the company is actively involved in. By forming such alliances with smaller companies, the company will be able to increase its customer base and it will also be able to build its weakening reputation because more consumers will have more faith in the company when they see others forming partnerships with them.

More people across the globe continue to consume beverages at alarming rates everyday. Research shows that people take beverages at the rate of 50billion times a day with Coca-Cola’s products accounting for 1.6 billion. Overall Coca-Cola has immense growth opportunities in countries around the world (Lewis 2007).

PESTEL environmental analysis

The macro environment factors that pose opportunities for Coca-Cola Company include:

The company operates in a favourable political environment as there are no strict laws imposed by the government on non alcoholic beverages because they fall under the food category required by the Food Drug and Administration agency (Lewis 2007). So the company is unlikely to get in trouble with governments in international operations. The only circumstances that could threaten its operations are amendments to laws and regulations and political unrest; however these are unlikely to affect the company as it has managed to thrive as a multi-national company.

The company also operates in a favourable economic environment both in America and in other countries as they offer greater sales opportunities. This is likely to provide immense growth opportunities for the company now and in the near future.

Technology wise, the Coca-Cola Company is rapidly using the internet and other forms of media to market its products. This has also become a major way in which it advertises its products to the public and creating more awareness for its existence among its customers and world wide.

Threats

Five Forces Model

Cadbury Schweppes which is a new entrant in the beverage industry took a main role in energy drinks with its Accelerade brand. This managed to garner $50m in the United States beating Coca-Cola’s energy drinks. Such entrants, pose a big threat to the company if it is unable to produce more functional drinks, it is likely to lose its market share and attractiveness (Lester 2009).

Competition and rivalry continues to intensify in the beverage industry (Dess 2011). Companies like PepsiCo and GSK pose a great threat to Coca-Cola because they produce more functional drinks than Coca-Cola and they are proving to be tough competitors than Coca-Cola had expected. Red Bull Company which also produces energy drinks has taken up a major role in the sports drinks as demand for the Coca-Cola carbonated drinks is gradually decreasing.

PESTEL environment analysis

The macro environment poses the following threats to the company:

The social environment poses a great threat to the company because more and more people are adopting a healthier lifestyle. More people are concerned with health issues and will strive to buy drinks that are non-carbonated as well as those that are recommended health wise. Carbonated drinks have been known to weaken the immune system and because of the sugar contained in them they provide higher chances of obesity cases. As many people adopt healthy living, the company is likely to lose its customers if it can not keep up with the demands of consumers to produce healthier products (Dess 2011).

The technological environment could also pose threats to the company as other companies are coming up with new products that are much healthier and those that serve a specific purpose to the consumers. If Coca-Cola can not keep up with the technological advances to produce more and new functional products then it is likely to lose its customers to competitors (Lewis 2007). For instance, in terms of energy drinks Lucozade and PepsiCo’s Gatorade have dominated the demand for sports drinks ahead of Coca-Cola’s Powerade.

In terms of its environment, water consumption could prove to a big threat. Water comprises the main component in the beverages. If the company uses water at a faster rate than is available, it is likely to incur shortages that may lead to production problems. Further, water is a very important resource in many productions but at the same time a scarce one in many countries. The company has also received criticism about the disposal of containers that have been said to pollute the environment.

Key success factors and competencies

A key success factor and competency of the company is the well established global presence because of its operations in over 200 countries in the world while supplying its products to billions of people worldwide.

Coca-cola’s success mainly comes from its unique brand of products that is Coca-Cola, Fanta, Diet Coke and Sprite. They have a sufficient and continuous demand from countries around the world and they account for the company’s major source of revenue. Building a renowned brand name has also proven to be one of its key competencies (Lewis 2007).

In terms of marketing its products, it has managed to make very memorable adverts that have continued to catch the attention of consumers and thereby getting sustained recognition from billions of them from all over the world. This is also a key competency because it has kept its consumers wanting more of its products through its numerous adverts.

With innovations of products such as Coca-Cola Zero, and Coca-Cola Vanilla which have been some of its key success in innovation, the company has proven that it has a key competency in innovations and it is able to adapt to changes in order to meet customers’ expectations.

Other key success factors include its abilities to form mergers with other small companies that have helped boost its image and its wide range of its products. Other competencies include unique distribution channels and skilled labour that has enabled it produce products for sustained competitive advantage (Dess 2011).

Analysis of the company’s financial performance as at the end of 2009

Efficiency

In terms of the company’s efficiency, the trade receivables days have increased from 153 days to 160 days. This means that the company’s debtors are taking longer to pay their debts in 2009 as compared to 2008. This is a 0.3% increase and even though a small margin, if the trend continues, the company will be prone to more bad debts that can affect its liquidity position as most of cash will be held up by debtors. Also the increase could mean that the company is having difficulties in its credit management system (Carey, Knowles and Clark 2011). To deal with the problem, the company should encourage early settlements and offer discounts for early payments, or it could even charge high interest rates for those debtors that have taken longer than expected.

Profitability

Net profit has increased by 2.4 % in 2009, this means that the company’s profitability is increasing at a very slow rate and this could be due to decreased sales in areas such as India and Middle East where the rumours have adversely affected the company’s sales level. Further the profitability might have been affected because declining market for the company’s products where customers opt to buy healthier and functional beverages.

Gearing

In terms of gearing the company’s debt to equity ratio has increased by 77% in 2009; however the company continues to be funded majorly by shareholders equity. For a recommended of 3:2, the company could be paying more taxes unlike if it were funded by more debt than equity that could enable it have more profits exempted from tax (Carey, Knowles and Clark 2011).

Usefulness of the Strategic management models used

SWOT analysis model

This strategic analysis tool is widely used to determine the internal strengths and weaknesses of a company as well as the external opportunities and threats that face a company. When used appropriately it is able to help one determine the current state of the company, both internally and externally. The model can also help the company in question find ways to optimize on its performance both for the current state and for the future (Hindle 2008).

In the case of Coca-Cola Company using the SWOT analysis tool helps to determine the strengths and weaknesses that the company is currently facing. These are internal to Coca-Cola and are those factors that exist that can help it develop strategies for the future. The external factors will help the company match its abilities with those factors in order to achieve optimal performance levels.

It is important that before strategies can be developed in Coca-Cola Company, its internal capabilities be addressed to see how they match with opportunities in the external environment and how to capitalize on these capabilities. Further the internal capabilities should be assessed to determine how they can be used to overcome threats in the external environment (Hindle 2008).

Opportunities in the environment can also be used to overcome the company’s weaknesses where they provide favourable conditions for the company to improve on its performance. It is also important that a combination of weaknesses and threats be avoided because they will only bring losses to Coca-Cola with the current immense competition.

PESTEL analysis model

The PESTEL analysis tool is vital in analysing a company’s macro-environment. In doing a PESTEL analysis, it is possible to determine how the company interacts with its external environment in order to identify the opportunities and threats that come with relating to the external environment (Williamson Cooke and Jenkins 2003).

A thorough analysis of the PESTEL macro-environment should reveal the key environmental factors that could help Coca-Cola capitalize on its strengths or help the company avoid activities that could lead to its downfall where it can not manage its weaknesses. Basically this strategic analysis model when combined with the SWOT analysis model should optimally assess the current position on Coca-Cola (Hindle 2008).

Analysis of the political, economic and legal environment is essential for the company because operating in various countries around the world could pose major challenges than if it were to operate on a national level (Williamson Cooke and Jenkins 2003). Further it is best that Coca-Cola is aware of the changes in the environment, society and in technology so that it is able to produce products that do not pose harm to the environment and it should not deplete the natural resources, it should also be able to produce products that meet the needs of society and are up to date.

Five Forces Model

Porter’s five forces model is also a key tool in analyzing a company’s competitive environment that is its industry. A company should always be aware of those factors that could pose great competition in the market. Factors include; the bargaining power of suppliers and buyers, threat of new entrants and substitutes, as well as the competitive rivalry among the companies (Dess 2011).

For the Coca-Cola Company, this model is very essential because with the increase in the number of companies in the beverage industry it needs critical analysis of how to combat competition, as it also looks for ways to deal with threats of new entrants such as Cadbury Schweppes. It also needs to ensure that it operates in an attractive industry if it has to improve its profitability.

STRATEGIC CHOICE

After the company’s current state has been analyzed, the next step is to develop strategies and to choose the best course of action that will help give optimal results in terms of its feasibility, acceptability and suitability to the company requirements. This chosen strategy should be one that will enable the company reach its future desired state (Dess 2011).

The Ansoff matrix

This is an essential tool that could help Coca-Cola and any other company to decide on a number of strategic choices in terms of growth in its products and markets (Lester 2009, p.52). Some of the strategic options available to Coca-Cola Company include:

Market penetration strategy

The company could continue to produce the carbonated drinks and at the same time continue with production of the functional drinks, while engaging in intense marketing to increase the market share of the existing brands in the existing markets. To drive out competitors Coca-Cola will have to devise a unique pricing strategy and engage in aggressive promotions to increase customer loyalty.

Product development strategy

The company could also decide to produce more functional drinks than carbonated drinks in order to keep up with demand for these drinks while keeping production of the carbonated drinks at a lower level. This will introduce new products to the existing market but the company will be required to have innovative competencies that will help it differentiate its new products from competitors (Lester 2009).

Market Development strategy

Alternatively, the company may decide to open up more markets in areas such as Middle East, India and other places around the world to increase the market for its existing carbonated and functional soft drinks. It may also need to form new distribution channels or use special pricing policies to gain a competitive edge in the new market.

Diversification strategy

Using this option, Coca-Cola will specialize in producing more functional drinks as well as finding new markets for those drinks. Such a strategy is very risky because a combination of products that the company has little experience in its marketing plus finding markets that the company has little or no knowledge could mean failure if more caution is not practiced (Lester 2009).

STRATEGY IMPLEMENTATION

For the any of the above strategies to be implemented successfully Coca-Cola has to adopt a number of changes in terms of its policies, structures and even its systems (Lewis 2009).

Structure

The company’s structure should be matched to its chosen strategy in terms of primary activities needed to accomplish that strategy, outsourced and internal activities, company’s building blocks, relations with external factors and the authorities needed to manage functional / divisional units within the company (Williamson Cooke and Jenkins 2003).

Systems and processes

New strategies may work with the existing systems or the company may have to do little changes to the systems. In terms of matching strategy with Coca-Cola’s systems, the company has to decide on whether to do redesign, improve or re-engineer its systems.

Policies

Organizational policies are also a key factor for strategy implementation (Lester 2009). Coca-Cola has to decide on whether to change its policies regarding the packaging or water usage for environment conservation purposes, or even its policies on product components in order to ensure the health and safety of consumers. Policies concerning workers’ welfare should also be taken into consideration.

CONCLUSION

Any company wishing to plan for its future must thoroughly analyze its strategic position to find the strategic options from which one viable course of action should be implemented to reach that desired future state. In the case of Coca-Cola developing strategic options is not enough it has to choose a strategy that is feasible, acceptable and suitable for its needs. Further it has to choose the right manner in which it is to be implemented.

RECOMMENDATIONS ON COCA-COLA’S STRATEGIC DIRECTION AND STRATEGY IMPLEMENTATION

If Coca-Cola is to reach its desired future state then it has to adopt the product development strategy. This is the most viable because it is acceptable and suitable to the company as it can use it to do away with competitors producing functional drinks. It is also feasible because selling functional drinks in its existing market will be easy because it has established a global presence. Further it needs to price these products in a manner that will attract customers to buy them.

Since Coca-Cola has an established structure, it will need little or no modifications. However, it will need to find a person with the required capabilities to foresee development of the new products. In terms of the systems and processes, they will need improvements to ensure that they can produce the required products in the best way possible, they need not be re-engineered. Further it will need to improve in its policies to avoid future environmental pollution or resource depletion, as it has had various cases of overusing the water available while its packaging has been criticized for environmental pollution.

 

References

Carey, M. Knowles, C. and Clark, J. 2011, Accounting: A Smart Approach, Oxford

University Press.

Dess, G. 2011, Strategic Management: Creating Competitive Advantages, McGraw-Hill

Education.

Hindle, T. 2008, ‘SWOT analysis’, Guide to Management Ideas & Gurus pp. 181-182 EIU:

Economist Intelligence Unit Business Source Complete, EBSCOhost, viewed 5 September 2011.

Lester, A. 2009, Growth management: Two hats are better than one, Palgrave Macmillan.

Lewis, H. 2007, Global market review of functional energy and sports drinks – forecasts to

2012: 2007 edition: Future growth strategies of leading energy and sports drinks companies, Aroq Limited, United Kingdom, Bromsgrove.

Williamson, D, Cooke, P, and Jenkins, W. 2003, Strategic Management and Business

Analysis, Elsevier Butterworth-Heineman.

 

 

Appendices

Appendix A: Coca-Cola’s financial statements for the year 2008 and 2009

Consolidated Balance Sheets as at April 2009 and April 2008

ASSETS April 2009 April 2008
CURRENT ASSETS
Cash and cash equivalents 6,816 4,701
Marketable securities 263 278
Trade accounts receivable, less allowances 3,139 3,090
Inventories 2,298 2,187
Prepaid expenses and other assets 2,198 1,920
TOTAL CURRENT ASSETS 14,714 12,176

INVESTMENTS
Equity method investments: 5,316
Coca-Cola Hellenic Bottling Company S.A. 1,386
Coca-Cola FEMSA, S.A.B. de C.V. 840
Coca-Cola Amatil Limited 680
Coca-Cola Enterprises Inc. –
Other, principally bottling companies and joint ventures 2,410
Other investments, principally bottling companies 441 463
TOTAL INVESTMENTS 5,757

OTHER ASSETS 1,793 1,733
Property, plant and equipment — net 8,425 8,326
Trademarks with indefinite lives 6,042 6,059
Goodwill 3,988 4,029
OTHER INTANGIBLE ASSETS 2,384 2,417

TOTAL ASSETS 43,103 40,519

LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses 5,651 6,205
Loans and notes payable 6,701 6,066
Current maturities of long-term debt 461 465
Accrued income taxes 356 252
TOTAL CURRENT LIABILITIES 13,169 12,988

Long-term debt 5,017 2,781
OTHER LIABILITIES 2,944 3,011
Deferred income taxes 865 877
THE COCA-COLA COMPANY SHAREOWNERS’ EQUITY
Common stock, $0.25 par value; Authorized — 5,600 shares 880 880
Capital surplus 8,021 7,966
Reinvested earnings 38,911 38,513
Accumulated other comprehensive income (loss) (2,893) (2674)
Treasury stock, at cost (24,207) (24,213)
Equity attributable to shareowners of the coca-cola company 20,712 20,472
Equity attributable to non controlling interests 396 390
TOTAL EQUITY 21,103 20,862

TOTAL LIABILITIES AND EQUITY 43,103 40,519

Consolidated Income Statements for the year ended April 2009 and April 2008

April 2009 $m April 2008 $m

NET OPERATING REVENUES 7,169 7,379

Cost of goods sold 2,590 2,624

GROSS PROFIT 4,579 4,755

Selling, general and administrative expenses 2,624 2,803

Other operating charges 92 78

OPERATING INCOME 1,863 1,874

Interest income 60 65

Interest expense 85 117

Equity income — net 17 137

Other income (loss) — net (40) (11)

INCOME BEFORE INCOME TAXES 1,815 1,948

Income taxes 456 448

CONSOLIDATED NET INCOME 1,359 1,500

Less: net income attributable to non controlling interests 11

Net income attributable to shareowners of 1,348
The Coca-Cola Company

Basic net income per share 0.58 0.65

Diluted net income per share 0.58 0.64

Average shares outstanding 2,313 2,322

Effect of dilutive securities 6 29

Average shares outstanding assuming dilution 2,319 2,351

 

Appendix B: Calculations

2009 2008

Efficiency ratio

Trade receivable days = 3139 /7169 × 365 = 160 days 3090 / 7379 × 365 = 153 days

Profitability ratios

Net profit margin = 1863 / 7169 × 100 = 26% 1874 / 7379 × 100 = 25.4%

Gearing ratio

Debt to equity ratio = 5017 / 21108 = 0.23 2781 / 20862 = 0.13

 

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Theoretical foundation: Consumer Behaviour Analysis

 

The science of behaviour needs to extend behavioural principles, technology and methodology gained in the course of vigorous experimental investigations further to the analysis of human choice in online settings. It is seldom possible, however, to undertake translational research in terms of extrapolation, for the circumstances to which experimental work is conducted may differ so fundamentally from those to which its methodology is translated, that some conceptual extension is required. Hence, while the underlying model of explanation remains intact, the sphere of application demands modification in how they are expressed. The need for conceptual development is required for the operant analysis of human economic behaviour in affluent, marketing-oriented social systems. While the underlying philosophy of science is unscathed in the process, the analysis accommodates novel topographies of behaviour and sources of reinforcement and punishment. But the interaction can be two-way: translational research may also be a source of new kinds of interpretation of familiar behaviour patterns.

 

 

Methodology and data:

 

Behaviour analysis offers its researchers a conceptual and methodological system that makes it possible to analyse the interplay between environment and behaviour. This entails verification of controlling variables and behaviour patterns by single case experimental designs . It is this focus on individual behaviour and experimental verification that is needed for further advancements in personalised retailing and web-based analytics, where we want to change and refine our marketing manipulations in real time.

 
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