Strategy formulation in a company

Since it is a crucial step in the strategic management process, developing a company’s strategy is a never-ending process. Strategic management is described as the ongoing process of creating and inventing goal-oriented plans that assist an organization in achieving its objectives while taking into account the resources at hand and the environment in which the organization operates (Wheelen, 2011). The Chief Executive Officer and top-level management are primarily responsible for carrying out the strategic management process. In order to make sure the strategy is successful in reaching the company’s goals, the management takes a number of things into account during the strategy formulation phase. This essay aims to carry out the Coca-Cola Company’s strategy formulation. The paper commences by assessing the long-term goals and objectives of the company. Further, the paper examines specific business strategies including vertical integration and strategic alliances, to accomplish competitive advantage over its rivals in the beverages industry. The paper concludes by outlining the company’s organizational chart.

Coca-Cola long term goals and objectives

Coca-Cola is a market leader in the non-alcoholic beverages industry, with operations in over 400 countries. The brand’s success is mainly attributed to innovation of new products and expansion of its existing products into new markets. Coca-Cola’s mission statement provides a roadmap for the long term growth of the company. The vision statement provides the strategic plan that will enable the company achieve significant growth in the long term. The main objective of Coca-Cola is to be a globally recognized brand that carries out its operations in an ethical and efficient way. Another goal of the company is to maximize shareholder’s wealth by increasing profits and market value.

Strategy Formulation

Given the outstanding entry of competitors in the beverages industry, Coca-Cola should expand its market operations in Canada by using its subsidiary Coca-Cola Canada. The soft drink industry in Canada has more than 20 bottling brands. The total revenue in Canada’s soft drink industry is estimated to be around $ 6.1 billion, with a projected annual growth of 3 percent (Chriqui, 2008). Over the years, the consumption of soft drinks in Canada has been on the rise. Given this statistics, it is evident that Coca-Cola should expand its business operations in Canada. Of importance; what resources and capabilities are required by Coca-Cola to pursue this market? The company must ensure it has a skilled workforce to carry out its business operations. The top management should have experience and be well versed with the Canadian beverage industry. The staff should possess the necessary skills required to implement the strategy. The company should also ensure it has adequate finances and assets to expand its operations in Canada. Proper budgeting and planning should be done to ensure the strategy does not stop due to financial constraints. Lastly, the company must ensure it has easy access to raw materials.

Expansion in the Canadian market will offer great value in this market. To start with, there will be creation of more jobs, either directly or indirectly. Consumers will benefit greatly due to business competition. These benefits include; good quality products and a large variety of soft drinks with affordable prices. Coca-Cola is known to produce a wide range of quality non- alcoholic beverages.

There are various strategies that Coca-Cola can implement to capture value in the Canadian market and sustain competitive advantage over time. Competitive advantage is simply defined as what a company is good at. It explains why consumers would prefer buying goods from a certain organization. Competitive advantage comes about when a company acquires a trait that enables it to do better than its opponents. Coca-Cola may use reduced cost as a competitive strategy. In this strategy, the company sells good quality products at lower prices than its competitors, thus attracting customers. The company may also use product differentiation strategy. Product differentiation is where the company sets its products apart from its competitors, by making it more attractive to the consumers (Dubé, 2005). Coca-Cola must have a clear understanding of the customer’s preference so as to package its products in an appealing way. Reduced cost and product differentiation strategies create customer loyalty therefore increasing the company’s market share.

Business management strategy

Coca Cola’s top management need to be creative when coming up with corporate strategies the company should adopt. Such strategies are mainly concerned with how the organization carries out its operations to achieve significant growth. Corporate strategies can be categorized into two major groups; diversification into other business activities and expansion into the current market. Diversification tends to be more risky because the company is venturing into a new market. On the other hand, expansion into the current market is a risk aversion strategy. It is suitable when the organization’s current market exhibits growth potential.

A company can expand its operations in the current market through horizontal integration or vertical integration. Horizontal integration involves expansion of the company’s current products at the same part of the supply chain. Vertical integration is where an organization carries out its activities in more than one distribution network. The company manufactures and distributes its products directly to the consumer. It is a good strategy when the company enjoys competitive advantage over its rivals. The main advantage of this strategy is that the company enjoys great control over its distribution networks. It is a cost effective strategy, in that the company scraps out middle men in its distribution channel.

Corporate strategies adopted by a firm can be conducted internally or externally through strategic alliances such as mergers and acquisitions. Strategic alliances occur when two or more companies decide to consolidate to undertake a distinctive, mutually beneficial project. This strategy is useful when the company is venturing into new markets. The main objective of strategic alliances is for all the parties to benefit equally from a project through sharing of ideas and resources. Strategic alliances may be short-term or long-term, depending on the objectives outlined by the parties.

Organizational structure

Coca-Cola has divisions all over the continents, with presidents who run operations in each division. All subsidiaries are under supervision of the head office. Hence the head office and Board of Directors must approve all strategies that subsidiaries adopt. The organizational structure implemented by Coca-Cola is efficient since it is a large corporation. Coca-Cola Canada falls under the North American Group division. The structure is summarized in figure 1.

Figure 1 Coca-Cola organizational structure

Conclusion

In conclusion, Coca-Cola should adopt cost reduction and differentiation strategies to sustain competitive advantage. The strategies should be conducted through strategic alliances with established firms in Canada, depending on the objectives of the company.

References

Wheelen, T. L., & Hunger, J. D. (2011). Concepts in strategic management and business policy. Pearson Education India.

Chriqui, J. F., Eidson, S. S., Bates, H., Kowalczyk, S., & Chaloupka, F. J. (2008). State sales tax rates for soft drinks and snacks sold through grocery stores and vending machines, 2007. Journal of public health policy, 29(2), 226-249.

Dubé, J. P. (2005). Product differentiation and mergers in the carbonated soft drink industry. Journal of Economics & Management Strategy, 14(4), 879-904.