SWOT Analysis of Coca Cola Company

The SWOT analysis is a snapshot of the organization performance and is used in determining the strategic options that can be utilized in improving the market position and competitive edge. Coca Cola Company operates in a soft drink industry having the largest market share in the industry. The excellent marketing strategy of the company has enabled it to keep a competitive edge and remain to be the dominant seller in the market. Pepsi is the company’s major competitor in the industry. Coca-Cola has established itself in the global markets which is a factor that has been a primary driver of the huge profits the company makes.

History of the Company

Coca Cola Company is a registered trade mark since its establishment on March 27, 1944. Initially, the coca cola company was established by pharmacist John Pemberton as a medicine producing company in 1884. In 1889, the company was bought by a businessman, Asa Griggs Candler who employed his magnificent strategic marketing tactics in the company. Through this, he managed to make coca cola company become dominant in the world market of soft drink in the entire 20th century. The efficient global marketing system has seen the company dominates in the market. The name Coca-Cola along with its logo were given by Mr. Pemberton’s accountant and they have remained to be in used till to date.

Internal and External SWOT Analysis

STRENGTHS

Brand name – Coca Cola brand is ranked among the most recognized, power wielding over consumer and popular beverage brands worldwide. This brand unconsciously and immensely influences consumer decisions.

Wide market share – The Company is world leading supplier in beverage. It is the largest and this has been significant in reaching wide market throughout the world. Coca-Cola exists in over 200 world countries.

Diversified beverage brands. Coca-Cola has around 550 brands worldwide. The diversification has been important in increasing the market share.

Vigorous, dynamic and strong global marketing and advertising campaigns. The Company is able to initiate the strategies through through print, broadcast and use of social media platforms. The advertisement campaigns reach many places, culture and people of all ages

Customer Loyalty- The established loyalty makes the company to remain the leading in the industry.

Increased levels of social responsibility in the community and thus increase its awareness. Coca cola sponsors many games including world cup.

Bargaining power over suppliers and generally enjoyment of the economies of scale.

Effective and extensive unparalleled worldwide distribution channels offered by bottlers. The idea is essential in creating a wide customer base.

Market segmentation. As a company, Coca-Cola has segregated regional bottlers where recently increased it stakes unlike before. This makes it easier to introduce new products into market and without much initial costs.

WEAKNESSES

Overdependence on beverages and narrow diversification of products than rival companies like Pepsi that have diversified products, offering snacks besides beverages.

Health risks as modern life food intake shifts towards the initial brands considered unhealthy with the need for conscious health living.

Decline in consumption of carbonated drinks due to healthy living concerns.

Revenues from traditional brands are sharply declining as revealed by revenue statistics from North America, India, and Asia as well as South America regions.

Increased debts due to new acquisitions such as Minute Maid

Too many beverage brands when some actually contribute little to overall company revenue.

Environmental concerns by firms in its wide network of companies.

OPPORTUNITIES

Focus and development of the non-performing brands to provide significant revenue streams.

Exploitation of the growth of reduced calorie content brands such as zero sugar and Dasani

Use of extensive worldwide channels to introduce new products

Increase in the consumption of bottled water.

Growth through acquisition which leads to market diversification.

Buying competition – Due to its large size, Coca – Cola can be able to buy competition from local products which sell patriotism.

Reduction in production costs coming via economies of scale and for specific market localities.

Development of new products based on different tastes and region

Potential of increasing market share in emerging developing markets like in China, India with high population

Using its aggressive marketing to retain its market share for dwindling market for beverages.

THREATS

Foreign exchange rate fluctuations. Coca-Cola employs people in different countries and whose revenues are paid in local currencies. These profits are changed to US dollars. A strong rate of the Dollar means reduction in the company revenues

Shift to healthy living diets and a need for enough drinks that pass the conscious healthy drinks bar. Currently, the company does not have enough of healthy beverage drinks.

Varied legal requirements in different countries to include food items and drinks information on products. This is negative information since the recipe is a guarded business secret.

Legal suits regarding misinformation on dietary content such as bromate in 2004 that led to recall of Dasani and lawsuits against health impact of artificial sweeteners against the company. This is amidst concerns for conscious healthy living issues and lifestyles.

Availability of water

Competition from saturated carbonated drinks market but largely from Pepsi, a company that is largely growing.

product diversification

Presence of local beverage brands in countries that enable to meet the tastes and preferences of many consumers.

Introduction of taxes on sodas

Negative publicity – lawsuits about healthy concerns of amount of calories in traditional Coca- Cola products

The impact of regional cultural differences.

Changing consumer tastes

SWOT analysis helps Coca-Cola in strategic formulation process and it acts as a guiding principle in resource allocation. The situational analysis is the backbone of the strategic plan and the company to focuses on marketing areas that would bring tremendous benefits. The buses employs the situational analysis to formulate ways of reducing costs and improving the organizational performance (Baah, 2015). The capabilities are used to add value and thus improve on the market share. The areas that need improvement are identified to improve on the company’s reputation. SWOT is instrumental in formulating desirable management strategies that attempt to solve the organizational problems. Risks affecting the organization are also identified and the outcome impacts on the growth and performance.

Conclusion

Coca Cola Company has grown immensely and this is attributable to vigorous marketing campaigns, strategic planning, and advertisement. Besides, the organization has been able to diversify revenue streams through diversified product brands. The company’s well-established brand as well as the huge market share creates barriers to entry for potential firms. SWOT is vital as it helps the company to make critical strategic decisions.

References

Baah Sandra. (2015). The Coca-Cola Company. Weebly. Retrieved on March 3, 2018 from https://sandrabaah.weebly.com/uploads/4/9/9/3/49933149/strategic_analysis_of_coca-cola.pdf