Coca Cola Analysis
Order Instructions:
Write a clear, concise, well organized analysis of a business case using correct grammar, composition and spelling. Please use theory, concepts, models, and research findings that you have been studying in our MGT 489 class to enrich your view of the case and help you to identify problems and support your analysis. In addition to the above criteria, you will be assessed on your ability to think creatively.
The assignment should include a maximum of three pages text double spaced 12 point Times-Roman font with one inch margins all around. You can also include an additional three pages of tables and or figures. Please completed assignment by December 15, 2014 with the subject heading MGT 489 (your section #) Individual Business Case Analysis
The elements of your business case analysis should include:
I. A Problem (or Opportunity) Statement
1. Please describe the most important strategic issue facing Coca-Cola’s ongoing expansion in China in 2014.
II. Elements of Analysis
2. Please describe the key economic and policy issues and trends in the China where the firm is operating.
3. Please describe the industry in which Coca-Cola is operating perhaps including information such as competitors, new entrants, substitute products, suppliers, the buyers and the intensity of industry rivalry.
4. Please identify the relevant stakeholders.
III. List Strategic Recommendations
5. Please list three strategic recommendations you would want top management to consider.
IV. Make a Final Recommendation
6. Please choose your most important recommendation and defend why it is the most important.
V. Learning Reflection
7. Please write one or two paragraphs that reflect on your own learning processes as you worked to complete this assignment.
Please use Case 20 in the text book (pages 666 – 674) as background information and be sure to research more current information online or at the library.
SAMPLE ANSWER
Coca Cola Analysis
- A Problem Statement
Coca Cola similar to other firms operates with the objective of increasing its profit value over a specified period. To attain this objective, the company creates a value for very constraint it serves, such as, its customers, stakeholders, creditors and so forth. China is undeniably the best investment environment for Coca Cola Company. Therefore, re-investing in China in 2014 has eventually become the strongest brand. However, besides expanding its operations in China, Coca Cola is facing the strategic issue of advancing its product diversification plan so as to engross a wider customer base. Currently, Coca Cola has exhausted the key sectors in the soft drink industry, including the carbonated dinks, bottled water and juice products. All these products are available in the China Markets. Although Coca Cola Company may ha the potential to diversify its product lines, the escalating health awareness of customers is a major threat towards the expansion (Rudarakanchana, 2013).
- Elements of Analysis
- Key economic and policy issues and trends in the China
Coca-Cola’s market distinguishes its market using location and age factors. Location relates to determining where the consumers come from. Although, most of the viable customers come from rural regions, Coca Cola customer’s base is within the urban regions. China’s economic diversity supports such segmentation. Economy analysis investigates the local and the international economy in addition to the inflation and recession crisis. Essentially, economic factors take into account factors that influence the production process as well as the output. As much as Coca Cola Company has already developed a marketing plan to expand its operations in China in 2014, the economic condition is uncertain. Therefore, the company would encounter great hostility from the already existing firms when setting up the price. Besides this, income inequality is another economic issue that is affecting the success of Coca Cola Company in China. The inequality in terms of economic growth in different locations impacts the purchasing ability of the consumers. Another key issue is the policy issue. Currently, Chinese customers are very conscious about their health based on the global campaign against sugary products. Therefore, industries in China have implemented a policy to avoid sugary products. Therefore, fast food restaurants which sell most of Coca Cola products are not avoiding Coca Cola products for fear of loosing their customers (Rudarakanchana, 2013).
3. Industrial Analysis in which Coca-Cola operates
to determine the likelihood of success of Coca Cola Company in China, it is important to conduct an industrial analysis to have an insight of the Porter’s 5 forces affecting the company.
Threat of New Entrants/Potential Competitors
Entry barriers for Coca Cola Company in China are comparatively low. The consumer switching expenditure is insignificant and no capital is required. However, there are relatively new brands entering into the market with even lower prices than Coca Cola products. Coca Cola Company, nevertheless, offers its products as beverages and brand in order to embrace a larger market share. Therefore, the loyal customers are unlikely to try any substitute brand.
Threat of Substitute Products:
Energy drinks and beverages are diverse and numerous in the market. In this regard, Coca Cola Company is yet to produce an entirely incomparable flavor. Therefore, customers rarely note the difference between the flavors produced by Pepsi and Coca Cola.
The Bargaining Power of Buyers:
The bargaining power of Coca Cola Company has no influence on the company, whether in terms of production or setting up of prices.
The Bargaining Power of Suppliers:
Coca Cola Company has always used the same ingredients since its started operating. The major ingredients include carbonated water, phosphoric acid, sweetener, and caffeine. The company does not change its suppliers, and is probably the largest customer to its suppliers.
Rivalry among Existing Firms:
The key competitor is the Pepsi Company, which as well offers a variety of soft drink products using its brand. Other brands in the market that are yet to gain momentum are such as Dr. Pepper.
4. The relevant stakeholders.
In China, the objective of the Coca-Cola Company is to engage in direct distribution of its products by establishing a sales centre in a strategic location with a population density of about one million people. These distribution centres also operate as storage houses. The owners of these centers become stakeholders to the company and, therefore, controls them distribution process within a confined location. Other important stakeholders include the large wholesalers with vast experience in retailing process as well as private wholesalers that distribute the products to the local customers. Besides, Coca Cola company as well partners with the government. Furthermore, Coca Cola Company forms an association with fast food restaurant which helps in selling and promoting the products to their customers (Rudarakanchana, 2013).
III. List Strategic Recommendations
- For Coca Cola Company to thrive in Chinese soft drink market should implement a reward system technique that serves as a motivation to its employees that promotes the product locally and internationally.
- Coca Cola Company should improve its consumer relationship initiatives, especially in markets where government intervention is intense.
- Coca Cola Company needs to market segment its products in order to understand the insight of consumer tastes and preferences.
- Demographic issues are as well a major factor that the top management should explore. Each market environment has diverse culture and traditions which are significant in determining the strategic measure to include.
- Make a Final Recommendation
- Coca Cola Company should diversify and target growth segments in major markets.
This is a key recommendation over the rest. As illustrated, Coca Cola Company faces stiff competition from other large companies like Pepsi. Therefore, unless the company diversifies its product, that is, launching a new product in the market
V. Learning Reflection
Coca Cola is constantly increasing its reputation globally as it continuous expanding its operations in China in spite of the economic recession. It is apparent that its operations in China are almost a success since the company has already adopted the economic and policy issues required. Furthermore, their contributions to economic development in China, in terms of employment opportunities have compelled the Chinese government and other partners to collaborate for the well being and prosperity of China (Rudarakanchana, 2013).
Reference
Rudarakanchana, N (2013). Coca-Cola (KO) Continues China Expansion. Retrieved from: http://www.ibtimes.com/coca-cola-ko-continues-china-expansion-1440676
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