SWOT and PEST used by the Coca Cola Company Order Instructions: Full topic:
Management tools SWOT and PEST are used by managers to inform decisions regarding business strategies. Discuss the usefulness and limitations of these tools in relation to a chosen organization, providing commentary on how managers may overcome/minimize any limitations and improve management decisions.
Organization: BMW OR Coca-Cola
SWOT and PEST used by the Coca Cola Company Sample Answer
Introduction
Coca Cola Company is the world’s largest beverage company based in the United States, which has a high number of refreshing consumers and still brands. The company is also ranked at top 10 private employers with more than seven hundred thousand system employees. The Coca-Cola Company also owns its anchor bottler in North America popularly known as Coca-Cola Refreshments(Baines, Fill & Page, 2013). Managers of Coca-Cola Company have been aware that strategic management is not a simple process. Strategic management is a process that often comes with numerous difficulties and is aimed at realizing the company’s objectives in an a timely manner(Dubrin, 2012). Therefore, managers have been using SWOT and PEST analysis in order to achieve their desired goals. However, these types of analysis have been associated with several advantages and shortcomings. The following discussion, therefore, describes some of the benefits of the two types of analysis on Coca-Cola Company. In addition, the paper highlights how the managers may overcome/minimize any limitations and improves the management decisions from the analyses.
SWOT and PEST used by the Coca Cola Company Discussion
SWOT analysis has been one of the management tools used by managers in Coca-Cola Company mainly because of its related usefulness. One of its usefulness is that the tool has been a source of information for strategic planning. This is due to the tool’s ability to identify the strengths of the company. These strengths include customer loyalty, strong marketing, and advertising, bargaining power over suppliers and corporate social responsibility (Baines, Fill & Page,2013). In addition, SWOT analysis provides information regarding the company’s weakness. These include negative publicity, under-diversified product portfolio, a significant focus on carbonated drinks, and high debt level due to acquisitions (Friend &Zehle, 2009). The analysis also provides information regarding the potential opportunities for the company. These include bottle-water consumption growth, growth through acquisitions, increasing beverages consumption, and growing beverages consumption in emerging markets mostly BRIC (Panda, 2008).
Furthermore, the tool provides information about the threats to the Coca-Cola Company. These are the company carries with it a strong dollar, water scarcity, changes in consumer preferences and competition from PepsiCo.Upon getting information for strategic planning from the SWOT analysis, managers at Coca-Cola Company maximize their response to the opportunities. As a result, the company reverses its weakness once the tool has identified them(Dubrin, 2012). Moreover, the tool is useful to the company as it enables the managers to identify the core competencies for the companies, thereby rebuilding the organization’s strength.
However, SWOT analysis has several limitations that limit its benefits to the Coca-cola company. One of it is that it makes its conclusion from a small base of data. Most of this data is mainly biased, and forces managers to make decisions that are not reliable. Another drawback from SWOT analysis is that it is mostly unrealistic. It normally underestimates the power of the threats (rivalry) and weaknesses to praise strengths and opportunities (Dubrin, 2012). This management tool also demands that the company has skilled and efficient labor. This retrogressively affects the company, and it makes managers unable to achieve their goals with the new existing system with threats and weaknesses.
A PEST analysis of Coca-Cola Company
From the above analysis, SWOT analysis focuses on internal environments of the company. Therefore, Coca-Cola Company uses PEST analysis to assess its external environments. The company’s managers use this management tool to determine the areas of concern and importance that can be addressed in the external environment (Braun & Latham, 2014). The PEST analysis is important for the strategic planning process for the Coca-Cola Company. This is because it unveils political factors affecting the company. This is, for example, changes in the non-alcoholic business environment. This might comprise competitive product and pricing pressures, and their ability to get or maintain a share of sales in the global markets as a result of actions by competitors (Wheelen& Hunger, 2012). This is useful in enabling the company to anticipate future business threats and take relevant action to minimize and limit their impact.
A PEST analysis is also beneficial to the company as it enables the company to understand economic factors such, for instance, factors that led to the recession and inflation (Lukac, 2005). This management tool is also important as it promotes the understanding of social factors such as when consumers engage in healthy lifestyles. In addition, it enables Coca-Cola Company to develop external and internal thinking about their markets (Henry, 2011).PEST analysis also provides an analysis of the technological factors. This is a benefit to as it enables the company to match which the new technology, thereby increasing an understanding of the wider business environment.
However, PEST analysis has limitations as far as Coca-Cola Company is concerned. One of its limitations that the analysis is time-consuming as it involves accessing quality external data sources from companies such as PepsiCo (Pangarkar, 2011). Another limitation is that data utilized in the analysis is mainly based on assumptions that subsequently make Coca-Cola Company to anticipate programs and projects that may affect the organization in the future (Frynas&Mellahi, 2011). Lastly, the analysis tends to oversimplify the amount of data used in decision-making; therefore, it is easy to use scant data.
Ways to Minimize Limitations inPEST andSWOT Analysis
Managers in the Coca-Cola Company can minimize the limitations resulting from the above types of analysis by combining PEST and SWOT analysis. This will make the managers get a more realistic overall picture in strategic planning (Henry, 2011). To counteract the limitations from PEST analysis, managers of Coca-Cola Company should be conducting the analysis on a regular. This will enable the Coca-Cola Company to get comprehensive data about market opportunities that will be beneficial to it. It can be deducted that PEST and SWOT analysis are two management tools that have a tremendous effect on Coca-Cola Company’s strategic management. Therefore, these tools are useful for a company to enable to address the immediate environment and future environment. SWOT analysis enables the company to discover its strengths, weaknesses, opportunities, and threats. PEST analysis, on the other hand, enables the company to assess the political, economic, social, and technological aspects for it to survive(Baines, Fill & Page, 2013). However, these two analyses have several limitations, and managers can develop strategies to counteract them. Combining the two analyses can enable the company to address limitations from each analysis using counterpart analysis. However, combining the two analyses may at times bring non-reliable results(Henry, 2011). Therefore, managers at Coca-Cola Company should be advised to use Porter’s five factors. To summarize the discussion, it can be said that Porter’s five factors will enable the managers to have a deep analysis of the rivalry, threat of substitutes, buyer power, supplier power, and barriers to entry. It can be observed that Porter’s five factors address almost all aspects in PEST and SWOT analyses. This is because, in business, what troubles much is not the profit, strengths, and objectives, but the repercussions that can arise upon entry of a competitor in the market pool. This is what Porter’s five factors can help the Coca-Cola Company to deal with rival firms such as PepsiCo.
SWOT and PEST used by the Coca Cola Company Bibliography
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Wheelen, T. L., & Hunger, J. D. (2012). Strategic management and business policy: toward global sustainability.Upper Saddle River, N.J., Pearson Prentice Hall.
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