Coca-Cola Company’s Problems

Competitive Advantage

Competitiveness can be described as the capacity of a corporation to give more value to its customers compared to its competitors (Keegan & Green, 2013). The importance of competitiveness is to help a company achieve improved returns. The intensity of competition keeps changing, which forces companies to reevaluate their position in the market. For a company to evaluate its competitive advantage, it has to assess its external and internal strengths and weaknesses using a SWOT analysis.

Coca-Cola Company, for instance, has a competitive advantage over other soft drink companies due to its strengths such as operating on a large scale, reducing production costs, well-established distribution channels and owning the protected, patented method of preparing their soda (Keegan & Green, 2013). In addition, its presence in many countries creates a strong brand and popularity. The ability of the company to drive sales by popularity, despite other entrants into the industry indicates the competitiveness of the company.

Porter’s Five Forces Theory

The description of Porter’s five forces theory and how they apply to the Coca-Cola Company is as follows:

The threat of New Entrants

Every company faces a threat of new entrants into its domain. Therefore, marketing is important for all firms as it creates the desired image and increases sales (Drummond & Ensor, 2005). Pepsi Cola’s adoption of an aggressive marketing campaign aims at entering markets dominated by the Coca-Cola Company (Gary & Kotler, 2010). Consequently, the Coke Company markets its products aggressively. Additionally, the use of patents helps it bar other firms from entering the market.

The threat of Substitute Products

Substitutes such as Pepsi and other soft drinks pose a threat to Coca-Cola as they all target the same consumers. The company thus has to adopt ways of reducing the substitution rate of its products. The use of copyrights has enabled the company to be competitive and to have its products remain unique, which curbs competition. The packaging in plastic or glass contour bottle worldwide marks the trademark of the company’s products (Keegan & Green, 2013).

Bargaining Power of Buyers

Buyers’ willingness to buy a product determines the purchases made. The company has placed its products strategically using pricing, packaging, and distribution thus enabling the buyers to get value for their money. The company has also publicized recommended retail and wholesale prices hence there is no need to bargain.

Bargaining Power of Suppliers

Vertical integration of the company reduces the bargaining power of its suppliers. The company outsources services and products through competitive bidding thus getting the advantage of selecting the supplier. The company processes and makes its main raw materials and packaging materials, which enables it to control its supplies.

Rivalry among Competitors

According to Keegan and Green, every global industry faces competition on the cross-border investments that are a proportion of the revenue targeted or generated (2013). Rivalry exists due to market sharing. Pepsi and Coca-Cola are rivals due to competition for the same markets share. The ownership of the exclusive rights to make the soft drink using unique flavor and packaging confers competitive advantage hence reducing rivalry (Gary and Kotler, 2005).

The Choice of Factors and How They Support Porter’s Five Forces Theory

The company aligns itself using various factors including the scale of operation that enables it to achieve economies of scale. In return, the company can offer fair prices to its customers. Marketing strategies such as the use of celebrities during major events such as sports activities, music concerts, and social functions help the Coca-Cola Company to promote its products and build a strong brand name.

Organizational Development Factors

Factors That Lead to the Establishment of an International Division within an

Organization on the Cusp of Increasing its Business Activities

Distribution is a prerequisite for increasing sales where demand is high. The Coca-Cola Company faces the challenge of distributing products to shops located in narrow streets and roads had been a problem in some cities (The Coca-Cola Company, 2011). The company created low-cost micro-distribution centers and relied on the use of motorbikes and small cars to distribute the sodas (The Coca-Cola Company, 2011). The adoption of the business distribution model in Africa and Asian markets has seen the company’s sales increase due to product availability in remote areas (The Coca-Cola Company, 2011).

The company’s development of a learning laboratory using its distribution division to train its distributors is an effective tool in the distribution (The Coca-Cola Company, 2011). The centers also help the company in monitoring and evaluation.

Typical global marketing activities that companies should centralize at their headquarters

Global product promotion positions the trade name as a global brand. Such a move determines the best promotion method to use when placing an advert in the global media. Research and development of global marketing are central to ensuring the coordination of marketing information and its implications versus applications. Global product promotion, research, and development should be central to ensure uniformity of information analysis.

Typical Global Marketing Activities That Companies Should Delegate to National or Regional Subsidiaries

Product promotion should ensure that the regions target potential customers and make them aware of the product. The persuading and reminding actions are more customer-oriented. The distribution process is well-suited for regional subsidiaries because they have appropriate knowledge of the regions’ physical locations.

MacDonald’s Social Responsibility

The company contributes towards Ronald McDonald House Charities that mainly support the stay of families in houses and hospital rooms. The houses and hospital rooms accommodate families that are in pursuit of their children’s treatment (McDonald’s Restaurants, 2013). The company has litter patrols that collect litter within a radius of 100 meters from their restaurants. This move ensures that the environment is kept clean. The company also ensures that it manages its waste efficiently by recycling. For instance, waste oil is converted into biodiesel for use in the company’s vehicles.

These activities create a positive image to the public about the company because they portray the company as caring for the needs of the less fortunate. The company’s consciousness of the environment is demonstrated by proper waste management activities of the company by recycling. The company can use biodegradable packaging material to increase social responsiveness. The company can also introduce community-based recycling programs that will see communities recycle their waste alongside the company.

References

Drummond, G & Ensor, J. (2005). Introduction to marketing concepts. Great Britain: Butterworth-Heinemann.

Gary, A. & Kotler, P. (2005). Marketing: An introduction (7th ed.). Upper Saddle River, N.J. Prentice Hall.

Gary, A. & Kotler, P. (2010). Principles of marketing. New York: Pearson.

Keegan, W. J. & Green, M. C. (2013). Global Marketing (7th ed.). Upper Saddle River: Prentice Hall.

McDonald’s Restaurants. (2013). The spirit of enterprise. Web.