The Coca-Cola Companys Competitiveness and Profitability

SWOT Analysis of Coca-Cola

Strengths

Weaknesses

Opportunities

Threats

SWOT Analysis Strategy

Strengths

The company is the largest non-alcoholic beverage manufacturer in the world. It produces 32% of all the types of drinks consumed in the world and owns more than 500 brands in over 200 countries globally. Due to its size, the firm always reinforces its market power, underpricing its items and pushing suppliers to lower their prices. Its powerful brand name, recognition, and marketing automatically influence consumers decisions when buying soft drinks. In addition, its pool of distribution networks allows it to have a larger coverage audience across the world than most of its rivals. Diversification of its portfolio into producing over 500 brands makes it meet every customers demands and less dependent on one item (Jurevicius, 1). Annually, it invests the largest amount of money on promotions globally, which gives it a competitive advantage over competitors. Lastly, it has grown to be the largest company in terms of revenue base and has the most acknowledged soft drinks brands in the whole world.

Opportunities

The company is currently venturing into ready-to-drink coffee, known as RTD coffee. Research shows that between 2013 and 2017, this beverage was the fastest-growing in the United States by 12.3% (Jurevicius, 1). Its RTD coffee named Georgia is equally successful both in Japan and the U.S. Despite the segment being small, Coca-Cola has the potential to expand it in America and other countries to become the RTD coffee leader.

Since the soft drinks market is flooded with many products from several competitors around the world, there is little or close to no room for expansion in this category of items. Therefore, it could venture into the alcoholic business, which is growing faster and has a big space for untapped opportunities. Currently, there is a need for consumers to use healthy beverages; previously, the demand for bottled water drinks grew by 7% in 2017 (Jurevicius, 1). Most specifically, there is a high clamor for the coconut water subcategory. The savory snack market is expected to continue expanding in the near future. Hence, Coca-Cola can tap into selling them in addition to beverages.

Weaknesses

The company has continuously relied on carbonated soft drinks (CSD) to generate the majority of its revenue. For instance, 70% or over $24 billion of its sales in 2017 were earned through selling CSD (The Coca-Cola Company, 2a). Currently, the demand for CSD is falling due to health-related issues attached to their consumption, and it could affect its profits. Coca-Cola is equally criticized over the influence of is products on obesity, questionable promotion methods, bribery to various government officials, and its policies towards the environment. This has led to negative publicity that has damaged its reputation over the years.

Threats

Consumers of its beverages are raising health queries about the safety of Coca-Cola soft drinks. In its own financial report, the company listed obesity worry among customers as its number one threat that could affect its business. The increased concerns from health professionals and government agencies overtaking too many sugar-sweetened beverages could lead to over-taxation of the items, thereby reducing their sales. Production of all soft drinks relies on the availability of water and how safe such is for human consumption. For example, Coca-Cola uses approximately 3.2 liters of water to manufacture 1 liter of Coke (Jurevicius, 1).

There is a threat that the drastic changes in the climate, overpopulation, pollution, poor waste management, and increased quest for food could make the commodity scarce. It is, thus, becoming hard for the firm to get clean water, a trend that has increased its production cost and lowered profitability. Intense competition from rival firms could pose another bigger threat to Coca-Cola. The beverage industry has many small, medium, and large multinationals that try to outdo each other in pricing, promotions, innovations, and packaging every year.

Competitiveness Strategy

Coca-Cola uses a differentiation strategy to enhance its business, customer loyalty, and value awareness. Firstly, it employs functional-level methods to increase efficiency, innovation, and consumer responsiveness (Hitt, 3). Its pricing, advertising, and product innovation, together with improved brands, products, packages, sweeteners, and equipment, enables the firm to meet the evolving needs of our customers. Secondly, its business-level tactics involve differentiating its products from competitors and lowering the cost of items, which has ensured it is unique and affordable to many people. Thirdly, it uses corporate-level mechanisms such as growth, stability, and retrenchment, has scaled up its presence everywhere in the world, unshaken by market trends, and maintains its production costs manageably.

Profitability Strategy

The company leverages its strengths to realize long-term and sustainable growth. It focuses on yearly revenue growth of 4% to 6% and 6% to 8% operating income (The Coca-Cola Company, 4b). Through leverage strategy, Coca-Cola pushes for enhanced topline growth to drive its bottom-line profitability and optimal returns. It has a topline expansion across all its businesses that focuses on prioritizing investments in areas that have the potential for maximum profits. Further, it increases its portfolio offerings while expanding margins through disciplined methods. Lastly, the company manages costs by balancing allocations to boost its growth and productivity.

Communication Plan

Competitiveness Strategies

Coca-Cola employs a communication strategy with a clear vision of how to reach its key stakeholders. The company knows the segment of the general public they target with its information. It packages its messages in an efficient way that causes the consumers to respond almost immediately (Mohamed, 5). Additionally, it uses the right medium or channels that can reach many people at the same time.

Profitability Strategies

As far as profitability is concerned, the firm creates awareness of its products and educates customers. It equally increases short-term sales by stimulating actions by encouraging product trials among potential clients and reinforcing desirable purchasing behavior among consumers.

Responsible (ethical) corporate citizen

As a responsible corporation, Coca-Cola has put in place programs that try to give back to society in its own ways. Firstly, it uses recycled bottle packaging to minimize the effects of plastic waste on the environment. Secondly, the company has a system in which it replenishes all the water that it uses so that communities are not starved because of its operations (Mishra, 6). Thirdly, it has committed to empowering women and young people to be part of its supply chain. This has helped the company to retain customers who are important players in its business success (The Coca-Cola Company, 7c). It has equally grown its positive brand recognition, which has boosted its consumer loyalty and helped in tapping highly skilled staff. Lastly, it supports different communities at various times when they are in need of help.