External Environment Analysis Essay
The Coca-Cola Company owes the success of its internal operations to its principles of corporate responsibility. The firm has incorporated an apt ethics program; this will guide their employees, and ensure them growth, achievement, and satisfaction for their jobs. In order to make this possible, The ideology of corporate responsibility is moderated and promulgated by the Public Policy and Corporate Reputation Council. The Council is comprised by a group of senior managers from each beverage and bottling company in the industry. It ascertains the risks and opportunities that each company in the industry encounters.
The PPCR Council advises beverage companies in their employee management and operations. Feasible business strategies are generated in order to achieve growth and progress for beverage companies like the Coca-Cola Company (The Coca-Cola Company,2008). The firm believes there is no Coke without the presence of its prolific employees, which is the major force behind more than satisfactory results for the growth and progress of the company. Its operations are bolstered by innovative thinking, unique perspectives, and operational excellence of the workforce, which sustains profit margins of the firm as well as its image.
With this in mind, the company recognizes the crucial role of its workforce plays in its worldwide operations. The Coca-Cola Company puts a premium on job satisfaction. The firm ensures that the Coca-Cola workplace is an environment where people can generate excellent input and augment their performance while enjoying what they do (The Coca-Cola Company,2008). Porter’s Five Forces Analysis Supplier Power Coca-Cola’s suppliers have been clamoring for increased prices for raw materials used in manufacturing their products.
Usually, these suppliers are responsible for the prices of raw materials to increase. Suppliers have gained the notoriety of manipulating the cost of raw materials, which generates a deliberate effect on the firm’s part. Suppliers are more manipulative whenever the number of suppliers is low. This gives the handful of suppliers to raise the price of raw materials, which in turn leaves firms line Coca-Cola’s no further options to purchase commodities of lower cost. An international brand like Coca-Cola’s is usually responsible for improving the working conditions within their factories (Foust, 2006).
The firm provides the much-needed technical assistance, which help augment the performance of both factory workers and shop floor employees. Buyer Power Buyer power is also considered the spending capacity of the consumer. In the athletic shoe industry, the buyer power is strong. This aspect simply states that the buyer or the consumer has always has a “say” on the price of particular good. Furthermore, buyer power is considered crucial due to the fact that it has a deliberate impact on the industry. However, softdrink companies like Coca-Cola’s has a discreet mutual arrangement regarding the aspect of buyer power.
These intangible mutual contracts between the firm and its consumers have been apparent for quite some time now (Foust, 2006). Firms have been empowering consumers to augment their buyer power. Buyer power has a relationship with supplier power as well. A firm like Coca-Cola’s opines for the cost of raw materials it acquires from its suppliers. Buyer power is quite a delicate matter to elaborate on. The asymmetry between the buyer and the industry generates a bevy of discrepancies, which contributes to an inconsistent market condition and prevents forward integration.
Barriers and Threats of Entry Perennial rival companies like PepsiCo and RC Cola are not the only ones who pose a threat for the company. Neophyte softdrink companies both domestic and international are always attempting penetrate the industry will also have a deliberate effect in the industry. The outcome will be a fluctuation in percentage of the market share of softdrink companies. Coca-Cola’s does its part through studying potential market segments to entice. Firms that tend to enter and exit a market are subjected to nominal profits (Foust, 2006). Competitive Rivalry
Coca-Cola’s always strives to survive in a competitive industry through the aid of its competitive advantage. For the plethora of softdrink companies, competition always matters in order to bolster profitability. Coca-Cola’s augments their advertising and marketing strategy by its charismatic approach to its advertising. The global softdrink industry is highly competitive (Foust, 2006). The company has to compete with national and domestic retailers such as discount store chains, department stores, independent retail stores, and internet retailers that cater to a particular market segment of similar merchandise.
The company has encountered stiff competition in Asian markets, which range from regional to national chains. Threat of Alternative Products & Substitutes The apparent threat of alternative or substitute products is a common adversity for Coca-Cola’s. A number of softdrink companies have always attempted to overwhelm Coca-Cola’s ‘s market share through attempts in cheaper price movements in order for consumers to consider other brands aside from Coca-Cola’s.
The subject of price elasticity surfaces whenever the price change of an alternative product affects as the demand for such product. The industry where Coca-Cola’s thrives is saturated by a bevy of substitute products, which to tend to constrained the ability of these companies to make an increase in prices. The softdrink industry is always sporadic and innovative in terms of manufacturing products, which can draw consumers to purchase their products. The outcome is a letdown in sales for the Coca-Cola Company (Foust, 2006).
The Coca-Cola Company. (2008). Governance & Ethics. Retrieved June 29, 2008, from http://www. thecoca-colacompany. com/citizenship/governance_ethics. html The Coca-Cola Company. (2008). Engagement. Retrieved June 29, 2008, from http://www. thecoca- colacompany. com/citizenship/engagement. html Foust, D. (2006). Queen of Pop. Business Week. New York: Aug 7, 2006. , Iss. 3996; pg. 44 Foust, D. & Byrnes, N. Gone Flat. (2004). Business Week. New York: December 20, 2004, Issue 3913: page 76