1. Perform an assessment of Coca-Cola's external environment, identifying key opportunities and threats, by doing the following:
a. Complete an analysis of Coca-Cola's external environment using Porter's Five Forces.
2. Using the Function Approach to Internal Analysis, identify key strengths and weaknesses at Coca-Cola by performing an in-depth internal analysis of the company. Use what you have learned in previous courses to perform your analysis. At a minimum, evaluate the following functional areas:
a. Accounting/Finance: Include your analysis of at least three (3) key financial ratios (if you need a resource, see: Drake, P. (n.d.). Financial Ratio Analysis. Retrieved from http://educ.jmu.edu/~drakepp/principles/module2/fin_rat.pdf).
c. Human Resources
d. Operations Management
3. After you have completed your Internal and External analyses, prepare a table in which you clearly show the most important strengths and weaknesses of the company, and the most salient opportunities and threats currently facing the Coca-Cola Company.
4. Conclude your analysis by answering the following:
a. Does Coca-Cola have more strengths or weaknesses? Explain.
b. Does Coca-Cola have more opportunities or threats? Explain.
c. Does Coca-Cola have any sustainable competitive advantages? If so, what are they?
Guidance on Coca-Cola's SWOT Analysis
Please see the attachment for the Solution with tables.
Analysis of External Environment
Porter's Five Forces Model's application to Coca-cola
There is a stronger competitive rivalry of Coke with Pepsi Co. but Coke is still a market leader and has gained market share marginally from 17.3% to 17.8% in a decade as compared to Pepsi whose market share has fallen from 10.3% to 8.4% during the same duration as reported by the trade publication named Beverage Digest (Wiener-Bronner, 2018: Feb. 21). Even in North America, in non-alcoholic beverages segment, Coke is leading with 22% market share as compared to Pepsi Co.'s 19% market share as per the data revealed by Euromonitor (Ramakrishnan, 2017: Oct. 25). The major competitive rivalry in United States of America is between Coca-Cola, Pepsi and Dr. Pepper Snapple Group (Watson, 2018: May 30).
Threat of Substitutes
Although Coca cola is a market leader in the cola segment but its market share has increased by only 0.5% in the last decade (Wiener-Bronner, 2018: Feb. 21). This is due to the fact that Pepsi and Coca are competing in different segments rather than only colas such as fruit juices, iced tea, coffee etc. (Wiener-Bronner, 2018: Feb. 21). Therefore, there is a strong propensity for the consumers to substitute cola drinks with other beverages. The health benefits of fruit juices is a strong attribute leading to substitution of cola. The threat is so strong that the consumption of carbonated beverages fell in the United States of America to a 31 year low as stated by Beverages Digest (Bloomberg, 2018: Apr. 26).
Threat of New Entrants
Due to Strong prominence of Coca Cola, Pepsi and Dr. Pepper Snapple in United States of America with stronger loyalty and economies of scale achieved by these companies. Coffee may have Starbucks as a potential competitor who can enter the carbonated beverage segment also but for this purpose it should be a strong brand with deep pockets.
Bargaining Power of Buyers
Buyers have a strong bargaining power as competition has emerged in the form of substitutes which are healthier. There was a strong backlash against the Coke brand as it was considered to be an unhealthier drink when it was a belief that the Diet Coke contained artificial sweeteners as consumers in United States of America became more health conscious (Arthur, 2018: Apr. 24). Therefore, the consumers are more discerning and they are negotiating not only in terms of prices but also in terms of providing them a healthy product which shall be a value proposition for them.
Bargaining Power of Suppliers
The suppliers of aluminum cans to Coca cola are increasing their prices due to higher tariffs imposed on import of aluminum from countries like Canada (Eavis and Tankersley, 2018: Aug. 6). Since there is shortage of aluminum as a raw material used to make cans and 90% of aluminum is imported by the domestic can manufacturers (Long, 2018: Mar. 1), the bargaining power of Coca cola gets lower with suppliers having capability to negotiate due to scarcity of the metal and high U.S. import tariffs. The company is giving the ownership of bottling to the local franchising although the company had adopted the centralization and consolidation strategy for its bottling operations in the 1900s and again providing local franchise the ownership has been termed by company as ...
The solution provides guidance on how to develop SWOT Analysis for Coca-Cola based on its strengths and weaknesses and utilization of Porter's Five forces framework to identify opportunities and threats.