The Coca-Cola company brand is best known as non-alcoholic beverages. The Coca-Cola company has served more than 600 brands, primarily sparkling beverages but the company also variety their beverages with milk, tea, juice, waters, energy drink and many more. The Coca-Cola was found in 1886 by a curiosity of an Atlanta pharmacist, Dr. John S. Pemberton, created flavored syrup and it was mixed with carbonated and the taste was excellent according to those who sampled it (World of Coca-Cola, n.d.). The Coca-Cola originated its first fountain in 1889 and were sold for five cents per glass. During the first year, growth of Coca-Cola was impressive, and to keep its growth and to protect the brand from copycat, Coca-Cola designs its own bottle with Alexander Samuelson which became standard bottle for Coca-Cola (Curtis, 2015).
Since its existence, Coca-Cola has used extensive and diverse advertisement to increase its market share, and this has led it to become one of the most recognized name brands in the world. Currently, the report from 2017 performance shows that Coca-Cola net revenues declined 20% to $7.5 billion for the quarter and declined 15% to $35.4 billion for the year, and cash flow from operations for the full year was $7 billion, down 20% (The Coca-Cola Company, 2018). However, the reduction in number does not mean that Coca-Cola is not well, yet there are reasons behind all of those reduction, and this paper is going to analyze how it could happened through Coca-Cola company’s strategic management. He purpose of this paper is to assess he current situation of Coca-Cola industry, evaluate the existing resources, suggest a strategy, and provide strategic recomendations.
The world is keep changing and to continue to thrive the business effectively and efficiently, it is important to develop misssion, vision, and values. For many reasons, these are also serving as marketing tool and tells society how the business is working for the society itself. It is also important for Coca-Cola company link their mission, vision, and values with humankind and the society. After all business is not just about profit, but also for the better humankind and the progress of the society (Pratap, 2016).
I. 1. Vision Statement
“To refresh the world in body, mind and spirit… To inspire moments of optimism through our brands and our actions… To create value and make a difference everywhere we engage.”
I. 2. Mission
? People: Be a great place to work where people are inspired to be the best they can be
? Portofolio: Bring to the world a portofolio of quality beverage brands that anticipate and satisfy people’s desires and needs.
? Partners: Nurture a winning network of customers and suppliers, together we create mutual, enduring value.
? Planet: Be a responsible citizen that makes a difference by helping build and support sustainable communities
? Profit: Maximize long-term return to shareowners while being mindful of our overall responsiblities
? Productivity: Be a highly effective, lean and fast-moving organization.
I. 3. Values
? Leadership: The courage to shape a better future
? Collaborations: Leverage collective genius
? Integrity: Be real
? Accountabilitiy: If it is to be, it’s up to me
? Passion: Committed in heart and mind
? Diversity: As inclusive as our brands
? Quality: What we do, we do well
Coca-Cola company views mission, vision and values as tools to gain trust from the society and to gain trust that they will do their business with manner and not only to benefit them but also to benefit the society. Coca-Cola has its own mission serves as how to achieve the goal of the company for what the bussiness exist for. Its vision serves as the company long-term goal. Its vision also adresses what they need to do in order to succeed in the future, particularly to achieve sustainability and quality growth. Coca-Cola mission and vision work in cohesion, they both support each other. Coca-Cola has its own values as a compass for actions and behavior of the company towards the world. Its key points in its mission, vision and values is how it plans to stay in business. Together it shows what Coca-Cola communicate its strategy, wants to do and how they are going to do that by being socially responsible.
II. Literature Review
II. 1. Product Differentiation
The concept of product differentiation has long been discusssed and been developed by economists in the literature. One of the pioneers (Shaw, 1912) described that the strategy of product differentiation as meeting human wants more accurately than the competition. Product differentiation is defined as a marketplace condition. If the product class were a comodity, all alternatives would be equal and perceived to be equal on all elements of the vector of price and both pyhsical and non-physical product characteristics. In other words, the prevalent condition is one in which all products are not perceived as equal on each of the product characteristiccs, including price. In addition, the firm may attempt to change the consumer’s ideal point on an attribute to a location nearer to that of its offering (Dickson & Ginter, 1987).
Product differentiation results from added features which give customers benefits that rivals cannot match. Before adding features, a company should throroughly research the need for the particular feature among customers in the intended target market (Bellante, 2018). Companies keep on adding new features just because their competitors are offering the, sometimes deletion of features and benefits from a product may be a very effective differentiation because customers never really wanted these benefits. However, adding the same features as competitors may make the products of a company more acceptsble among customers, though it may end up introducing similar products that does not result in any differential advantage (Lancaster, 1975).
In order to get the best analysis on product differentiation, it is important for us to define product classes on two characteristics; the production-consumption link and production conditions (Lancaster, 1975). The production-consumption link means that the characteristics of product are assmbled at the production end and then made available to ultimate customers pr it can be said no more than a transfer mechanism. Production condition can be used to analyze consumers preferences, means that we shall assume that the population consists of a very large number of consumers with different preferences, so that there is a continuous spectrum of preferences, and we shall refer to a uniform distribution of preferences.
III. External Analysis
The competitive state of an industry is a key facotr in determining how firms develop their strategies to earn profit over time. Even though the nature of competition differs significantly between industries, competition in the non-alcoholic beverages industry is determined by its own particular structure. Industry structure refers to the interrelationship among the five forces presented by Porter (Dickson & Ginter, 1987), described in detail in this chapter, that drive behaviour of firms competing in that industry. Moreover, an attempt is made to explore the emerging trends in the non=alcoholic beverages industry, identify the key success factore, evaluate industry attractiveness and identify strenght, weaknesses, opportunities, and threats Coca-Cola is facing in the current environment.
III. 1. Porter’s Five Forces of Coca-Cola
Porter’s five forces is a framework that attempts to analyze the level of competition within an industry and business strategy. Porter referred to these forces as the micro environment, to contrast it with the more general term marco environment (Hagemann, 2016). They consist of those forces close to company that affect its ability to serve its customers and make a profit.