Coca-Cola Company’s Management Decisions

Background

Coca-Cola Company is an American multinational business that deals with the production and distribution of non-alcoholic beverages. This company is renowned for the production of its flagship brand dubbed Coca-Cola. The organisation, which was established in 1886, has its headquarters located in Atlanta, Georgia. According to Hassan, Amos, and Abubakar (2014), the success of Coca-Cola in the global market lies in its capacity to manage a franchised distribution network.

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The main company is responsible for the preparation of syrup concentrate, which is later passed on to different bottlers across the world. Coca-Cola appreciates the significance of engaging communities living in countries where it has established its operations. This company’s leadership holds the opinion that an organisation’s health depends on the well-being of the people being serves. Coca-Cola engages in numerous corporate social responsibilities as a way of giving back to the surrounding communities. Today, it has diversified its product lines to serve the needs of its health-conscious customers. This article offers an analysis of this company from an entrepreneur’s perspective.

Entrepreneur Perspective

Technological advancements have made it easy for businesses to interact and gather information from global audiences. Many trade experts argue that the current state of consumerist stimuli will contribute to the future of industrial revolution (Ittelson 2009). Organisations that have the capacity to adapt to the present nature of entrepreneurial growth are at a better place to alter their operations and exploit emerging opportunities.

This company’s leadership appreciates that it cannot realise this goal without partnering and learning from other businesses. In 2013, Startup Weekend and Startup America Partnership came together to establish UP Global, an enterprise dedicated to “creating vibrant start-up communities around the world by connecting entrepreneurs with the resources they need to be successful” (Butler 2013, para. 4).

The organisation under investigation is devoted to supporting UP Global network. Specifically, it acknowledges that offering expertise and innovation skills can help upcoming entrepreneurs to realise their dreams. Coca-Cola has been taking part in mentorship programmes aimed at assisting prospective entrepreneurs. This business plays a huge role in Startup Weekend events around the globe. These initiatives bring together designers, engineers, entrepreneurs, and developers. Their primary objective is to allow them to share ideas on how they can capitalise on arising opportunities.

This company seeks to avail resources and create knowledge amid the rising “maker movement” of entrepreneurs who are developing and selling physical products due to the availability of services such as 3-D printing that facilitate the production and launch of novel solutions (Bayona-Saez et al. 2017). Coca-Cola desires to unleash as many entrepreneurs as possible around the globe.

This move is expected to go a long way towards facilitating the realisation of the UP Global’s objective of empowering sustainable communities. Innovation is a critical constituent of Coca-Cola Company’s corporate culture. The firm’s success lies in its ability to come up with novel products that meet the ever-changing clients’ preferences. In spite of the strides that this company has made in the field of innovation and entrepreneurship, it acknowledges the importance of instilling a start-up attitude in its employees.

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Business Issues

One of the major issues that the company faces is the struggle to minimise overreliance on full-sugar beverages (Foster 2014). For decades, this company has depended on the production of drinks with high sugar contents. The increase in the rate of people suffering from diabetes and obesity and the rising demand for healthy drinks have compelled this corporation to look for ways to manufacture calorie-free soft drinks.

Currently, the sales of Coca-Cola’s classic beverages continue to decline internationally. Even though this business is in the process of manufacturing drinks with low calorie contents, it does not have adequate non-sugar brands to substitute its existing products (Powell & Gard 2015). Many customers continue to associate Coca-Cola with the production of junk merchandise. The company’s senior beverages analyst admits that Coca-Cola has a long way to go regarding the revolution of cola carbonates. As the number of customers opposed to sugary drinks continues to rise, this business should ensure that its low sugar brands fulfil clients’ health demands.

Coca-Cola faces digital challenges. This corporation deploys television as its major advertising tool. Currently, many people have access to Internet-enabled mobile phones, which make it easy for them to search for products online. Coca-Cola has done little to exploit the potential that the digital media poses. This situation has made it hard for the business to reach millennials who form the biggest share of the global population. Coca-Cola is in the process of investing in digital media to boost its product promotion strategies.

It has lost touch with many customers over the last ten years. A research conducted in the United Kingdom revealed that many consumers are expressing their dissatisfaction with the company’s products (Valta 2015). Such findings have prompted this corporation to roll out a campaign aimed at helping it to realise a global brand. This organisation is yet to come up with an iconic advertising strategy akin to the famous “Share a Coke” slogan that united its customers. It has to look for ways to convince people to continue buying its products.

SWOT Analysis

Coca-Cola has an exceptional brand identity. Hence, it is one of the companies with the strongest brand equities. This organisation’s global presence has facilitated the development of its brand name. Coca-Cola enjoys the largest market share in the beverage industry. Consequently, it is able to overcome competition from Pepsi and other beverage companies. Its superior marketing strategies enable it to reach many customers. Particularly, it has managed to win customers’ loyalty across the world. This company’s products receive immense support from international clients. It has an efficient distribution network that enables it to sell commodities across numerous countries without challenges.

One of Coca-Cola’s main weaknesses is its low product diversification. This company has not ventured into other profitable product lines such as snacks (Ronit & Jensen 2014). As such, its efforts regarding the production of healthy beverages are insignificant. Many customers are avoiding the consumption of carbonated drinks because they associate them with diabetes and obesity.

Nonetheless, it has an opportunity to venture into developing countries where customers are yet to shift to the use of healthy drinks. Additionally, Coca-Cola has a chance to diversify its product lines to include foods or snacks. The transportation of merchandise has contributed to increased operations costs in this business. However, it has an opportunity to minimise these expenses by improving its transportation systems. Moreover, it has a chance to boost its performance by focusing on value addition to its products. Coca-Cola encounters a myriad of threats. For instance, it faces the threat of indirect competition from coffee chains such as Costa Coffee and Starbucks. Its high consumption of water also exposes it to the risk of water scarcity.

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Marketing Analysis

Target Market

Coca-Cola does not have a specified target market. Instead, this company manufactures drinks for all markets while emphasising on clients’ age and gender. It has soft drinks and fruit juices meant for children aged between three and ten. Beverages such as Coke Life and Diet are meant for health-conscious consumers. These drinks contain low sugar levels and calories, hence making suitable for people suffering from diabetes. This company sells packed water as a way to target athletes and health-sensitive individuals.

Competitors

Coca-Cola faces stiff competition from Pepsi, which manufactures soda beverages and energy drinks. It also sells juices and bottled water. Coca-Cola also faces competition from Red Bull, a company that is well-known for its production of energy drinks.

Competitive Advantages

A superior brand image is a major competitive advantage for Coca Cola. This corporation has managed to preserve the quality of its drinks for a long time. Indeed, customers of all ages can relate to at least one brand from this organisation. Coca-Cola has an efficient distribution network. It sells at least 400 brands across the world. Additionally, it has retail stores in more than 200 countries. Improved distribution systems have made it hard for rival companies to dislodge Coca-Cola from its overseas markets.

This business has a secret recipe that it guards at all costs. Such a menu enables the company to manufacture consistent products around the globe while at the same time cutting down on production costs. Coca-Cola has invested in employee training, thus guaranteeing it of an experienced and dedicated workforce. Training workers has contributed to increased innovation capabilities within this company. Hence, they are better placed to try novel ideas.

Financial Analysis

Sales

In 2013, this company’s sales volume stood at $46.9 billion (Huddlestone 2018). This figure indicated a 2% decline in relation to the sales volume recorded during the previous year (Huddlestone 2018). In 2015, Coca-Cola’s sales volume decreased further by 4%. This organisation earned $44.3 billion during this financial year (Huddlestone 2018). In 2017, the sales went down significantly (Sharf 2014). The company reported a further decrease of 15% to $35.4 billion due to market changes witnessed in China (Huddlestone 2018).

Net Profit

Coca-Cola’s net profit was going down within the above three periods. In 2013, this company’s annual net profit was $8.6 billion (Macrotrends 2018). In 2015, the net revenue went down to $7.4 billion (Macrotrends 2018). In 2017, organisational restructuring and logistical headwinds witnessed in China led to the company’s annual net profit going down significantly. Particularly, it reported an annual net profit of $1.3 billion (Macrotrends 2018).

Current Assets

Coca-Cola’s current assets increased within the above three periods. In 2013, they stood at $31.3 billion (Stock Analysis on Net 2018a). In 2015, they grew to $33.4 billion (Stock Analysis on Net 2018a). Despite challenges witnessed in 2017, this corporation’s current assets grew to $36.6 billion (Stock Analysis on Net 2018a).

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Current Liabilities

Current liabilities affect the day-to-day performance of a business. Coca-Cola’s current liabilities increased in 2013 and 2017. In 2013, this organisation’s current liabilities were $27.8 billion (Stock Analysis on Net 2018b). In 2015, they went down to $26.9 billion (Stock Analysis on Net 2018b). In 2017, this figure rose to $27.2 billion (Stock Analysis on Net 2018b). Such results signified that the company was not doing well during this particular year.

Reference List

Bayona-Saez, C, Cruz-Cazares, C, Garcia-Marco, T & Garcia, MS 2017, ‘Open innovation in the food and beverage industry’, Management Decision, vol. 55, no. 3, pp. 526-546.

Butler, D 2013, Startup refreshed: why Coke is joining the entrepreneurial revolution. Web.

Foster, RJ 2014, ‘Corporations as partners: “connected capitalism” and the Coca Cola Company’, Political and Legal Anthropology Review, vol. 37, no. 2, pp. 246-258.

Hassan, DN, Amos, AA & Abubakar, OA 2014, ‘An evaluation of marketing strategies undertaken by Coca-Cola Company as a multinational corporation in Nigeria’, IOSR Journal of Economics and Finance (IOSR-JEF), vol. 3, no. 2, pp. 5-10.

Huddlestone, N 2018, The Coca-Cola Co performance trends 2013-2017- results data. Web.

Ittelson, T 2009, Financial statements: a step-by-step guide to understanding and creating financial reports, 2nd edn, Career Press, Wayne, NJ.

Macrotrends 2018, Coca-Cola net income 2006-2018. Web.

Powell, D & Gard, M 2015, ‘The governmentality of childhood obesity: Coca-Cola, public health and primary schools’, Discourses: Studies in the Cultural Politics of Education, vol. 36, no. 6, pp. 854-867.

Ronit, K & Jensen, JD 2014, ‘Obesity and industry self-regulation of food and beverage marketing: a literature review’, European Journal of Clinical Nutrition, vol. 68, no. 1, pp. 753-759.

Sharf, S 2014, ‘Coca-Cola profits decline 14%, future growth plan fails to impress’, Forbes. Web.

Stock Analysis on Net 2018a, Coca-Cola Co. (KO) statement of financial position, assets. Web.

Stock Analysis on Net 2018b, Coca-Cola Co. (KO) statement of financial position, liabilities and stockholders’ equity. Web.

Valta, K 2015, ‘Overview of water usage and wastewater management in the food and beverage industry’, Desalination and Water Treatment, vol. 53, no. 12, pp. 3335-3347.

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