Introduction
The success of any company in the international markets depends largely on the business and organizational strategies that the given company adopts. In most cases, such success is tied to the extent of marketing done to retain the existing customers as well as attract new ones. An example of company that has been successful as far as penetration and growth in international markets is Coca-Cola (Holstein, 2011).
The company is considered to be one of the world’s leaders within the soft drink industry. The company has operations in over 150 countries with its brands including nonalcoholic brands. Over the years, the company has been able to gain competitive advantage and it is considered to be the world’s most value brand. This paper analyses the international market of Coca-Cola in an attempt to provide insights into how the company has operated to achieve the top position as far as the soft drink industry is concerned.
Background of Coca-Cola
There are numerous companies dealing with the production, distribution and marketing of nonalcoholic syrups and beverage concentrates. In spite of this, Coca-Cola has stood out as the leader in this sector with the company’s operational brands being more than 400 taking into consideration energy drinks, coffee, teas, juice and juice drinks, waters, and other light beverages.
The company is operational in more than 200 countries including segments such as Eurasia, Middle East, North Asia, North America, Latin America, European Union, East, South Asia and Pacific Rim, and Africa. Coca-Cola has dominated the soft drinks industry. For example, in the year 2004, the company was named as top brand in terms of value and sales volume for sector dealing with ready to drink products, fruit and vegetable juice.
Significance of Research
Changes in the market play a significant role as far as the level of competition in the market is concerned. Similarly, internal and external business environments influence the success of any given company. Coca-Cola is known to be the leader when it comes to the production and distribution of soft drinks all over the world (Mooney, 2007). The company has improved in terms of value over time. Regardless of its economies of scale, the company boosts of being the world’s highly valued brand and this, and led to the development of world’s recognition (Kurt Christensen, 2010).
In spite of the tough economic times, depression, prosperity, peace of ever war, Coca-Cola has grown tremendously in terms of product portfolio and value (Sicilia & Palazón, 2008). For example, a review of the company’s past shows that Coca-Cola has earned respect among customers in terms of brand building as well as effective management of team.
This research paper is highly significant in that it will offer insights on the strategic approaches adopted by Coca-Cola company to ensure that it remains competitive both in the local and international markets. As such, the paper will involve comprehensive analysis of Coca-Cola’s current position, the state of the soft drink industry, as well as an evaluation of the available resources and strategies that the company uses to remain relevant in the international market (Mooney, 2007). For this reason, the research is important in that it will act as an addition to the existing knowledge as far as understanding the competitive nature of Coca-Cola in terms of distinctive competence and strengths is concerned (Sicilia & Palazón, 2008; Mooney, 2007).
An Overview of the Soft Drink Industry
There are many companies within the soft drink industry and this has led to increased completion in the industry. For this reason, firms are working hard to ensure that they remain relevant to their customers. Regardless of the fact that different industries exhibit a lot of difference as far as the state of competition is concerned, the soft drinks industry has a specific structure that determines the level of competition in the market (Kurt Christensen, 2010). In this case, firms within the industry are subject to behave differently with respect to the industry structure where a lot of effort is given in aspects such as new entrants to the market, the extent of rivalry among competing firms, the bargaining power of buyers and the threat of suppliers, as well as the threat of substitutes.
Following the increase in the level of competition within the soft drinks industry, some trends to gain competitive edge have emerged as highlighted below:
Mergers and acquisition
Due to the growth of the industry, new firms are entering the soft drinks industry every now and then. Such influx increases the level of competition to an extent that some companies have to merge or acquire others for them to remain competitive. Addition, companies are opting for merger and acquisition as a way to increase their economies of scale. For example, Quaker Oats was acquired by PepsiCo and later bought Gatorade, a move that was very significant in the expansion of PepsiCo’s energy drink portfolio. The acquisition of Quaker Oats by PepsiCo was a disadvantage to Coca-Cola since PepsiCo is one of its largest competitors.
Globalization
There is an increase in global networks due to the advancement in technology and such change has given companies the chance to make collaboration within the local market as well as ensure expansion to international markets. Wild and Wild (2014) points out that with the current rate of globalization, expectations are high that the annual growth rate of the international soft drink market will expand significantly.
Changes in lifestyle
The chance in customer lifestyle influences the level of competition within any industry and so is the case in the soft drinks industry. For example, the current change in lifestyles, attitudes, and increased societal concerns have adversely affected the sales volume of many companies within the soft drinks industry. Presently, there is a constant awareness regarding the need to observe what people eat or drink (Sicilia & PalazĂłn, 2008). This is based on the fact that carbonated drinks are associated with adverse health implications.
Changes in buyer preference
There is a high probability of changing preferences among soft drinks customers. The implication is that in the event that the change is negative, the competition is also affected. With the increase in the rate of innovation in the world nowadays, buyers are looking for improved products while firms are using such opportunities to increase their competitive advantage.
Innovation
Product innovation is a common aspect of competition in the soft drinks industry since buyers are in constant search as well as desire for certain features in the products that they get in the market (Mirvis, Herrera, Googins, & Albareda, 2016). As such, for companies to ensure that they are competition, they need to embrace innovation in their operations.
Discussion, implications and recommendations
The rapid changes in the international market conditions have adverse impacts on the operations and competitive advantage of Coca-Cola (Wild, & Wild, 2014). With respect to the emerging trends, there are some aspects that Coca-Cola is doing well while in other cases, the company’s operations are negatively affected. First, the company suffers from various strategic issues with one of them being the decline in the sales especially for the carbonated soft drink. Secondly, the lifestyle awareness trend has had negative impact on the sales volume of Coca-Cola (Mirvis et al., 2016). Thirdly, Coca-Cola faces stiff competition from PepsiCo (Roderick, 2016). Evidently, there are a number of concepts and factors that negatively influence the competitiveness of the company when viewed from international market perspective.
In spite of this, there are other aspects that have been of much significance with respect to the company’s relevance in the international market. For example product innovation is one of the driving forces as far as gaining competitive edge is concerned (Iarca, Ruşeţ, Sima, & Gheorghe, 2011). Despite such importance, there is a lot of conflict among firms especially in the bottling aspect since there is no innovation (Mirvis et al., 2016).
However, Coca-Cola has embraced innovation in its product development particular in the taste element. For example, the company has increased its brand portfolio to factor in Coca-Cola with lime, and lemon, Vanilla Coke, Cherry Coke, Diet Cherry Coke, Fresca, and regular Coke Zero (Roderick, 2016).
For the company to remain competitive there is a need for continuous product innovation (Kurt Christensen, 2010). To achieve this, Coca-Cola should take into consideration the needs and wants of its consumers, as well as be up to date with the market trends. Secondly, the company needs to ensure the production of quality products as it is a significant element of success. In this case, there is a need for products designed in such a way that they can satisfy implied or even stated customer needs. Alternatively, Coca-Cola can factor in products that have no deficiencies as in the case of Coke Zero.
By adopting some of the suggested concepts above, Coca-Cola will be able to compete favorably with other companies in the same industry such as PepsiCo (Mukherjee, 2008). For example, in the case that the company decides to work on customer’s preference, the implication is that it will lower the number of clients lost due to lack of/the presence of certain deficiencies in any of its products. Secondly, offering products that take consideration of the needs and wants of the consumers is a significant way to attract new consumers, as well as maintain existing ones.
References
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