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Strengths in the SWOT of coca cola

Brand Equity Interbrand in 2011 awarded Coca cola with the highest brand
equity award. Coca cola with its vast global presence and unique brand identity is
definitely one of the costliest brands with the highest brand equity.
Company valuation One of the most valuable companies in the world, Coca cola
is valued around 79.2 billion dollars. This valuation includes the brand value, the
numerous factories and assets spread out across the world and the complete
operations cost and profit of Coca cola.
Vast global presence Coca cola is present in 200 countries across the world.
Chances are, any country that you go to, you will find coca cola present in that
market. This vast global presence of coca cola has also contributed to the building of
the mammoth brand name.
Largest market share There are only 2 Big competitors in the beverage segment
Pepsi and Coca cola. Out of these 2, coca cola is the clear winner and hence has the
largest market share. Amongst all beverages, Coke, Thums up, Sprite, Diet coke,
Fanta, Limca and Maaza are the growth drivers for Coca Cola.
Fantastic marketing strategies Coca cola unlike Pepsi always tries to win
peoples heart. Where Pepsis target is continuously changing, and is targeted towards
youngsters, Coca cola targets people of all ages. The targeting is also done by
celebrities who are well liked for example Amitabh Bacchan, Sachin tendulkar,
Aishwarya Rai, Aamir Khan etc
Customer Loyalty With such strong products, it is natural that Coca cola has a
lot of customer loyalty. The products mentioned above like Coca cola and Fanta have
a huge fan following. People will prefer these soft drinks over others. Because of the
good taste of Coca cola, finding substitutes becomes difficult for the customer.
Distribution network Coca cola has the largest distribution network because of
the demand in the market for its products. On the other hand, due to this successful
distribution network, Coca cola has been able to command such a high market
presence.
Weaknesses in the SWOT of coca cola
Competition with Pepsi Pepsi is a thorn in the flesh for Coca cola. Coca cola
would have been the clear market leader had it not been for Pepsi. The competition in
these two brands is immense and we dont think Pepsi will give up so easily.
Product Diversification is low Where Pepsi has made a smart move and
diversified into the snacks segment with products like Lays and Kurkure, Coca cola is
missing from that segment. The segment is also a good revenue driver for Pepsi and
had Coca cola been present in this segment, these products would have been an
additional revenue driver for the company.

Absence in health beverages If you watch the news, you would know that
obesity is a major problem affecting people nowadays. The business environment is
changing and people are taking measures to ensure that they are not obese.
Carbonated beverages are one of the major reasons for fat intake and Coca cola is the
largest manufacturer of Carbonated beverages. The inference is that the consumption
of beverages in developed countries might go down as people will prefer a healthy
alternative.
Water management Coca cola has faced flak in the past due to its water
management issues. Several groups have raised lawsuits in the name of Coca cola
because of their vast consumption of water even in water scarce regions. At the same
time, people have also blamed Coca cola for mixing pesticides in the water to clear
contaminants. Thus water management needs to be better for Coca cola.
Opportunities in the SWOT of coca cola
Diversification Diversification in the health and food business will improve the
offerings of Coca cola to their customers. This will also ensure that they get better
revenue from existing customers by cross selling their products. The supply chain
which is distributing their beverages can also distribute these snacks thereby sharing
the load of Supply chain costs.
Developing nations Although developed nations have a high presence of Coca
cola, these countries are slowly moving towards healthy beverages. However
developing countries are still being introduced to the delight of carbonated drinks
and soft drinks. Countries like India which are developing and have a hot summer,
find the consumption of cold drinks almost doubled during summers. Thus the
higher consumption in developing business environment can be a good opportunity
to capitalize for Coca cola.
Packaged drinking water With hygiene becoming a major factor in the
consumption of water, Packaged drinking water has found its way into peoples mind.
Coca cola has a presence in the packed drinking water segment though Kinley.
Although Kinleys expansion is slow as of now, Kinley has a huge potential of
expansion. Thus Coca cola as a company should focus on the expansion of Kinley as a
brand and take it up to Bisleri s level of trust.
Supply chain improvement Supply chain can be a major cost sink hole with the
transportation costs always rising. Coca colas complete business is based on
transportation and distribution. There will always be possible improvements in this
area. Thus Coca cola should keep strict watch on its Supply chain and keep improving
to bring the cost down.
Market the lesser selling products In the product portfolio of Coca cola, there
are several products which have not found acceptance in the market. Coca Cola needs

to concentrate on the marketing of these products as well. It is understood that Coca


cola has made several expenses to launch these products. Thus, the marketing and
subsequent rise of sale of these products will help revenue of Coca cola.
Threats in the SWOT of coca cola
Raw material sourcing Water is the only threat to Coca cola. The weakness of
Coca cola was the suspected use of pesticides or vast consumption of water. However,
the threat here is that water scarcity is on the rise. With the climate changing, and
regions of various countries facing scarcity of water, sooner or later someone might
raise fingers on beverage companies. Thus, Water sourcing is an axe which can fall
anytime on the head of Coca cola. If water is limited or rationed, Coca cola can
experience a major downfall in their revenue and capacity of distribution. The same
can affect its arch rival Pepsi as well.
Indirect competitors Coffee chains like Starbucks, Caf coffee day, Costa coffee
are on the rise. These chains offer a healthy competition to Coca colas carbonated
drinks. They might not be a big competition for Coke, but they do give a dent to its
beverage market. Similarly, health drinks like Real and Tropicana as well as energy
drinks like Red bull and Gatorade are stealing away the market share indirectly.

Company Background
Name

The Coca-Cola Company

Logo

Industries served

Beverage (more than 500 brands)[1]

Geographic areas served

Worldwide (more than 200 countries)[[1]

Headquarters

Atlanta, Georgia, United States

Current CEO

Muhtar Kent

Revenue

$46.854 billion (2013) 2.42% decrease over $48.017 billion (2012)[1]

Profit

$8.584 billion (2013) 4.82% decrease over $9.019 billion (2012)[1]

Employees

130,600 (2014)

Main Competitors

PepsiCo Inc., Dr Pepper Snapple Group, Inc., Unilever Group, Mondelez International, Inc., Groupe Danone
S.A. and many other companies in the beverage industry.

Business description
This is The Coca-Cola Company business description taken from the companys financial
report:
"The Coca-Cola Company is the worlds largest beverage company. We own or license and
market more than 500 nonalcoholic beverage brands, primarily sparkling beverages but also a
variety of still beverages such as waters, enhanced waters, juices and juice drinks, ready-todrink teas and coffees, and energy and sports drinks. We own and market four of the worlds
top five nonalcoholic sparkling beverage brands: Coca-Cola, Diet Coke, Fanta and Sprite.
Finished beverage products bearing our trademarks, sold in the United States since 1886, are
now sold in more than 200 countries.
We make our branded beverage products available to consumers throughout the world through
our network of Company-owned or -controlled bottling and distribution operations as well as
independent bottling partners, distributors, wholesalers and retailers the worlds largest

beverage distribution system. Beverages bearing trademarks owned by or licensed to us


account for 1.9 billion of the approximately 57 billion beverage servings of all types
consumed worldwide every day.
We believe our success depends on our ability to connect with consumers by providing them
with a wide variety of choices to meet their desires, needs and lifestyle choices. Our success
further depends on the ability of our people to execute effectively, every day.
Our goal is to use our Companys assets our brands, financial strength, unrivaled
distribution system, global reach, and the talent and strong commitment of our management
and associates to become more competitive and to accelerate growth in a manner that
creates value for our shareowners.

SWOT
The Coca Cola Company SWOT analysis 2015
Strengths
Extensive and diversified product portfolio
Advertising and marketing capabilities
Strong partnerships with bottling companies
Leading player in the global beverages
industry
Brand recognition and reputation
Strong partnership with McDonalds

Weaknesses
Poor R&D capabilities
Rising debt levels
Dependence on income and profits from the
U.S.
Focus on soft carbonated beverages
Criticism and negative publicity

Extensive distribution channels

Opportunities
Growing alcoholic beverage industry
Expansion of ready-to-drink coffee products
in the U.S. market
Acquisition of Arizona or Gold Peak readyto-drink tea brands

Threats
Obesity concerns may reduce demand for
some of the companys products
Rising U.S. dollar exchange rate
Rising minimum wage and healthcare costs in
the U.S.
Water scarcity and poor quality could
negatively impact The Coca-Cola Companys
production costs and capacity
Increased competition and capabilities in the
marketplace could hurt The Coca Cola Companys
business

Strengths
1. Advertising and marketing capabilities. The Coca Cola Companys annual advertising
spending was $3.266 billion, $3.342 billion and $3.256 billion in 2013, 2012 and 2011,
respectively.[1] Advertising expenses accounted for 6.9% of total revenues each year. In 2013,
The Coca Cola Company was the largest advertiser in the beverage industry in the world.

Exhibit 1. Yearly advertising budget for major beverage companies


Company

2013

2012

2011

The Coca Cola Company

$3.266 billion

$3.342 billion

$3.256 billion

PepsiCo Inc.[3]

$1.443 billion

$1.369 billion

$1.295 billion

Dr Pepper Snapple Group Inc.[4]

$486 million

$481 million

$460 million

Source: Companies financial reports


In addition, companys total marketing expenses reached $6.9 billion or 14.7% of total
revenue in 2013. The companys marketing budget is not the largest when compared to the
rivals budgets, but its the one that is used the most effectively.
Exhibit 2. Marketing expenses for major beverage companies in 2013
Company

Marketing expenses

Total revenue

The Coca Cola Company

$6.9 billion

$46.854 billion

PepsiCo Inc.[3]

$34.7 billion

$66.415 billion

Dr Pepper Snapple Group Inc.[4]

$3.618 billion

$5.997 billion

Nestl S.A.[5]

$20 billion (approx.)

$95 billion (approx.)

EST Analysis
The PEST analysis identifies changes in the market caused by political, economic, social, and
technological (PEST) factors.
Below is the PEST analysis for the Coca-Cola Company, a global enterprise that has ranked as
one of Fortune's top 10 most admired companies for the past consecutive five years.

Political Analysis and Factors


The Food and Drug Administration (FDA) regards non-alcoholic beverages such as Coca-Cola as
within the food category. The government regulates the manufacturing procedure of these
products. Companies that fail to meet the government's standards are subject to fines. Coca-Cola
is also subject to the Occupational Safety and Health Act and to local, state, federal, and foreign
environmental regulation. Following are some of the factors that are influencing Coca-Cola's
operations:

1.

Changes in laws and regulationschanges in accounting standards, taxation


requirements (tax rate changes, modified tax law interpretations, entrance of new tax laws),
and environmental laws either in domestic or foreign authorities.

% of

2.

Changes in non-alcoholic business eracompetitive product and pricing policy


pressures and ability to maintain or earn share of sales in worldwide market compared to
rivals.

3.

Political conditions, specifically in international marketscivil conflict, governmental


changes, and restrictions concerning the ability to relocate capital across borders.

4.

Ability to penetrate emerging and developing marketsthis also relies on economic


and political conditions, such as civil conflict and governmental changes, as well as CocaCola's ability to form effectively strategic business alliances with local bottlers, and to
enhance their production amenities, distribution networks, sales equipment, and technology.

Economic Analysis and Factors


During the recession of 2001, the US government took aggressive actions to turn the economy
around by 2002. Coca-Cola took note of this, and realized that loan interest rates would likely rise
as the economy returned. Thus, they took out low-cost loans in 2001 to fund growth in 2002.
They used the loans for research and development on new products to capitalize on in a strong
2002 economy. Currently, as global growth is slowing, Coca-Cola may be watching for a similar
opportunity.

Social Analysis and Factors


Social factors that affect the sales of Coca-Cola's products include the following:
1.

The majority of people in the US are showing increasing interest in healthy lifestyles. That
has strongly influenced the sales within non-alcoholic beverage sector as many customers
switch to bottled water and diet colas such as Coca-Cola Light or Zero.

2.

Time management is a concern for 43 percent of all households, a percentage that has
increased over the years.

3.

Customers from ages 37 to 55 are concerned with their nutrition. Also, a large portion of
the population are baby boomers. As they become seniors, they are more concerned about
life choices that will impact their life expectancy. That will continue to affect the non-alcoholic
beverage sector by increasing the demand for healthier drinks.

Technological Analysis and Factors


Some factors that cause a company's actual results to vary from expected results include:

1.

The efficiency of a company's advertising, marketing, and promotional programs


For example, television, web, and social media advertising are constantly evolving. The
ability of a company to effectively promote their products through these channels impacts
sales.

2.

Packaging designIn the past, the introduction of cans and plastic bottles increased
sales volume for the company due to how easy these containers were to carry and dispose.

3.

New equipmentBecause the technology is continuously advancing, new equipment is


constantly being introduced. Because of these new technologies, Coca-Cola's production
volume has increased sharply compared to that of a few years ago.

4.

New factoriesCoca-Cola Enterprises (CCE) has six factories in Britain that use modern
technology to ensure the quality and speedy delivery of product. In 1990, CCE opened one
of Europe's largest soft drinks factories in Wakefield, Yorkshire. The factory has the ability to
produce cans of Coca-Cola at a faster rate than a machine gun can fire bullets.