The firm under analysis is the Coca-Cola Company. The Coca-Cola Companyis a multinational enterprise based in America. The company is a beverage corporation that manufactures non-alcoholic drinks. It is involved in the marketing and retail. Its most popular drink is Coca-Cola. The headquarters of the Coca-Cola Company is in Atlanta, Georgia in the USA
The soft drinks that the company produces include 7 Up, Fanta, Sprite, Nestea, minute maid among others.
“An accounting system consists of the personnel, procedures, technology, and records used by a firm to develop accounting information and communicate this information to decision makers (William et.al. 2008)
The Coca-Cola Company uses the equity accounting method. (Weiss 2000) they use this method because they are a parent company with many subsidiaries and they need to include the other profits made.
The Pros and Cons of equity accounting and the Impact to the Coca-Cola Company
The equity method has certain advantages. First, it is accurate. It provides the parent company with an accurate income. This method gives income from all sources. The consolidated statements are within the different subsidiary companies and the only way to bring the statements together is through equity. Second, this method helps to hide numbers. The parent company or a subsidiary may not be performing well but the equity method hides all this and balances.
The disadvantages are that it is hard to use and to obtain. It takes a very long time to combine the consolidated numbers into the equity accounting. The equity method shows dividends as deductions instead of as revenue. In the process, the equity reflects as a net asset. It reduces the amount of investments.
The equity method has been advantageous to the Coca-Cola Company in that it helps the company to keep track of the subsidiaries and their participation. Sometimes in hiding the numbers, investors keep investing even when the profits are not highly attractive.
Business performance: the Marketing strategy of the Coca-Cola Company
The first four marketing strategies, according Needham (1996), are on the product, price, promotion and place.
The Coca-Cola company has a variety of products with the most popular one being Coke. They have ensured that they have a variety of products to suit the different consumer tastes. They have used the strategy of increasing the product lines. By increasing the product lines, the marketers expand the product mix (Needham 1996). The company has a wide range of soft drinks including 7 Up, Fanta, Sprite, Nestea, Minute Maid and Coca-Cola.
The price that a consumer pays determines the profit of the company (Needham 1996). Time after time, the Coca-Cola Company adjusts their prices of the product. In the different regions, their bottlers package different quantities of the soda so that the prices can suit different consumers. The company uses market-skimming strategy to achieve its goals. For the packaging, they use quantities like ranging from 200 Ml to 2 litres on average. They also include different packaging materials including plastic bottles, cans and glass bottles.
The most popular way that The Coca cola Company promotes it products is through advertisements. They advertise through the internet, social media and outdoor advertising. Sometimes they use their corporate social responsibility activities as advertisements.
The company also considers ways to have the products get to the audience. Products are available readily in wholesale and retail. The company contracts bottlers in the different regions, and they transport to the concentrate, which the bottlers dilute and distribute.
The other three elements, according to Behera (2008) are the People, process and the physical evidence.
The Coca-Cola Company has earned a brand name and reputation, and the customers serve as their promoters (Coca Cola Company, 2012).
Process refers to the techniques and channels that used to inform customers of the services offered (Behera, 2008). This makes them knowledgeable and they are able to make product decisions.
Finally, is the physical evidence. The company makes use of brochures and pamphlets (Albrow & Kings, 1990).
SWOT analysis of the Coca Cola Company
SWOT analysis as a strategic planning method is useful as far as the evaluation of a company’s strengths, weaknesses, opportunities as well as threats is concerned. SWOT. SWOT analysis seeks to determine the scope upon which the firms’ strengths, as well as weaknesses, can deal with the changing business internal environment. A SWOT analysis thus must begin at identifying the desired objectives to be accomplished. The strengths involve the characteristics of an organization that provides it with an advantage as compared to the other firms in the entire industry. The strengths thus entail something that a firm is good in doing and that which provides the firm with a chance to compete with other firms in the industry. The strengths of Coca Cola Company include the following;
Coca Cola has an advantage in that its premier brand is recognized in the industry. This is due to the high advertising as well as promotion budgets that Coca Cola uses. Some of the various media that are used in advertising and promoting Coca Cola includes newspapers, television, internet and radio. Also, the company makes use of retailers, and consumers so as to advertise and promote its products.
Coca Cola Company successes with regards to the soft drink are a result of knowledge of the corporate strengths in combination with the rigorous industry analysis in order to gain a greater strategy.
The market positioning that the Coca Cola adopts enables it to expand its market share as compared to its rivals such as Pepsi Cola and Dr Pepper/Seven Up.
Weaknesses entail the business features that pose a disadvantage to the firm. With regards to the Coca Cola Company, the following are the shortcomings that hinder it from achieving its goals; there is stiff competition in the soft drinks industry for instance; soda brands, sport drinks as well as water drinks are the main competitors of Squirt.
Opportunities are concerned with the chances that enable a firm to perform exceedingly well and achieve its goals. The opportunities are very important as far as the firm’s growth and profitability is concerned. The following are the main opportunities of the Coca Cola Company; the decision to invest in other nations provides the firm with an opportunity of increasing the market share. With this regards, the Coca Cola Company will be able to increase its market niche by specializing in serving market niches that the major competitors overlook.
Threats refer to the external factors that hinder a firm form achieving its objectives. Threat has the effect of hindering the firm’s growth as well as profitability. With regards to the Coca Cola Company, the following are the main threats that prevent it from achieving its set goals; massive adverting campaigns by competitors, and hence expanding their market share. Such rival firms include the Mellow Yellow as well as Mountain Dew who spends huge amounts of money to advertise their products. Also, soft drink is usually not a necessity implying that people can do without it. It is thus an inferior commodity implying that the individual demand for the product goes down once the income increases as people tend to consume other products, which they consider being more superior. With this regard, the consumers enjoy high bargaining power, and this is a threat to the Coca Cola Company
The Coca Cola Company PEST Analysis
An organization should carry out a PEST analysis so as to satisfy the needs of its clients. The PEST describes such players as political, economical, social-cultural and technological.
With regards to technological innovation, an organization requires to be creative enough so as not to lag behind the competitors. Innovation has been regarded as critical as far as the business organizations are concerned. The Coca Cola Company has thus overwhelmingly institutionalized the innovation culture. The company is fully aware that the lack of innovation can contribute to their shrinking market share.
Economic environment is concerned with such aspects as foreign exchange rates, per capital income, general infrastructure, and inflation rates.
Social -cultural environment is concerned with such aspects as religion, education, population demographics among others. Collaborators, customers, competitors, and finally the climate that surrounds the Coca Cola Company in its environments have an impact in its operations. The distributors as well as the suppliers play an important role of ensuring that the products reach the consumers.
Political environment that have an impact on the Coca Company involves the government laws that e.g. taxation policies.
The positive and negative sides of globalization in the UAE context
United Arab Emirates (UAE) lies on the Persian Gulf in the Southeast of the Arabian Peninsula. It is an Arab nation, and the capital of the country is Abu Dhabi (CIA World Fact 2012)
The UAE local firm selected for analysis in this question is Hunter Foods Limited FZCO.
The Hunters Food Limited Company manufactures and distributes snacks. It is located in Dubai, UAE (Hunters Food 2012). The company has a worldwide reputation for innovation, quality, and packaging.
Albrow et. al. (1990), defines globalization as the process where there is international integration. The integration is a result of interchange of world views. In the context of the report, is economic globalization. According to Oshi et. al .(2009), this is the interdependence of national economies and the increase of movement of goods, services, technology and capital across borders.
Globalization has played a prominent role in Hunter Foods Company. First and most important, globalization has served the Foods Company with a worldwide market. The Dubai based company is able to get a market outside UAE. According to the Hunter Food Company website (2012), it has its products in other regions including North America. Asia pacific, Europe, Middle East and Africa.
Globalization also allows for an increase in not only the market but also the products line. Through globalization, the company benefits expansion of its production. Globalization has also helped the Hunter Foods Company achieve progress in information and technology.
With globalization, there are more demands for the products. This calls for the increase of the rate of production. More the production units lead to less costs of production.
Globalization leads to competition to Hunter Foods. Foreign investors may invest in the country. Globalization enables easy exportation and importation. This calls for Hunter Foods to up their game all the time to survive in the competition
How Hunter Foods Company has changed its marketing strategy to meet global consumers
The Hunter Foods company has used the product strategy as its main strategy to meet the global, market. First, they have an in house design, with experts who meet the consumers changing needs both in the country and globally. They have designed long shelf life products that are cholesterol free, nut free, and do not contain nuts (Hunter Foods 2012). This specification helps to serve global needs of consumers.
Second, they have also considered the Pricing strategy. The different countries and regions have different living standards. They tailor their products to create an optimum price for the different regions according to the living standards.
Third is the Promotion strategy. The company has included ways of advertising that will reach out to the world. They make use of the internet. Customer satisfaction, which they achieve by the quality product, serves as a significant promotion element.
As for the Place strategy, Hunter foods have had their products distributed in leading retail centers all over the regions they operate in. They major on the intensive distribution to a large market.
The Pros and cons of globalization in UAE markets
As a disadvantage, globalization may cause competition. This competition may cause an undesirable shift of market strategies of the company. For example, globalization may lead to tax havens for a food company from the United States. This investor will gain entry to the UAE with reduced or no tax. The food companies in UAE like Hunter Foods will in turn suffer because the new investors have an edge over them. They have to lower their prices as a strategy, which would result to lower profits (Williams et, al., 2008).
Globalization is advantageous because it opens up new markets. A company that was initially selling or operating in the UAE only gets an opportunity to venture into the new markets. Globalization, therefore, expands it areas of operation.
On the same note of opening up new markets as an advantage, a company also has a choice of sectors that the company deals in. If the Arab community in the United Arab Emirates does not consume pork because of the Islam religion dominating the region, food companies cannot produce pork products. However, with globalization the markets are not only bugger, but also diversified. The Food Company in United Arab Emirates can, therefore, produce pork products and market them in other regions (CIA - The World Fact book, 2012).
Other advantages of globalization include fostering of social and political relationships between the members. Different states may share Information and technology.