The Coca-Cola Company is a leading soft drink and beverage manufacturer and marketer with a footprint in every part of the globe. The company’s objective is to offer and deliver soft drinks products anywhere in the world using safe and affordable supply chain management. Coca-Cola customers can access their favorite brands of soda and beverages anywhere in the world at modest prices. The company applies innovation to diversify its line of products in order to meet a wide range of consumers’ demands and preferences for soft drinks. In addition, the company creates value to its customers through its management expertise and technological investments. This has enabled the Coca-Cola Company to produce and deliver into the market products of high quality that meet the consumers’ varying needs.
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Coca-Cola has several strategies aimed at providing it with a competitive advantage over its competitors in the soft drinks market; these methods include business, corporate and international level strategies.
Under its business level strategy, the company offers its products at the most competitive price in the market. The company has effective cost control policies that translate to cut on costs in its business processes, hence resulting to competitive pricing of its products in the market. The Coca-Cola Company has gained cost leadership in the beverage market in relation to its competitors. Still, it should continue trying to create unique and valued products through differentiation, which will enable the company to achieve competitive advantage over potential rivals. Furthermore, the company should use its experience curve to cut its costs, improve on the management strategies as well as production processes. It is advisable to develop a strong supply link with its suppliers, thus enjoying significant bargaining power and making large purchases, which will attract remarkable discounts. A proper business level strategy will enable Coca-Cola to lock out new entrants into the beverage and soft drinks industry and to gain a competitive advantage over its existing competitors.
Cooperate level strategy will enable Coca-Cola to diversify its operations to bring more value to its shareholders and customers. For instance, the company should continue diversifying the operations from its conventional soda products to packaging and distribution of bottled water and juices. Such diversification will create synergies for the different lines of business. The company will achieve a significant competitive advantage in terms of its production processes through sharing of common manufacturing facilities, distribution channels, sales teams, research and development, cut costs and growth in revenue. Having being in existence for over 100 years, the company has already gained from diversification by reinventing itself and benefiting from the economy of scale through cost savings and shared business activities among its various businesses. Through diversification, Coca-Cola has benefited from its existing core competencies including reassigning accumulated skills and expertise across its business units. Pooling its different business units together, the company will be able to gain an upper hand in bargaining with suppliers and offering customers. The Coca-Cola Company will receive considerable advantage from its different business units through easier and quicker entry into the market, access to reliable suppliers and building on the existing distribution channels.
International level strategy will allow the organization to retain its global competitiveness by creating value in the international market. The company should take advantage of the falling global trade restrictions to create more markets for its line of products. Apart from creating new markets and expanding on the existing ones, the Coca-Cola Company should be able to enhance on its reduced cost at all levels of its operation by utilizing relatively inexpensive labor in diverse parts of the globe. In addition, the company will reduce the research and development costs if it utilizes the vast pool of experiences and expertise in various geographical locations. Global strategy will enable the company to optimally utilize resources at every location to gain competitive advantage. Thus, the company will enhance the level of its products’ quality throughout the world. Hence, the company’s products will easier adapt to various markets’ conditions, thus making it easy to identify opportunities for an attractive niche in a market.
The company faces various challenges in terms of implementing its strategies. On its business level strategy, the company risks being obsessed with too much differentiation that does not add value to the products and business in general. Furthermore, new entrants and competitors can easily imitate the differentiation strategy, thus making it less effective and unique. Differentiation is a costly strategy which may not always resonate with potential consumers. This can lead to heavy investments that do not offer economic value and competitive advantages to the company.
The corporate strategy capital requirement is prohibitive especially in case of acquisitions, efforts to link two different organizational cultures to create a new culture, and in case of different financial and management control systems. In joining different business units together, the company faces the challenge of ineffective working relationships between various units due to diverse management styles. Combining different units’ operations causes loss of key personnel who are declared redundant.
The international level strategy faces numerous risks beyond the company’s control. The political and civil unrest in different countries affects businesses adversely. Violence and terrorism in many parts of the globe has caused waning in the level of business. Other challenges include weak laws and enforcement. Moreover, the company faces potential risks through currency fluctuations, inadequate supply of required manpower to operate in foreign countries, and differences in wage rates prevailing in different markets. Cultural diversities, customs, language, customers’ preferences, and mentality are some of the challenges faced by the Coca-Cola Company in its quest for global expansion.
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