REPORT: THE COCA-COLA COMPANY
The Coca-Cola company has been a dominant player in the beverage industry for over a century. Market dominance can be attributed to the company’s strategic management plans. Strategic management involves the continuous planning and formulation of policies that are relevant to an organization’s vision, (Wheelen, et.al., 2017). The plans are key to achieving goals and objectives of the company. A company’s operations are subject to internal and external factors. Internal factors are mainly the human resource and managerial activities undertaken. The company can control its internal environment to suit its production activities. On the other hand, external environment entails all the activities that happen outside the company but can influence its production processes. External factors are uncontrollable.
Organizational culture: It entails all the values and traditions that the company strives to uphold throughout its production life. The mission of the company includes; refresh the world in body, mind and spirit, inspire moments of optimism and happiness, create value and make a difference everywhere the company engages, through actions and brands, (Bowers, et.al., 2017). The vision is to become fully sustainable and achieve long-term growth. Values upheld by the company include; accountability, commitment, integrity, unity of purpose, innovation and quality.
Human resource: This is the department tasked with recruiting, hiring and staffing of employees. Human resource managers at Coca cola focus much on hiring highly competent workers. This helps the company to maintain its position as the leading producer of beverages in the international market. Human resource ensures that all employee affairs are addressed effectively to enable them to concentrate and be more productive. Also, appropriate compensation plans are formulated to ensure that all employees feel appreciated and valued for their service, (Noe, et.al., 2017). The company also has training programs for all its workers across the world. This is to equip all staff members with the necessary skills that are specifically needed to achieve the company goals. Human resource management at the company is very much effective and this can be proven from their ever-expanding business and employee volumes.
Company physical assets: For any company to operate effectively, there has to be enormous investments on physical assets. The coca cola company has invested heavily on land, buildings, equipment and machinery. All these are to enable effective production process. Equipment and machinery are regularly serviced and faulty ones replaced with new ones. Also, the company disposes off its physical assets after a useful life of 40 years. New assets are purchased to enable smooth operations after disposing the old ones.
Organizational structure: The company has in recent years shifted its structure to adapt a decentralized system of organization. The two main divisions of the company are the Bottling investments and the Corporate department. Bottling mainly deals with actual production activities like packaging and distribution. On the other hand, the corporate department majors in the office management activities, sales and marketing, policy formulation and revision of goals and objectives.
Profits and cashflows management: Profits maximization is always one of the main objectives of any company. Shareholders wealth must be maximized. Profits realization is a way of assessing the effectiveness of operations. Coca cola company has its profits and cashflows analyzed annually by the finance and accounting departments. All cashflow analysis are shared with all investors in the company.
Decision making: The company does not make any hasty decisions. Analysis is done annually to evaluate performance and determine whether any changes should be made especially regarding the products, (Meissner & Wulf, 2015).
Just like any other organization, the coca cola company is affected by factors beyond its control from time to time. Such factors may include; political instabilities, unhealthy competition, climate change, trends and technological changes, legal restrictions such as market liberalization in different economies, and media advertisements which influence market behavior, (Barlow, et.al,.2018) The company is unable to change occurrences that are outside its jurisdiction. The only way to prevail is by making necessary adjustments from time to time to counter the prevailing external environment.
Competitive advantage means having supremacy over the competitors in the market. By being the most valued and most preferred by the consumers, a company is said to have more competitive advantage. Products of the coca cola company have been ranked the most demanded beverages all over the world. The company has gone ahead to franchise and establish production lines across continents in the world. Great sales and marketing strategies have ensured that the company reaches all parts of the world. This extensive market coverage and consistency in quality production has facilitated the company’s great market power.
STRATEGIES USED TO GAIN COMPETITIVE ADVANTAGE
Branding has been the far most essential strategy used by the Coca-Cola company to gain and maintain competitive advantage. Creation of several brands each targeting a certain specific group of customers has improved the sales of the company, (Bragg, et.al., 2018).
Advertisements on mainstream media and also on social networks has also been very beneficial in gaining competitive advantage. Coca-Cola has for many years used true stories to inspire and influence market behavior. The company has been able to capture the interests of many customers through the personal stories shared on adverts, (Deal, 2018).
Secrecy especially on the composition and production of the beverages has been the best strategy for the company since its inception. The company’s beverages have remained unique for over a century and thus the customers are able to identify and relate to the products easily, (Krishnaswamy, 2017). This has been instrumental in maintaining a competitive advantage in the global market.
MEASUREMENT GUIDELINES TO VERIFY STRATEGIC EFFECTIVENESS
The Coca-Cola company has two main guidelines used in evaluation of strategic effectiveness. The two guidelines include; earnings and earnings growth, and profit margins. Total earnings are equivalent to sales times the profit margins. Earnings growth is changes witnessed in earning over time. Profit margins cover gross profits and gross profits margins. Gross profit value equals total sales less the value of cost of sales. The gross profit margin is equal to the gross income divided by the total sales.
EFFECTIVENESS OF THE MEASUREMENT GUIDELINES
Gross profit is very essential in analyzing a company’s performance. A positive trend in gross profits is an indication of efficient utilization of company resources in the production process. Gross profit is also very relevant in calculating the organization’s gross profit margins. The gross profit margins indicate level of efficiency in production and distribution processes. Coca-Cola boasts having higher profit margins than its competitors in the market. This alone is a key attraction for investors to the company and thus the company is ever expanding.
Also, Coca-Cola has maintained a positive trend in its earnings and an ever-increasing growth in earnings. This signifies the company’s great performance in its activities. Total sales have been on the rise and thus the total net profits have also been increasing.
Barlow, P., Serôdio, P., Ruskin, G., McKee, M., & Stuckler, D. (2018). Science organisations and Coca-Cola’s ‘war’with the public health community: insights from an internal industry document. J Epidemiol Community Health, 72(9), 761-763.
Bowers, M. R., Hall, J. R., & Srinivasan, M. M. (2017). Organizational culture and leadership style: for effective crisis management. Business Horizons, 60(4), 551-563.
Bragg, M. A., Roberto, C. A., Harris, J. L., Brownell, K. D., & Elbel, B. (2018). Marketing food and beverages to youth through sports. Journal of Adolescent Health, 62(1), 5-13.
Deal, J. (2018). Brand Communication in a Large Consumer Goods Company: A Case of The Coca-Cola Company.
Krishnaswamy, S. (2017). Sources of Sustainable competitive Advantage: A Study & Industry Outlook. St. Theresa Journal of Humanities and Social Sciences, 3(1).
Meissner, P., & Wulf, T. (2015). The development of strategy scenarios based on prospective hindsight: an approach to strategic decision making. Journal of Strategy and
Noe, R. A., Hollenbeck, J. R., Gerhart, B., & Wright, P. M. (2017). Human resource management: Gaining a competitive advantage. New York, NY: McGraw-Hill Education.
Wheelen, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2017). Strategic management and business policy (p. 55). Boston: pearson
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