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Strategic Management
1
Table of Contents
Description Page No.
Industry Profile 3
Company Profile 4
Mission Vision 5
Micro ...
Strategic Management
2
Acknowledgment
We are very grateful to Allah who blessed us the strength and courage to stand by th...
Strategic Management
3
Industry Profile
The beverage industry in Pakistan has grown over the time. The industry produces s...
Strategic Management
4
certain macroeconomics factors certainly do have the potential to corrode this industry’s
profitabi...
Strategic Management
5
Company in the year 1923 and his more than sixty years of leadership took the business to
unsurpass...
Strategic Management
6
Our mission is to bring consumers quality refreshments that anticipate and satisfy their desires
an...
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1. Threat of new entrants
2. Rivalry among existing competitors
3. The bargaining power of buyers
4...
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The Bargaining Power of Suppliers:
The main ingredients for soft drink include carbonated water, ph...
Strategic Management
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SWOT analysis
Strenghts
1: Financially strong
2: Loyal Customers
3: Most extensive beverage
distrib...
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Strengths
 Financially strong
One of the main strengths of CCBPL is the financial strength of the...
Strategic Management
11
loyal to the organization and it is resulting in improving the motivation level of the
employees, ...
Strategic Management
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emerging economies but it will prove weak as the world is fighting obesity and is moving
towards c...
Strategic Management
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PepsiCo is fiercely competing with Coca Cola over market share in Pakistan and
neighboring Countri...
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EFE AND IFE Matrix
Developing the EFE Matrix
External Factor Evaluation Weighting Rate Weighted
Sc...
Strategic Management
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Total 1.00 3.2
Explanation on calculation
Based on the above calculations it has been concluded th...
Strategic Management
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Based on the above calculations it has been concluded that the company’s Total Weighted Score
is 3...
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Coke seeking to increased market share for their present product in present market through
greater...
Strategic Management
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ANALYZE THE PORTER’S GENERIC STRATEGIES
Coca-Cola is seen to have employed these two competitive s...
Strategic Management
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FIVE MATRICES OF COCA COLA
ANALYSIS ON BCG MATRIX
Products Revenue
$
%age of
Revenues
Profits
$
%a...
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Further Coca Cola can make growth because there is a potential in the market and more growth
and m...
Strategic Management
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The Internal-External (IE) Matrix
According to the graph studied above Coca Cola is lying in the 1...
Strategic Management
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SPACE Matrix
6
5
4
3
2
1
-6 -5 -4 -3 -2 -1 1 2 3 4 5 6
-1
-2
-3
-4
-5
-6
Competitive
IS
ES
CA
FS
C...
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X-axis: -1.4 + 5.0 = 3.6
Y-axis: 5.4 + -3.2 = 2.2;
Coordinate: (3.6, 2.2)
Explanation
According to...
Strategic Management
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TOWS Strategic Alternatives Matrix
Opportunities
1: Bottled water
consumption growth
2: Increasing...
Strategic Management
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Quantitative Strategic Planning Matrix
The strategies which can be used are market penetration or ...
Strategic Management
26
Key External Factors
Weight
Increasing the
advertisement /
Marketing
Budget
Introducing the
energy...
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27
 Secondary research
 Primary research
After conducting the research company will come to know th...
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Production department
To produce to that limit where they can generate the revenues to gain share ...
Strategic Management
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has room for improvements, but the Coca-Cola Company is not far from perfection. This empire
will ...
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  1. 1. Strategic Management 1 Table of Contents Description Page No. Industry Profile 3 Company Profile 4 Mission Vision 5 Micro Environment & Five Forces Model 6 SWOT Analysis 8 Competitive Profile Matrix 13 EFE AND IFE Matrix 14 Corporate Strategy 16 Porter’s Generic Strategies 17 Space Matrix 18 Grand Strategy Matrix 19 BCG Matrix 20 I-E Matrix 21 TOWS Matrix 22 Quantitative Strategic Planning Matrix 25 Implementation Stage 26 Conclusion 27
  2. 2. Strategic Management 2 Acknowledgment We are very grateful to Allah who blessed us the strength and courage to stand by the difficulties that came in the way and who enabled us to complete this project effectively.As plants cannot grow without seeds, birds cannot fly without wings.Similarly knowledge cannot be attained without proper direction and supervision. We are, therefore, also thankful to our respected Ma’am Quratulein Muqarab, because of whose generous co-operation and help, the accomplishment of this Project became possible. Executive Summary In this project we have analyzed the company’s mission and vision and also proposed a new mission statement for the company. On the basis of secondary research we have identified the SWOT analysis of the company and also prepared the five different matrices to identify the strategies which governed by coca cola and we also give some recommendations about the strategies which coca cola can use in order to compete in the market.
  3. 3. Strategic Management 3 Industry Profile The beverage industry in Pakistan has grown over the time. The industry produces soft drinks, juices, syrups, milk, and squashes. With about 170 units currently in operation throughout the country, both upstream and downstream industries have grown and are flourishing. There are 34 beverage plants in the country and this is one industry, which is very well organized. Job oriented in nature, the beverage industry employees over 500,000 people directly and indirectly and also supports many other up/down stream industries such as crown corks, glass bottles, plastic shells, sugar, transport, advertising and media, P.E.T bottles, concentrates etc. due to this industry a huge number of outlets/shops are supported to generate wide-spread economic activity in the country. Soft drinks market in Pakistan is growing rapidly. And the carbonated category is the leader in the soft drink market with a share of 63.7 %. This reflects such a huge market to cater. The beverage industry in Pakistan has a lot of potential and room for growth and development. There exist a lot of opportunities for new entrants and local players to exploit the untapped facets of the market, for instance the energy drink market or juices, by strategically positioning their products and by resorting to innovative and effective marketing strategies. According to a recent report on Pakistani Food and Beverage Industry, dated January 20th 2014, the two primary threats to this industry are; political instability and continuous militant activity, which have the tendency to obstruct foreign direct investment in this industry. Challenges faced by beverage industry are the high prices and unavailability of sugar and also the taxes, excise duty, and sales tax at the rate of 15 percent on the retail price. This is the reason that beverage industry at the moment has very low per capita consumption of 20 serves whereas in other countries of our region it varies from120-250 on the basis of single serve of 250 ml. Based upon the aforementioned facts, on can conclude that the beverage industry is Pakistan has gained momentum and is more likely to continue the growth in coming years as well. Although,
  4. 4. Strategic Management 4 certain macroeconomics factors certainly do have the potential to corrode this industry’s profitability Company Profile The Coca Cola Company The Coca-Cola Company (TCCC) was first introduced by John Syth Pemberton, a pharmacist, in the year 1886 in Atlanta, Georgia when he concocted caramel-colored syrup in a three-legged brass kettle in his backyard. He first “distributed” the product by carrying it in a jug down the street to Jacob’s Pharmacy and customers bought the drink for five cents at the soda fountain. Carbonated water was teamed with the new syrup, whether by accident or otherwise, producing a drink that was proclaimed “delicious and refreshing”, a theme that continues to echo today wherever Coca-Cola is enjoyed. Dr. Pemberton’s partner and book-keeper, Frank M. Robinson, suggested the name and penned “Coca-Cola” in the unique flowing script that is famous worldwide even today. By the year 1886, sales of Coca-Cola averaged nine drinks per day. The first year, Dr. Pemberton sold 25 gallons of syrup, shipped in bright red wooden kegs. Candler, an entrepreneur from Atlanta. By the year 1891, Mr. Candler proceeded to buy additional rights and acquire complete ownership and control of the Coca-Cola business. Within four years, his merchandising flair had helped expand consumption of Coca-Cola to every state and territory after which he liquidate. The business continued to grow, and in 1894, the first syrup manufacturing plant outside Atlanta was opened in Dallas, Texas. Others were opened in Chicago, Illinois, and Los Angeles, California, the following year. In 1895, three years after The Coca-Cola Company’s incorporation, Mr. Asa G. Candler announced in his annual report to share owners that “Coca- Cola is now drunk in every state and territory in the United States.”As demand for Coca-Cola increased, the Company quickly outgrew its facilities. A new building erected in 1898 was the first headquarters building devoted exclusively to the production of syrup and the management of the business. In the year 1919, the Coca-Cola Company was sold to a group of investors for $25 million. Robert W. Woodruff became the President of the
  5. 5. Strategic Management 5 Company in the year 1923 and his more than sixty years of leadership took the business to unsurpassed heights of commercial success, making Coca-Cola one of the most recognized and valued brands around the World. Vision Be the outstanding beverage company leading the market, inspiring people, adding value through excellence. Mission Build a sustainable and profitable business through refreshing consumers, partnering with customers, delivering superior value to shareholders and being trusted by communities. EVALUATION OF MISSION COMPONENTS Customer No Product/services No Market yes Technology No Concern for survival No philosophy yes Self concept No Concern for public No Concern for employees No Values  Passion: We put our hearts and mind into what we do.  Accountability: We act with high sense of responsibility and hold ourselves accountable.  Integrity: We are open, honest, and ethical and we trust and respect each other.  Teamwork: We collaborate for our collective success. PROPOSED MISSION & VISION STATEMENT Mission:
  6. 6. Strategic Management 6 Our mission is to bring consumers quality refreshments that anticipate and satisfy their desires and needs through modern technology and inspiring employees to be the best that they can continue to provide the best products on the market. Vision: We are dedicated to upholding standards, while maintaining the leadership position in the beverages category when delivering superior customer service in a highly efficient and profitable manner. Our Goals  People and Organizational Leadership: Build a highly capable organization and be the employer of choice.  Commercial Leadership: Profitably deliver superior value to consumers & customers at the optimal cost to serve. Supply Chain: To be the best in class consumer demand fulfillment organization that exceeds customer expectations highest in quality, lowest in cost, in a sustainable, socially responsible manner.  Operational Excellence: Create a culture of Operational Excellence to support continuous improvement of our business process and systems.  Sustainability: Ensure the long term viability of our business by being proactive and innovative in protecting the environment and be recognized as one of the most responsible corporate citizens by all stakeholders. Micro-environment Entry barriers are relatively low for beverage industry: there is almost 0 consumer switching cost and very low capital requirement. There are more and more new brands appearing in the market with usually lower price than Coke products. However Coca-Cola is seen not only as a beverage but also as a brand. It has a very significant market share for a long time and loyal customers are not very likely to try a new brand beverage. To analyze the micro-environment and its factors, we use the Porter's five forces model to identify the existing industrial factors, which include the following:
  7. 7. Strategic Management 7 1. Threat of new entrants 2. Rivalry among existing competitors 3. The bargaining power of buyers 4. The bargaining power of suppliers 5. Threat of substitute product Threat of new entrants Threat of new entrant is the result of new competitors joining in the industry, causing the company to develop competitive advantage and maintain the market share. Hence, competition within the industry becomes higher. However, to reduce the threat of new entrants, Coca-Cola would need to create a strong brand image. By creating brand image, customers would be more likely to stay with the product and therefore the threat is reduced. Threat of Substitute Products: There are many kinds of energy drink and soda products in the market. Coca-Cola doesn’t really have a special flavor. In a blind taste test, people couldn’t tell the difference between Coca-Cola coke and Pepsi cola. The Bargaining Power of Buyers:  The individual buyer has no buying pressure on Coca-Cola  The main competitor, Pepsi is priced almost the same as Coca-Cola.  Consumer could buy those new and less popular beverages with lower price but the flavor is different and the quality is not guaranteed.  Large retailers, Hyper star have bargaining power because of the large order quantity, but the bargaining power is lessened because of the end consumer brand loyalty.  People are getting concerns of negative effects of carbonated beverages. Increasing number of consumers begin to drink fruit juice, lemonade and tea instead of soda products.
  8. 8. Strategic Management 8 The Bargaining Power of Suppliers: The main ingredients for soft drink include carbonated water, phosphoric acid, sweetener, and caffeine. Any supplier would not want to lose a huge customer like Coca-Cola Rivalry among Existing Firms: Currently, the main competitor is Pepsi which also has a wide range of beverage products under its brand. Both Coca-Cola and Pepsi are the predominant carbonated beverages and commit heavily to sponsoring outdoor festivals and activities. As Coca-Cola has a longer history, it is advertised in a more classical approach while Pepsi tried to attract younger generation by using pop stars as brand ambassadors. Currently Coca-Cola slightly topped Pepsi as the possessor of the most U.S market share.
  9. 9. Strategic Management 9 SWOT analysis Strenghts 1: Financially strong 2: Loyal Customers 3: Most extensive beverage distribution channel 4: Hi tech & up-to date Technology 5: Sustained Quality & Brand name 6: Working Environment Weaknesses 1: Less Focus on Small Cities 2: Utilization of Resources 3: Brand failures 4: Undiversified product portfolio 5: Significant focus on carbonated drinks Opportunities 1: Bottled water consumption growth 2: Increasing demand for healthy food and beverages 3: Enter into new market 4: Availability of Products Threats 1: Changes in consumer tastes 2: Legal requirements to disclose negative information on product labels 3: Competition from PepsiCo. 4: Saturated carbonated drinks market 5: Local Manufacturers 6: Rumors of Coke being Un- Healthy
  10. 10. Strategic Management 10 Strengths  Financially strong One of the main strengths of CCBPL is the financial strength of the company because it is supported and controlled by Coca Cola International. Therefore, unlike past, now they can start any long term project without concerning too much about finances available. According to Interbred, The Coca Cola Company is the most valued ($77,839 billion) brand in the world. So, there is no issue of finance in CCBPL.  Loyal Customers The firm enjoys having one of the most loyal consumer groups. Coca Cola is enjoying a positive image in the minds of the consumers. They normally think that it is better in quality as compare to other competitors available in the market. .  Most extensive beverage distribution channel Coca Cola serves more than 200 countries and more than 1.7 billion servings a day. CCBPL Established Nation-wide infrastructure is helping the organization to increase the sales volume of the company.  Hi tech & up-to date Technology CCBPL has up to date technology in its production. As Coca-Cola company claims that they are very sensitive about hygienic conditions, so that’s why they using up to date technology to achieve this objective.  Sustained Quality & Brand name They have sustained Quality assurance of the brand that they are offering to customers.  Working Environment Another important strength of CCBPL is the working environment that they are offering to their employees. Due to this environment, the employees that are working here are
  11. 11. Strategic Management 11 loyal to the organization and it is resulting in improving the motivation level of the employees, which in the end results in high productivity and better performance. Weaknesses  Less Focus on Small Cities The major weakness of the company is its distribution channel. It is one of the main reasons of its slow progress and low market share in this market as compared to the competitor. Due to lack of availability of the products and less differentiation from competitors, it has become very difficult to capture a big market share. CCBPL owns big shares in big cities of Pakistan but in rural areas it lacks behind a lot.  Utilization of Resources The company is also lacking in utilization of the resources. People are having various facilities but they don’t know their best use. For example, people working in fleet department don’t know to make the best use of Fleet Management System and usually performing tasks in very difficult manner manually that can be easily performed by using FMS.  Brand failures Plus, the firm’s success of introducing new drinks is weak. Either they aren’t marketed well or are not launch after a proper market survey. Many of its introduction result in failures, for example, Sprite 3G or Fanta Citrus.  Undiversified product portfolio Unlike most company’s competitors, Coca Cola is still focusing only on selling beverage, which puts the firm at disadvantage. The overall consumption of soft drinks is stagnating and Coca Cola Company will find it hard to penetrate to other markets (selling food or snacks) when it will have to sustain current level of growth.  Significant focus on carbonated drinks The business is still focusing on selling Coke, Fanta, Sprite and other carbonated drinks. This strategy works in short term as consumption of carbonated drinks will grow in
  12. 12. Strategic Management 12 emerging economies but it will prove weak as the world is fighting obesity and is moving towards consuming healthier food and drinks. Opportunities  Bottled water consumption growth Consumption of bottled water is expected to grow both in Pakistan and the rest of the world.  Increasing demand for healthy food and beverages Due to many programs to fight obesity, demand for healthy food and beverages has increased drastically. The Coca Cola Company has an opportunity to further expand its product range with drinks that have low amount of sugar and calories.  Enter into new market A huge part of the market is still waiting for first entry. Coca Cola can get the advantage of first entry if it focuses on such areas.  Availability of Products The best opportunity for CCBPL is to increase market share through increasing the availability of the products in the market. Threats  Changes in consumer tastes Consumers around the world become more health conscious and reduce their consumption of carbonated drinks, drinks that have large amounts of sugar, calories and fat. This is the most serious threat as Coca Cola is mainly serving carbonated drinks.  Legal requirements to disclose negative information on product labels Some Coca Cola’s carbonated drinks have adverse health consequences. For this reason, government considers to pass legislation that requires disclosing such information on product labels. Products containing such information may be perceived negatively and lose its customers.  Competition from PepsiCo.
  13. 13. Strategic Management 13 PepsiCo is fiercely competing with Coca Cola over market share in Pakistan and neighboring Countries. High production capacity of the main competitor PepsiCo is a threat for Coke, because they are having a better chance to increase the production and availability of the products and further increase the market share.  Saturated carbonated drinks market The business significantly relies on the carbonated drinks sales, which is a threat for the Coca Cola as the market of carbonated drinks is not growing or even declining in the world.  Local Manufacturers The local manufacturers can also disturb the market share due to their low price offerings. For example Gourmet  Rumors of Coke being Un-Healthy The changing health-consciousness attitude of the market could have a serious effect on Coca Cola. CPM – COMPETITIVE PROFILE MATRIX Coca-Cola Pepsi Critical Success Factors Weight Rating Weighte d Score Rating Weighted Score Market Share Price Comp Financial Position Product Quality Product Lines Customer Loyalty Employees Marketing Total 0.15 0.10 0.12 0.15 0.15 0.15 0.11 0.07 1.00 4 0.60 3 0.30 4 0.48 3 0.45 4 0.60 4 0.60 3 0.33 3 0.21 3.71 3 0.45 3 0.30 4 0.48 3 0.45 4 0.60 4 0.60 3 0.33 3 0.21 3.56
  14. 14. Strategic Management 14 EFE AND IFE Matrix Developing the EFE Matrix External Factor Evaluation Weighting Rate Weighted Score Opportunities Bottled water consumption growth 0.1 4 0.4 Increasing demand for healthy food and beverages 0.15 3 0.45 Enter into new market 0.10 3 0.3 Availability of Products 0.05 4 0.2 Threats Changes in consumer tastes 0.05 4 0.2 Legal requirements to disclose negative information on product labels 0.10 1 0.1 Local Manufacturers 0.15 3 0.45 Rumors of Coke being Un-Healthy 0.10 3 0.3 Competition from PepsiCo 0.1 4 0.4 Saturated carbonated drinks market 0.10 4 0.4
  15. 15. Strategic Management 15 Total 1.00 3.2 Explanation on calculation Based on the above calculations it has been concluded that the company’s Total Weighted Score is 3.2 which shows that the company is hugely successful in utilizing its opportunities and minimizing the threats around it Developing the IFE Matrix Internal Factor Evaluation Weighting Rate Weighted Score Strengths Financially strong 0.1 4 0.4 Loyal Customers 0.05 4 0.2 Most extensive beverage distribution channel 0.1 3 0.3 Hi tech & up-to date Technology 0.1 4 0.4 Sustained Quality & Brand name 0.10 4 0.4 Working Environment 0.1 4 0.4 Weaknesses Less Focus on Small Cities 0.05 4 0.2 Utilization of Resources 0.05 4 0.2 Significant focus on carbonated drinks 0.1 3 0.3 Undiversified product portfolio 0.15 3 0.45 Brand failures 0.1 3 0.3 Total 1.00 3.55
  16. 16. Strategic Management 16 Based on the above calculations it has been concluded that the company’s Total Weighted Score is 3.55 which shows that the company is hugely successful in utilizing its strength and minimizing the weakness around it CORPORATE STRATEGIES Vertical Integration Vertical integration is the process of combining several steps in the distribution chain either the inputs or outputs of the organizational controls. Backward integration In this case, Coca-Cola started Coca-Cola Enterprises (CCE) and positioned it as an independent bottling subsidiary of Coca-Cola. The parent company would buy other struggling bottlers and resell them to CCE. Diversification Strategy Diversification strategy refers to seeking unfamiliar products or markets to develop and exploit. It is a strategy to eliminate the potential risk of a current product or market orientation does not seem to provide further opportunities for growth. Related diversification Coca-Cola uses this strategy to explore new drink categories continuously, and it is keeping the tradition of expanding on their current portfolio of brands and products. Coca-Cola has more than 3000 products in over 200 countries of the beverage brands with core focus on brand of Coca-Cola, Diet Coke, Coke Zero, Sprite and Fanta. INTENSIVE STRATEGIES Market penetration:
  17. 17. Strategic Management 17 Coke seeking to increased market share for their present product in present market through greater market efforts. Coke do market penetration through increase advertisement expenditures, offering sales promotion and also increasing publicity. Coke in 2009/2010 spent million on its new slogan “Open Happiness”, which replaced “The Coke Side of Life. Product development Coca-Cola has long been committed to a product development strategy. This allows Coca-Cola to penetrate existing markets with new products due to their high brand awareness. This strategy capitalizes on Coca-Cola’s favorable trademark reputation Strategic Alliance The distribution of Coca-Cola has reached all around the globe; it has a huge and wide customer base. Therefore, Coca-Cola highly focuses on enabling their customers to reach their products more regularly. Thus, all partners of Coca-Cola work closely with customers – for example they have strategic alliance with McDonald many others. Global Strategy Globalization is the key concern of Coca-Cola. The company has a total control in cost pressure, so the cost pressure is low. Therefore, Coca-Cola can operate under the Multi domestic Strategy. Thus, by running the local responsiveness of Coca-Cola is high. However, the features of multi domestic strategy for Coca-Cola are that they mutually extensive customize both their product offering and marketing strategies in different place with different national conditions. In addition, they are operating in seven regional operating groups such as, North America Group, Latin America Group, Europe Group, Eurasia & Africa Group, Pacific Group, Bottling Investments Group and McDonald's Division. The reason is that they are trying to create their value innovation activities by doing the market and product research in different potential national market.
  18. 18. Strategic Management 18 ANALYZE THE PORTER’S GENERIC STRATEGIES Coca-Cola is seen to have employed these two competitive strategies: Focused Low Cost and Broad Differentiation. Focused Low Cost The company has chosen to serve the consumer drink market and achieved cost savings by means of: 1. Achieving economies of scale in the mass production of all Coca-Cola products lowers its unit cost. 2. Long learning, knowledge and experience in production and process, as the company existed more than a century. 3. Efficiency and effectiveness in manufacturing and distribution network. 4. Sharing of research and development, advertising and promotions cost among the brands carried by Coca-Cola has enabled to achieve economies of scope. Broad Differentiation Coca-Cola uses Broad Differentiation strategy on the basis of: 1. Offering of wide range of its drink products are currently being offered in the global market. 2. High brand image and recognition have resulted in superior product perception among consumers. 3. Packaging and bottling, the use of contoured shape bottle and the slim curly font have made Coca-Cola an easily recognized symbol.
  19. 19. Strategic Management 19 FIVE MATRICES OF COCA COLA ANALYSIS ON BCG MATRIX Products Revenue $ %age of Revenues Profits $ %age of Profits Relative Market Share Industry Growth Ratio Coca Cola 50 billion --- 280 million --- 0.58 7% NOTE: Revenues of Pepsi were 85 Billion in 2013. And Pepsi is a market leader in Pakistan. BCG MATRIX By making the analysis of BCG matrix we come to know the Coca Cola is the star product of the Cola industry in carbonated drinks because they have captured the reasonable market share and making growth by utilization of resources and making strategies according to the situation. Coca Cola
  20. 20. Strategic Management 20 Further Coca Cola can make growth because there is a potential in the market and more growth and market share can be captured by making further strategies such as market penetration. GRAND STRATEGY MATRIX AsperthefigureaboveCocaColacomesinthefirstquadrant.Thecompanymustfocusonthecurrentmarketand achieve growth by adopting product development and market penetration strategies. The company has abundant resources and competitive advantagethroughwhichit canachieve growthbyadoptingthe backwardand forward integration strategies. Coca Cola can also adopt the related diversification strategy to reduce its risk with broad portfolio or product line. Coca Cola can afford to take benefits of external opportunities in manyareas. It can take riskbeingaggressivewhennecessary. Rapid Market Growth Quadrant II Quadrant I Strong Competitive Position Slow Market Growth Weak Competitive Position Quadrant III Quadrant IV
  21. 21. Strategic Management 21 The Internal-External (IE) Matrix According to the graph studied above Coca Cola is lying in the 1st cell which means that it is using the build and grow strategy in order to achieve the maximum market share and growth. In this regard Coca Cola can use the certain strategies such as product development, market penetration and related diversification.
  22. 22. Strategic Management 22 SPACE Matrix 6 5 4 3 2 1 -6 -5 -4 -3 -2 -1 1 2 3 4 5 6 -1 -2 -3 -4 -5 -6 Competitive IS ES CA FS Conservative Aggressive Defensive
  23. 23. Strategic Management 23 X-axis: -1.4 + 5.0 = 3.6 Y-axis: 5.4 + -3.2 = 2.2; Coordinate: (3.6, 2.2) Explanation According to the graph above, it is noticed that company is falling in the aggressive quadrant of space matrix. It is located at the coordinates of 3.6 on x-axis and 2.2 on the y-Axis. It shows that company has admirable position to use its IS in order to take advantage of external opportunities, overcome weaknesses and avoid threats. So, in this position Coca-cola company has set of possible strategies such as market penetration, product development, market penetration, forward integration and backward integration, horizontal diversification depending upon the detailed conditions that are faced by the companies. Return on Assets (ROA) 6 Rate of Inflation -3 Leverage 6 Technological Changes -2 Net Income 6 Price Elasticity of Demand -2 Income/Employee 6 Competitive Pressure -6 Inventory Turnover 3 Barriers to Entry into Market -3 5.4 -3.2Environmental Stability (ES) AverageFinancial Strength (FS) Average Environmental Stability (ES)Financial Strength (FS) Market Share -1 Growth Potential 5 Product Quality -1 Financial Stability 6 Customer Loyalty -1 Ease of Entry into Market 4 Technological know-how -2 Resource Utilization 5 Control over Suppliers and Distributors -2 Profit Potential 5 -1.4 5.0Competitive Advantage (CA) Average Industry Strength (IS) Average Competitive Advantage (CA) Industry Strength (IS)
  24. 24. Strategic Management 24 TOWS Strategic Alternatives Matrix Opportunities 1: Bottled water consumption growth 2: Increasing demand for healthy food and beverages 3: Enter into new market 4: Availability of Products Threats 1: Changes in consumer tastes 2: Legal requirements to disclose negative information on product labels 3: Competition from PepsiCo. 4: Saturated carbonated drinks market 5: Local Manufacturers 6: Rumors of Coke being Un-Healthy Strengths 1: Financially strong 2: Loyal Customers 3: Most extensive beverage distribution channel 4: Hi tech & up-to date Technology 5: Sustained Quality & Brand name 6: Working Environment SO 1.Increasing the marketing campaigns to capture the maximum share in the emerging economies S1,O2 2. Making alliances with emerging fast-food chains S4,O2 3. Entering in rural areas which will ensure the availability of the product in the whole country. S2,04 ST 1-Market penetration through which further efforts will be made to increase market share of products.S1,T4 2-Making the unrelated diversification such as entering in snacks division.S1T1 3-Increasing the marketing budget in order to fight with competitor. S1,T3 4-Introducing reward schemes to make further growth.S3,T5 Weaknesses 1: Less Focus on Small Cities 2: Utilization of Resources 3: Brand failures 4: Undiversified product portfolio 5: Significant focus on carbonated drinks WO 1. Allocation of budget on failed brands to cater new markets w3, 03 2. Market the products to rural areas in all countries like the way its marketed in Pakistan w1,O4 WT 1-Product development by using best market techniques in order to cater rumors w4,T6 2-market penetration in rural areas through which loyalty will be increased in order to beat the local manufacturers.w1,T5
  25. 25. Strategic Management 25 Quantitative Strategic Planning Matrix The strategies which can be used are market penetration or product development Strategic Alternatives Key Internal Factors Weight Increasing the advertisement / Marketing Budget Introducing the energy drinks Strengths AS TAS AS TAS 1: Financially strong 0.1 3 0.3 2 0.2 2: Loyal Customers 0.05 2 0.1 4 0.2 3: Most extensive beverage distribution channel 0.1 2 0.2 3 0.3 4: Hi tech & up-to date Technology 0.1 2 0.2 3 0.3 5: Sustained Quality & Brand name 0.1 3 0.3 2 0.2 6: Working Environment 0.1 --- --- --- --- Weaknesses 1: Less Focus on Small Cities 0.05 2 0.10 1 0.05 2: Utilization of Resources 0.05 --- --- --- --- 3: Brand failures 0.1 --- --- --- --- 4: Undiversified product portfolio 0.15 2 0.3 3 0.45 5: Significant focus on carbonated drinks 0.1 4 0.4 3 0.3 SUBTOTAL 1.00 1.9 2
  26. 26. Strategic Management 26 Key External Factors Weight Increasing the advertisement / Marketing Budget Introducing the energy drinks Opportunities AS TAS AS TAS 1: Bottled water consumption growth 0.1 --- --- --- --- 2: Increasing demand for healthy food and beverages 0.15 2 0.30 2 0.3 3: Enter into new market 0.10 2 0.2 4 0.4 4: Availability of Products 0.05 4 0.2 3 0.15 Threats 1: Changes in consumer tastes 0.05 --- --- --- --- 2: Legal requirements to disclose negative information on product labels 0.10 --- --- --- --- 3: Competition from PepsiCo. 0.15 4 0.6 3 0.45 4: Saturated carbonated drinks market 0.10 --- --- --- --- 5: Local Manufacturers 0.1 2 0.2 3 0.3 6: Rumors of Coke being Un-Healthy 0.10 3 0.3 2 0.2 SUB TOTAL 1.00 1.8 1.8 SUM TOTAL ATTRACTIVENESS SCORE 3.7 3.8 As we look upon the results of QSPM we observe that the strategy which got highest score is related diversification .we will be following this strategy and introducing energy drinks .for this purpose we will do the following. Research and development Firstly the company has to do the research on the consumer preferences the R&D team have to find out the consumers taste, price they are willing to pay and which category they prefer in energy drinks .research can include both
  27. 27. Strategic Management 27  Secondary research  Primary research After conducting the research company will come to know that which product they have to develop .once the product is developed sampling will be sent to the different markets for testation purpose. Coca-Cola can outsource their research team as they have no related experience in this field .so its better off to out source this department After the research has been finalized and the company knows what to produce they can build a team which will work on this project. For this purpose the y can use Matrix structure Matrix structure is said to be the best structure as it has less disadvantages compare to the other structures. Here Coca-Cola can bring together the creative heads to work on this project .people from different department like finance department .marketing department, production department can together to further proceed with this project. After the team have put together we will develop certain objectives which each department has to follow to achieve long term goal. Long term goal To successfully launch the energy drinks into market and gain a market share 10% at the end of financial year. Company will further break this goal into small chunks for each department. Finance department objectives To generate finance to support this project and to carry on successfully
  28. 28. Strategic Management 28 Production department To produce to that limit where they can generate the revenues to gain share in the market Marketing department It is responsibility of the marketing department to sale those product which are produced by the production department. Resource allocation Recourses are to be allocated according to priorities established by annual objective. There are four types of recourses  Financial resources  Physical resources  Human resources  Technology resources  Example For production department It is understood that for production department they will need new technology in the form of new machinery as they are moving into new line of energy drinks. Conclusion The Coca-Cola Company is a very effective company that remains loyal to its customers, while continuing to meet the ultimate goal of every company, to maximize its profits. Coca-Cola could do a better job with the marketing techniques of its company. Additionally, it can always improve its products to meet the demands of more consumers, especially in the untapped market where tastes vary. The target marketing and management group could work on satisfying more races, cultures, age groups, and people that are in less developed areas. Every company always
  29. 29. Strategic Management 29 has room for improvements, but the Coca-Cola Company is not far from perfection. This empire will continue to be prosperous as long as it continues to put its customers at the top of its priorities list.

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