Professional Documents
Culture Documents
A2. Describe major external environments that may possibly affect organizations strategic
development. Provide examples as illustration.
A3. Please discuss the following strategies and use appropriate examples to illustrate your answer.
Integration strategies
Intensive strategies
Diversification strategies
Defensive strategies
Michael Porters Generic strategies
A. Case Abstract
Coca Cola operates in over 200 nations around the world and sells carbonated and non
carbonated beverages. Coca Colas line of non carbonated drinks includes: water, juice, and
teas. The company has over 70,000 employees and is led by CEO Neville Isdell.
57
The Coca-Cola Companys (Cokes) operating segments include 1) Africa, 2) East, South East
Asia & Pacific Rim, 3) European Union, 4) Latin America, 5) North America, 6) North Asia,
Eurasia, and the Middle East, and 7) bottling investments. Not all soft drink products/flavors of
the company are available in all the operating groups.
The Coca-Cola Company has two major rivals: PepsiCo and Cadbury Schweppes PLC.
Its interesting to note that PepsiCo has more that double the employees as Coca-Cola as listed
in Exhibit 6. Groupe Danone competes to a lesser degree with Coke. The number 3 soft drink
producer, Cadbury Schweppes PLC (behind Coca-Cola and PepsiCo Inc.), is a diversified
company that produces and markets beverages, chocolate, and chewing gum. Cadbury plans to
divest its beverage division in 2007. Hershey Foods has expressed interest as well as various
private-equity firms.
The soft drink industry primarily consists of PepsiCo, Coca Cola Company, and Cadbury
Schweppes PLC. Federal regulations may prohibit PepsiCo and Coke from bidding for
Cadburys carbonated soft drink business. Analysts however believe the brand Snapple, which
Cadbury sells, would be a good fit for Coke. PepsiCo would likely benefit most from
acquiring Cadburys Mexican assets with such strong brands as Squirt, Crush, and Canada Dry.
B. Vision Statement
C. Mission Statement
D. External Audit
Opportunities
58
Threats
59
conflicting interest exist.
2. Multiple lawsuits against the new Enviga
beverage for calorie burning claims in 0.04 2 0.08
advertising
3. Smaller, lesser known brands are turning to 0.06 2 0.12
major beer distributors for bottling.
4. Overall carbonated drink sales have been flat
due to links of sugar to obesity and high fructose 0.10 2 0.20
corn syrup to heart disease.
5. Pepsi is more diversified offering beverage and 0.20 3 0.60
food products.
6. High cost of commodities such as sugar, and 0.10 3 0.30
metals used in production of cans.
7. Many smaller companies are fierce competitors 0.08 3 0.24
around the world in their local markets.
TOTAL 1.00 2.84
E. Internal Audit
Strengths
Weaknesses
60
Key Internal Factors Weight Rating Weighted
Score
Strengths
1. Product line has over 400 brands. 0.09 4 0.36
2. Strong global presence, located in over 200 countries. 0.10 4 0.40
3. Long history has built excellent brand recognition. 0.06 4 0.24
4. Partnership longevity with established sporting events 0.05 4 0.20
including the Olympics.
5. Industry leader in market capitalization with $112 0.12 4 0.48
billion.
6. Return on Equity yielded 30 percent in 2006. 0.04 4 0.12
7. Leader of dividend yields of 2.6 percent. The company
has had 43 consecutive years of an annual dividend 0.04 4 0.16
increase.
8. Joint venture between The Coca Cola Company and
Nestle has resulted in the establishment of Beverage 0.06 4 0.24
Partners Worldwide (BPW).
9. Coca-Cola has formed a strong partnership with
McDonalds, with McDonalds becoming their largest 0.10 4 0.40
customer.
Weaknesses
1. Product line is limited to beverages. 0.09 1 0.09
2. A failed $16 billion acquisition of Quaker Oats hinders 0.10 1 0.10
long-term growth.
3. Negative publicity in India because of water issues, has 0.03 2 0.06
led to poor brand image and hindered growth there.
4. Lack of management willingness to place foreign 0.02 2 0.04
products into American markets.
5. Marketing deficiencies due to turnover in leadership and 0.05 2 0.10
a 16 percent decrease in advertising spending.
6. Coca Colas inventory turnover is only 5.4 compared to 0.05 2 0.10
Pepsi Co.s 8.0.
TOTAL 1.00 3.09
C.2 Based on the weighted scores of SWOT, identify the most important elements in the SWOT that
faced by Coca Cola.
C.3 Based on the SWOT analysis, can you propose strategies to Coca company in order to seize its
strengths and opportunities, and to avoid threats and weaknesses?
61