BPP Business School Assignment Cover Sheet

Programme:MSc management

Module Title:Strategy

Assessment Title:You are a management consultant and you have been hired from the Board of Directors of your chosen firm to prepare a report that presents an assessment of the strategic position of the organization within its industry.

SRN:xxxxxxxxxx Number of pages: 14 Wordcount:2000

Strategic Analysis i

Table of Content

Introduction................................................................................................................................................... 1

Overview of Coca Cola India........................................................................................................................ 2

Overview of the Indian drink Industry .......................................................................................................... 2

Analysing the External and Internal Environment of Coca Cola India ........................................................ 3

Porter’s five forces Model ........................................................................................................................ 3

Implementing Porter’s five forces Model on Coca Cola India ............................................................. 3

SWOT Analysis.......................................................................................................................................... 5

Implementing SWOT Analysis on Coca Cola India ............................................................................. 5

Resource -Based View Analysis ................................................................................................................ 7

Implementing Resource-based view on Coca Cola .............................................................................. 7

Conclusion .................................................................................................................................................... 9

Analysis ..................................................................................................................................................... 9

Recommendations ................................................................................................................................... 10

References ................................................................................................................................................... 12

Strategic Analysis 2

Strategic Analysis of Coca Cola India

Introduction

Coca Cola Company is a well known brand that is operating internationally. Coca cola is

a global market leader in making soft drinks. Coca cola is currently selling 400 brands of drinks

(non alcoholic) all over the world. It is operating in more than 200 countries. It has been

established in the year of 1886. Coca cola has been faced many economic peaks and troughs,

peace and wars, depressions and blissfulness. In the era of 1990, Coca cola became most

successful company because of having the best quality soft drinks, and excellent Management

team among all other brands throughout the world (http://www.coca-colacompany.com)

The purpose of this Assignment is to analyse current business environment of Coca cola

India and its impact on Coca cola India, to evaluate the present resources of Coca Cola and then

provide recommendations related to strategy. Internal and external environment of Coca Cola

have been analysed by three tactics; SWOT, RBV and Porter’s five forces model and then

relevant strategic recommendations have been provided.

Overview of Coca Cola India

In India, Coca Cola is a well known brand and a leading soft drink company. After

entering in India, company has faced many issues by which company left Indian market. After

re-entering in India, Company had captured the market correctly by using effective strategies.

Now in India, Coca Cola is enjoying profitable growth and is giving tough competition to others

Strategic Analysis 3

in the market. The company is currently producing and marketing many soft drink brands like

Coca cola, Fanta, Maaza juice, kinley water etc.

The system of Coca cola is contributing more to reduce the unemployment rate of the

country directly and indirectly. Coca cola has more than two million retailers in the country. The

Coca Cola Company has a very positive influence on industries like plastic, glass, sugar, banking

etc. The company has excellent corporate social responsibility programs that show the company

is contributing more to enhance the value of the society (http://www.coca-colaindia.com)

Overview of the Indian drink Industry

The drink industry of India is very strong. The food and beverage industry of India

ranked on number 6th in Asia food and drink risk/reward rating. If they compare with china, the

Indian economy is more consumer face. India is currently enjoying good trade balance, but the

infrastructure is becoming problematic for Indians. Currently in Indian drink industry hot drinks,

alcoholic and non-alcoholic drinks are manufacturing. Extensive growth of soft drinks (non-

alcoholic) is due to best leaders are contributing like coca cola and PepsiCo. Coca Cola and

PepsiCo have committed to contributing in Indian drink industry for long-term. The competition

in Indian industry between two is very high; they should use a proactive approach (Business

Monitor International, 2011)

Analysing the External and Internal Environment of Coca Cola India

Porter’s five forces Model

It is the model that helps in identifying the industry effectiveness of Organization. It is

based on 5 forces that measure the profitability of the company with respect to its industry. The

Strategic Analysis 4

weaker these forces, the best the opportunities that the organization has to perform best in

industry (chapman, 2005, pp 1-2).

Figure 1: Porter’s five forces Model adopted from Porter (1980)

Implementing Porter’s five forces Model on Coca Cola India.

Bargaining power of Suppliers

Suppliers of Coca Cola Company include bottlers and commodity ingredient providers.

Commodity ingredients include flavour, sugar etc. Coca Cola Company has a lower power on

cost because manufacturers of these products are manufacturing the same product and only

limited suppliers are there in soft drink industry, in India. However, there is a general rise in the

cost of commodities, which may directly affect the profitable growth of Coca Cola.

Threat of New Entrants

In Indian industry, the threat of entering new soft drink manufacturing companies is low.

Entering any industry lead to the high cost like production, warehouses, transportation costs. The

Strategic Analysis 5

bottlers in the drink industry are very limited so when any company enters they should build

their own bottlers. Makers of concentrates already raised the prices. All the things make difficult

to companies to enter in drink industry, so the threat of new entrants is low for Coca Cola India.

Bargaining power of Buyers

Coca Cola Company does not direct sell to customers. The main buyers of the beverages

are distributors who further distribute the beverages to retailers to wholesalers than to customers.

The bargaining power of Buyers is very strong. Coca Cola drink is commonly sold out in large

volume in fast food restaurants, supermarkets, vast stores etc. Because of which they decide to

bargain on low price. When demand of soft drinks is low due to health issues, they bargain on

the high price.

Competitive Rivalry

There is a very tough competition in the Indian drink industry; PepsiCo is putting more

pressures to Coca Cola. Currently, PepsiCo has planned to expand its businesses in the non-

carbonate sector which lead to decline in market share of Coca Cola. The same prices of

products among competitors put a pressure to stretch tightly on profit margins. PepsiCo is a rival

of Coca Cola in the drink industry.

Threat of Substitute Product

A strong threat is of having substitutes of Coca Cola products. The substitutes may

include energy or sports drinks, coffee, water and tea. Consumers are more health conscious, so

energy drinks and water are mostly in use by them. Variety of different coffees is very popular

Strategic Analysis 6

among consumers. Different energy drinks are very popular in the market that tempts the

customers to buy and taste them.

Cola can borrow capital on its existing distribution networks for strengthen itself SWOT Analysis

To make any strategy, companies must first analyse their current situation. It can be done

by doing SWOT. SWOT analysis analyses the current internal strengths and weaknesses and

external opportunities and threats of the company (Bohm, 2008, pp.1)

Implementing SWOT Analysis on Coca Cola India

Strengths

International and well known brand with a diversified portfolio attracts young group

and to other customers.

Heavily investing in India as per decided by Coca Cola Co (parent company).

Coca cola is a market leader in the Drink industry, even tough competition and

continuous investments by PepsiCo.

Taking ownership of various operations will help Coca cola to set its marketing

direction by itself and it will increase the efficiency of Coca Cola.

Weaknesses

Currently it has no large investments to protect its market share.

Increase in price of Coca Cola products may affect its consumers

Strategic Analysis 7

Consumers in India are facing health issues, and some become more health conscious

that directly affect the sales of the Coca Cola.

Opportunities

There is a long-term growth of non-carbonated drinks like energy drinks etc. Coca

cola has also launched some of these products like burn energy drink and lemon drink

etc.

Coca Cola has been takeover many local beverage companies. The company has also

been successful in getting ownership of most of the bottlers operations. These

acquisitions lead to enhance the revenue stream of the Coca Cola.

Coca by doing more investments in the rural areas of the country.

Threats

There is a general rise in the price of commodities mostly used in making drinks like

sugar etc. Increase in price of these may affect the profitability of Coca Cola.

PepsiCo is a rival of Coca Cola in Indian industry. PepsiCo has decided to extend its

business operations in the non-carbonated sector via acquisition. This could lead to

decrease the share of Coca Cola is market.

The same product price of competitors may affect the profits of the Coca Cola.

Resource -Based View Analysis

Resource based view is based on resources of organization and its capabilities. Both are

very important and fundamental constants in making strategies for organization. The aim of

Strategic Analysis 8

analysing the resource based view of any organization to find out the relationship between the

company’s resources, capabilities, competitive advantage and profit (Grant, 1991). Tangible

resources are the ones that are physical like buildings, machineries, plants and equipments.

Intangible resources are nonphysical things created by the supervisors and managers of the

organization like company’s reputation and brand name. Capabilities refer to the skills that

employees have to utilize the company’s resources efficiently in the production (Hill & Jones,

2010).

Implementing Resource-based view on Coca Cola

Coca Cola is an international giant and market leader in Indian beverage Industry so;

Company is making excellent efforts to produce the best quality products for its customers. Coca

Cola Company is using many different resources to ensure itself that they are producing high

quality products and satisfying their customers. The resources of Coca Cola India are based on

two; tangible and intangible resources. These resources help Coca Cola at different production

stages.

Tangible resources

The tangible resources of Coca Cola India include its human assets, financial assets and

physical assets. Coca Cola possesses many physical resources like plants and buildings.

Company has its own self production plant that leads to reduce in cost of production. Having,

many plants and equipments ensure that Company do not require any loan or lease for fulfilling

the capital requirement. Coca Cola has a strong financial position in Indian market which ensures

that Company is not facing any major issues regarding cash shortages in managing its

Strategic Analysis 9

production. Human assets are the employees and workforce of the company. Company has

employed trained, highly skilled, technical and qualified personnel. The company’s employees

are helping to achieve the goals and objectives of the company. Encouraged and motivated

employees of the company are giving their best to meet the demands of the customers and satisfy

them. The Coca Cola team involves in formulating strategies to how to target new customers in

different areas, how to maintain a long-term relationship with customers and how to compete

well in the Indian beverage industry.

Intangible Resources

Intangible resources of the company may include the brand image and good will.

Company is enjoying profitable growth in the industry, and after producing quality products,

Coca Cola became a loyal brand. Company has faced many issues (regarding corporate

citizenship) earlier in India, but with team efforts, company’s reputation has become good in the

eyes of community and customers.

Capabilities

The management team and employees of the company possess excellent skills that they

are utilizing in producing quality products, which makes them different from their competitors.

Innovation and reputation are the capabilities that Coca Cola has. They are producing innovative

products that help them to gain competitive advantage. Company has now become a valuable

brand among consumers in India. The team has successfully achieved its goal of making good

reputation among Indian community.

Strategic Analysis 10

Conclusion

Analysis

After implementing porter’s five forces model on Coca Cola, it has been realized that

Company is doing well and enjoying profitable growth after becoming a market leader in Indian

drink Industry. A threat of increase in price of raw material may affect the profitable growth of

the company. Low threat of new entrants may give some opportunities to Coca Cola to attract

more customers. A strong threat of Substitutes may affect the strategic position of Coca Cola in

Indian drink industry. A tough competition has been faced by Coca Cola due to its rival PepsiCo.

Low demand of soft drinks, due to health issues, in the country can influence the company’s

bargaining power of buyer.

The SWOT analysis of Coca Cola Company reveals many strengths, weaknesses,

opportunities and threats of the company. Company’s major strength is that Coca Cola is an

international giant and well known brand. Nowadays young generation become brand conscious

and relying mostly on quality brand. The major weaknesses of the company are increase in price

of products, health issues, no large investments to protect the market share may badly affect the

profitability of the firm and position in Indian industry.

After implementing RBV on Coca Cola, it can be concluded that the company has a

strong strategic position in the market. Company is fully utilising its tangible and intangible

sources to produce the best quality products for its customers. The company is capable enough to

produce products with high quality to gain competitive advantage in the market. It is showing

that the company has efficiently formulated the strategy with the help of internal resources and

distinctive capabilities; it will help the company in long-run, but the company must do more

Strategic Analysis 11

efforts to win the war against its rival PepsiCo, who is continuously making efforts to be on top

in the industry.

Recommendations

Company’s current diversified portfolio is already strategically aligned but based on previous

analysis is deemed fit to recommend that;

Indian consumers are becoming health conscious, due to various health issues, so it

directly affects the profitability of the company. They must try to produce more energy

drinks like they have recently launched burn energy drink and lemon drink.

Competition is very high between Coca Cola and PepsiCo; as PepsiCo has planned to

expand its business in the non-carbonated sector by acquiring local firms. Coca Cola

should also expand its through acquisition to gain competitive advantage over its rival.

Company should also acquire local juice manufacturing companies; Customers are now

more attracting towards juices.

Coca Cola Company must focus on doing more investments in rural areas of the Country.

As the company faced some corporate citizenship issues earlier; CSR is the best thing to

make strong relationship with the society; having a good relationship with the community

enhances the image of the company.

Strategic Analysis 12

References

Bohm,A. ( 2008), SWOT Analysis, seminar paper, pp.1, retrieved from

http://books.google.co.uk/books?id=1cGnPy9H7XUC&printsec=frontcover&dq=swot+a

nalysis&hl=en&sa=X&ei=PGdSUd6wF66O7Ab8xYGABA&ved=0CDgQ6AEwAQ#v=

onepage&q&f=false on March 27, 2013.

Business Monitor International (2011), India food & drink report, Q3, Business Monitor

International Ltd., pp. 9, 81, retrieved from

http://search.proquest.com.ezproxy.apollolibrary.com/docview/872100254 on March 27,

2013.

Chapman,A.( 2005), based on Michael Porter's Five Forces of Competitive Position Model, pp 1-

2, retrieved from http://www.caps.am/data.php/879.pdf on March 26, 2013.

Data retrieved from http://www.coca-colacompany.com/ on March 27, 2013

Data retrieved from http://www.coca-colaindia.com/ on March 27, 2013.

Grant. M, R. (1991), The Resource- Based Theory of competitive advantage: Implications for

strategy formulation, California Management Review, pp.133, retrieved from

http://www.skynet.ie/~karen/Articles/Grant1_NB.pdf on March 28,2013.

Hill. W. L, C & Jones. R, G. (2010), Strategic management: An integrated Approach, 9-e,

Cengage Learning, Inc, pp.75, retrieved from

http://books.google.com/books?id=CzIK9ELsyYwC&pg=PA75&dq=tangible,+intangibl

e+resources&hl=en&sa=X&ei=xOlTUZXTE4uS7Aa_o4HgDg&ved=0CEEQ6AEwAw#

v=onepage&q=tangible%2C%20intangible%20resources&f=false on March 28, 2013.

Strategic Analysis 13