External and Internal Environments
Assignment must follow formatting requirements:
- be typed double spaced, using Times New Roman (size 12), with one inch margins on all sides,
references must follow APA or school-specific format.
- include a cover page containing the tittle of the assignment, the student’s name, the professor’s name,
the course title, and the date. The cover page and reference page are not included in the required page
length.
Choose an industry you have not yet written about in this course, and one publicly traded corporation
within that industry. Research the company on its own Website, the public filings on the Securities and
Exchange Commission EDGAR database
and any other sources you can find. The annual report will often provide insights that can help address
some of these questions.
Write a six page paper in which you:
- Choose two segments of the general environment that would rank highest in their influence on the
EXTERNAL AND INTERNAL ENVIRONMENTS 2
corporation you chose. Assess how these segments affect the corporation you chose and the industry in
which it operates.
- Considering the five forces of competition, choose the two that you estimate are the most significant for
the corporation you chose. Evaluate how well the company has addressed these two forces in the recent
past.
- With the same two forces in mind, predict what the company might do to improve its ability to address
these forces in the near future.
- Assess the external threat affecting this corporation and the opportunities available to the corporation.
Give your opinions on how the corporation should deal with the most serious threat and the greatest
opportunity. Justify your answer.
- Giver your opinion on the corporation�s greatest strengths and most significant weaknesses. Choose
the strategy or tactic the corporation should select to take maximum advantage of its strengths, and the
strategy or tactic the corporation should select to fix its most significant weakness. Justify your choices. - Determine the company�s resources, capabilities, and core competencies.
- Analyze the company�s value chain to determine where they can create using the resources,
capabilities, and core competencies discussed above.
- Use at least 3 quality references. Note: Wikipedia and other Websites do not qualify as academic
resources.
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External and Internal Environments
Introduction
Coca Cola is the world’s market leader in the production of beverages, taking pride in
over 1.8 billion consumers globally on a daily basis. The company was founded in 1886 by Dr.
John Pemberton and it has its headquarters in Atlanta Georgia US. Currently, the company
operates in over 200 countries across the globe, hence being a great creator of employment
opportunities to millions and millions of people. One aspect that makes coca cola to stand out
over the years is its constant efforts in innovation to come up with drinks which meet the needs
of its diverse client base. This however does not mean that the company has not encountered any
challenges along the way in gaining its title as the world’s leader in the beverage industry.
- Various dynamics in the external environment have impacted differently on the overall
performance of the industry. One of those external factors is the sociological aspect. With
lifestyle diseases being on the increase in the recent past, people have become extremely
cautious on what they consume or drink. Coca-Cola products have not been spared by this
change in people’s preferences since the health aspect of some of its drinks has been put into
question mostly by nutritionists. This is seen to have a negative impact on the sales growth of the
company with some people opting to replace high intake of beverages with water, which
apparently is healthier. Various campaigns that have been carried out through the media for a
change of lifestyle, have played a role in sensitizing people towards the intake of certain foods
and beverages. However, this has not crippled down Coca-cola since the company has been
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witnessing a constant annual growth as it is evident in its previous financial reports (George,
1992). Through research and development, the company has been able to come up with some
products that can meet some of these nutritional qualifications and expectations of the clients. A
good example of this is the Diet Coke, which comprises of low sugar that make it suitable for
people with diabetes.
Another external factor which affects Coca-Cola is the environment. For instance, during winter,
a large number of people shy away from consuming cold beverages due to the impact it may
have on their health. This simply means that the total sales of Coca-cola are likely to go down
during such a period.
- The beverage industry has in the recent past emerged as one of the most competitive
industries. Although most buyers welcome competition, since it comes with improved services,
to the sellers this aspect has very undesirable impacts to the business if proper measures are not
put in place to address it. Out of the five forces of competition, Coca Cola has faced the threat of
new entrants. This implies that the profitability of the company may be eroded by influx
companies in the industry. In a market where there are no barriers to trade, the entry of new
companies becomes inevitable hence prompting Coca-Cola to make strategic decisions to
continue to be the market leader (George, 1992). Since Coca-Cola does not retain any patent as
far as the industry is concerned, new entry means that its profit can decline to a competitive rate.
The ability of Coca-Cola to post high profits after every financial year has been seen as one of
the motivating factors to attract new market entrants since they are able to clearly see that they
are venturing into a very profitable sector.
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The other force of competition that the company faces is the threat of substitution. Some
rival companies have discovered that the only way to beat Coca-Cola and win the customers,
who have been loyal to it for a long time, is to come up with products which are similar to Coca
Cola products in terms of their constitution, packaging, and varieties (George, 1992). These close
substitutes have found their way into the markets that have been dominated by Coca-Cola and
therefore making some customers to switch to the alternatives. The worst scenario happens
when these substitute products are priced lower than Coca-Cola products, as this makes them to
appear more attractive to clients.
- In order to address the force of a new entrant in the industry, Coca-Cola should come up
with very durable and strong barriers to entry into the market. For instance, Coca-Cola should
use patents to ensure that it brands the industry such that any companies wishing to enter the
market are deterred from doing so. In addition, Coca-Cola should be able to utilize its economies
of scale to ensure that new entrants are deterred from gaining access to such markets. This can be
derived from mass production of its products, hence bringing the per unit cost down. As a result,
this would mean that the price of their products will be lower, thus attracting more customers.
To beat the force of substitute products, Coca-Cola should invest more resources in
branding its products in order to create its own identity which will become easier for the
customers to associate with. This will in turn give the customers as sense of ownership of the
brand and thus becoming harder for them to be convinced to turn to substitute products. Use of
economies of scale, as noted above, can also be a strategy for Coca-Cola to beat substitute goods. - One of the external threats facing Coca-Cola is competitive rivalry. The number of
competitors in the industry has increased in the recent past, where some of them have been
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offering undifferentiated products. As a result, this has had a negative impact on reducing the
market attractiveness, hence the overall profitability. To deal with that, Coca-Cola should
constantly embark on research and development to ensure that they keep on innovating new
products to stay ahead of their competitors. One of the greatest opportunities for the company to
make use of is the growth in technology. Technology comes with myriad opportunities for the
company to market its products and increase the client base (Jones, 2002). For instance, the
company can use different platforms such as social media, website as well as blogs, to create
awareness of its products at a minimum cost. Consequently, this will translate into cutting down
its total overhead cost hence increased profitability. Use of online desks can also be seen as
another platform where Coca-Cola can make use of technology to enhance its growth. Through
this, the company can interact with its buyers to improve service delivery and this will lead to
increased sales in the company .
- One of the greatest strengths of Coca-Cola is that it has been in a position to maintain an
efficient retail distribution for many years. This has ensured a constant supply of various Coca-
Cola products to the market at any given time. This by itself is a very positive signal to the
reliability of any company and plays a big role in winning customer loyalty. To ensure smooth
running of the retail distribution, Coca-Cola always ensures that it leaves a significant profit
margin for the retailers to enjoy it. This acts as a big motivation to ensure that they stock the
company’s products. Important to mention, is that those profit margins are standardized in
various regions to protect the customers from being overcharged by greedy retailers (George,
1992). The high profit margin enjoyed by the retailers is also seen as a strategy by Coca-Cola to
ensure that the retailers do not get easily persuaded by its competitors to stock their products.
One of the weaknesses of Coca-Cola has been its inability to come up with unique flavors to set
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it apart from competitors. Its innovative measures in the recent past have been seen to focus
more on packaging as opposed to addressing issues to do with flavors. The uniqueness of flavors
would help it beat the competition.
- The company has a wide resource base with assets in different branches that the company
owns and operates in over 200 countries. This is a clear indication that the company has
managed to build up a lot of capital over the years. With the large amount of capital, the
company has stretched its capability in the sense that it can afford to continue its expansion and
venture into untapped areas (Daft, 2006). Its massive resources also enable the company to set
aside a considerable amount of money to fund research and development to ensure that it stays
abreast with market dynamics. Its core competency is the ability to put its customer satisfaction
first. It has managed to do that through creating an efficient distribution channel which makes it
easier for customers to receive products throughout all its branches across the globe. - Coca-cola company takes pride in a very efficient and economical value chain which
includes a partnership with the suppliers, distributors, retailers as well as the end consumers. The
role of each one of the elements mentioned above in the value chain cannot be underestimated
and Coca-Cola seems to understand this. The company has used its resources and capabilities to
strengthen each element in the value chain to grow its business sustainably. Through a well
elaborate value chain, the company should be able to close all market gaps and ensure a smooth
flow of goods from the manufacturing point to the end consumer.
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References
Daft, R. (2006). Organization Theory and Design. St. Paul: West Pub. Co.
George, H. (1992). Coca-Cola: An internal and external environmental analysis. Hays, Kan:
Docking Institute of Public Affairs, Fort Hays State University
Jones, J. (2002). Bringing Technology Tools to Management: a Support Perspective. New York:
Waddell Publishing.
