Strategic Management Political and Social

Question: Discuss about the Strategic Management for Political and Social. Answer: Introduction: Coca Cola is one of the leading American Multinational Beverage companies which are based out of Atlanta, Georgia. The company is the leading company and marketer of non alcoholic beverage and syrups. The company is known for its flagship product coca cola a non alcoholic beverage which is renowned worldwide and has satisfied almost all the households effectively. The company serves worldwide and is the largest beverage company in the world with strength of 124000 employees and total revenue of $44.294billion as calculated in the last financial year of 2015 (Freeman, 2010). The company started under the presidentship of John Pemberton as Coca Cola around 130 years ago. It has owned some of the top beverage brands around the world like Thumbs Up brand in India and Minute Maid in US. It works around the world but its key markets are US, UK, Australia, India, China et cetera. Over the years the company has developed its products as per the taste and preference of the consumers which has helped the company to stand tall and in spite of exceedingly tough market environment it has experienced monopoly. Even though the company has had wonderful run in the market but in the recent past it has been affected by sheer rivalry by emerging companies in the market and hence analysing the external market of the organisation is extremely important (David David, 2016). Macro Environmental Analysis of Coca Cola The macro environment of the company is basically the external environment which involves different aspects essential to be analyse by the company before launching a product. The Macro environmental analysis consists of different tools like PESTEL and SWOT analysis which will help to understand the external business environment of the organisation. Below the macro analysis of the organisation Coca Cola is done. PESTEL Analysis Political: There are number of political factors which Coca Cola is affected by both in US and abroad but it is not completely limited to the political instability of in the operating country. The pressure of the political groups and lobbying groups affect its business to a large extent. US Food and Drug Administration plays a huge role in the sales of Coca Cola products. All the products that Coca Cola sells will have to be passed through by the FDA in US. Even in the other countries beverage industry like in Australia Coca Cola faces strong opposition from the governmental bodies regards to products if they are not up to the mark. Increase in taxes and changes in labor policies have affected the business of the company in Australia. Globally the company has faced number of problems with its business due to negative political conditions (Hitt et al., 2012) . Economic: The sales of Coca Cola are impacted by different economic factors which are involuntary to the company. The beverage industry is hit by the change in the exchange rates in Australia, revision in the minimum wage policy in the country and tax rates which has increased in Australia in the recent past. Even though the company has a huge financial backup and is comparatively hit less by these factors but its sales have dipped in the recent past. Social: The increase in awareness of the people regarding carbonated drinks and health impacts created by this has created problems for the company especially with its carbonated beverages. The change in lifestyle of people which has shifted to healthier one has reduced the sales of the carbonated beverages but its syrups and concentrated liquid products have not been affected. Coca Cola products have been now only targeted for youths which have gone well for the company (Hill et al., 2014). Technological: Like every other company Coca Cola has been able to focus on the technological advancement very successfully. The use of website and online communication with social media has gone well for the company. Environmental: Coca Cola has been very particular about its activities for less impact on environment. It has stopped using plastics and now recyclable plastics are used. Less usage of paper is promised, and recycling stations have been developed in different places. It also contributes to environmental charity effectively. Legal: Coca Cola tends to use all the possible legislations like the corporation act, minimum wage act and equality acts within its organisation to be fair in its operations (Wheelen Hunger, 2011). SWOT Analysis Strengths Huge brand equity. One of the most valuable companies in the world. Vast global presence. Large market share. Weaknesses Lack of product diversification. No presence of health beverages Water management has been questionable (Eden Ackermann, 2013). Opportunities Developing markets in developing nations Product diversification improvements Introduction of packaged water. Improvement in the online market. Threats Direct competitors Poor raw material sourcing. Huge capital investment in foreign markets. Emergence of new companies (Hill Jones, 2013). Overall it could be said that the external environment of the company is competitive and it will face definite barriers from different competitors, political barriers and social problems regarding changes in the mindset. The company already has huge market share and brand equity which is definitely a plus for them but it will have to combat with the increasing pressure from the direct and indirect competitors and will have to control capital investment which would help the company to place itself better in the market (Thompson Martin, 2010). Competitive Analysis Coca Cola The competitive analysis of Coca Cola will help to understand its immediate competition and its scope for business in the market. Porters five forces will help to understand the position of the company effectively. The analysis is given below: Threats of new entrants: There is a very small chance of new entrants coming in the industry. it could be said that the global market of non alcoholic beverage industry is highly saturated. The new entrants will find it very hard to get benefit of the economies of scale production that is highly utilised by existing players like Coca Cola and Pepsi. Bargaining Power of Buyers: This is comparatively high in the market due to the diversified choice available to consumers. It could be said that the availability of number of products helps the buyer to choose what they like (Wheelen Hunger, 2011). Bargaining power of suppliers: the bargaining power of suppliers depends on the kind of material they supply. Coca Cola uses supplier diversity program which helps to decrease the bargaining power of each supplier and helps the company. Threat of substitutes: Threat of substitute could be considered moderate because it completely depends on the consumers. If they prefer to drink coffee instead of cold drink the market will fall rapidly and hence it could be said that threat of substitute will highly depend on the market structure and taste and preference of the consumers. Competitive rivalry: Competitive rivalry is huge in the market due to the presence of different multinational companies. Pepsi is the biggest threat to Coca Cola. Even in foreign markets there are number of companies like Gatorade and other drinks pose serious challenge to Coca Cola (Eden Ackermann, 2013). Overall to conclude it could be said that Coca Cola will have to be very focused on the constant increase in its competition and accordingly it will have to develop its products in the market. It will have to come up with different products so that it could cope up with increasing competition. Coming up with organic beverages and less use of carbon is likely to increase the preference of the organisation. Overall it could be said that the company has to strategise its movement in the global market as well as regionally (Hill Jones, 2013). References David, F., David, F. R. (2016). Strategic Management: A Competitive Advantage Approach, Concepts and Cases. Eden, C., Ackermann, F. (2013).Making strategy: The journey of strategic management. Sage. Freeman, R. E. (2010).Strategic management: A stakeholder approach. Cambridge University Press. Hill, C. W., Jones, G. R. (2013).Strategic management theory. South-Western/Cengage Learning. Hill, C. W., Jones, G. R., Schilling, M. A. (2014).Strategic management: theory: an integrated approach. Cengage Learning. Hitt, M. A., Ireland, R. D., Hoskisson, R. E. (2012).Strategic management cases: competitiveness and globalization. Cengage Learning. Thompson, J. L., Martin, F. (2010).Strategic management: awareness change. Cengage Learning EMEA. Wheelen, T. L., Hunger, J. D. (2011).Concepts in strategic management and business policy. Pearson Education India.