Environmental scanning

Introduction

In the competitive business world, companies need proper strategies that will give them a competitive advantage over their rivals. For instance, many companies use the environmental scan as a strategy to keep ahead in business. The objective of this report is to carry out an environmental scan of Coca-Cola Company. An environmental scan is defined as the dynamic scrutiny and assessment of an organization’s internal and external environments with the aim of identifying any opportunities and threats that may affect the business operations. In a strategic management plan, environmental scanning helps an organization identify and understand environmental factors surrounding the industry in which the business is operating (Hill, 2014). An appropriate scan of the will help the business in achieving its desired objectives and have a competitive advantage over its rivals. This document gives a brief description of the Coca-Cola Company as well as an environmental scan which involves an evaluation of the internal and external environment in which Coca-Cola operates. Furthermore, an evaluation of the competitive advantage will be examined by assessing the strategies, measurement guidelines and the effectiveness of the measurement guidelines used by the company.

Company description

Coca-Cola Company is a well-established multinational company in the beverages industry. The company’s history dates back to 1886 when John Stith Pemberton, a Columbus pharmacist, invented a unique tasting syrup formula that was mixed with carbonated water. Frank Mason Robinson, who worked as Stith’s partner is the brainchild behind naming the drink Coca-Cola and designing the trademark which is still in use to date (Nganga, 2014). The brand was later bought by Assa G. Sander in 1889, resulting in incorporation of the Coca-Cola Company in 1892. Over the years, Coca-Cola has increased its brand to include products such as; Sprite, Dasani, Fanta, Minute Maid and Diet Coke, among others.  Coca-Cola operates in over 200 countries globally, making it the largest and most popular non-alcoholic beverage company. Pepsi is the company’s major competitor in the non-alcoholic beverages industry (Nganga, 2014).

Assessing the Internal and external environment

The internal environment refers to those factors that are directly attributable to the company. This includes the company management, staff, shareholders and the company’s corporate culture (Hunger, 2014). The fundamental internal environment factors that have influenced Coca-Cola’s success include their corporate culture of having a clearly defined vision and mission statement, their effective organization skills, and strong communication networks.  The company’s vision statement is important in that it gives employees an understanding of the company’s corporate culture while the mission statement guides the employees and company management towards the firm’s objectives. The management’s fundamental role in Coca-Cola is to maximize shareholders revenue through increasing the company’s market share. Additionally, there exist strong communication links between the management and staff (Hunger, 2014). This enables the company to run its business operations smoothly. To efficiently supervise and govern its internal environment, Coca-Cola conducts assessments of its business activities and takes action to avert ineffectiveness in the production and consumer processes.

In contrast, the external environment comprises of factors that are beyond the company’s control. Some notable Coca-Cola external business environment includes; consumer behavior, economic, political and social factors. Coca-Cola products are consumer products and are greatly affected by consumer behavior and income levels. Generally, soft drinks are considered as a luxury by many consumers (Wagner, 2014). A slight decrease in the consumer’s disposable income may result in them forgoing taking soft drinks and this causes a reduction in the company’s sales. Economic factors such as inflation and changes in the foreign exchange rate affect the way Coca-Cola operates. Inflation results in an increase in the general price levels in the economy. The political environment is manipulated by several factors such as political parties and government policy. Some government policies in different countries make it difficult for Coca-Cola to venture into these markets. More to this, corruption and political favors makes it difficult for Coca-Cola to run their business (Nganga, 2014). Lastly, the social environment and cultural beliefs cannot be overlooked. Coca-Cola franchises distribution of its products in different countries. The franchising concept may not be received well due to different socio-cultural beliefs, such as biases to foreign products.

Competitive advantage

Having a competitive advantage is when a company has conditions such as inexpensive labor or easy availability of resources hence the company holds a superior position in the industry as a result of this favorable conditions. Competitive advantage comes about when a company acquires a trait that enables it to do better than its opponents (Wagner, 2014). Coca-Cola’s competitive advantage is arguably the best hence making the company a world leader in the non-alcoholic beverage industry. Their competitive advantage is brought about by the fact that they have a secret ingredient, which tastes better compared to their competitors. Since the company was started, more than 100 years, nobody knows the secret ingredient that coca cola uses to make their beverages (Nganga, 2014).

More to this, the company’s ability to come up with different products and modifying old ones has made it have a competitive advantage over its competitors. Since its incorporation, Coca-Cola has introduced new products into its brand and expanding their client base globally. The company currently has more than 400 brands in over 200 markets internationally. Lastly, the widespread distribution techniques adopted by Coca-Cola has made it easy for the company to access billions of customers globally. Further, Coca-Cola products are easily accessible in remote areas where other beverage companies would never think of distributing their products (Nganga, 2014). An excellent example being the African continent- it is not surprising to find a small shop in the remote areas selling Coca-Cola products.

Strategy and measurement guidelines

Coca-Cola’s success is attributed to the strategies adopted by the company. These strategies include being able to do market segmentation, having an effective product distribution system, well-priced products, and innovative marketing techniques. Market segmentation enables the company to identify suitable products for particular customers while franchising enables them to distribute their products globally, making it reach a wide range of customers (Hunger, 2014). The pricing strategy adopted by Coca-Cola is to make products affordable to its consumers. Moreover, Coca-Cola has invested a lot in marketing campaigns to create market awareness. For instance, the company has embraced the use of social media platforms to advertise its products. Additionally, the brand involves itself in sponsoring international sporting events like the FIFA world cup that was hosted in South Africa (Nganga, 2014).

Coca-Cola has also put in place efficient measurement guidelines. The purpose of the measurement guidelines is to analyze the strength and weaknesses of the strategies adopted and to adjust them to meet the changing market needs. The brand measures the success of its strategies by examining the total net profit. The net profit, determined by deducting total expenses from the revenues earned shows if the company is making progress. An increase in the company’s net profit implies that the strategy adopted is effective. The company also measures the effectiveness of its strategies by examining to what extent the strategy has achieved the company’s objectives (Hunger, 2014).

In conclusion, the company is able to keep ahead of its rivals due to the internal and external factors affecting the company’s operations. In addition, the company has several favorable conditions which give it a competitive advantage over its rivals. Finally, the company has effective progress measurement guidelines; these measurement guidelines have been effective in ensuring the company maximizes its profits and hence maintain a competitive advantage over its competitors. As a result of the combination of these factors, the company has recorded immense growth.