pestel analysis of coca cola

PESTLE ANALYSIS OF COCA COLA COMPANY

SUBMITTED TO:

SIR HASHIM KHAN

SUBMITTED BY SSH SHAYKH

1

THE COCA-COLA COMPANY-

INTRODUCTION & HISTORY Refreshment is a language everyone understands, and no one speaks it better than CocaCola. Sometimes a soft drink is more than just a carbonated, sweetened beverage. Sometimes it represents an exciting lifestyle. Soft drink-giant Coca-Cola was one of the first on the bandwagon of promoting soft drinks as a way to excite your life. Starting as early as 1907, ads described the drink as "full of vim, vigor and go." John Pemberton, an Atlanta pharmacist, invented the drink one day in 1886 while seeking a quick headache cure. He put it on sale for 5 cents a glass in his neighborhood pharmacy. Back then, the syrup was mixed and then added to a glass of seltzer water upon purchase. Pemberton's bookkeeper, Frank Robinson, christened the drink "Coca-Cola" and wrote the name in the distinctive script that is still used today. The name comes from the extract of coca leaves and kola nuts contained in the syrup. Eventually in 1929, the cocaine was completely removed from the formula, leaving caffeine to provide the kick. But Pemberton wasn't a businessman and didn't understand the drink's potential. Between 1888 and 1891 he sold the company in bits and pieces to local entrepreneur Asa Griggs Candler. In 1891, Candler completed the purchase and became Coca-Cola's first president. He traveled the country introducing pharmacists to the drink, which they sold from their counters. Candler also gave the pharmacists plenty of clocks, scales, calendars and other items laden with the Coca-Cola logo as well as coupons for customers to redeem a free glass of the drink. Even Candler didn't fully appreciate the brand's potential. In 1899, not realizing that customers might want to take their Coke with them, he sold the bottling rights to two Chattanooga, Tennessee lawyers for a dollar. They soon built a thriving bottling business, in turn selling the rights to other entrepreneurs around the country. In 1916, the Root Glass Company created the well-known curved bottle that immediately differentiated Coca-Cola from the many imitators that had sprung up, and Coca-Cola smartly obtained a patent for the design. The bottling business grew, with 1,000 bottlers by 1920 as the brand expanded into Cuba, France, Puerto Rico and other territories. In 1918, Candler sold the company to Ernest 2

Woodruff, whose son Robert became president in 1923. Robert Woodruff was the man responsible for the rapid expansion of the Coke brand throughout the world -- during World War II, he decreed "every man in uniform gets a bottle of Coca-Cola for 5 cents, wherever he is, and whatever it costs the company."

MISSION STATMENT In the early 1990s, Roberto Goizueta shared the following mission statement in a booklet entitled 'Coca-Cola, a Business System toward 2000: Our Mission in the 1990s'. "Bringing refreshment to a thirsty world is a unique OPPORTUNITY for our Company... and for all of our Coca-Cola associates... to create shareholder value. Ours is the only production and distribution system capable of realizing that opportunity on a global scale. And we are committed to realizing. With Coca-Cola as the enterprise, ours is a worldwide system of superior brands and services through which we, our franchises, and other business partners deliver satisfaction and value to customers and consumers. By doing so, we enhance brand equity on a global basis. As a result, we increase shareholder wealth over time. Our GOAL for the 1990s sounds deceptively simple: It's to expand our global business system, reaching increasing numbers of consumers who will enjoy our brands and products more and more often. To succeed we will make effective use of our fundamental RESOURCES: brands, systems, capital, and, most important, people. Because these resources are already available, one might assume we need only to draw on them for achieving our goal. Nothing could be more wrong. The CHALLENGE of the 1990s will be not only to use these resources but to expand them... to adapt them... to reconfigure them in constantly changing ways in order to bring about an ever renewed relationship between the Coca-Cola system and the consumers of the world .to make the best even better. About brands … Increasing globalisation of the communication industry means we can more effectively expose our advertising and other image-building programs through a worldwide brand framework. This places a premium on maintaining our traditional excellence as a premier brand advertiser. Yet we must remember that it is our franchisee network around the world, which will distribute and locally market our brands. To appropriately leverage these brands, we must recognize that our franchisees and we are fundamentally in the business of servicing our customers and meeting the needs, real o perceived, or our customers. Coca-Cola, in every form... classic, diet, caffeine free, cherry, light... is the most widely recognized and esteemed brand in the world. Sprite and Fanta are worldwide brands; they

3

must play a role in our brand strategy. We will continually strive to develop new brands where the opportunity presents itself. About systems... Moving closer to the customer both in our own organizational structure and in timely decision-making will be mandated by the global, yet diverse, marketplace of the 1990s. Structurally, a flatter organization of our Company will be required. Ours is a multilocal business. Its relative state of development varies dramatically from the soft drink frontiers of Asia to the sophisticated markets of North America... -At present, our main product, 'Coca-Cola', is now sold in over 135 countries, and is the leading soft-drink product in most of these countries. About capital... Shaping business systems which are close to consumers will require not only the investment of our capital for new assets but more sophisticated management of existing ones Existing assets will be evaluated as potential resources for meeting our goal. About people... We need the right people for the 21st century... We must have people who use facts and knowledge to add something... to add value to our customers' businesses. In an age where everyone has basically the same information at the same time, the advantage goes to people who can take information and quickly put it to effective and profitable use... It means having people who can create a competitive advantage".

PESTEL ANALYSIS Political Analysis for Coca-Cola Non-alcoholic beverages fall within the food category under the FDA. The government plays a role within the operation of manufacturing these products in terms of regulations. There are potential fines set by the government on companies if they do not meet a standard of laws. The following are some of the factors that could cause Coca-Cola company's actual results to differ materially from the expected results described in their underlying company's forward statement:-

4

Changes in laws and regulations, including changes in accounting standards, taxation requirements, (including tax rate changes, new tax laws and revised tax law interpretations) and environmental laws in domestic or foreign jurisdictions.

Changes in the non-alcoholic business environment. These include, without limitation, competitive product and pricing pressures and their ability to gain or maintain share of sales in the global market as a result of action by competitors. Political conditions, especially in international markets, including civil unrest, government changes and restrictions on the ability to transfer capital across borders. Political structure and legal considerations also have impinged on Coco-Cola Company’s strategies. Governments of some Arab nations boycotted Coca-Cola’s products due to a political dispute and discontented with the company for maintaining distributors in Israel.

Economical Analysis Being flexible and willing to change to satisfy consumers’ needs, has enabled Coca-Cola to exploit the economies of scale that was gained by its global marketing and at the same time making its products appeal to local taste, which these have earned the company an enormous profits quarterly. As Coca-Cola has expanded over the decades or even nearly a century, the company has benefited from the various cultural insights and perspectives of the societies in which business is done. No doubt of the remarkable experience it has, it is still very committed to local markets, to paying attention to what people from different cultures and backgrounds like to drink, and where and how they like to drink it, to remain competitive and to develop more new drinks to satisfy its markets. Now, the estimated brand equity of Coca-Cola is $84billion, market share of more than 50 percent in beverage industry globally and about 70 percent of its income comes from countries outside United States. Every 10 seconds, 126,000 people in the whole world, choose to reach out for one of The Coca-Cola Company brands, and it is the company’s mission to make that choice exciting and satisfying, every single time.

5

Previously the U.S. economy was strong and nearly every part of it was growing and doing well. However, things changed. Before the attacks on September 11, 2001, the United States was starting to see the economy recover slightly and it is only just recently that they achieved the economic levels. Consumers are now resuming their normal habits, going to the malls, car shopping, and eating out at restaurants. However, many are still handling their money cautiously. They believe that with lower inflation still to come, consumers will recover their confidence over the next year. As researching for new products would cost less the Coca-Cola Company will sell its products for less and the people will spend as they would get cheap products from Coca-cola.

Social Analysis for Coca-Cola industry Foreign environment factors have influenced the Coca-Cola’s strategies in international marketing. Culture has a tremendous effect on people’s preferences and perception. Language is one of the aspects of culture that marketers must take care of, in term of translating product name, slogans and promotional messages so as not to convey the wrong meaning. Coca-Cola did not look much into this aspect when entering into the markets of countries like China and Taiwan as the literal translation of Coca-Cola in Chinese characters mean, “bite the wax tadpole”. Changes are necessary in international marketing for consumer’s products, as it is important that the products suit one’s taste, preferences and fulfill one’s needs. CocaCola has continued changing, improving and developing new drinks to appeal to local tastes. After discovering that Coke did not appeal as much to Japanese consumers, Coca-Cola developed over 30 new drinks for the Japanese market, which inclusive of Asian tea, English tea, coffee and fermented-milk drink. In China, Coca-Cola has also begun the similar strategy of introducing beverages developed for the taste buds of local market. It launched a fruit juice drink called Tian Yu Di (Heaven and Earth) specifically for the Chinese market with planning of introducing the market with a Chinese iced tea and soy milk drink. Many U.S. citizens are practicing healthier lifestyles. This has affected the non-alcoholic beverage industry in that many are switching to bottled water and diet colas instead of beer and other alcoholic beverages. Also, time management has increased and is at approximately 43% of all households. The need for bottled water and other more convenient and healthy products are in important in the average day-to-day life.

6

Consumers from the ages of 37 to 55 are also increasingly concerned with nutrition. There is a large population of the age range known as the baby boomers. Since many are reaching an older age in life they are becoming more concerned with increasing their longevity. This will continue to affect the non-alcoholic beverage by increasing the demand overall and in the healthier beverages.

Technological Analysis for Coca-Cola Some factors that cause company's actual results to differ materially from the expected Results are as follows: The effectiveness of company's advertising, marketing and promotional programs. The new technology of internet and television which use special effects for advertising through media. They make some products look attractive. This helps in selling of the products. This advertising makes the product attractive. This technology is being used in media to sell their products. Introduction of cans and plastic bottles have increased sales for Coca-Cola as These are easier to carry and you can bin them once they are used. As the technology is getting advanced there has been introduction of new machineries all the time. Due to introduction of this machineries the production of the Coca-Cola company has increased tremendously then it was few years ago Coca-Cola has six factories in Britain which use the most state-of the-art drinks technology to ensure top product quality and speedy delivery. Europe's largest soft drinks factory was opened by CCE in Wakefield, Yorkshire in 1990. The Wakefield factory has the technology to produce cans of Coca-Cola faster than bullets from a machine gun

Legal Analysis Legal aspect focuses on the effect of the national and world legislation. The Coca Cola Company receives all the rights applicable in the nature of their business and every inventions and product developments are always going into the patented process.

Environmental Analysis 7

Environmental analysis examines the local, national and world environmental issues. According to the data of the Coca Cola Company, all of the facilities are strictly monitored according to the environmental laws imposed by the government.

Last Words With the intensive study of the PESTLE, the company will continue to emerge and develop if they manage to find solutions in different challenges that the entire organization might face.

8