Business Administration (BA)
Strategic Management Analysis
The highly competitive marketplaces and the rapid changes in technological development are forcing organizations to manage their strategies more effectively to succeed in business operations. According to Kotler et al. (2012), strategic management refers to the processes of defining, describing, and applying different business strategies into business activities for gaining competitive advantages and better organizational performances. Strategic analysis is the key method of conducting effective strategic management. According to Palmer (2010), strategic analysis is the process of investigation, evaluation, and developing business strategies to meet organizational goals and objectives. The strategic analysis focuses on both internal and external business environments. Consequently, the key tools of strategic analysis are Value Chain Analysis, SWOT analysis, PESTLE analysis, and Porter’s Five Forces analysis. This reported has conducted a strategic analysis for a particular company named “Coca-Cola”.
1.1 Coca Cola background
Coca-cola is the largest manufacture in the world, which was founded by a pharmacist named John Pemberton in 1886. Coca-cola is now operating across the globe covering most of the countries. Coca-cola is serving millions of customers every day by its million of devoted and dedicated workforces, distributes, representatives, wholesalers, and retailers. The key products of Coca-cola are soft drinks, carbonated drinks, juice, juice-drinks products. Coca-cola customers are of all ages people including children, young, adults, old, men, and women. The target markets of Coca-cola are all of the nations of the world including developing and developed countries, and the US, the EU, Asia, and Africa (Coca-Cola Annual Report, 2014).
1.2 Report structure
In the introduction, the report has provided a brief discussion of the strategic management, strategic analysis, and the background of the Coca-cola company. Then, the report has conducted a market analysis on Coca-cola covering both internal and external business environments using suitable analytical tools. Next, the report has conducted a resource and capability analysis on Coca-cola focusing on its internal resources and capabilities and applying appropriate tools and techniques. Finally, the report has conducted a strategic fit analysis based on the analysis done in the previous sections and evaluated the Coca-cola strategic fit within the market environment.
Task A: Market Environment Analysis
Market environment analysis refers to the analysis of business both external (macro) and internal (micro) factors, and the critical success factors (Kotler et al., 2012).
2.1 External (Macro) Environment Analysis
The External (macro) environment refers to factors and variables which come from outside of the business and are not controlled by organizations. PESTLE analysis is the key tool to analyze the external business environment (Thomas, 2007). PESTLE refers to political, economic, social, technological, legal, and environmental issues. PESTLE analysis focuses on these factors and their impacts on business performance and productivity (Kotler et al., 2012).
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Diagram: PESTLE Analysis on map. Source: (Palmer, 2010)
2.1.1The PESTLE Analysis for Coca Cola
|Factors||Analysis for Coca Cola|
|Political: political issues are related to governments and their policies. It includes political stability, violence, and unrest, laws, and policies like tax policies, trade laws, environment and employment laws, etc.||Several political issues in different nations are impacting Coca-cola’s performance. The political instability, violence, and unrest in third-world countries have negative impacts on supply chain management and business activities. The slower growth of the economy in many countries and restricted laws imposed on Tax, environment, and employment are influencing Coca-cola’s revenue and profits.|
|Economic: economic issues are related to the economic environment of business. This includes factors related to exchanges rates, economic volatility, deflation and inflation, national interest rate, fiscal and monetary policies taken by the nation’s central bank.||Many economic factors are influencing Coca-cola’s business performance. The increased tax rate in many counties is decreasing Coca-cola profits. The volatile economy with slower growth in many nations impact customer income level and buying power, which impacts Coca-cola sales and profits. Different monetary and fiscal policies in different countries are giving hard time to Coca-cola to adopt its product prices and profit margin in international marketplaces.|
|Social: social issues refer to the factors related to people’s health and wale fare, population growth, demographics, ages, etc. The social and cultural issues may also be included here.||As Coca-cola is operating in almost all of the countries, it faces different social and cultural issues. Different countries have different cultures and social issues which influence Coca-cola to adapt its business in international markets. Secondly, people are nowadays more concerned regarding their health, consequently, expect more medically proven healthy drinks. As a result, Coca-cola needs to give an extra concentration on providing more healthier products. Thirdly, the rapid changes in demographics are forcing Coca-cola to be more strategic in their business plans.|
|Technological: Technological issues are related to include technological development and changes, advancement, innovation, and automation, which may impact business strategies and decisions, activities, operations, and performance.||The technological development in Coca-cola has benefited both its business and consumers. Coca-cola has adopted very sophisticated and advanced technology in its supply chain management, inventory management, customer services, and other operations, which have improved its performance and productivity. In addition, www.coca-cola.com has extended Coca Cola business. Customers can easily find their desired products and services information, can conduct the buying process, payment process, and delivery process seating at home online.|
|Legal: legal issues are related to rules and policies for both buyers and sellers during the selling or purchasing process to establish the rights of both sellers and buyers.||Legal policies imposed in different counties are impacting Coca-cola’s performance directly. For example, there is a restriction on payment demand from suppliers, and changes prices without customer notices. In addition, there are many policies such as health insurance, pension schemes, etc are impacting monopoly control of Coca-cola activities.|
|Environmental: Environmental issues are related to weather, climate changes, natural disasters such as floods, and earthquakes.||Different environmental issues raised in different countries that force Coca-cola to take part in the program of environmental safety. Consequently, Coca-cola’s initiatives are to minimize its carbon level to zero position by 2025 concerning global warming. In addition, Coca-cola is serious to reduce its manufacturing wastes. However, these issues impact business overall sales and profits.|
|Source: Kotler et al. (2012)||Source: Coca Cola Annual Report (2014)|
2.2 Internal (micro) environment analysis
Internal (micro) environmental issues are those related to business internal activities and policies (Kotler et al., 2012). Porter’s Five Forces model is used as the main technique to analyze a business internal environments (Hautte, 2005)……………………