Discuss About The International Review A Management Marketing.
Competitive Advantage is the situation which allows a company to manufacture the products or create services at a lower price but with the same or superior quality which its competitors are producing. It helps in generating greater value for the company and its stakeholders due to which it becomes difficult for the competitors to outwit the company.
The competitive advantage pertains to the favorable position which the organization seeks in order to be more profitable than its competitors. To gain the competitive advantage, the company must be able to show a higher degree of comparative or differential value as compared to its competitors and transfer the information to its target marketing (Njambi et al., 2016).
Coca-Cola Beverages Sri Lanka Ltd. (CCBSL) is situated in Biyagama, the only Coca Cola bottling plant in Sri Lanka. It was originated in 1961 and it has over 700 employees. It manufactures and sells over 12 million of cases of beverages per year and is operated by a country wide network comprising of 127 distributors (Linked in, 2017).
So, in this report, the analysis of the economic environment of the Coca-Cola Beverages Sri Lanka Ltd. would be assessed along with evaluating the competitive advantage in the context of current and future scenario of the company. Also, suggestions would be given for developing the competitive advantage of the company for reaching at the desired position in the next three years.
The economic environment in which the company would be conducting its operations has been in progressive mode in the Sri Lankan economy. It delivers lots of benefits such as foreign exchange earnings, contribution to the innovation in the beverage industry and up liftment of the rural economy. It has been an appropriate source of employment and has played a significant role in the local economy (Athukorala et al., 2017).
The beverage industry is amongst the crucial segments in the agri- business industry. The transforming economic status has given a chance to the company so that it can increase the manufacturing units in the country. Many industries have started in the Northern and the Eastern Districts to increase the manufacturing of the raw and finished goods for the beverage industry. The land has been allocated to the company and various training programs have been conducted by the government for the workers of the beverage companies to enhance their employment skills.
The beverage industry has reported a growth rate of 3.7 % in the first quarter of 2017 in the Sri Lankan economy (Department Of Census and Statistics, 2017).
Coca-Cola Beverages Sri Lanka Ltd. is the biggest beverage company in Sri Lanka and it delivers more than 500 brands to its consumers. It formulates various policies and procedures which can be adapted to the changing business environment in the industry in which it operates.
The current competitive advantages of the company can be evaluated with the help of Michael Porter’s Five Forces. The five forces were discovered by Porter to measure the industrial competitiveness of the company. Industrial competitiveness can be defined as the capability of the industry to expand itself in the market and to retrieve more profits than its competitors subject to certain conditions (Xing & Guo, 2017). The five forces are:
Also, it is not observed as a product but as a brand. It holds a very large brand share in the market since a long time and its loyal consumers will not shift to other brands.
Besides the Porter’s five forces of competitive advantage, there are other factors evaluating the current competitive advantage of the company. These are brand name and trade mark. A brand is a name, sign, design, term or a combination of all these aspects which is used for distinguishing the goods or services of one seller from other. Trade mark differentiates the offering of one company to other. Coca Cola has become a leader in the beverage industry of Sri Lanka through its excellent quality and brand. It is known for its creativity and it targets the young section of the society. It has successfully accomplished its goal of capturing the attitude of the Sri Lankan youth (Sarich et al., 2015).
Product Packaging is another competitive advantage possessed by the company. The shape of the bottle of Coca Cola was first registered as Coca Cola Bottle. The packaging of the product draws the attention of the customers of the company and justifies the worth of the product to them (Titus, 2012).
The target market is another competitive strategy followed by the company. The target marketing for the advertising strategy of the brand comprises of the demographic, geo-demographic m product usage characteristics and psychographic components of the consumer section it is aiming at. The company deals with the international chains of retailers to create mutual benefits .It apply the demographic factor to target the youth customers.
According to The Coca Cola Company (2016) the company has focused on maximizing its revenue and profit to arrive at its competitive position in three years’ time. The company has implemented the revenue growth strategies according to the type of market it is operating. It has focused on increasing the sales in the emerging market of Sri Lanka. It has attempted to keep the price of its products affordable and strengthened the foundation of its success in future. In the developing market of Sri Lanka the company has balanced the volume and pricing of its products. Also it has increased its profitability by offering smaller packages and aluminum bottles to its consumers (Munasinghe et al., 2017).
The company has become more efficient to rebuild its growth for developing its competitive advantage in the next three years. It is investing to develop better marketing skills along with enhancing its financial stability. It has increased its efficiency and productivity along with lowering its cost of production. It is operating on the formula of “Zero Based Work”. It implies from the assumption that the budget of the company begins with zero and it must be justified on yearly basis. It should not be carried to the next year on the basis of levels established in the last year. By cutting its expenses on non-media marketing such as store campaigns, the organization has found new investments in its systems of supply chain (Koc & Koc, 2014).
With the help of the funds retrieved by productivity improvement, the company would be able to invest in its brands and business, thereby increasing the returns to its shareholders. The company considers productivity not as an event or series but as a continuous process for becoming more efficient in its operations.
Investment in brand and business is another strategy to gain competitive advantage in the next three years. Healthy business requires regular investments by the company. It has invested for better marketing strategies, thereby enhancing its quality and quantity to achieve competitive advantage in the next three years. The company has started investing more than $ 250Million to create more stronger and influential ads (Grath, 2013).
The company has invested to expand its beverage portfolio and tried to improve its position in the energy category .It has created strategic partnerships with the famous beverage brands of Sri Lanka. In the year 2015, it developed its first international advertising for the promotion of the Coca – Cola trademark of Coke. It has recently launched the “Taste the Feeling” campaign which emphasizes on its refreshing taste.
Further, the company is refocusing on its core business model to build a competitive advantage in the next three years. It is expanding its portfolio which includes more than 500 brands including fruit juices, water, tea, coffee, energy drinks and value added dairy products .Also, the company has been able to lead the international system for independent bottling partners, thereby creating value for its consumers. The company has acquired and regulated a number of bottling partners for improving its performance and enhancing its manufacturing and distribution systems.
Coca-Cola Beverages Sri Lanka Ltd has taken steps to reshape its business. It has tried to assess the taste of its consumers and their priorities along with creating innovations in its retail and supply chains. It is recognizing the areas in its operating structure where it could be more efficient and faster. It has connected its business units directly to the headquarters and aligned the internal procedures for enhancing its efficiency and productivity. Also, it has also made the workplace interesting and full of learning and growth for its employees so that they become motivated to work (Ionescu & Dumitru, 2015).
Coca-Cola Beverages Sri Lanka Ltd operates in the non –alcoholic division of drinks in the beverage industry. The non-alcoholic beverage division of drinks is highly competitive and comprises of several firms. It includes firms operating in many geographical areas as well as those conducting their commercial activities in the local and regional areas.
The recommendations regarding the ways to achieve the desired competitive advantage in the next three years comprise of many factors. First of them is acquiring various positions in the market to fulfill the various necessities of the customers in terms of value for money. Therefore the company should choose the strategic option of hybrid in which the company can maintain its price thereby differentiating itself from its competitors. The company can select a mix of pricing, sales promotion techniques, advertising, enhanced competence in techniques of production, innovation in products, vending and dispensing equipment, introduction of new packaging and safeguarding the brands and trademarks (Karanja, 2015).
In this regard, Coca Cola should increase its yearly marketing budget, launch new products catering to the needs of different consumer segments and evaluate the model to assist its retail consumers so that it can maximize its sales. The risk of losing the market share due to lowering its prices can be managed through economies of scale in which the company can produce products in large quantities to cover its cost of production along with entering new geographical markets (Gomez, 2012).
Furthermore, the company should innovate and add more unique products to its portfolio. It can diversify its range of products in various market segments. Diversification is an approach which differentiates the company from its current markets and merchandises. It is a good option for the company as it will assist in breaking new grounds in different market segments. Diversification requires a lot of capital for the company. It also requires research and development along with the requirement of the skilled people to diversify the business of the company. Coca Cola needs a lot of careful planning along with large amount of public awareness to diversify its business (Diris et al., 2013).
The company should diversify its business according to the changing preferences and choices of the consumers. The consumers have become aware of their health and thus avoid consuming beverages which contain high amounts of sugar and caffeine. Thus Coca Cola should manufacture products which can cater to the emerging health conscious section of the society. Also, it can produce energy and sports drinks for its targeted consumers-the youth. It has to capture their attitude and attention by producing unique and appealing products in the nominal price range. Thus the company should think globally but act locally (Pride & Ferrell, 2015).
The consumers have different experiences based on their personal priorities and locations. So, Coca Cola should adjust its approach so that it can make use of these variations by appropriately marketing its beverages to connect with its consumers (Butler & Tischler, 2016).
Moreover, the company should align its global strategy with the corporate strategy. The corporate strategy assists the performance of the overall commercial activities of the business and the distribution of resources to achieve the goals of the business. Moreover, the company should develop system productivity and capabilities together with its bottling partners (Thushara, 2015).
Conclusion
Hence to conclude, it can be said that Coca-Cola Beverages Sri Lanka Ltd is one of the largest beverage companies, largest producer and marketer of nonalcoholic beverages in Sri Lanka. The competitive advantage of the company is its outstanding marketing strategies, hold of its target market specially the young section of the society and its innovation skills. It has strongly positioned itself in relation to its competitors. It competes itself in the nonalcoholic beverage segment of the beverage industry. It competes with the firms operating in the international markets as well as those operating in the local and regional markets.
It can enhance its competitive advantages by adopting various techniques. The key strategies of the success of the business are customer satisfaction and innovation. The productivity of the corporate resources comprising of people, money and machines in all the facets of the commercial activities is dependent on how the consumers feel about the business.
So, if Coca-Cola Beverages Sri Lanka Ltd wants to accomplish its competitive advantages in the next three years, it should rearrange its operations to be consumer driven along with its excellence in the research and development, manufacturing and marketing activities. So, for the company, it is not the question for doing it right rather doing the right thing. So the strategies which would assist the company in accomplishing its competitive advantage in the near future are winning the consumer loyalty, repeated buying, product innovations and consumer satisfaction.
References
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Butler, D., & Tischler, L. (2016).Design to Grow: How Coca-Cola Learned to Combine Scale and Agility (and How You Can Too). Simon and Schuster.
Department Of Census and Statistics (2017) .National Accounts of Sri Lanka. Retrieved from https://www.statistics.gov.lk/national_accounts/dcsna_r2/reports/detail_note_2017q1_english.pdf
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