This research paperwork uses Coca-Cola Company as case study for examination of different strategic capabilities, external, as well as internal environments that affects business operations. Coca-Cola Organization was founded back in the early days of 1886 (Zhang and Xia 2015, p. 25). The organization operates its business in at least two hundred nations globally and has over two thousand seven hundred different beverage products. It deals with production of four of the top soft or non-alcoholic beverages that consist of Fanta, Sprite, Fanta, and Diet Coke (McKinney 2017, p. 34). Therefore, this paper examines strategic capabilities, external environments, and strategic choices within operations of Coca-Cola organization that operates in global marketplaces.
Internal resources and capabilities that give the organization a competitive advantage
Every organization needs to poses at least a single merit to contest successfully in marketplace. If a company fails to identify a single or just does not possess proper internal resources and capabilities, rivals soon surpass it and compel business to depart marketplace (Iag?ru, Iag?ru, and Ciortea 2016, p. 337). There exist several means of attaining gain but the critical include price and differential gain.
Cost advantage
From argument by Bryzhan and Lepa (2014, p. 11), an organization can achieve superior performance through production of similar quality services or products but at lower costs. In this scenario, an organization sells products at a similar price as chief competitors but reaps higher margins of return because of lower costs of production (Rasool and Shah 2015, p. 34). For instance, Coca-Cola uses technique of SWOT analysis to monitor its opportunities and threats that result from changes in cost of products and services.
Differentiation Advantage
The internal resource along with capabilities that comes with differentiation advantage is vital in operation of every organization in attaining competitive advantage. Differentiation advantage in an organization is attained through process of offering exclusive services together with products and charging premiums price for such offers (Hay et al., 2017, p. 49). Furthermore, differentiation strategy in operations of organization is utilized in this situation and company position itself more on branding services, designing, advertising, quality, as well as development of new products.
VRIO framework (Internal Environment Strategies Analysis)
The internal environment strategies within an organization such as Coca-Cola comprise of secure infrastructure, development of technological usage, procurement, together with HR management. The merit of framework of VRIO along with its study of the organization is since it aids organization to function while concentrating on various operations with focus on provision of durable together with quality services or products in global markets (Navaresse, Yauch, Goff, and Fonseca 2014, p. 442). The analysis of VRIO aids in process of classification of varied activities within organization to attain a relative merit in market as compared to their rivals.
Analysis of external environment – PESTEL
Key drivers
Key drivers of change in the external environment include political, technological, economic, socio-cultural, and environmental factors. Recent political together with economic development together with associated shifts in the practice along with delivering of services and products have led different managers and professionals to recognize the links and significance between ideas of solving problems and skills of making decisions (Wilken and Sinclair 2011, p. 12). The PESTEL analysis remains to be the strategic devices that form the key driver of change in the external environment of organizations. Some of the impacts of these key drivers include
Political factors
They affect operations of an organization both directly and indirectly. These factors affect organizations but not limited to political stability in company and other global markets. The type of government can increase participation of organization in markets (Tadi?, Ðor-devi?, Eri?, Stefanovi?, and Nesti? 2017, p. 3965). When regulations set by governments are strict, most organizations find it tough to operate within those areas.
Economic drivers
These factors have direct influence on buying trend of customers of an organization. Increase in interest rates, inflation, and economic growth affect advancement of organization to reach targeted customers. Presence of globalization negatively affects outputs of organization as management tend to channel huge funds to improve services rather than in producing more goods to be distributed around markets (Wilkins 2016, p. 573). Presence of several business uncertainties within the market indicates that customers are probably to spend much money to buy quality goods.
Social-cultural drivers
Population growth rate and age profile have huge effects on buying rates of different products. For instance, aged population tends to consumer little sweet products compared to young generations (Jou, Niederdeppe, Barry, and Gollust 2014, p. 849). Such cases lead to decline in production by an organization that deals with such products.
Technological drivers
Impacts of emerging technologies have huge impact on operations of companies. Emerging technologies increase rate of production of products and sales of services. Different managers use technologies to reach huge number of targeted customers in different places at short time without making one-on-one move to their place of residents (Lesmeister 2017, p. 41). Technology improves income of organization as it increases remote working with different stakeholders in different areas.
Industry Analysis – Porter’s five forces
Appropriate framework
The appropriate frameworks involve the focus on Porter’s Five Forces that focus on business unit strategy device. The device is utilized in making the analysis of the value or attractiveness of the structure of an organization (Pal and Kumar 2014, p. 98). These include entry of contenders, danger of substitutes, influence of bargaining of buyers, bargaining influence of dealers, together with opposition among active companies.
Threat of new entrants
The simple it is for recent organizations to come in market, the further agressive contest is created in the process. Some of ways of reducing the threat include by forming an existing loyalty to major brands, incentive for the use of a specific buyer and having high fixed costs on products and services (Tushnet 2017, p. 873). The other means of reducing such impacts include imposing of government restrictions, forming brand equity, and protecting entry of different products into the market.
Authority of dealers
It shows amount of pressure different dealers can lay on business. Dealers hold extra authority since there exists little sellers of the specific merchandise. Suppliers have power when there are no substitutes leading to increased profitability (Lijing and Yunnan 2016, p. 18). When suppliers are able to switch costs relative to firms switching chargers make suppliers have power in operations of an organization.
Power of customers or buyers
The framework demonstrates how much pressure targeted customers can place on the operations of an organization. If a customer has the large enough effect to affect the margins as well as volumes of organization, then they posses considerable authority. Certain motives why clients might posses authority comprises of little number of purchasers making them to have the power of goods under offer (Kelly and Smith 2018, p. 11). When customers purchase large volumes they have power and this makes company to work on providing existing substitute products during their operations.
Availability of substitutes
The framework presents the likelihood that an individual might be ready to switch to the competitive service other product. If share of controlling is minimal, then it might create a solemn danger to profitability of an organization (Hay et al., 2017, p. 50). Some of the issues that can influence threat of alternatives include tendency to substitutes by buyer, buyer switching charges, technological advancements and innovation of products.
Competitive rivalry
The framework describes the intensity of competition that exists between the firms within the industry. For instance, highly competitive industries generally earn low returns in the markets. These low returns are as a result of the cost competition is high among firms. The highly competitive marketplaces might result from different factors (Zhang and Xia 2015, p. 34). Some of these factors include presence of many players of about similar size and no dormant firm. Presence of little differentiation that exists between competitor services and products as well as a mature industry with very little advancements leads to competitive rivalry.
SECTION 2
The two major strategic options that could be recommended for Coca-Cola Organization to increase its entrepreneurial opportunities on the market include international expansion strategies and inorganic growth strategies or partnerships. Strategy of International expansion comprises of Simple Export, Complex Export, multi-domestic, together with Global essential in increasing entrepreneurial opportunities on the market for an organization (Wilken and Sinclair 2011, p. 180). However, Inorganic growth strategies (Partnerships) consist of Mergers and Acquisitions, Collaboration and Alliances that increase entrepreneurial chances on the market for an organization.
International expansion strategies
It refers to different options essential for operating outside the country of origin of an organization. It is idea that the management uses to expand business activities of an organization into different nations through the global markets. It also implies more than just making different investments in nations outside of home of organization (Rasool and Shah 2015, p. 32). The concept of this strategy comprises of idea of maintaining the actual presence of business of organization in those nations (McKinney 2017, p. 33). Aggregation comprises of standardization process that leads to creation or utilizing existing economies of scale across multiple locations.
Simple export allows Coke Company to reach most of its targeted customers around globe so that it can refresh their thirsts for coke products. Export strategy allows the organization to have a lot of options to choose from and some of those options might be across the place of origin leading to improvement in production (Pal and Kumar 2014, p. 95). Coke Organization can customize its programming or advertisement that is shown on televisions with dozens of countries to improve the market shares. Complex export on the other hand by organization involves the process of seeking the middle ground between best strategy to reach big number of targeted consumers and different markets (Lesmeister 2017, p. 40). It allows the firm to make some concessions to local and global tastes of its services and products.
Inorganic growth strategies (Partnerships)
Coca-Cola Company pursues inorganic development in various ways. Some of the ways involve from strategic relationships that are beneficial to both parties to traditional mergers and acquisitions. Coke Organization uses strategic partnership as a way to leverage business operations to increase their entrepreneurial chances on markets. Such partnership allows Coke Company to generate mutually beneficial revenue synergies as well as cost savings. In the Coke Organization, many of these strategic relationships develop channels into new marketplaces (Bryzhan and Lepa 2014, p. 6). The idea can help the company to increase its addressable market exponentially.
International expansion strategies
In this strategy, sustainability is assessed in different criteria that are specifically essential to the company such as expectation sustainability, environmental, and capability suitability. These categories of sustainability are well categorized to reflect the specific needs of organization. However, acceptability of this strategy involves measuring of return, reactions of stakeholder, and risk of using this strategy to increase entrepreneurial of company in the market (Iag?ru, Iag?ru, and Ciortea 2016, p. 337). Feasibility of this strategy on the other side comprises of the make or break of the strategy to increase entrepreneurial of organization in the market.
Inorganic growth strategies or partnerships
In this strategy, suitability has been essential criterion used for screening different ways that company can use to increase its entrepreneurial in markets. It exploits the strengths of company such as provision of work for environment opportunities such as establishing the organization in new growth sectors of marketplaces. The use of acceptability illustrates market advancements as strategic option for Coke Organization. According to sediments by Kelly and Smith (2018, p. 12), feasibility aspect of this strategy focuses on physical resources, core competencies, and internal resources that support the increase in entrepreneurial in the markets. The idea is mostly concerned with necessary resources for implementation of aspects that are available.
From above examination, it is evident that strategic capabilities, external environment, and strategic choices are extremely significant to the success of every business or company. Organization stays to dominate in every industry if and only if they strictly adhere to these business aspects as discussed above. In summary, for an organization to be successful in its operations, it must be in the position to beat its chief competitors and it can only beat its competitors by winning the loyalty of targeted customers. In order to attain loyalty of the clients in global markets both strategic capabilities, external environment, together with strategic choices must be effective.
List of References
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