Internal Analysis and Strategy Formulation
Your assignment is to analyze the Coca-Cola Corporation and its economic performance over the last five (5) years. You should begin with the last available reference year. Your Activity responses should be both grammatically and mechanically correct, and formatted in the same fashion as the Activity itself. If there is a Part A, your response should identify a Part A, etc. In addition, you must appropriately cite all resources used in your response and document in a bibliography using APA style. (100 points) (A 4-page response and a table are required.)
Part A Your paper should begin with a description of Coca Cola. Describe the company’s main competitors. Assess the company’s performance over the past five years and document Coke’s profit and market share position.
Part B Identify which resources, core competencies, and distinctive competencies have allowed Coke to reach its level of success. Be sure to consider different measures of performance in your analysis and to compare (benchmark) the results you highlight with those of Coke’s competitors.
Part C Using a VRIO framework, build a table that addresses the value, rarity, limitability, and organization for each of the items you have identified above. Be very explicit in your explanations.
Part D Last, analyze whether the items discussed are likely to continue to yield a competitive advantage for Coke. Why or why not?
PART A
Coca-Cola is considered the most valuable brand name as well as the world’s largest non-alcoholic beverage firm. The organization is an American-based international corporation, producer, marker, and retailer of syrup concentrates. It is most famous for its initial flagship product identity, ‘Coca-Cola,’ invented in 1886 by Dr. John Pemberton. During its introduction to the market, the drink was primarily a mixture of carbonated water and sampled by all clients though it was Jacob’s Pharmacy that put it on the market for sale. The name tag and design were done by Frank Robinson, the bookkeeper of Pemberton, that the firm has maintained today. The organization was incorporated in 1889 with headquarter in Atlanta, Georgia, after Asa Griggs bought the beverage formula for approximately $2300 (Ridder, 2022). Further, World War II resulted in a new diversification in the packaging of Coca-Cola. However, the coke trademark was first utilized in 1941, and in 1946 the firm bought rights to Fanta, which was initially developed in Germany. In the 1960s, brands like Fresca, tab, sprite, and maid joined the company. However, the 1980s resulted in the development of cherry coke and diet coke, closely followed by Dasani and PowerAde within the 1990s. Presently, the organization operates in more than 200 nations, with its roots deeply planted in various local communities making Coca-Cola highly successful in the non-alcoholic sector.
The most significant rivals of the company include Red Bull, PepsiCo, Tropicana, and Nescafe. The main reason for the high competition perceived between Coca-Cola and PepsiCo is their highly effective delivery strategies, and both firms have exceptional sales and marketing approaches (Ridder, 2022). However, Coca-Cola considers Nescafe as its primary rival due to its superb taste and fantastic distribution and sales by Nescafe. On the other hand, Red Bull is proactive in developing energy and sports drink and is among the significant direct rivals aligned to the brand appraisal. Finally, Tropicana has a highly unique and huge flavor base, deemed the most active indirect rival in the beverage industry. The company’s overall market share is approximately 32.36% for the second quarter of 2020, which has declined by 4.93% from the first quarter. The firm’s North American market share is about 14.7%, calculated from the same quarter. Also, the organization reported a 28.48% decline in revenues for the second quarter; thus, it could be concluded that this financial decline is directly linked to the pandemic’s influence on the economy (The Coca-Cola Company, 2020).
PART B
The firm’s main competencies that have given it a competitive advantage over its competitors are its strong marketing determinations and the brand name. This has made the firm reach more than 200 nations and a sustainable profitability development for more than a decade. Besides, the firm has been simplified compared to other organizations within the beverage industry, in which different firms have opted to change their strategies rapidly to meet the clients’ demands. Further, Coca-Cola is dedicated mainly to building a robust security attentiveness program that ensures that its supply chain strategizes its services aligned to the market’s requirements (Coca cola’s Core Competencies, 2020). additionally, Coca-Cola’s products target the whole family and are designed and positioned for clients of all ages. Also, the company’s resources consist of physical assets like financial, technological, and raw material resources. Lastly, considering the existing resources, significant competencies, and raw materials, the company’s main competencies have allowed Coca-Cola to reach its current success level. However, Coca-Cola should reflect on its internal environment activities, such as its distribution network and marketing strategies, to conduct its universal leader in the supply of non-alcoholic beverage industry.
PART C
The company’s essential resources that have resulted in a competitive edge are assessed below using the VRIO framework, which stands for valuable, rare, imitability, and organization.
| Resources | Value | Rare | Imitation | Organization |
| Global distribution network | It is perceived as the most significant resource allowing the firm to serve the international market and sustain its international presence (Pratap, 2017). | The strategy is only possessed by a few beverage industry rivals and assists the firm in managing its international reach. | Yes, although Pepsi also has an international distribution network, it cannot be compared to Coca-Cola. | Yes, Coca-Cola’s policies and processes are exceptionally organized to aid it in exploiting its valuable, inimitable, and rare resources. |
| Huge product range | Yes, it has aided the firm in reaching and serving its international audience with varying preferences. | Not rare since its rivals like Pepsi also deal in a considerable product array. | Yes, it is a temporary edge since Pepsi has an extensive product array. | |
| Highly skilled employees | Yes, it assists the company manages its massive production operation effectively. | Yes, the firm is considered a leader in the soda sector regarding its employee management. | Yes, since it is challenging to imitate the competitive edge created by skilled human resources. High expenses are required for recruiting, training, and paying skilled employees. | |
| Secret formula | Yes, the formula is only accessible to a few individuals within the firm. | Rare, though Pepsi also serves exceptional flavors. However, the differentiated flavor produced by Coca-Cola offers it a competitive advantage | It is not possible to imitate; hence offers a sustainable competitive edge. | |
| Marketing skills and expenditures | Yes, it aids Coca-Cola in managing a differentiated brand image and remaining connected to its audience. | Its marketing expenses are about $4 billion and are deemed higher than its rivals. | Highly challenging to imitate due to the high expenditure, hence, competitive parity. | |
| Brand image | Yes, it’s the main force that drives value and is crucial in managing a remarkable market presence. | Yes, it is challenging to create a strong brand image like Coke. However, Pepsi has an equally strong image. | It is not plausible to copy, though a rival’s strong brand image could risk its success (Pratap, 2017). | |
| Research and development | Yes, it has aided the firm in consistent innovation and responding to the dynamic market conditions. | Yes, though Pepsi has also highly invested in its R&D. | Not unique since other companies also highly invest in R&D, hence temporary edge. |
PART D
The first factor, the international distribution network, would only offer a provisional edge since the firm’s competitors like Pepsi can easily copy such a strategy. Coca-Cola has huge product array would ensure that the company has a temporary advantage since its rivals can easily imitate. Nonetheless, no competitors other than Pepsi directly deal with such a large product array. Furthermore, highly skilled employees would present only a parity advantage since it entails significant outflow. However, it is extremely hard for its rivals like Pepsi to copy such a strategy because of its fiscal strength. The secret formula would present the company with a sustainable competitive advantage since only a few people are aware of the formula, hence cannot be imitated by other organizations. To a certain degree, a single rival, Pepsi, has a strong brand image comparable to Coca-Cola. The research and development would offer Coca-Cola a competitive parity since most organizations in this industry are highly invested in R&D. overall, the company has specific essential sources of a completive edge. However, Pepsi can match a number of its sources. Despite this, Coca-Cola’s secret formula and brand image offer it a sustainable competitive edge.
References
Coca cola’s Core Competencies. (2020). Retrieved from: https://cookmyproject.com/blog/coca-colas-core-competencies/
Pratap, A. (2017). VRIO Analysis of Coca Cola. Notesmatic. Retrieved from: https://notesmatic.com/vrio-analysis-of-coca-cola/#:~:text=VRIO%20is%20a%20framework%20used,%2C%20rarity%2C%20imitability%20and%20organization%3F
Ridder, M. (2022). Coca-Cola Company – statistics & facts. Statista. Retrieved from: https://www.statista.com/topics/1392/coca-cola-company/#topicHeader__wrapper
The Coca-Cola company. (2020). Coca-Cola Reports First Quarter 2020 Results; Provides Update on Business Environment Amid Coronavirus Pandemic. News & Events. Retrieved from: https://investors.coca-colacompany.com/news-events/press-releases/detail/987/coca-cola-reports-first-quarter-2020-results-provides
