Strategy Analysis of Coca-Cola
M d. Ismail H ossain, Department of Accounting & I nformation
Systems, University of D haka, Email: I smail.ais217@gmail.com
Executive summary
In this report, an inner view of Coca-Cola Company has been revealed. Here, different types of
strategy analysis tools have been used and we try to find out the actual position or environment of
the Coca-Cola Company. Basically, we use different types of the matrix such as SWOT matrix,
EFE matrix, IFE matrix and QSPM matrix for this purpose. At the beginning of the report we have
covered the background of Coca-Cola and historical background where we have included its main
products and its main competitors and then we try to show company’s performance by using EFE
matrix, IFE matrix, SWOT analysis which indicates the strengths, weaknesses, opportunities, and
threats of the Coca-cola Company. The score of EFE matrix is 3.39 and the score of IFE matrix is
3.03 which indicate a strong position of Coca-Cola Company. On the other hand, the Quantitative
Strategic Planning Matrix (QSPM) is basically used to find out the most suitable strategies of
Coca-Cola Company. Here, rating and weight have been used to show scoring of the strategy
analysis. The reasons behind taking weight and rating have been shown for strategy formulation.
Initially, we formulated 8 strategies and based on the scores form QSPM matrix we finally select
3 strategies. The selected strategies are- reduce investment in soft drinks by 20% in increasing
investment in fast food products, chips, cake, and homemade products by 20%; focus on the
diversified products through partnerships to reduce the water-related problems and to cope with
customer changing needs; diversification of products to cake, biscuits to the developing nations.
It is expected that by implementing these strategies Coca-Cola Company will be able to avail its
opportunities and avoid its threats by gaining competitive advantages.
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Table of Contents
CHAPTER ONE .........................................................................................................................1
BACKGROUND OF COCA-COLA ...........................................................................................1
1.1 Company overview ...............................................................................................................1
1.2 Historical Background ...........................................................................................................1
1.3 Products ................................................................................................................................3
1.4 Competitors...........................................................................................................................4
1.5 Analysis of Mission Statement ..............................................................................................5
1.5.1 Mission statement of Coca-Cola Company..................................................................5
CHAPTER TWO ....................................................................................................................7
EXTERNAL ANALYSIS .......................................................................................................7
2.1 Introduction .......................................................................................................................7
2.2 PESTEL analysis ...............................................................................................................7
2.2.1 Political environment ..................................................................................................8
2.2.2 Economic environment ...............................................................................................9
2.2.3 Social environment ...................................................................................................10
2.2.4 Technological environment ....................................................................................... 11
2.2.5 Environmental analysis ............................................................................................. 12
2.2.6 Legal environment ....................................................................................................13
2.3 Key opportunities ............................................................................................................ 14
2.3.1 Developing nations ...................................................................................................14
2.3.2 Supply chain improvement ....................................................................................... 14
2.3.3 Extended Reach ........................................................................................................ 14
2.3.4 Packaged drinking water ........................................................................................... 15
2.3.5 Improving the lesser selling products ........................................................................ 15
2.3.6 Diversification .......................................................................................................... 15
2.3.7 Marketing opportunities ............................................................................................ 15
2.3.8 Market expansion through partnerships .....................................................................15
2.4 Key threats ...................................................................................................................... 16
2.4.1 Intense competition ...................................................................................................16
2.4.2 Changing health-consciousness attitude ....................................................................16
2.4.3 Water scarcity ........................................................................................................... 16
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2.4.4 Strong dollar ............................................................................................................. 16
2.4.5 Legal issue ................................................................................................................ 16
2.5 EFE matrix for Coca-Cola ............................................................................................... 17
2.5.1 Evaluation of Weighted Score ................................................................................... 18
2.5.2 Reasons for weight and rating in EFE Matrix ............................................................ 18
CHAPTER THREE ............................................................................................................... 21
INTERNAL ANALYSIS ......................................................................................................21
3.1 STRENGTHS.................................................................................................................. 21
3.1.1 Strong brand image ...................................................................................................21
3.1.2 Largest market share .................................................................................................21
3.1.3 Brand value .............................................................................................................. 22
3.1.4 High customer loyalty ............................................................................................... 23
3.1.5 Extensive distribution network .................................................................................. 23
3.1.6 Investment in marketing and advertising ...................................................................24
3.1.7 High company valuation ........................................................................................... 24
3.2 Weaknesses ..................................................................................................................... 26
3.2.1 Water-related problems ............................................................................................. 26
3.2.2 Declining revenue .....................................................................................................26
3.2.3 Relatively less product diversification ....................................................................... 27
3.2.4 Absence in health beverages ..................................................................................... 27
3.2.5 Problem with foreign currency fluctuation ................................................................ 27
3.2.6 Adjusting consumer changing need ........................................................................... 27
3.3 IFE Matrix....................................................................................................................... 28
3.3.1 Evaluation of Weighted Score ................................................................................... 29
3.3.2 Reasons for weight and rating in IFE Matrix ............................................................. 30
CHAPTER FOUR ................................................................................................................. 32
STRATEGY FORMULATION (SWOT) .............................................................................. 32
4.1 Introduction ..................................................................................................................... 32
4.2 SWOT Analysis............................................................................................................... 34
4.3 QSPM ............................................................................................................................. 34
4.4 Internal and External (I/E) Matrix: ................................................................................... 38
CHAPTER FIVE................................................................................................................... 39
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Conclusion ............................................................................................................................ 39
References ......................................................................................................................... 41
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Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
CHAPTER ONE
BACKGROUND OF COCA-COLA
1.1 Company overview
Key Facts
Name
The Coca-Cola Company
Founded
May 8, 1886
Industries served
Beverage
Geographic areas served
Worldwide (more than 200 countries)
Headquarters
Atlanta, Georgia, United States
Current CEO
James Quincey
Revenue (US$)
35.410 billion (2017) 15.4% decrease over 41.863 billion (2016)
Profit (US$)
1.182 billion (2017) 81.9% decrease over 6.527 billion (2016)
Employees
61,800 (2018)
Main Competitors
PepsiCo Inc., Dr. Pepper Snapple Group, Inc., Unilever Group,
Mondēlez International, Inc., Groupe Danone, Kraft Foods Inc., Nestlé
S.A. and many other companies in the beverage industry.
1.2 Historical Background
The Coca-Cola beverage invented by John Stith Pemberton in 1886, Coca-Cola was meant as a
drink to impart good health and stamina. Pemberton was a pharmacist from Columbus, Georgia
who originally made a cocawine called Pemberton’s French Wine Coca in 1885.
When prohibition laws were passed within his county, Pemberton set out to make a new, nonalcoholic drink. What he created was a pleasant tasting syrup that could be mixed with carbonated
water and served at the soda fountain as a refreshing drink. He first sold this drink for five cents a
glass at his establishment, Jacob’s Pharmacy in Atlanta, Georgia. The average sales for the first
eight months averaged nine glasses a day. Another Atlanta pharmacist and businessman, Asa
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Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
Griggs Candler bought into Pemberton’s company, and in the following year, Pemberton sold
Candler his remaining interest in the company. Asa Candler purchased exclusive rights to the
Coca-Cola formula in 1891 and by the following year, had increased sales ten times over. Sales
were going so well that Candler sold his pharmaceutical business and devoted himself fully to the
success of Coca-Cola. His brother, John, and Pemberton’s former partner, Frank Robinson, joined
Candler and together they formed The Coca-Cola Company. Coca-Cola Wood Triangle Sign the
trademark “Coca-Cola” was registered in the US Patent Office on January 31, 1893. Candler
continued to grow the business with aggressive advertising and distributing thousands of free drink
coupons.
In 1894 the popular drink was sold in bottles for the first time. Beginning in 1899, independent
bottling companies were licensed to bottle Coca-Cola – a practice that is still in use today by the
US soft drink industry.
In the early 1920s Robert Woodruff, then president of The Coca-Cola Company, demanded strict
standards at soda fountains where drinks were mixed, in order to create a uniform, quality product.
This “Quality Drink” campaign included having trained service people at the soda fountains to
ensure that Coca-Cola was served correctly.
In 1926 Woodruff established the Foreign Department, which in 1930 became a subsidiary of
Coca-Cola known as The Coca-Cola Export Corporation. Woodruff was determined to expand the
Coca-Cola Company internationally. Plants had already been built in France, Cuba, Panama,
Canada, Puerto Rico, the Philippines, and Guam. Woodruff introduced the revolutionary new 6bottle cartons that made it easier to take Coca-Cola home. In 1928, bottle sales exceeded those at
the soda fountain. In 1929 metal, top-opening coolers were created to dispense bottles of ice-cold
Coca-Cola in stores and filling stations.
Automatic soda dispensers made their debut in 1933 at the Chicago World’s Fair when Coca-Cola
introduced the Dole Master Dispenser. This was the first soda dispenser that was able to mix the
carbonated water and cola syrup together automatically, which was then dispensed merely with a
pull of the handle.
When WWII broke out, Robert Woodruff was quoted as saying that he wanted “to see that every
man in uniform gets a bottle of Coca-Cola for 5 cents, wherever he is and whatever it costs the
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Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
Company.” During the war, 64 bottling plants were constructed as close as was possible near areas
of combat in N. Africa, the Pacific, and Europe. Military personnel consumed more than 5 billion
bottles of Coca-Cola during WWII.
In 1955 Coca-Cola was first put into cans for military personnel in Japan and the Pacific, but
bottlers did not embrace this new container until 1960. The now world-famous drink was also now
offered in 10-, 12- and 26-ounce bottles. The first plastic 2-liter bottle was introduced in 1977.
The Coca-Cola Company introduced Diet Coke in 1982. This was the first extension of the CocaCola and Coke trademarks. In two years’ time, Diet Coke was the top-selling diet soft drink in the
world.
In 1985 the formula for Cola-Cola was changed and The Coca-Cola Company released a new
Coke. There was such a negative reaction to this change that the old formula was re-released within
8 months with the name Coca-Cola Classic. On July 12th of 1985, the new Coke was the first soft
drink to be consumed in space, having been placed in specially designed cans just for the trip on
the Space Shuttle Challenger. These containers were called the “Coca-Cola Space Can”.
Diet Coke became the first diet soft drink consumed in space aboard the Space Shuttle Discovery
in February of 1995. This trip marked the first time soda fountain equipment was used in space.
Today, Coca-Cola produces nearly 450 brands in more than 200 countries and rates as one of the
most recognizable trademarks in the world.
1.3 Products
Coca-Cola makes so many different beverages that if you drank one per day, it would take you
over 9 years to try them all (The Coca-Cola Company, 2018). Coca-Cola has a product portfolio
of more than 3,500 beverages (and 500 brands), spanning from sodas to energy drinks to soy-based
drinks. The main products of Coca-Cola are –
 COCA-COLA
 Sprite Zero Sugar
 SPRITE
 Kinley
 FANTA
 Georgia Coffee
 Diet Coke
 Powerade
 Coca-Cola Zero
 Del Valle
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Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
 Schweppes
 Gold Peak
 Aquarius
 Fuze Tea
 Minute Maid Pulpy
 Ice Dew
 Dasani
 smart water
 Simply
 Thumbs Up Charged etc.
 Vitamin water
1.4 Competitors
The main competitors of Coca-Cola arePepsi – The biggest and closest competitor of Coca-Cola; its archrival PepsiCo was formed after
the merger of Pepsi and Frito lay in 1965. The brand has seen growth in organic revenue in 2017.
It has 20 billion dollar brands in its product portfolio. US is its largest market where it is engaged
in intense competition with Coca-Cola. Its Net revenue in 2017 was 63.5 Billion Dollars and Gross
Profit 28.8 Billion dollars (The Coca-Cola Company, 2018). The two brands compete across
several categories including sod beverages, health, and energy drinks as well as bottled water and
juices. In fact, Pepsi is the toughest competitor of Coca-Cola and their rivalry has come to be
termed as Cola wars.
Red Bull – Red Bull despite its limited product portfolio is a major competitor for the energy drink
products of Coca-Cola. It is a famous brand that sells across 171 countries and is now focusing on
core markets of western Europe and USA for farther growth. In 2017, the brand sold more than
6.3 Billion cans and its turnover reached 6.282 Billion Euros (Coca-cola.co.uk, 2018). Red Bull
saw its sales booming in 2017 in five major markets including Turkey, India, Netherlands,
Northern Europe, and United Kingdom. This has led to better financial figures including operating
profit and revenues for Red Bull in 2017. Red Bull is the toughest competitor for the energy drinks
by Coca-Cola.
Dr. Pepper Snapple – Pepper Snapple has a portfolio of more than 50 refreshing brands. These
brands include carbonated soft drinks, juices, teas, mixers, waters, and other beverages. The brand
is a major competitor for Coca-Cola in the US market. Its 2017 revenue was 6.4 billion dollars of
which 90% was earned from the US market. Dr. Pepper Snapple has made a series of strategic
acquisitions over the last three decades to grow its business and customer base.
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Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
Nestle – While Nestle is not a direct competitor of Coca-Cola, still it competes with the brand
across some specific product categories like bottled water. Its Nestle Pure Life and Poland Spring
are two bottled water brands that are quite popular and major competitors for Coca Cola’s Dasani.
Parle – Parle is an Indian brand and competes with Coca-Cola across some specific product
categories that include bottled water and juices. Parle’s Frooty, Appy and Bailey are major
competitors of Coca Cola’s minute maid and other juice products as well as juice drinks and bottled
waters in the Indian market.
1.5 Analysis of Mission Statement
Here we will analyze by providing the given mission statement of Coca-Cola company and restate
the mission statement by enlisting the nine instruments which make the mission statement proper
and suitable to their stakeholders.
1.5.1 Mission statement of Coca-Cola Company
Coca-Cola declared that their Roadmap starts with their mission, which is enduring. It declares
their purpose as a company and serves as the standard against which they weigh their actions and
decisions (Publishing, 2018). So the mission statement of Coca-Cola is:

To refresh the world in mind, body, and spirit

To inspire moments of optimism and happiness through our brands and actions

To create value and make a difference.
No
1
2
3
4
Availability
No
No
Yes
No
5
Components of mission statements
Customers
Products or services
Markets
Technology
Concern for survival, growth, and
profitability
6
7
8
9
Philosophy
Self-concept
Concern for public image
Concern for employees
Yes
No
No
No
Yes
Analysis of words
To refresh the world
To create value and make a
difference
To inspire moments of
optimism and happiness
Table 1.0: Analysis of Mission Statement
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Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
1.5.2 Restated mission statement: The restated mission statement of Coca-Cola should be:

To serve all those global customers with the best value for money product internationally.

To present the best beverages that anyone could ever think of.

To inspire employees for innovations for future profitability, future growth and future
financial soundness of the company.

To always advance technologically to increase the efficiency of the employees.

To provide values and to create happiness and moments that everyone will cherish for.

To continuously explore new products and develop cost-effective processes.

To ensure public safety, public health and environmental health.

To assure work safety, best work environment and to provide a gratuity to the employees
for their valuable services.
1.5.3 Analysis of restated mission statement
No
Components of mission statements
Availability
Analysis of words
1
Customers
Yes
Global customers
2
Products or services
Yes
Best beverages( Water and soft-drinks)
3
Markets
Yes
International market
4
Technology
Yes
Promise for advancing technology
Concern for survival, growth, and
5
Future profitability, future growth, and
profitability
Yes
financial soundness
Providing values thus happiness and
6
Philosophy
Yes
moments for everyone
Brand value and grabbing international
7
Self-concept
Yes
market
Public safety, public health, and
8
Concern for public image
Yes
environmental health
Safe and sound work environment,
9
Concern for employees
Yes
gratuities for best performance
Table 2.0: Analysis of the restated mission statement
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Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
CHAPTER TWO
EXTERNAL ANALYSIS
2.1 Introduction
The external analysis is analyzing and examining the industry factors of the company for which
we will be conducting research. The external analysis discusses the factors of competitive
structure, competitive position, dynamics and history of the company. This analysis is also called
macro level analysis which analyzes the macro-level performance of the company such as political,
social, global, technological analysis and demographic analysis. The core objective of the external
analysis is to find out the opportunities and threats in an industry or the segment that will result in
profitability, volatility, and growth. Here we will be conducting the external analysis on CocaCola.
2.2 PESTEL analysis
Since PESTEL analysis is a tool to define what the external analysis actually discusses we will be
scrutinizing all the external factors using PESTEL analysis which are connected to Coca-Cola
(Bhasin, 2018). PESTEL analysis is the tool of external analysis to monitor and analyze the macro
environment what external analysis actually does to find out the result of which identifies threats
and weaknesses.
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Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
(Source: B2U - Business-to-you.com, 2018)
2.2.1 Political environment
Political environment examines the current and potential influences from political pressures. The
non-alcoholic beverages fall in the category under the FDA and the government plays a role within
the operation of manufacturing these products. In terms of regulations, the government has the
power to set potential fines for the companies that did not meet their standard law requirement.
The changes in laws and regulations, such as accounting standards, taxation requirements, and
environmental laws and foreign jurisdictions might affect the book of the company as well as their
entry into this country. Other than that, the changes in the nature of business as non-alcoholic
beverages can gain competitive product and pricing pressures and the ability to improve or
maintain the share in sales in the global market as a result of action by competitors.
The political conditions of the country are also the basis of the study, especially in internal markets
and other governmental changes that affect their ability to penetrate the developing and emerging
markets that involve the political and economic conditions. However, Coca-Cola continuously
monitoring the policies and regulations set by the government. Coca-Cola is the leading soft drink
brand in Bangladesh. However, the primary barrier for Coca-Cola’s entry into the Bangladeshi
market was its political environment. Despite the liberalization of the economy in and the
introduction of the New Industrial Policy to eliminate barriers such as bureaucracy and regulation,
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Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
there was still a lot of protectionisms. When Coca-Cola had decided to enter in Bangladesh to
distribute the products, Coca-Cola was monitoring the policies and regulations of this country. For
the example, when entering Muslim country like Bangladesh, Coca-Cola followed the regulation
by adding “Halal” stamp in each of Coca-Cola’s products. In this case, Coca-Cola has no political
issues in this matter.
So, Coca-Cola is surviving in the market by the mercy of FDA. They have to cover all the
regulations provided by the government to put their products on the shelves for sale. Some political
changes may prevent Coca-Cola from supplying drinks, taxes, accounting, marketing, and labor
law can affect Coca-Cola in this way.
2.2.2 Economic environment
The economic factors analyze the potential areas where the firm can grow and expand. It includes
the economic growth of the country, interest rates, exchange rates, inflation rates, wage rates, and
unemployment in the country. Economic environment examines the local, national and world
economy impact which also includes the issue of recession and inflation rates. The non-alcoholic
beverage industry like Bangladesh has high sales in countries outside the U.S because here alcohol
is prohibited from a religious perspective. According to the Standard and Poor's Industry surveys,
"For major soft drink companies, there has been an economic improvement in many major
international markets, such as Japan, Brazil, and Germany." These markets will continue to play a
major role in the success and stable growth for a majority of the non-alcoholic beverage industry
like Bangladesh. There is a low growth in the market for carbonated drinks, especially in CocaCola’s main market. The company first analyzes the economic condition of the country before
venturing into that country. When there is an economic growth in the country, the purchasing
power among people increases. It gives the company or the marketer a good chance to market the
product. Coca-Cola, in the past, identified this correctly and rightly started its distribution across
the country.
Interest rates are the rate which is imposed on the company for the money they have borrowed
from the government. When there is an increase in the interest rates, it may deter the company in
further investment as the cost of borrowing is higher. Coca-Cola uses derivative financial
instruments to cope up with the fluctuating interest rates. Inflation and wage rate go hand in hand
when there is an increase in the inflation the employee demand for a higher wage rate to cope up
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Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
with the cost of living. This comes as an additional cost for the company which cannot be reflected
in the price of the final product as the competition and risk in this segment is higher. This is a
threat in the external environment faced by the company. From the above explanation, it is clearly
seen that the economic factors involve a major impact on the behavior of the company during
various economic situations.
Inflation is one of the main problems that a country has to face in their economy. Rising prices in
the food and other products don’t only affect the consumers it also has an adverse effect on a
company. The inflation rate for the year 2009 was too high. As prices have gone up in Bangladesh
for various products, there has been uncertainty in the decision making of almost every company.
Coca-cola has also been affected by the same; it has been forced to think about their input costs,
as they have been rising due to inflation. Their expenditure has been rising, with more costs in
salaries, distribution channels, and other operating costs. Beverage industry being price
competitive market, they have not revised their product prices.
2.2.3 Social environment
Social factors are mainly the cultural aspects and attitude, health consciousness among people,
population growth with age distribution, emphasis on safety. The company cannot change the
social factors but the company has to adjust itself to the changing society. The company adapts
various management strategies to adapt to these social trends. Coca-Cola which is a B2C company
is directly related to the customer, so social changes are the most important factors to consider.
Each and every country has a unique culture and attitude among the people. It is very important to
know about the culture before marketing in a particular country. Coca-Cola has about 3300+
products in their stable, when entering into a country it does not introduce all the products. When
they started their business in Bangladesh, it introduces a minimum number of products according
to the culture of the country and the attitude of the people.
Consumers and government are becoming increasingly aware of the public health consequences,
mainly obesity which is the second social factor in the soft drinks industry. It inspired the company
to venture into the areas of Diet coke and zero calorie soft drinks. The problem of obesity is taken
seriously among the youngsters who like to maintain a good physique. Hence coke introduced
dietary products for those youngsters who can enjoy a coke with zero calories. In one of the study,
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Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
it is said that “Consumer from the age groups 37 to 55 are also increasingly concerned with
nutrition”. Since many are aware, they are concerned with the longevity of their lives.
This will affect the demand of the company in the existing product and also is an opportunity to
venture into new health and energy drinks industry. Population growth rate and the age distribution
is another social factor to be considered. It is very important because non-alcoholic markets have
most of its share from the children and youngsters. Adults used to celebrate mostly with alcohol.
The age distribution of the country becomes important for the success of the product in this
country. Initially, it struggled to find acceptance as there were already other brands. Coca-Cola
had earlier focused more on the American way of life in their advertising campaigns, which the
Bangladeshi consumers could not identify with. Also, they did not focus on competition from other
alternatives. However, things were brought under control when they gave more attention to their
marketing mix. With the lowering of their prices by almost 15-20%, more investment in market
research and focus on the target group of 18-24-year-olds, they were able to increase their market
share and build brand loyalty. Coca-Cola today, has made significant investments to build its
business in Bangladesh. It has also generated employment for lots of people in the related industry
through its procurement, supply and distribution cycles.
The soft drink industry today is growing steadily due to the economy, strengthening the middle
class and low per capita consumption. With the increase in health consciousness among urban
consumers, the company has introduced newer products such as Diet Coke, which contains lesser
calories than ordinary Coca-Cola. This is also responsible for the company shifting focus from
carbonated drinks to Fruit Drinks / Juices and bottled water. The rural market had also been
identified by Coca-Cola as an attractive target, with almost 70% of the country’s population.
2.2.4 Technological environment
Technology plays a varied role in the soft drinks industry. The manufacturing and distribution of
the products is relatively a Low-Tech business, although the creation of a new product with the
perfect blend and taste is a science (an art in itself). Technological contributions are most important
in packaging. The company relied on their bottling partners for a significant portion of their
business. Nearly 83% of the worldwide unit case volume is manufactured and distributed by their
bottling partners in whom the company does not have controlling power. Hence it is necessary for
the company to maintain a cordial relation with their bottling partners. If the company does not
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Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
give ample support in pricing, marketing, and advertising then the bottling industry while
increasing their short-term profits, may become detrimental to the company.
The advancement in technology in the company has led to Introduction of new ways for the
availability of Coca-Cola, it introduced general vending machines all over the world. In products,
it led to the development of new products like Cherry Coke, Diet Coke etc. The technical
advancement in the bottling industries includes the introduction of recyclable and non-refillable
bottles, the introduction of cans which are trendy, stylish and popular among the youngsters of the
country. Technology is the main focus of the analysis where the introduction and the emerging
technological techniques are valued. This creates opportunities for new products and product
improvements in terms of marketing and production. As the technology advances, new products
are introduced into the market. The advancement in technology has led to the creation of cherry
coke in 1985 but consumers still prefer the traditional taste of the original coke.
2.2.5 Environmental analysis
The 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. Coca-Cola has earned a title of
the environment-friendly company and Coca-Cola Bangladesh too has followed in the footsteps.
Coca-Cola’s Corporate Social Responsibility (CSR), is an initiative that prioritizes many social
and environmental issues; one of them being „water conservation‟. They support many
communities based rainwater harvesting projects and help lending conservation education.
The company has made sure that the following ideas are considered during their operations:
I. Environmental due diligence before acquiring land
II. Environmental impact assessment before commencing the project
III. Groundwater and environment survey before selecting the site
IV. The ban on purchasing CFC emitting refrigerating equipment
V. Wastewater treatment facilities
VI. Compliance with all regulatory environmental requirements VII. Energy conservation
programs
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Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
VIII. By following these guidelines Coca-Cola has helped the environment with consistent profits
and success. They seek to provide leadership in three different areas, these are as follows:
IX. Water efficiency and water quality
X. Energy efficiency
XI. Eliminating or minimizing solid waste.
Though being an environmentally friendly company, Coca-Cola had to face its share of
controversies. On 4th February 2007, Centre of Science and Environment in Bangladesh released
a report based on an experiment done by the Pollution Monitoring Laboratory. In the experiment,
they tested 17 packaged drinking water brands and found that Coca-Cola’s Kinley has 15 times
more pesticide residue levels than the stipulated norms, Bisleri had 59 times and Aquaplus had
109 times. The main law governing the food safety is the Prevention of food alteration act, which
stated that pesticides should not be present in any food item but did not have a law against
pesticides being present in soft drinks. However, the Food Processing Order stated that the main
ingredient used in soft drinks must be „potable water‟ but the Bureau of standards had no
prescribed standards for pesticides in water.
But later it was found that BIS had stated that pesticides should not be present or it should not
exceed 0.001 part per million. Further, the health ministry of Bangladesh admitted that „there were
lapses in PFA regarding carbonated drinks‟.
2.2.6 Legal environment
The legal factors include discrimination law, customer law, antitrust law, employment law, and
health and safety law. In Coca-Cola the business is subjected to various laws and regulation in the
numerous countries in which they do the business, the laws include competition, product safety,
advertising and labeling, container deposits, environment protection, labor practices. In
Bangladesh, the products of the company are subjected to various acts like Drug and Cosmetic
Act, Occupation Safety and Health Act, various environment-related acts and regulations, the
production, distribution, sale, and advertising of all the products are subjected to various laws and
regulations. Changes in these laws could result in increased costs and capital expenditures, which
affects the company profitability and also the production and distribution of the products.
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Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
Various jurisdictions may adopt significant regulations in the additional product labeling and
warning of certain chemical content or perceived health consequences. These requirements if
become applicable in the future the company must be ready to accept and have necessary changes
in hand for the same. Legal aspect focuses on the effect of national and world legislation. The
Coca-Cola Company receives all the rights applicable in the nature of their business and every
invention and product developments are always going into the patented process.
In the present scenario, the consumer is the king, if a product is defective, not meeting the stated
standards a consumer can complain against the manufacturer. Coca-Cola has to make sure that
they have written price, manufacturing date, expiry date, batch no, nutritional facts are written on
the packed product. Ministry of Labor makes the laws for proper employment in the country.
They have stipulated norms on employing people from the country and getting expatriates in the
company as well.
2.3 Key opportunities
We will try to determine some key opportunities here which are given below:
2.3.1 Developing nations
Consumption in developing environment can be a good opportunity to capitalize for Coca although
developed nations have a high presence of Coca-cola, these countries are slowly moving towards
healthy beverages. However, developing countries are still being introduced to the delight of
carbonated drinks and soft drinks. Countries like India which are developing and have a hot
summer, find the consumption of cold drinks almost doubled during summers. Thus the higher
consumption in developing environment can be a good opportunity to capitalize for Coca-cola.
2.3.2 Supply chain improvement
The supply chain can be a major cost sinkhole with the transportation costs always rising. Coca
cola’s complete business is based on transportation and distribution. There will always be possible
improvements in this area. Thus Coca-cola should keep a strict watch on its Supply chain and keep
improving to bring the cost down.
2.3.3 Extended Reach
The population continues to increase at a steady clip. In order to capitalize on this fact and
consumers’ shift toward healthier living Coca-Cola has focused on bolstering a variety of its
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Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
business lines. Areas such as India and China have ramped up demand for the company’s latest
juice and coffee offerings. Too, developing countries face hefty clean water shortages, which ought
to result in surging demand for the company’s bottled water goods. These business segments have
increased at double-digit rates in the past year, highlighting an elevated need for beverages other
than Coca-Cola’s traditional drinks. We believe Coca-Cola remains dedicated to differentiating its
portfolio and delivering emerging markets with various beverage staples over the long term.
2.3.4 Packaged drinking water
With hygiene becoming a major factor in the consumption of water, packaged drinking water has
found its way into people’s mind. Coca-cola has a presence in the packed drinking water segment
though Kinley. Although Kinley’s expansion is slow as of now, Kinley has a huge potential
of expansion. Thus Coca-cola as a company should focus on the expansion of Kinley as a brand
and take it up to Biller’s level of trust.
2.3.5 Improving the lesser selling products
In the product portfolio of Coca-cola, there are several products which have not found acceptance
in the market. Coca-Cola needs to concentrate on the marketing of these products as well. It is
understood that Coca-cola has made several expenses to launch these products. Thus, the
marketing and subsequent rise of the sale of these products will help revenue of Coca-cola.
2.3.6 Diversification
Diversification in the health and food business will improve the offerings of Coca-cola to their
customers. This will also ensure that they get better revenue from existing customers by crossselling their products. The supply chain which is distributing their beverages can also distribute
these snacks thereby sharing the load of Supply chain costs.
2.3.7 Marketing opportunities
Marketing opportunities have grown fast in the 21st century with the rise of new technologies
including digital and AI. Pepsi seems to be getting ahead in the race. Coca-Cola can use these
resources and technologies for effective marketing and grow its customer engagement.
2.3.8 Market expansion through partnerships
The brand has excellent opportunities for market growth through new partnerships. Partnering with
fast food or food brands can help Coca-Cola grow its market share and better market its brands.
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Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
2.4 Key threats
After the inclusion of some key opportunities, now we will try to discover its key threats which
are hampering the progress of Coca-Cola.
2.4.1 Intense competition
Coca-Cola competes with the soft drinks beverage companies in local and international markets.
Basically, Coca-Cola Company produces non-alcoholic beverages. But recently many other
companies have produced the same kinds of product (Businessteacher.org.uk, 2018). PepsiCo is
one of the major competitors of Coca-Cola and they are competing with Coca-Cola over market
share intensively.
2.4.2 Changing health-consciousness attitude
Consumers around the world become more health conscious. As a result, they reduce their
consumption of carbonated drinks. This is the most severe threat as Coca-Cola is offering
carbonated drinks.
2.4.3 Water scarcity
Water is becoming scarcer around the world and increasing the cost of water. Coca-Cola needs a
large amount of water to produce their soft drinks which are created a very negative impact to run
their business smoothly.
2.4.4 Strong dollar
Coca-Cola Company earns more than 60% profit from the outside of United States. Due to strong
dollar performance against other foreign currencies firm’s overall income may fall.
2.4.5 Legal issue
Coca-Cola’s some drinks have adverse health consequences. That’s why many governments
consider passing legislation that requires disclosing such information on the product labels. Some
information may be created negative conception on consumers and the company might be lost their
customers.
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Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
2.5 EFE matrix for Coca-Cola
When using the EFE matrix we identify the key external opportunities and threats that are affecting
or might affect a company.
Serial
Opportunities of Coca-Cola
weight
Rating
Weighted
Score
1
Developing nations
0.14
3
0.42
2
Supply chain improvement
0.08
3
0.24
3
Extended Reach
0.1
3
0.3
4
Packaged drinking water
0.07
3
0.21
5
Improving the lesser selling products
0.07
2
0.14
6
Diversification
0.1
3
0.3
7
Marketing opportunities
0.06
4
0.24
Market expansion through partnerships
0.09
3
0.27
Intense competition
0.13
4
0.52
2
Changing health-consciousness
attitude
0.1
3
0.3
3
Water scarcity
0.06
3
0.18
4
Strong dollar
0.04
3
0.12
Legal issue
0.05
3
0.15
8
Threats of Coca-Cola
1
5
1
Total
17
3.39
Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
2.5.1 Evaluation of Weighted Score
The weighted score of EFE matrix for Coca-Cola is 3.39 which is above average 2.50 which means
that the company is performing well to avail its opportunities and avoiding threat but as the highest
score can be 4 so the company has an area of improvement yet.
2.5.2 Reasons for weight and rating in EFE Matrix
Serial
Opportunities for Coca-Cola
Reasons for weight and rating
The higher consumption in developing environment can be
a good opportunity to capitalize for Coca-cola and it is
1
Developing nations
expanding its business rapidly to those countries. So here
weight is 0.14 and rating is 3 as it has further opportunities.
The strong supply chain can be a strong competitive
advantage for a company for being a market leader. Though
2
Supply chain improvement
Coca-cola has a strong supply chain it has an area for
improvement more. Therefore, here weight is 0.08 and the
rating is 3.
Consumers are shifting toward healthier living which is a
very important fact for Coca-Cola and it is focusing on
3
Extended Reach
bolstering a variety of its business lines. Therefore, here
weight is 0.1 and the rating is 3.
Due to hygiene factors, packaged drinking water has been
very popular and Coca-cola has a presence in the packed
4
Packaged drinking water
drinking water segment though Kinley but it is not much
accepted by people. So weight is 0.07 here and rating is 3.
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Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
All the products of Coca-Cola are not doing business well
5
Improving the lesser selling
products
so it is facing a great challenge and further Coca-Cola is not
so efficient in this area. So here weight is .07 and rating is 3.
Diversification is very important for the continuous
6
Diversification
development of business and Coca-Cola is also diversifying
regularly. So here weight is 0.1 and the rating is 3.
Marketing through digital media is a great opportunity for
7
Marketing opportunities
business and Coca-Cola is using this media properly. So
here weight is 0.06 and rating is 4.
Partnering with fast food or food brands can help Coca-Cola
8
Market expansion through
partnerships
grow its market share and better market its brands and CocaCola is also considering this matter in its business. So weight
is 0.09 and rating is 3 here.
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Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
Serial
Threats of Coca-Cola
Reasons for weight and rating
Coca-Cola
is
facing
competition
nationally
and
internationally from different competitors but it is trying its
1
Intense competition
best to sustaining in the market through different activities.
So here weight is 0.13 and rating is 4.
Changing attitude of Consumers is a great threat of Coca-
2
Changing healthconsciousness attitude
Cola but it is trying to cope with it. So weight is 0.1 here and
rating is 3.
Water is becoming scarcer around the world and increasing
the cost of water. Coca-Cola is able to manage water but it
3
Water scarcity
needs to be more efficient in this sector. So here weight is
0.06 and rating is 3.
Coca-Cola Company earns more than 60% profit from the
outside of United States. Due to strong dollar performance
4
Strong dollar
against other foreign currencies firm’s overall income may
fall. Coca-Cola is handling this matter through a different
mechanism. So here weight is 0.04 and the rating is 3.
Adverse health consequences of Coca-Cola is a threat for it
5
Legal issue
and Coca-Cola is trying to settle this matter. So here weight
is 0.05 and the rating is 3.
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Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
CHAPTER THREE
INTERNAL ANALYSIS
3.1 STRENGTHS
There are some key strengths which are needed to comprise in this report and those are provided
below:
3.1.1 Strong brand image
Coca-Cola is perhaps one of the most influential brands in the world. Throughout the years, CocaCola has set out to form its brand identity and image via their logo, endorsement, and
advertisements, they have established themselves as a brand that is based on one universal value
– happiness (Frue, 2018). Their advertisements and images portray them as a brand that is
synonymous to happiness. The way they have strategically placed their brand logo makes them
across as a brand that is committed to working towards more sustainable communities. The CocaCola logo itself is an invisible asset only defining the identity of the brand but also the very base
of a loyal set of consumers.
3.1.2 Largest market share
The company continued to gain value share in total nonalcoholic ready-to-drink (NARTD)
beverages. Net revenues declined 8% to $8.9 billion, impacted by a 15% headwind from the
refranchising of company-owned bottling operations. Organic revenues (non-GAAP) grew 5%,
driven by concentrate sales growth of more than 2% and price/mix growth of more than 2%.
Largest beverage companies in the world in 2017
Rank
Name
2017 revenue (in US$ billions)
Beverage segment
1
Anheuser-Busch InBev
56.444
Alcoholic
2
The Coca-Cola Company
35.410
Non-alcoholic
3
PepsiCo Inc.
29.857
Non-alcoholic
4
Nestlé S.A.
29.109
Non-alcoholic
5
Suntory Holdings Limited
22.057
Alcoholic
6
Heineken N.V.
21.888
Alcoholic
7
Starbucks Corporation
17.650
Non-alcoholic
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Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
8
Diageo Plc
17.078
Alcoholic
9
Pernod Ricard S.A.
11.132
Alcoholic
10
Molson Coors Brewing Co.
11.002
Alcoholic
Table 3.0: Largest beverage companies in the world in 2017
(Source: Beverage Industry)
3.1.3 Brand value
The global value of Coca-Cola brand from 2006 to 2018 was very high. In 2018, the value
amounted to 79.96 billion U.S. dollars, up from 78.14 billion a year earlier. The Coca-Cola
Company generated 35.41 billion U.S. dollars in revenue with its activities around the globe in
2017. The company's largest regional market was North America, accounting for 24.4 percent of
the revenue. The company also owns 13 other brands that each annually earn at least US$1
billion:

Coca-Cola

Minute Maid Pulpy

Fanta

Dasani

Sprite

Simply

Diet Coke/Coca-Cola Light

Vitamin water

Coca-Cola Zero

Gold Peak

Minute Maid

Fuze Tea

Georgia Coffee

Ice Dew

Powerade

smart water

Del Valle

I LOHAS

Schweppes

Ayataka.

Aquarius
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Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
The Coca-Cola Company’s billion-dollar brands
(Source: The Coca-Cola Company)
3.1.4 High customer loyalty
The secret for any successful product, first and foremost, is it’s got to taste great because there’s
no compromise on flavor. Coke just hit the nail on the head 132 years ago. Diet Coke was
introduced in the 1980s, for people who want a lighter taste, and it’s still going strong. We’ve since
added Coca-Cola No Sugar, which we think is our best-tasting sugar-free cola, for people trying
to moderate their sugar intake but who want the taste of classic Coke. We’ve also developed CocaCola Stevia No Sugar for people who are looking for the full taste but want a natural sweetener,
something that’s becoming increasingly important for many people.
3.1.5 Extensive distribution network
The Coca-Cola Company can be looked upon as a global business that operates on a local scale
and this has been possible because of the Coca-Cola system that includes the company itself and
it’s more 250 bottling partners across the globe. The Company produces and sells and the beverage
bases, concentrates and the syrups to the bottling operators and they manufacture, packages and
distribute the final beverages to the vending partners and customers who then again sell the
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Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
products to the consumers. The bottling partners work in close relation with the customers i.e. the
restaurants, grocery stores, the convenience stores, amusement parks, and the movie theatres so
that localized strategies that have been developed in partnership with the company can be executed
efficiently.
3.1.6 Investment in marketing and advertising
TV commercials remain a powerful piece of The Coca-Cola Company’s advertising arsenal. Even
in today’s digital-driven marketplace, Coke's global “Taste the Feeling” campaign, which
launched one year ago with a renewed focus on the beverage’s taste and other functional aspects,
leans heavily on television ads. A series of spots tell universal stories featuring young people
enjoying Coca-Cola as a part of authentic everyday moments. This renewed focus on productivity
also includes rethinking its approach to digital marketing, which de Quinto said has often been
fragmented and inefficient. Digital currently accounts for about 20 percent of the company’s global
marketing budget. Coca Cola’s advertising expenses have increased by around 2 Billion in 18
years.
The Coca-Cola Company and its competitors’ advertising expenses 2015-2017 (in US$ billions)
Company
The Coca-Cola Company
PepsiCo Inc.
Dr Pepper Snapple Group Inc.
2017
2016
2015
3.976
4.004
3.499
2.4
2.5
2.4
0.547
0.477
0.473
Table 4.0: Coca-Cola and its competitor's advertising expenses
(Source: The respective companies’ financial reports)
3.1.7 High company valuation
In the end, a company is worth only as much as investors are willing to pay for it. Coca-Cola
currently has about 4.32 billion shares outstanding. With a share price of around $43.50 per share,
that puts Coca-Cola's market capitalization at roughly $188 billion.
However, market
capitalization takes into account the relative amounts of cash and debt that a company has. Some
people prefer to look at enterprise value, which ignores the capital structure that a company has
chosen and instead focuses on the value of the business that the company generates. When you net
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Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
out cash and debt, Coca-Cola has an enterprise value of almost $213 billion. Coca-Cola's most
recent financial statements put a value of $94 billion on its assets.
The most important strength of Coca-Cola is its brand image and the high brand awareness. The
brand is present in nearly every part of the world and enjoys a very high degree of popularity.
Coca-Cola also holds the largest market share of around 48% in the beverages industry. Another
key strength of Coca-Cola is its strong product portfolio. To match the competition from the health
drinks, it introduced Diet Coke to Coke Zero Sugar, Fanta Orange Zero, Lilt Zero, Schweppes Diet
Lemonade, and Powerade Zero. It has presented low-calorie options for nearly all its major and
well-known products.
In this way, the coca cola company holds some significant strengths that give it a competitive edge
in the market. Its flavorful drinks enjoy a very high level of customer loyalty. A key reason behind
its impressive international presence is its robust distribution network. Coca-Cola utilizes unique
marketing and advertising strategies. It has continued to make major investments in marketing and
advertising as well as customer engagement. From time to time viral marketing videos to social
media campaigns, Coca-Cola has used all of them to attract customers. It also gains publicity
through sponsorship and other methods. Currently valued at $83.84 billion, Coca-Cola enjoys high
brand value. An excellent distribution network is also an important strength of the brand. These
are the key strengths of Coca-Cola and also the reasons behind its success.
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Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
3.2 Weaknesses
Coca-Cola should focus on the mentioned weaknesses which are given below:
3.2.1 Water-related problems
In many parts of the world, water is a limited resource, facing unprecedented challenges from
overexploitation, as well as rising demand for food and other consumer and industrial products
whose manufacturing processes require water. Water is also one of the main ingredients in Coca
Cola’s products. It has faced a lot of criticism over water management related issues. In the past,
it has faced severe criticism over water consumption. While these issues have continued, the brand
is still dealing with water management related issues and is investing in water conservation among
other things for dealing with the water crisis.
3.2.2 Declining revenue
From the past five years, it can be seen that the revenues of Coca-Cola have been declined steadily.
At the same time, the gross profits of the brand have also fallen consistently. In 2017 net operating
revenues was 35.4 billion dollars which were 41.9 billion dollars in 2016.
Year
Revenue (in
mil. USD)
Net income (in
mil. USD)
Price per Share (in
USD)
Employees
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
23,104
24,088
28,857
31,944
30,990
35,119
46,542
48,017
46,854
45,998
44,294
41,863
35,410
4,872
5,080
5,981
5,807
6,824
11,787
8,584
9,019
8,584
7,098
7,351
6,527
1,248
14.47
15.26
19.24
19.71
18.49
22.12
26.84
30.7
33.78
35.82
37.29
40.63
42.8
130,600
129,200
123,200
100,300
61,800
Table 5.0: Comparative analysis
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Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
3.2.3 Relatively less product diversification
The main competitor of Coca-Cola is Pepsi which has made a smart move and diversified into the
snacks segment with different products like Lays and Kurkure. But Coca-Cola is completely
missing in this segment and it can be seen that this segment is a good revenue driver for Pepsi but
Coca-Cola has missed the opportunity completely. For Coca-Cola, it can be a reason for the loss
of market share in the future.
3.2.4 Absence in health beverages
Nowadays, obesity is a major problem for people around the world. Therefore, people are giving
more emphasis on healthy beverages for not being obese. Carbonated beverages are one of the
major reasons for fat intake and Coca-cola is the largest manufacturer of carbonated beverages. As
a result, people are switching to healthier drinks from Coca-Cola. This is reflected in Coca Cola’s
revenues which have been in decline since 2012.
3.2.5 Problem with foreign currency fluctuation
Foreign currency fluctuation is also another weakness for Coca-Cola Company. The organization
acquires incomes, pays costs, claims resources, and brings about liabilities in nations utilizing
monetary standards other than the U.S. dollar, including the euro, the Japanese yen, the Brazilian
genuine, and the Mexican peso. In 2014, it utilized 70 useful monetary standards notwithstanding
the U.S. dollar and inferred $26.2 billion of networking incomes from operations outside the
United States. Since its merged monetary proclamations are exhibited in U.S. dollars, Coca-Cola
must decipher incomes, wage and costs, and in additional resources and liabilities, into U.S. dollars
at trade rates as a result amid or toward the finish of each revealing period. Moreover, Preparation
of the balance sheet in U.S dollars is considered a great challenge for it. Even though the U.S is
strong but this is a great weakness especially due to the market unknowns in these markets due to
war, dictatorship, currency manipulations and the business environment as a whole.
3.2.6 Adjusting consumer changing need
As Coca-Cola is doing business in different countries it is very difficult for it to adjust with
consumers’ changing needs and cultural diversity. It has to consider what people like to drink and
how they like to drink it. In the same time, local restaurants and shops are offering different types
of freshly made drinks like flavored carbonated drinks and iced coffee. As result, they are taking
the profit of Coca-Cola products. At the same time, health-conscious people abandoning soda as
27
Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
seen through research that over the past 20 years, sales of full-calorie soda in the United States
have plummeted by more than 25 percent, which includes coke drinks.
3.3 IFE Matrix
Internal Factor Evaluation (IFE) Matrix is a strategic tool used to evaluate a firm’s internal
environment and to reveal its strengths as well as weaknesses. The internal and external factor
evaluation matrices have been introduced by Fred R. David in his book ‘Strategic Management’.
According to the author, both tools are used to summarize the information gained from the
company’s external and internal environment analyses (Jurevicius, 2018). The summarized
information is evaluated and used for further purposes, such as, to build SWOT analysis or IE
matrix. Even though the tools are quite simplistic, they do the best job possible in identifying and
evaluating the key affecting factors.
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Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
IFE matrix for Coca-Cola
Serial Strengths of Coca-Cola
1
2
3
4
5
6
7
1
2
3
4
5
6
Total
Strong Brand Image
Largest market share
Strong brand portfolio
High customer loyalty
Extensive distribution network
Investment
in marketing
advertising
High company valuation
Weaknesses of Coca-Cola
and
Water related problems
Declining revenue
Relatively less product diversification
Absence in health beverages
Problem with foreign currency
fluctuation
Adjusting consumer changing need
Weight
Rating
Weighted
Score
0.11
0.12
0.05
0.09
0.05
0.02
3
4
3
3
3
2
0.33
0.48
0.15
0.27
0.15
0.04
0.02
4
0.08
0.1
0.18
0.07
0.12
0.03
3
3
3
2
4
0.3
0.54
0.21
0.24
0.12
0.04
1
3
0.12
3.03
3.3.1 Evaluation of Weighted Score
The weighted score of IFE matrix for Coca-Cola is 3.30 which is above average 2.50 which means
that the company is performing well to use its strength and recovering weakness but as the highest
score can be 4 so the company has an area of improvement yet.
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Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
3.3.2 Reasons for weight and rating in IFE Matrix
Serial
Strengths of CocaCola
Reasons for weight and rating
Strong Brand Image
1
Brand image is very important to be accepted by customers
vastly and so weight is relatively high 0.11. On the other hand,
the company is quite successful to keep this brand image
though there are other strong brands like Pepsi. So the rating
is 3 here.
Largest market share
2
The company has been able to capture a large market share
and it is also continuing it which is very important for a
company. As a result, the score is 0.12. The company is able
to keep and capture the big market and so the rating is 4 here.
Strong brand portfolio
3
To survive in the market you have to expand your portfolio
continuously. Coca-Cola is also extending its portfolio
continuously. But other competitors are also very strong here.
So, in this case, the score is 0.05 and the rating is 3 here.
High customer loyalty
4
Customer loyalty is very important for consistent
performance. Coca-cola is also very strong in this position but
its competitors have also strong customer loyalty. So it has a
room for development in this area. Therefore, here score is
0.09 and rating is 3.
5
Extensive distribution
network
The distribution network is very important for cost structure
of a company and the company has a good distribution
network. So here score is 0.05 and the rating is 3.
6
Marketing and advertising expense are very important for the
profitability of a company and Coca-Cola have to invest here
Investment in marketing
regular basis. But its revenue is not improving continuously.
and advertising
So there is a scope for efficiency. Therefore, here score is 0.02
and the rating is 2.
High company valuation
7
Value of a company is very important for investors and it has
been increased rapidly. So here score is 0.02 and the rating is
4.
30
Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
Serial
Weaknesses of Coca-Cola
Reasons for weight and rating
The water problem is one of the most important
Water-related problems
weaknesses of Coca-Cola. It has been facing this
problem for a long time period and it has also taken some
initiative. So here score is 0.10 and the score is 3.
1
It is the main weakness of Coca-Cola company and there
Declining revenue
taken different types of initiatives for the improvement
of its revenue. So here weight is 0.18 and the rating is 3.
2
Relatively less product
3
are different factors for this decline and Coca-Cola has
diversification
Products of Coca-Cola is less diversified beyond soft
drinks relative to its competitors but it is on the process
of diversification. So here weight is .07 and rating is 3.
It is an important concern of people and they are
The absence of healthy
becoming health conscious but Coca-Cola is not very
beverages
proactive in this area. So weight is 0.12 and the rating is
4
2.
It is very common for multinational companies and
Problem with foreign currency Coca-Cola is handling it consistently but there are some
fluctuation
chances of loss. So here weight is 0.03 and the rating is
4.
5
Assuming the demand of customers is very important
Adjusting consumer changing and in the changing world it is very essential but Cocaneed
6
Cola is trying to cope with it. So here weight is 0.04 and
the rating is 3.
31
Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
CHAPTER FOUR
STRATEGY FORMULATION (SWOT)
4.1 Introduction
SWOT analysis is most commonly used by business entities, but it is also used by nonprofit
organizations and, to a lesser degree, individuals for personal assessment. Additionally, it can be
used to assess initiatives, products or projects.
The framework is credited to Albert Humphrey, who tested the approach in the 1960s and 1970s
at the Stanford Research Institute. Developed for business and based on data from Fortune 500
companies, the SWOT analysis has been adopted by organizations of all types as an aid to making
decisions.
SWOT
Strengths
Weaknesses
Opportunities
Formulation of
Strategies
Threats
This Coca-Cola SWOT analysis reveals how the company controlling one of the most iconic
brands of all time used its competitive advantages to become the world’s second largest beverage
manufacturer (Frue, 2018). It identifies all the key strengths, weaknesses, opportunities and threats
that affect the company the most. After that based on the strength, weakness, opportunities, and
32
Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
threats we have formulated different types of strategies which will help us to avail the opportunities
and increase strengths of Coca-Cola. Besides, these strategies will also help Coca-Cola to avoid
threat and decreasing weakness. After that using the QSPM matrix, we have checked the
attractiveness score (AS) of different strategies and based on these scores we have suggested most
appropriate strategies.
33
Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
4.2 SWOT Analysis
Opportunities
1. Developing nations
2. Extended Reach
3. Packaged drinking water
4. Market the lesser selling
products
5. Diversification
6. Marketing opportunities
7. Market expansion through
partnerships
Threats
1. Intense competition
2. Changing healthconsciousness attitude
3. Water scarcity
4. Strong dollar
5. Legal issue
Strengths of Coca-Cola
1. Strong Brand Image
2. Largest market share
3. Strong brand portfolio
4. High customer loyalty
5. Extensive distribution network
6. Investment in marketing and advertising
7. High company valuation
SO strategy
1. Increase marketing expense by 15%. (By
using a strong brand image, Coca-Cola can avail
the over-population of Asian countries like
Bangladesh and India) (S1,7; O1,6)
2. Increase investment to packaged drinking
water by 20-25% to increase their market
share.(Since hygienic water lacks in developing
nations, so they can utilize their strong brand
value, high customer loyal of Coca-Cola and
largest market share to differentiate their products
like in the juice and coffees ) (S7; O3)
ST strategy
5. Invest in the fast food products by
$100million. (As they can diversify the
competition since they have high customer loyalty
and high distribution network.) (S4;T1)
6. Use hedging and open L/C with their strong
brand value of $79 billion to reduce the strong
dollar issue. (S7;T4)
4.3 QSPM
34
Weaknesses of Coca-Cola
1. Water-related problems
2. Declining revenue
3. Relatively less product diversification
4. The absence of healthy beverages
5. Problem with foreign currency fluctuation
6. Adjusting consumer changing need
WO strategy
3. Diversification of products to cake, biscuits to
the developing nations. (It will reduce the waterrelated problems every year about 10 %.) (O5;
W1,2)
4. Focus on the diversified products through
partnerships to reduce the water-related
problems and to cope with customer changing
needs. (O7,W6)
WT strategy
7. Reduce investment in soft drinks by 20% in
increase investment in fast food products, chips,
cake, and homemade products by 20%.
(T1,4;W1,2,3)
8. Invest in healthy beverages by $200million to
avoid the health-consciousness attitude of
customer.(T2;W4)
Strategy 1
Strategy 2
Strategy 3
Strategy 4
Strategy 5 Strategy 6
Ismail Hossain;
Department
Systems,AS
University
Weight
ASof Accounting
TAS & Information
AS
TAS
TASof Dhaka.
AS Email:
TASIsmail.ais217@gmail.com
AS TAS AS TAS
key Md.
Factors
Opportunities
Developing
nations
Supply chain
improvement
Extended Reach
Packaged
drinking water
Improving the
lesser selling
products
Diversification
Marketing
opportunities
Market expansion
through
partnerships
Strategy 7
AS TAS
Strategy 8
AS TAS
0.14
4
0.56
4
0.56
2
0.28
2
0.28
2
0.28
3
0.42
3
0.42
3
0.42
0.08
3
0.24
4
0.32
4
0.32
2
0.16
1
0.08
2
0.16
4
0.32
0
0
0.1
2
0.2
3
0.3
2
0.2
3
0.3
1
0.1
0
0
2
0.2
0
0
0.07
3
0.21
4
0.28
0
0
1
0.07
0
0
0
0
0
0
0
0
0.07
2
0.14
1
0.07
2
0.14
3
0.21
0
0
0
0
2
0.14
0
0
0.1
0
0
0
0
3
0.3
3
0.3
4
0.4
0
0
3
0.3
2
0.2
0.06
0
0
0
0
3
0.18
4
0.24
2
0.12
1
0.06
1
0.06
1
0.06
0.09
0
0
0
0
2
0.18
4
0.36
1
0.09
1
0.09
1
0.09
1
0.09
0.13
3
0.39
1
0.13
2
0.26
3
0.39
4
0.52
0
0
4
0.52
4
0.52
0.1
0
0
0
0
0
0
0
0
0
0
0
0
3
0.3
3
0.3
0.06
0.04
0.05
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
2
0
0
0.12
0
0
0
0
0
0
0
0
0
4
4
0
0.16
0.2
3
0
0
0.18
0
0
0
0
0
0
0
0
0.11
4
0.44
4
0.44
4
0.44
3
0.33
4
0.44
1
0.11
3
0.33
3
0.33
Threats
Intense
competition
Changing healthconsciousness
attitude
Water scarcity
Strong dollar
Legal issue
Total
Strengths
Strong Brand
Image
35
Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
Largest market
share
Strong brand
portfolio
High customer
loyalty
Extensive
distribution
network
Investment in
marketing and
advertising
High company
valuation
0.12
4
0.48
3
0.36
4
0.48
2
0.24
3
0.36
0
0
3
0.36
3
0.36
0.05
3
0.15
3
0.15
3
0.15
2
0.1
3
0.15
0
0
3
0.15
3
0.15
0.09
4
0.36
4
0.36
3
0.27
3
0.27
3
0.27
0
0
4
0.36
3
0.27
0.05
3
0.15
3
0.15
4
0.2
3
0.15
2
0.1
0
0
4
0.2
4
0.2
0.02
1
0.02
0
0
1
0.02
1
0.02
2
0.04
0
0
0
0
0
0
0.02
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0.1
0
0
0
0
4
0.4
4
0.4
0
0
0
0
4
0.4
0
0
0.18
3
0.54
4
0.72
2
0.36
2
0.36
2
0.36
2
0.36
3
0.54
2
0.36
0.07
2
0.14
2
0.14
3
0.21
2
0.14
3
0.21
0
0
3
0.21
3
0.21
0.12
0
0
0
0
0
0
0
0
0
0
0
0
0
0
4
0.48
0.03
0
0
0
0
0
0
0
0
0
0
4
0.12
0
0
0
0
0.04
0
0
2
0.08
0
0
2
0.08
2
0.08
0
0
2
0.08
2
0.08
Weaknesses
Water related
problems
Declining
revenue
Relatively less
product
diversification
Absence in health
beverages
Problem with
foreign currency
fluctuation
Adjusting
consumer
changing need
1
4.02
4.06
4.39
4.52
36
3.6
1.68
5.16
4.03
Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
Ranking of Strategies:
Strategies:
Score
Strategy 7
5.16
Strategy 4
4.52
Strategy 3
4.39
Strategy 2
4.06
Strategy 8
4.03
Strategy 1
4.02
Strategy 5
3.6
Strategy 6
1.68
Rank
1
2
3
4
5
6
7
8
Based on the score of QSPM matrix we have ranked strategies and we would suggest that CocaCola Company should pursue the strategies according to ranking. But as it is very tough to
implement all the strategies at a time due to time, money and other required resources, we would
like to suggest 3 strategies to pursue for Coca-Cola Company (Maxi-pedia.com, 2018). Finally,
the selected strategies are –
Strategy 7: Reduce investment in soft drinks by 20% in increasing investment in fast food
products, chips, cake, and homemade products by 20%.
Strategy 4: Focus on the diversified products through partnerships to reduce the water-related
problems and to cope with customer changing needs.
Strategy 3: Diversification of products to cake, biscuits to the developing nations (like India,
Bangladesh, Pakistan).
It is expected that by implementing these strategies Coca-Cola Company will be able to avail its
opportunities and avoid its threats by gaining competitive advantages.
37
Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
4.4 Internal and External (I/E) Matrix:
The score of EFE matrix is 3.39 and the score of IFE matrix is 3.03.
THE IFE TOTAL WEIGHTED SCORES
4.00
4
3.00
I
2.00
1.00
II
III
IV
V
VI
VII
VIII
XI
(Coca Cola Company)
THE EFE
TOTAL
WEIGHTED
SCORE
3
(3.39 , 3.03)
2
1
Based on the EI matrix we should go for Grow and Build strategies like market development,
product development, market development, market penetration or integration. It also support
result drown from SWOT matrix.
Product Development: Reduce investment in soft drinks by 20% in increasing investment in
fast food products, chips, cake, and homemade products by 20%.
Horizontal integration: Focus on the diversified products through partnerships to reduce the
water-related problems and to cope with customer changing needs.
38
Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
CHAPTER FIVE
Conclusion
The Coca-Cola Company is now one of the most successful companies of the world and here we
have tried to find out the ins and outs of Coca-Cola Company. At first, we have analyzed the
mission statement of Coca-Cola Company and tried to identify 9 major elements of mission
statement like – customer, products and service, philosophy, self-concept, technology, concern of
survival, growth, and profitability, concern for public image, concern for employees, market. Some
elements of mission statement have been found in its mission statement and then we have restated
a mission statement focusing on those elements. Then we have analyzed the external and internal
environment of coca cola. For analyzing the external environment of Coca-Cola Company we have
used PESTEL and then identified major opportunities and threats. Its major opportunities are
developing nations, extended Reach, packaged drinking water, market the lesser selling products,
diversification, marketing opportunities and market expansion through partnerships. On the other
hand, our major threats are intense competition, changing health-consciousness attitude, water
scarcity, strong dollar, legal issue. Based on our major opportunities and threats we have
formulated EFI matrix. The score of EFE matrix is 3.39 and the score of IFE matrix is 3.03 which
indicate a strong position of Coca-Cola Company. Finally, based on those elements of the external
environment and the internal environment we have formulated our SWOT. In our analysis we have
tried to consider all the strength, weakness, opportunities and threats and using those elements we
have formulated 8 strategies initially and based on the scores form QSPM matrix we finally select
3 strategies. Finally, the selected strategies are –
 Reduce investment in soft drinks by 20% in increasing investment in fast food products,
chips, cake, and homemade products by 20%.
 Focus on the diversified products through partnerships to reduce the water-related
problems and to cope with customer changing needs.
 Diversification of products to cake, biscuits to the developing nations.
Moreover, the Coca-Cola achievement isn't something that has been accomplished overnight.
Many years have gone since John Pemberton made the mystery recipe for Coca-Cola in 1886.
Who might have imagined that after over a hundred years, his creation would have this much effect
in the world and transform Coca-Cola into a worldwide recognized brand?
39
Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
To produce the world's best-known item, The Coca-Cola Company needs to utilize the most
noteworthy quality procedures and build up principles which ensure the creation of an
institutionalized item which lives up to buyers' high desires every last time they drink a bottle or
can of Coca-Cola.
In spite of the fact that Coca-Cola is performing admirably and picking up the trust of its shoppers
and getting new purchasers to trust each day, it should act far superior to keep its current position
in drink industry and continue developing. The Company should expand its investor's riches by
expanding its deals and diminishing the costs which will result in higher income and net benefit.
We would like to propose the accompanying proposals for the Coca-Cola Company:
Today everything is quickly changing and organizations for surviving ought to run well ordered
with those changes. The advancement gives the organization key favorable position among its
adversaries. So Coca-Cola Company can present another item, which numerous individuals will
need to attempt. Coca-Cola needs to constantly reinforce its image to keep up brand faithfulness
and separate itself from its rivals, with the end goal to keep up its solid market position. They can
invest in other products like fast food, chip, cake etc. To reduce the competition in the market and
also for the water scarcity problem. They can increase revenue by increased marketing expense. If
they spend more on marketing they can easily grab the attention of consumers more than the other
brands of Soft Drinks Company. So they should increase the market expense in order to build a
strong position in the market and to create more profit. Although it has a strong position in the
market worldwide. But they can make it stronger by doing so in this competitive world.
Another real resource for an organization of this size and clout is keeping up coherence among the
workforce. This is fundamental to stay with them in a positive heading, achieving shared objectives
and always defining new objective.
With the end goal to ensure these measures, the Company has needed to build up a cozy association
with its franchisees dependent on a shared worry for quality. And Total Quality Management lies
at the core of this procedure including a consistent accentuation on getting quality models right
every time and on constantly looking for better approaches to enhance execution.
40
Md. Ismail Hossain; Department of Accounting & Information Systems, University of Dhaka. Email: Ismail.ais217@gmail.com
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(2018).
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