Soft drink manufacturing Case Study

Researching with the help of the PESTEL’S model will help in the identification of the political, economic, legal, technological, social and ethical factors that affect the industry. Political Factors One of the major political factors that affect the industry is the government regulation when it comes to the process of manufacturing and processing. A number of policies were introduced, after the number of people that lost their lives after consuming a product from the soft drink manufacturing industry. These policies were to ensure that the government carefully scrutinizes all the production and manufacturing procedures to ensure that they are of the highest standards possible. Moreover, the industry is favored by the political stability that lies between the American and the western countries.

In this case, if the customers may decide to stop purchasing these products and services, the profitability would turn to huge losses leading to a steep decline in the sales of the company. Additionally, the industry also has to endure with the high-interest rates when it comes to the repayment of loans and debts that the industry owes to either the bank or other affiliate organizations that have helped in the growth of the whole company. The high-interest rates will affect the process in which the industry would be able to reap benefits and profits off its past investments. The changes in the interest rates may vary depending on the regulatory policies that are provided at a global level by the government and the board heading the industry.

In this case, the consumer ability would affect the interest rates that would be used by industry when it comes to the selecting and setting prices for the products manufactured. Another social factor that directly influences and fosters growth within the industry is the customs and perceptions regarding the use and purpose of soft drinks. In most of the countries, it has become a necessity that people and other guests are welcomes with a soft drink before getting to feast on the main meal (Brogi et al. Other countries always make it a mandate that the guests to ceremonies and events are welcomed by soft drinks and other products from the soft drink manufacturing industry. In doing so, most of the people publicly allow the carbonated/ soft drinks to become part of their life hence generating profits and more shares for the entire industry.

Technological Factors With the rapid technological evolution, new technologies have been launched into the market hence creating awareness about the industry and its products. One of the legal factors is the presence of legal regulations and laws that directly affect the accounting standards, the production, and taxation of some of the products produced within the industry. Most of these laws and legal regulations have been set to ensure that the high-quality standards are maintained. There are also laws that have been set to ensure that the industry follows a legal channel/ route when it comes to the safety measures that are used in the packaging and distribution of the products from the industry. In order to oversee the entire process, there are a number of bodies and agencies that have been created to help in the administration and monitoring of the products that come from the industry.

One of the agencies involved in the monitoring process is the Federal Trade Commission which ensures that all the businesses conducted by the industry comply with the legal set standard and the legal environment of the business conducted. Assignment Part 2 Porter’s Five Forces The soft drink manufacturing industry goes through a number of challenges which prevents it from making profits. Using Porter's five forces model, we can be able to identify the problems that the industry faces. Below is an analysis of the soft drink manufacturing industry using Porter's five forces model. The Threat of New Entrants To begin with, the threat of new entrants hasn’t been a big issue for the soft drink industry due to its market dominance over the past few years.

This dominance prevents new market start-ups that may have better products from making any profit out of its high-quality soft drinks. In this case, the soft drink industry can use the digital and print media platform to notify its customers of the products that they are selling. Apart from the hard and non-alcoholic drinks present in the market, the soft drink industry has few competitors. This means that it will have fewer cases where substitutes pose a threat to the whole industry. Bargaining Power of Customers Regarding maintaining the profitability within the whole company, the customer plays a big role in determining whether this happens. In this case, the customers have the power of making demands and requests which may cause a change in the operations within the industry.

In this case, some of the firms in the industry may transact some businesses that are which are illegal or do not follow the laws that have been enacted to ensure the presence of fair competition. Bargaining Power of Suppliers The bargaining power of the suppliers, in this case, can be referred to as the market inputs of the industry. The supplier plays a major role in ensuring that the industry makes good and quality products that will be more viable in the market. In this case, the suppliers to the industry control the business since they are in charge of the transportation of the raw materials and machinery that to be used in the manufacture of the products. In order to bring a balance and reduce the bargaining power of the suppliers, having multiple suppliers would be efficient since it would also reduce the dependence on one supplier (Greer, 2018).

O4. The industry demonstrates an improvement of the economy due to the high GDP in the industry as a result of an increased purchase of soft drinks. O5. The soft drinking culture makes almost mandatory for events and parties to have soft drinks, thus giving rise to purchasing power. O6. Stiff competition policies have affected the industry reducing the annual profit due to reduced net income. T2. Presences of government regulations when it comes to regulating the prices and taxation have greatly affected the growth of the industry. T3. The rise in the Interest rates has acted as a discouragement hindering expansion and growth of the industry. T9. Most of the waste materials from the industry are non-biodegradable hence resulting in environmental pollution.

T10. The increased production and recycling costs have discouragement many partners in the industry from making more products. O11. Dominance in the market has also increased the chances of retaliation from the competitor industries. O17. There is a sustainable competitive advantage that favors the competitors allowing them to launch their new products on the market. O18. The competitors also have bargaining leverage when it comes to negotiating with the dominating parties. T14. There is higher supplier solidarity hence making it hard for a bad customer to get another good supplier T15. There are lower entry barriers hence creating more opportunities for new businesses to join the industry. T16. The availability and accessibility of the distribution services make it easy for new entrants to market their products.

Stiff competition Policy T2. Government Regulation Economical O3. High consumer Spending Income hence bringing more profit to the industry O4. High GDP hence improved an economy T3. The rise in the Interest Rates T4. An increase of recycling programs O10. Presence of eco-friendly sources of energy with less carbon and sulfur emissions that have no pollution effect to the environment T9. Global impact of the waste from the industry T10. Increased production and recycling costs Customers O11. Diversification of products in the industry O12. Lower entry barriers T16. Easily available and accessible distribution services Competitors O17. Sustainable competitive advantage O18. Bargaining leverage T17. Buyer price sensitivity T18. Mondelez International Inc. revenue return is 25. 92 billion USD while Groupe Danone’s revenue reads at 24.

68 billion EUR and The Kraft Heinz Company revenue returns is 26. 23 billion dollars as of 2017. Based on the fact that Coca-Cola is among the leading firms in the manufacturing of nonalcoholic beverages across the globe, it has efficient personal that is committed to achieving the mission of the company (Pratap, 2016). The company runs the business through addressing the needs of the people through a diverse setting. The company ensures that customers and suppliers have been treated with respect an honor since they are the ones who drive the business. Thus, through its mission and vision, Coca-Cola Company demonstrates its ability to achieve the rank it aspires for as well as it believes by building effective brands and partners that work collaboratively to attain their mission and vision of the company (Pratap, 2016).

Major Strategies Coca-Cola Company applies various strategies that have contributed to the company's success in the past and have the power to sustain the company in the future. By ensuring that all its brands meet legal standards based on its tight internal control during manufacturing is essential to its success strategy (Vrontis and Sharp, 2017). Thus, from the perspective of a business level strategy, differentiation strategy remains the leading strategy based on the unique value proposition and taste. However, this cannot be achieved without the help of low-cost leadership and perhaps a focused strategy to achieve a large leading market share by serving customers in a unique an efficient way. In relation to corporate-level strategies, the company engages in growth strategies through the investment of large amounts on its brand expansion globally.

The fact that the brand is almost available in various beverage industries across the globe is evidence of its focus directed toward its growth strategy. seems to be a close competitor of Coca-Cola Company and applies the growth strategy as part of its successful strategy. The company achieves this through effective management of crucial aspects of consumer trends in order to maximize its profits. Thus, the company focuses more on supporting growth in areas of its business that matter such as investing in its powerful brands. Also, the company is focused on expanding its market share through venturing into new markets such as in China, U. S, and other chocolate markets. Thus, in order to create awareness of its brand, the company focuses on various marketing strategies such as the target segment, positioning, and segmentation.

In relation to the target segment, the company aims to make its products available o attractive audience once their needs have been explored. Thus, the company highly targets the segment that has high awareness in relation to media as they influence most family consumer decision based urban regions. Strategic positioning is yet another crucial marketing strategy that the company applies in order to connect with new customers in the highest areas of its product consumption (Danone, 2018). Differentiation in terms of packaging and consumer preferences and tastes is also a major strategy for the company to make its brand unique and thus attract more customers to the business. The company is committed to offering better products in order to improve its brand awareness through the people involves in its objective to make better communities through its brand and improve its competitive advantage.

Based on the beverage industry, Coca-Cola Company and its competitors are prominent and successful based on each company's ability to implement fresh ideas into their business. Thus, it is evident that Coca-Cola and its top competitors in the beverage industry are trying to implement growth through various aspects of their business in order to gain a large market share and competitive advantage in the market. This is evident through the application of differentiation strategy for every brand to attract new customers and develop its own position in the global market. Low-cost leadership and sustainability is yet another important strategy applied by both organizations in an attempt to make the community a better place through the manufacturing of safe beverages for human consumption.

The company was forced to pay approximately 193 million dollars to settle this lawsuit related to racial discrimination and come up with a diversity council in an attempt to protect its public image. As soon as the company was done clearing discrimination lawsuit, it was involved in yet another lawsuit just three years down the line. A Coca-Cola executive from a mid-level by the name Mathew Whitley filed a whistle-blowing allegation. This is following Coca-Cola’s fraud case with Burger King. The case involved the company’s fraud against Burger King to introduce its frozen Coke for consumption as a child's snack. The current financial condition of the company seems to steadily improve despite its loss of $2. 75 billion as a result of charges against violation of new tax policies.

The bottling business of the company has improved the margins of the company to approximately 3. 15 percent (Coca-Cola Company, 2017). The company reports total revenue of 35,410,000 dollars and gross profit of 22,154,000 as per 2017 quarterly report. 8B $11B Quick 3. 05 ROA 14. 49% ROE 60. 58% Total Revenue $102. 525B $35. The company has invested heavily in its marketing as well as advertising strategies in order to engage more customers to the brand while striving to maintain the current ones. Also, the company has the power to come up with a new product since they have the finance, identity, manufacturing power, and customers, and evaluation to support this. Weaknesses Coca-Cola runs short in its limited diversity based on the brand it offers. This is based on the fact that they only offer drinks when their drink can be accompanied with snack foods.

Competition from other companies in the beverage industry has an additional business that produces snacks under their brand names thus, forcing the company to make fewer profits than its competitors who apply this strategy. S4. Through its organic revenue, the company is likely to grow strong and further in an attempt to maximize on its strengths. S5. Coca-Cola consists of a strong distribution network due to the high demand for its products across the globe. S6. Coca-Cola has a large Customer loyalty hence being able to easily command a large following. S12. The Company is able to access over 200 countries across the globe, thus giving it a large operational reach. S13. It is exposed to new opportunities in its various market of operation, thus exposing the organization to more levels of growth.

S19. The company is also on the way to becoming a growth-oriented business in order to be stronger enough to adapt to changing circumstances fast. S20. It has a well-established employee, thus offering strength appropriate for running the business. W1. It is affected by high rates of debt, thus affecting the company’s profits due to high borrowing costs. W7. It fights cases of declining revenue based on its gross profits and its net operating costs. W8. Due to the scarcity of sources, the company experiences increased production cost as well as labor resources. W14. The company also suffers from a lack of health beverages to combat cases of obesity in its products. W15. Difficulty shifting by the needs of its customers due to rapidly changing customer needs.

W16. The company has a global presence with a unique brand. W1. Challenges complying with various government regulations in various countries. W2. Lawsuits and negative publicity are yet cases involving water and other issues such as discrimination. W4. Cases of financial shortage due to large fines hence affecting the budgeting of the company. W5. Cases of currency fluctuations in the various markets of operation worldwide. W6. Reduced access to raw material such as water due to its current scarcity. W10. Poor cultural diversity in connection to the consuming power of its products. Technological S8. An effective packaging technique that is easily recycled. Table 4 Porter’s Five Force Analysis Strengths Weaknesses Customers S11. Customer loyalty to command a large following. S12. The Company is able to access over 200 countries across the globe, thus giving it a large operational reach.

W14. New Entrants S16. The company also operates as a multicultural organization hence enjoying various opportunities in these regions of operation. S17. Coca-Cola is considered among the most valuable beverage companies across the globe W17. Inflation and new tax policies in various markets result in the unexpected expenditure. W20. Poor decision from its leaders resulting in stagnant situations that ends up affecting the organization. Writing Assignment 3 Coca-Cola Company’s Revised Vision and Mission Statement The world keeps changing and so is the customer demand, especially in the beverage industry. Thus, in order for Coca-Cola Company to keep up with the industry for long, the company has to look ahead. This goes without saying that, Coca-Cola will have to understand the forces as well as trends that shape its business as the business moves to the future in order to be able to prepare for the unknown.

This is accomplished by envisioning what the company intends to achieve as success in order to maintain stability, quality, and growth. Its stated vision reads, “Be a highly effective, lean and fast-moving organization. ” The rewritten statement states, “To be a great place to work, produce quality brands, winning network with partners, supporting the environment, maximizing profits, and being productive “(The Coca-Cola Company, 2018). Thus, its vision demonstrates that in order for Coca-Cola to achieve its mission, staff, profit, and environmental preservation remains its top concern. This clearly indicates the company’s interest to support productivity while meeting the demands of its shareholders through its winning culture of ethical behaviors and attitudes. This explains why in S11 the company has a loyal customer base that has grown to a large following.

This is probably because of S14 that demonstrates the company’s brand identity in the market that the people have identified with it worldwide. Thus, O12 reflects on why the company has lower chances of losing its customers and O11 shows the company's efforts to present customers with the diversification of various brands. O8 shows the company's efforts to use advanced technology to improve its manufacturing process. This illustrates the availability of various sources of energy for the company with less impact on the environment. In an attempt to keep its customers, S9 demonstrates the organization efforts to franchise its products to meet the growing consumer demands and with fewer health effects. According to T1 and T2, the company suffers from cases of competitive policies as well as governmental regulations.

These factors impact the profits of the company due to increased returns that the company has not initially budgeted for. However, according to S19, Coca-Cola is focused on becoming the most developed oriented business in an attempt to be strong in adapting as new circumstances kick in. Also, S4 demonstrates the company’s efforts to improve its finances through its organic revenue to fill the gaps where it sales run low. This implies that its top competitors such as Peps that have a segment that includes manufacturing snacks and food that go with their drinks (Reuters, 2018). The fact that Coca-Cola lacks brands that can be consumed alongside its beverage brand result to W15 that includes the company’s inability to shift based on the needs of its customers.

As shown in T18, the company is likely to increase its buyer switching prices in an attempt to prevent losing their loyal clients to potential competitors that have improved other segments of their products. Also, as suggested in T10, the company suffers from cases of increased manufacturing cost as well as the recycling process. T17 demonstrates buyer sensitivity in relation to the price the organization recommends and T20 implies a reduced price based on substitute performance. The aim is to reduce some of its operating cost and improve profits. WO2 O16,W13,O12,W12 Despite various failures in some of its products due to a bad image, the company’s record to produce quality brands favors its presence in the beverage industry.

WT1 T18, W15, W16 The fact that Coca-Cola has only focused on offering non-alcoholic without any other food segment business to go along with it limit the company from making more sales every time their product is purchased. WT2 T10,W7,T20,W5,T17 Cases of currency fluctuations and exchange rates, as well as different government regulations in different countries, have impacted the profits of the company. This is as a result of spending outside the budget. The company is also keen on achieving its business model that entails manufacturing refreshing brands. This is evident based on the fact that the company is among the leading in the beverage industry with brands such as coffee, sports drinks, juices, water, hydrated drinks among other non-alcoholic beverages (The Coca-Cola Company, 2018).

Thus, Coca-Cola is focused on fully implementing these strategies due to its sharp interest in the growth and product development. This is through the application of differentiation technique as well as low leadership strategies to drive its work plan. Recommended Actions In an attempt for Coca-Cola Company to improve on its rate of development, it is crucial that the company assigns the right seats to the right people. The purpose of this recommendation is to ensure that Coca-Cola Company remains among the leading non-alcoholic beverage manufacturer in the industry. Having the right talent occupy the right seat is beneficial to the company in terms of growth and profit-making through its sharp innovative manufacturing process that the talented team leads to ensure high productivity is reached.

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