Strategy & Decision Making

Student Name
Student ID:

1
Contents
Introduction......................................................................................................................................4

Business Strategy.............................................................................................................................5

Porter's 5 Forces Analysis: Coca-Cola............................................................................................6

Figure 01: Porters five forces..........................................................................................................6

The threat of new entrants: Medium Pressure.............................................................................7

The Threat of Substitute Products: Medium to High pressure....................................................7

The Bargaining Power of Buyers: Low pressure.........................................................................7

The Power of Suppliers: Low pressure........................................................................................7

Rivalry Among Existing Firms: High Pressure...........................................................................7

SWOT analysis of Coca-Cola..........................................................................................................8

Figure 02: SWOT Analysis.............................................................................................................8

Strengths of Coca-Cola: Internal factors.....................................................................................8

Highest brand equity................................................................................................................8

Acquisitions.............................................................................................................................9

Weakness of Coca-Cola: Internal Factors...................................................................................9

Powerful competitor................................................................................................................9

Product diversification:............................................................................................................9

Health concerns.......................................................................................................................9

Opportunities for Coca-Cola: External factors..........................................................................10

Threats for Coca-Cola: External Strategic Factors....................................................................10

Controversy for water usage..................................................................................................10

Controversial packaging........................................................................................................10

Indirect competition...............................................................................................................10

PESTEL Analysis: Beverage industry in the UK..........................................................................11

2
Figure 02: PESTLE Analysis.........................................................................................................11

Economic Factors..................................................................................................................12

Business Strategy...........................................................................................................................12

Difference Between domestic and international market............................................................13

Space Matrix..................................................................................................................................13

Space Matrix Calculations.........................................................................................................14

Figure 04: Space matrix.................................................................................................................15

Business strategy position..............................................................................................................16

ANSOFF matrix.........................................................................................................................16

Figure 05: ANSOFF matrix...........................................................................................................16

Market Penetration.................................................................................................................16

Market Development:............................................................................................................17

Product development.............................................................................................................17

Diversification.......................................................................................................................17

Conclusion.....................................................................................................................................18

REFERENCE................................................................................................................................19

3
Introduction
The Coca-Cola company is the world's largest beverage company. It has more than 500 beverage
brands throughout the world. The beverages include water, juices, teas, coffees, energy drinks,
sports drinks. In addition, Coca-Cola has some varieties such as coke, diet coke, Fanta, sprite.
The primary purpose of this company is to provide nonalcoholic beverages to the world and
make a difference in the beverage industry. It has been operating for more than a century in more
than 200 countries.
Every day, in the beverage industry, sold beverages account for 57 billion dollars in total, from
which Coca-Cola sells 1.9 billion dollars alone. Their mission statement is "Refresh the world.
Make a difference". Their vision is to create a sustainable business that is good for the
environment and retains brand value. The AIM shows how a big giant company named Coca-
Cola used different strategic tools to build their business strategy and reach the peak of the
beverage industry.

4
Business Strategy
Business strategy is the plan a company undertake for its growth, operation and nurture phase. It
helps to achieve the success for a company by gaining more customers. (jargons, 2019)
It is needed to

 achieve effectiveness,
 Secure a profitable position,
 Meet challenges and threats
 Gain control over the situation

5
Porter's 5 Forces Analysis: Coca-Cola

Figure 01: Porters five forces

Source: (Forgang, 2015)

Porter's five forces of analysis were first introduced to the world in 1979. Since then, it has been
an essential framework to analyze any company. In the UK, the beverage industry has been
rising since then. Coca-Cola made the perfect execution of the rising demand.

6
The threat of new entrants: Medium Pressure
The threat of new entries is relatively low. There is not high pressure nor low pressure in this
section. Every year new brands enter the market with new products all over the world. However,
very few reach it worldwide. That is why Coca-Cola is the sole survivor in the international
beverage industry. Besides, Coca-Cola has been holding the highest market share for a long time.

The Threat of Substitute Products: Medium to High pressure

Every day new beverages of new taste are entering the market somewhere in the world. Coca-
Cola has more than 500 beverage products in the world. Coca-Cola covers almost every kind of
nonalcoholic beverage. So, they can compete with new substitute products. Still, new beverages
are entering the market, so there is always some threat. 

The Bargaining Power of Buyers: Low pressure

Coca-Cola has the highest brand loyalty, so the demand for Coca-Cola products is always high.
That is why the buyer does not have to bargain about anything with Coca-Cola.

The Power of Suppliers: Low pressure

The primary ingredients to produce cocacola is water and other ingredients such as sweetener
and caffeine. The suppliers are more or less the same. Coca-Cola is one of the biggest customers
for this ingredient. So, the supplier wants to keep them as their regular customer

Rivalry Among Existing Firms: High Pressure

The main and only competitor of Coca-Cola is Pepsi. Pepsi also has a vast range of flavors and
beverages; Pepsi also expanded its business worldwide. Both are competing for the peak.
Besides, there are other competitors like Dr. pepper, but they could not reach success.

7
SWOT analysis of Coca-Cola

Figure 02: SWOT Analysis

Source: Author
SWOT analysis is used to understand the internal factors of a company. The factors that will help
the company to make decisions. (Visser, 2021)

Strengths of Coca-Cola: Internal factors

Strong Brand Name: Coca-Cola has a strong brand name in the USA and all over the world.
Almost everyone on the planet knows their brand name. So, every corner of the world knows
about the name Coca-Cola. Which made them the strongest brand name ever in the beverage
industry.
Highest brand equity: coca cola was awarded as the highest brand equity in 2011.right now it
holds the most share in beverage industry. The name Coca-Cola is holding this equity.

8
Global Product: Coca-Cola operates in more than 200 countries worldwide. It serves 9 billion
products daily to the world. Coca-Cola has more than 500 different beverage types such as Fanta,
sprite, juice, water.
Customer Loyalty: Coca-Cola has the highest number of loyal customers. Their product is said
to be touched with motions. Besides, their marketing campaign hit people emotionally, and
people are somehow emotionally attached to the brand, making it difficult to switch to another
brand. Moreover, they have a huge fan of Coke, Fanta, and sprite.
Largest market Value: Right now, Coca-Cola holds the highest market share estimating over
90 billion dollars. It has retained its position as the largest market value for many years. Besides,
there are only two big players in the beverage industry. One is Coca-Cola, another is Pepsi, out
of which Coca-Cola holds the larger share.
Efficient supply chain: The supply chain of Coca-Cola is one of the most efficient ones. From
suppliers to distributors, every section has high efficiency. For example, in the distribution
sector, Coca-Cola collaborated with nearly 250 bottling partners globally. As a result, the
distribution system is so efficient that customer gets a bottle of coke even in the nearest shop to
their home.
Acquisitions: in 2016, they acquired a company named Ades. With this acquisition, Coca-Cola
expanded its business in Latin America and now is the sole proprietor in Latin America. Ades is
a soy-based company in Latin America.

Weakness of Coca-Cola: Internal Factors

Powerful competitor: Coca-Cola has only one competitor, which is Pepsi. Moreover, it is a
strong competitor. Though Coca-Cola holds the highest market value, highest market loyalty
Pepsi is also running the same way.
Product diversification: Coca-Cola has a variety of beverage products such as Fanta, sprite,
coke zero. However, all the products are beverage products. In contrast, Pepsi launched snacks
products which gave them a rise in sales.
Health concerns: carbonated beverage is not good for the health. Health experts discourage
using soft drinks like Coke, Fanta, sprite as these is harmful to health.

9
Opportunities for Coca-Cola: External factors
Product diversification: Coca-Cola has the opportunity to launch new snack alike products just
like Pepsi. It can generate them some revenue as well as step aside from the sole dependency on
the beverage.
Expand the business: Though Coca-Cola has been operating in more than 200 countries, there
are still some countries where demand for soft drinks is high. So, they can expand to those
countries.
Improve supply chain: Coca-Cola has the most efficient supply chain in the world.
Nevertheless, the supply chain cost is raising. So, they can find alternatives to distribution and
supply.
Bring healthy drinks to the market: With a high brand value, anything they launch may attract
consumers. For example, Coca-Cola has the chance to bring in some healthy drinks such as milk
to expand their business and stop the criticism. (Wilkins, S. 2016) 

Threats for Coca-Cola: External Strategic Factors

Controversy for water usage: the main ingredient of Coca-Cola is water. Coca-Cola consumes
much water worldwide. Many social groups have claimed that Coca-Cola made a scarce in
water-scarce regions.
Controversial packaging: where it comes to packaging, Coca-Cola uses plastic bottles.
Moreover, they are one of the highest plastic bottle users. Furthermore, this vast usage of plastic
is criticized all over the world.
Indirect competition: although there is only one competitor, that is Pepsi. Other companies like
Starbucks, Costa coffee, Tropicana, and Nescafe are indirectly competing with Coca-Cola.

10
PESTEL Analysis: Beverage industry in the UK

Figure 02: PESTLE Analysis

Source: (Forgang, 2015)

The beverage industry in the UK took a big shift in 2016 when chancellor George Osborne
proposed a new tax fee. The new taxation rate is 19p per liter if the beverage has more than 5g of
sugar. Moreover, the tax is 24p per liter if the beverage has 8g super per 100ml. After the
announcement of this sugar, usage dropped instantly by 43%. (Britishsoftdrink.com, 2018). The
soft drink industry in the UK contributes 11 billion dollars to the national GDP and made an
opportunity for 340000 jobs.

11
Political Factors: In the UK, all the factories require maintaining a limited amount of
ingredients in producing soft drinks. There are many rules and regulations that the companies
have to meet. Besides Brexit, there have been some significant changes in the industry.
Economic Factors: The taxes in the UK were raised, and it impacted the beverage industry.
Besides, the uncertainty of Brexit has made a rise in the production of raw materials needed to
manufacture soft drinks. So, it opened a wide market in the EU but lessened the market in the
UK.

Social Factors: With high taxing on soft drinks, the price of soft drinks increased, and sugar
decreased. So, the soft drink industry more favorable in nutrition and health. As a result, people
were willing to buy soft drinks at a high price. Moreover, the soft drinks companies donated 10%
to the charities, which resulted in common people's belief. (Rugmans, T. 2013)

Environmental factors: As the main ingredient for soft drinks comes from nature, assuring
natural sustainability is a must for the companies. Besides, the UK signed the Paris agreement,
which had an impact on the soft drinks industry. In addition, Coca-Cola had a campaign in 2019,
and its main purpose was environmental sustainability (O'Shannassy, T. 2018). So, they are
trying to protect the earth and run their business at the same time.

Legal Factors: Soft drink companies must obey the legal framework of the UK tax, health and
safety laws (Food and Drink Innovation Network 2016). With Brexit, more changes in the legal
sector can impact Coca-Cola more than other soft drinks because of its excessive use of sugar.

Business Strategy
Coca-Cola follows various strategies to leverage their business. We saw that they have superior
quality products, superior packaging, powerful brand value, loyal customer, and international
recognition from the sot analysis. In terms of beverage quality, they still maintained the quality,
even though prices of ingredients have increased (tunaiji, 2018).
When it comes to packaging, they produced a contour-colored bottle, which differentiated them
from their competitors. Then they have superior brand loyalty, as they are operating in more than
200 countries, they created a market worldwide, which gave them the chance to control the price.
12
Besides strong brand loyalty, they never had to think of the consumers of their product. The
Coca-Cola advanced its technology in packaging. To make a sustainable environment, they
reduced the use of plastic in their bottles. They collaborated with different bottling partners who
do their packaging, distribution to the final product. (Britishsoftdrink.com, 2018)
Their main focus is through marketing. First, they launched a campaign in 2016, which was a
media campaign mainly. Their main target was to engage the customers with coke bottles. Then
they launched another campaign in 2019 where the main focus was on a sustainable
environment.
The company said on their website that they are moving toward reducing sugar in their products.
This is because consumers are now more conscious about their health, and they know more about
sugar's harmful effects. So, Coca-Cola changed its strategy to a leverage strategy. They are now
supporting new beverage products such as coke zero, juices, coconut water, tea. This way, they
are leveraging their product as a health-conscious brand. (tunaiji, 2018)

Difference Between domestic and international market

There are some differences between the domestic business of the UK and international business.
Domestic business is the business that is conducted inside UK, and international business refers
to the business that is conducted outside. The domestic business target customer is limited inside
the UK, whereas the international business has many customers. While it comes to the beverage
industry, local beverage companies of the UK targets only the consumers inside UK. In contrast,
Coca-Cola targeted the customers inside the UK and outside Ku.

Space Matrix
Here is an analysis of the space matrix. A space matrix is used to analyze a company. It is used
to determine in which position the company is strategically and what should they do next
strategically. Space matrix is determined based on swot analysis, Porter's five forces, etc. (Anon.,
2018)

13
 Internal Strategic Position External Strategic Position
Competitive Industry
(worst+6, +1Best) (worst+6, +1Best)
Market share +1 Growth Potential +5
Brand Image +1 Resource Utilization +6
Technological advancement +2 Financial Stability +6
Customer loyalty +1 Consolidation +4
Product life cycle +2 Profit Potential +5
Control over supplier +2 Ease of entry +4

Average +1.50 Average +5.00

Financial Environmental
(worst+6, +1Best) (worst+6, +1Best)
Working capital +5 Technological change +1
ROI +6 Competitive pressure +4
REA +6 Inflation rate +2
Leverage +5 New entry +2
Net income +6 Price elasticity +1
Demand variability +1
Average +5.00 Average +1.83

Space Matrix Calculations

ES Avg Score= -1.83 + Avg FS Score (+5.00) = +3.17
Avg CA Score = -1.50 + Avg IS Score (+5.00) = +3.50

14
 Figure 04: Space matrix
Source: Author
Coca-Cola is in such a position that it can dominate the market. They can develop their product,
diversify their product, take advantage of external opportunities, remove their weakness and
threats and increase their revenue more.

15
Business strategy position
ANSOFF matrix
Coca-Cola is one of the best international companies in the world. They have been operating for
more than 200 years. But as time passes every company changes its strategy depending on the
situation. Coca-Cola also changed its strategy. Ansoff matrix is to show the strategy they took to
remain their first position in the competitive beverage industry (Anon., 2018) (Ansoff Matrix —
A Guide to the Ansoff Product Market Growth Matrix, 2021)

Figure 05: ANSOFF matrix

Source: (Anon., 2018)

Market Penetration: Promoting existing products in the same market is called market
penetration. They penetrated the market by associating with cultural events such as Christmas,
Eid, they boosted their sales on cultural occasions by changing the color of the bottle and size.
They also gave free samples during different cultural occasions.

16
Market Development: Market development is when Coca-Cola enters into a new market with
its existing products. Coca-Cola already operates its business in more than 200 countries. Still,
there are some areas where they couldn’t expand their business as expected.
Product development: Coca-Cola develops its product by promoting new products into existing
markets. This is how they introduced zero coke, Fanta, sprite in the market where coke was
already in use. In this case, they introduced new tastes, new colors, new packaging, etc.
Diversification: Coca-Cola diversified through introducing new products in a new market. This
is how they introduced mineral water, t-shirts, etc.

17
Conclusion
The most valuable asset of the company is their product loyalty and their strategy in the market.
They change their strategy depending on the market. Coca-Cola analyzes their company with the
help of SWOT analysis, they analyze the industry with PESTLE analysis and the position of the
company through Porter's five forces. Finally, they build up their strategy through the Ansoff
matrix.

18
REFERENCE
Britishsoftdrink.com, 2018. British Soft drinks Association.
Businessjargons.com, 2019. Business jargons
Forgang, W., 2015. Strategy-specific Decision Making. Armonk: Taylor and Francis.
Helms, M. M., & Nixon, J. (2010). Exploring SWOT analysis–where are we now? A review of
academic research from the last decade. Journal of Strategy and Management, vol. 3(3), 215-251.
Kim, W. C., & Mauborgne, R. (2004). Blue ocean strategy. Harvard Business Review, October
2004, 76-84.
Kumar, R., & Nathwani, A. (2012). Business alliances: why managerial thinking and biases
determine success. Journal of Business Strategy, vol. 33(5), 44-50.
O'Shannassy, T. (2008). Sustainable competitive advantage or temporary competitive advantage:
Improving understanding of an important strategy construct. Journal of Strategy and
Management, vol. 1(2), 168-180.
Rogmans, T. (2013). Location and operation mode decision making in the Middle East: a case
study approach. Journal of Strategy and Management, vol. 6(2), 190-206.
tunaiji, n. a., 2018. cocacola strategy project, s.l.: researchgate.com.
Visser, D., 2021. Exploring SWOT analysis – where are we now
Wilkins, S. (2016). Establishing international branch campuses: a framework for assessing
opportunities and risks. Journal of Higher Education Policy and Management, vol. 38(2), 167-
182.

19