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Corporate Strategy, Governance & Ethics

Coca-Cola Company

Corporate strategies are the core of every business undertaking. These strategies are the steering wheel that directs the way where the company is headed. In present times, the alignment of this strategy with the ethical and governance issues is imperative for any company to be successful (Barkay, 2012). The main reason for selecting the topic of corporate strategy, governance and ethics in global environment rests in the fact that even if a company has properly strategized plans, but if they are not integrated with the governance and ethics then the strategy is likely to fail. For the present case, Coca-Cola has been chosen as the company presents a good example of adhering to the ethical practices.

Critical Analysis of Coca-Cola

Coca-Cola is a leader in manufacturing, distributing and marketing of non-alcoholic drinks all across the world. 1944. The Company has been producing over 230 beverage brands and has been marketing the four soft drink brands which are among the top five brands of the world. These are Sprite, Fanta, diet Coke and Coke. At present the main focus of the company is to have a sustainable community and having proper economical development (Nagdaseva, 2012).

Product is basically everything that can be put on offer to the customers who want to satiate their need. Products are of two types i.e. tangible and intangible. A product is a blend of psychological, physical, symbolic and service attributes, not only the physical merchandise. A product is same as goods. Goods are seen as physical objects available in the markets as per accounting. The term product is primarily used by those who want to examine the richness and details of a particular market offering (Colicchia, Melacini and Perotti, 2011).

Goods are physical products which carry forward the brand name of a company. The product of Coca-Cola is carbonated beverages which come both canned and bottled. A company ought to take into consideration the products produced by it and the specific phase of the product life cycle to which the different products belong. The marketing strategies of the company vary as per the product type and its lifecycle stage. There are three levels that make up a complete product (Dhar and et.al., 2005). The core product carries the fundamental benefit. For Coca-Cola’s drinks, the benefit of quenching the thirst with taste is offered.

The second layer is the actual product which includes the brand name, packaging, styling, quality and features. The beverages are packed in cans and bottles and all the different brands under the company have different yet attractive packaging (Doyle, 2011). They carry their distinctive brand names. For instance, Coke is packaged in a transparent bottle having red stickers and red cap. These have become the signature style of Coke. This and the drink is the actual product. The augmented product of the company is the delivery of the product on time and as per the requirements of the customers. The company has an extensive distribution network which facilitates the ready delivery and availability of the company’s drinks (Esty and Winston, 2009).

The markets targeted by the company are defined in terms of psychographic, demographic, product usage and geo-demographic characteristics. The drinks offered by Coca Cola are mainly for all types of customers however, there are certain areas wherein the company targets specific customers (Goodman, Fandt and Michlitsch, 2007). For instance, the Diet Coke is targeting customers who belong to the age group thirty five to forty. The drink PowerAde is targeted towards the people who are extremely health conscious and are involved in sports activities. The target market of the company is growing mainly due its worldwide presence and easy availability. The company enjoys a stable market segment because it sells its drinks in big nations such as USA and China and these countries have diverse demographics that like the drinks (Griffin, 2010).

Critical Analysis of Coca-Cola’s environment

For analyzing the environment of the company both internal and external environments will be studied. The internal analysis included SWOT analysis and the external analysis includes PESTLE and Porter’s Five Force model.

Under the PESTLE analysis, only the political and economic environment will be studied as the factors are explained under other headings.

PESTLE

Political Factors:

As the Coca-Cola concentrated drinks belong to the non-alcoholic sector, therefore they fall under the Food and Drug Administration which is a United States agency. The FDA checks and certifies that whether or not constituents used in the preparation of the soft drinks of Coca-Cola in a specific nation is as per the standards or not. The company therefore takes all the required steps to evaluate meticulously prior to the introduction of any constituent in its beverages and attain an approval of the FDA. Coca-Cola also takes into account the regulations forced by the FDA on plastic bottled things (Idowu and Filho, 2009).

In addition to this, other political aspects include accounting standards and tax policies. The accounting standards that the company uses are changed with time which has a substantial role in the reported outcomes. The organization also comes under the purview of income tax policies as per the jurisdiction of the countries in which it is operating. The import and excise duties are also levied on the distribution of the soft drinks in the nations where the company does not have any outsourcing entity (Jain and Kedia, 2011). Furthermore, if there is turbulence or dethroning of the existing government or some sort of political unrest in the country then the demand for the products evidently goes down. Countries such as Iraq where the terrorist activities are high, pose a challenge for Coca-Cola to penetrate the market.

Economic Factors:

The economic facets assess the potential areas wherein the company can develop and grow. These entail the interest rates, economic growth of the nation, inflation rates, exchange rates, unemployment rates and wage rates. The organization first evaluates the economic situation of the nation prior to entering into it. When the nation is in the phase of economic growth, the purchasing power in the hands of the people is high. Coca-Cola has in the yesteryears correctly identified this and aptly embarked upon its distribution across the different nations. Weakness and strength of the currency also influence the export of the products (James, 2011).

Interest rates also keep on fluctuating and this may deter the organization from making additional investments as the borrowing costs is very much high. Coca-Cola makes use of the derivative financial instruments to deal with turbulent interest rates. This acts as an extra cost to the firm which cannot be shown in the prices of the final product as the risk as well as competition in this segment is very high (Justo and Cruz, 2008).

Porter’s Five Forces

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