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Competitive Strategy of the Coca-Cola CompanyMatthew BellMGMT585 – Strategic ManagementJune 4, 2014Dr. Michael CorriereCompetitive Strategy of the Coca-Cola CompanyA competitive strategy “deals exclusively with the specifics of management’s game plan for competing successfully” (Thompson, 2014 p. 90). Without some type of preconceived strategy a business would have no direction or idea on how to meet the desired goals. These preconceived plans or strategies need to deal with how it will please the customers, strategic moves to counter the moves of the competition, and some type of initiatives that strengthen a company’s standing in the market (Thompson, 2014). This is not always the easiest task to undertake. Unforeseen changes in factors such as the market, environment, or even politics can undo a company’s strategic plan. To be successful, executives and managers have to have a well, though-out plan that can stand strong against any adversity. Also, executives and managers have to pick the strategy that they feel will make them competitive and ultimately successful no matter where they are operating but be willing and able to adapt when necessary.Coca-Cola’s Competitive Strategy & PracticingThe Coca-Cola Company operates in more than 200 countries and produces more than 450 products. Based on these numbers, the competitive strategy that Coca-Cola uses is the broad product differentiation strategy. According to Thompson (2014), a broad differentiation strategy seeks to differentiate the company’s products from rivals in such ways that will appeal to a broad spectrum of buyers. The Coca-Cola Company deals majority in the non-alcoholic drink market and provides products such as caffeinated beverages, decaffeinated beverages, energy drinks, drinks with zero calories, and water (Coca-Cola, 2014). Product differentiation enhances the consumer welfare by offering a greater variety of products and companies such as Coca-Cola do not only do this to make themselves better than other companies in the non-alcoholic market, but rather to help make their own product better (Tremblay & Tremblay, 2011). Another reason why a company such as Coca-Cola benefits from product differentiation is because product differentiation is the driving force of economic progress (Tremblay & Tremblay, 2011). Economic progress allowed for Coca-Cola to enter the global marketplace.The Coca-Cola Company is a global organization. Developments in the global economy have allowed for new communications, computing technology, and reasonably open global trading regimes (Teece, 2010). This allows for customers to have more choices and also allows for a means for the customers provide their needs to the manufacturer. Coca-Cola seems to have the same competitive strategy of broad differentiation globally. They state in the global diversity framework that in order to achieve true diversity they plan on winning in the marketplace by appealing to diverse consumers with their brands (Coca-Cola, 2014.). Coca-Cola has been able to advertise to different nations throughout the globe and just recently opened their digital media platform in eight countries. This is important for success because the internet and communication revolution has empowered customers and companies to expand and offer more differentiation to suit the needs of specific countries (Teece, 2010).SupplementingObviously product differentiation is not enough. Coca-Cola has taken many steps to further enhance their market success. Coca-Cola always has been and is currently working to develop business models to participate in new lines of beverages, extend existing product lines, and advertise and market their products (Coca-Cola, 2013). Using business partnerships is how Coca-Cola is making this happen. A partnership is a collaboration to pursue common goals while leveraging resources from both companies and capitalizing on the strength of each company (Jamali & Keshishian, 2009). Other businesses sometimes have what a company is missing or what a company can use to enhance a product such as one of the brands of Coca-Cola. Still, there are other ways that Coca-Cola is supplementing its strategy of broad product differentiation.Coca-Cola always seems to be putting their brand on different products, hence why they have a broad product differentiation. They are able to do this by acquisitions of other already established companies. Acquisitions cause revitalization and revitalization is one of the most important outcomes of an acquisition (Vermeulen, 2012). Acquisitions will usually help a company restore a sense of vitality to their business and generates a spark and find a way to renew themselves before products and operating methods become outdated because an acquisition can remind management that their current ways of doing things might need a change (Vermeulen, 2010). Sometimes the acquisitions are just to be some part or all of that specific product to add to the existing product line and possibly broaden horizons.The third, and possibly most important supplement that Coca-Cola is working in to using the strategy of focused low-cost strategy in certain markets based on consumption occasion, competitive intensity, and socioeconomic levels (Coca-Cola, 2014.). Using the focused low-cost strategy aims at gaining a competitive advantage by serving products at a lower price than rival competitors in certain markets (Thompson, 2014). This will help raise sales of Coca-Cola in regions that sales are down either from competitor rivalry or poor distribution channels. Coca-Cola has many supplements in place to help ensure their own success globally.Diversification StrategyHaving a diversification strategy is considered to be of upmost importance for an organization’s long term leadership position in its own industry (Nath, Nachiappan, & Ramanathan, 2010). The Coca-Cola Company is employing a diversification strategy by striving to create a work environment that provides all associates with equal access to information, development, and opportunity from that development (Coca-Cola, 2013). Coca-Cola is also expanding its current product line by buying equity in Green Mountain Coffee Roasters Inc. to have the rights to their cold coffee Keurig K-Cups. This will help them stay atop the non-alcoholic beverage industry that they are striving for. Nath et al. (2010) suggests that fims diversify to extend its resources into new markets and business. Coca-Cola’s global diversity mission is to mirror the rich diversity of the region or marketplace that they serve. As mentioned earlier, Coca-Cola has a framework for global diversity. The framework consists of diversity in the workplace in the markets where they operate, winning the marketplace by appealing to the customers, maximizing procurement opportunities with women and minorities, and enhancing the lives of the communities that they serve (Coca-Cola, 2014).When a business’ value chains possess competitively valuable cross-business relationships that present ways for the business to better perform under one direction is known as related business (Thompson, 2014). The diversification strategy that Coca-Cola is taking is related business. It wasn’t until 2010 that the Coca-Cola Company advanced their partnership, which led to the acquiring of the whole enterprise with their bottler, Coca-Cola Enterprise (Coca-Cola, 2014). This combined all U.S. and Canada businesses into a North America Group. By expanding to a multinational network, such as Coca-Cola is doing, it can enable greater coordination control and even increase operational efficiency (Qian, Khoury, Peng & Qian, 2010). Having a business related diversification strategy will also being less expensive when dealing with learning opportunities and eliminates limits to capitalizing on the cost invest in knowledge that may be more valuable (Qian, et al., 2010).Recommendations for ImprovementProduct and processes, especially the product origin as a measure for product and quality are becoming more important to consumers in today’s society (Teuber, 2010). Coca-Cola pushes multiple product lines to multiple locations throughout the globe. Shipping products from different manufacturers globally will decrease net profit due to shipping and import tariffs. Coca-Cola should take time and look at the actual consumer demand for diversification to manage what products go where which should help increase sales/profit and lower shipping and tariff costs. To be more effective in each region, Coca-Cola has to perform research in each region and ask: (Teuber, 2010).Which geographical indicators exist in the market?What price premium can be achieved by the geographical indicators?Will the prices have to differ across countries and regions doe to geographical location?Coca-Cola has to find a breakthrough strategy. A breakthrough strategy is a successful introduction of a radical change in business operations that changes the market and creates a new way of doing business (Wang & Kimble, 2010). Coca-Cola does not have to change the entire process of their company but should rather look at something that will be perceived as being environmentally friendly and cost saving. Components that go together to make up a product is known as the architecture of that product (Wang & Kimble, 2010). If Coca-Cola has too many individual components that make one of their products they should find a way to cut down and be able to mass produce more from the same amount of material. One example would be from when Coca-Cola changed from glass bottles to plastic bottles. The plastic costs less but can more harmful to the environment if people do not recycle as Coca-Cola suggests. Arrowhead Water was able to sell the amount of water in a bottle but reduced the amount of plastic used by 60% of their previous plastic bottle. Coca-Cola has to find a “game changer” and try reducing plastic, mass producing the caps with less plastic, or even just find a way for a bottle of soda to stay carbonated longer after opened.ConclusionCoca-Cola started in the 1920’s. That means that they have been successful for almost one hundred years. The Coca-Cola Enterprise has had its up and downs just like any other business but the reason they are successful is because of their competitive strategies. Having a product differentiation allows them to meet the needs of almost every person globally. For the people that do not drink soda, they can have a water, even a flavored water. For the sports enthusiast or non-morning person, he or she can have an energy drink for a boost. The fact that Coca-Cola is supplementing the product differentiation strategy with business partnerships, acquisitions, and a focused low-cost strategy where needed proves that they are adaptable and atop their competitive market. Finally their diversification proves that they care for their people while trying to save costs at the same time. Coca-Cola wants to build the company from within and not by buying multiple companies that have nothing to do with the market they compete in. The Coca-Cola Company does have a game plan for competing successfully and shows that they can adapt when necessary.ReferencesBaumgartner, R. J., & Ebner, D. (2010). Corporate sustainability strategies: sustainability profiles and maturity levels. Sustainable Development, 18(2), 76-89.Coca-Cola - 2013 Year in Review - Company Highlights. (2014). Coca-Cola - 2013 Year in Review - Company Highlights. Retrieved June 4, 2014, from , D., & Keshishian, T. (2009). Uneasy alliances: Lessons learned from partnerships between businesses and NGOs in the context of CSR. Journal of Business Ethics, 84(2), 277-295. doi: Nath, P., Nachiappan, S., & Ramanathan, R. (2010). The impact of marketing capability, operations capability and diversification strategy on performance: a resource-based view. Industrial Marketing Management, 39(2), 317-329.Qian, G., Khoury, T. A., Peng, M. W., & Qian, Z. (2010). The performance implications of intra‐and inter‐regional geographic diversification. Strategic Management Journal, 31(9), 1018-1030.Teece, D. J. (2010). Business models, business strategy and innovation. Long range planning, 43(2), 172-194.Teuber, R. (2010). Geographical indications of origin as a tool of product differentiation: The case of coffee. Journal of International Food & Agribusiness Marketing, 22(3-4), 277-298.Thompson, A. A. (2014). Strategy: Core concepts and analytical approaches. Retrieved from , C. H., & Tremblay, V. J. (2011). The Cournot–Bertrand model and the degree of product differentiation. Economics Letters, 111(3), 233-235.Vermeulen, F. (2012). How acquisitions can revitalize companies.Wang, H., & Kimble, C. (2010). Low-cost strategy through product architecture: Lessons from china. The Journal of Business Strategy, 31(3), 12-20. doi: ................
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