To help us meet the opportunities and challenges of a rapidly changing environmental landscape, The Coca-Cola Company has developed a comprehensive environmental management system. This system is designed specifically for alignment with operations of the Coca-Cola business system and focuses on environmental issues directly related to their business. Compliance, waste minimisation, pollution prevention, continuous improvement, and identification of cost savings are all hallmarks of The Coca-Cola Environmental Management System (TCCEMS).
At the core of The Coca-Cola Environmental Management System is a simple overarching principle: we shall conduct our business in ways that protect and preserve the environment. This principle is supported by a series of policies, requirements and practices.
Their system supports and encourages a wide array of environmental leadership initiatives around the world. The purpose of these initiatives is threefold:
To advance their understanding of the environmental issues facing their business
To foster new and innovative solutions to those issues
To serve as a catalyst for constructive dialogue and improved environmental performance
Economic Influences
Business cycles like recession and booms affect the company. In times of recession people are more likely to buy cheaper alternatives to their product since it is not an essential product. Reduced income will mean that people want to spend their cash on vital things. The rate of interest and the rate of exchange of other countries will also affect the company. As a US based firm exporting goods to places like Britain whose currency have a higher value it will mean more profit for coke.
Inflation affects the way the firm operates in many markets around the world. In general, they are able to increase prices to counteract the inflationary effects of increasing costs and to generate sufficient cash flows to maintain their productive capability.
With approximately 70 percent of the company s 1999 operating income generated outside the United States, weakness in one particular currency is often offset by strengths in others over time. Coca-Cola uses derivative financial instruments to further reduce their net exposure to currency fluctuations.
Euro Conversion
In January 1999, certain member countries of the European Union established permanent, fixed conversion rates between their existing currencies and the European Union’s common currency (the Euro).
The transition period for the introduction of the Euro is scheduled to phase in over a period ending January 1, 2002, with the existing currency being completely removed from circulation on July 1, 2002. The Company has been preparing for the introduction of the Euro for several years. The timing of their phasing out all uses of the existing currencies will have to comply with the legal requirements and also be scheduled to facilitate optimal co-ordination with the plans of their vendors, distributors and customers. The work related to the introduction of the Euro and the phasing out of the other currencies will include converting information technology systems, recalculating currency risk, recalibrating derivatives and other financial instruments, evaluating and taking action, if needed, regarding the continuity of contracts; and modifying their processes for preparing tax, accounting, payroll and customer records.
New Accounting Standards
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 133 (SFAS No. 133), Accounting for Derivative Instruments and Hedging Activities. The statement requires all derivatives to be recorded on the balance sheet at fair value and establishes new accounting rules for hedging instruments. This company will have to change its process to comply with the above.
Socio-cultural Influences
Things like income distribution, population and life style will affect the firms decision of whether or not to branch out into a certain region.
Levels of education will decide whether the right staff is available before new factories are set up.
Technological influences like speed of technological transfer and rate of obsolescence have to be borne in mind before new expensive equipment is purchased. The firm can not afford to waste funds on soon out of date equipment, especially with Pepsi close behind.
Coca-Cola though a multinational organisation operates in a static environment where the future can be easily forecasted.
The company s core competence is the brand name and image of Coca-Cola, though their marketing and distribution channels come a close second.
The company claims to be a corporate citizen whose first duty is to the public and its customers, however I believe that their first loyalty is to their shareholders and the board of trustees.
The ultimate objectives of Coca-Cola s business strategy are to increase volume, expand their share of world-wide non-alcoholic ready-to-drink beverage sales, maximise our long-term cash flows and create economic-value-added by improving economic profit.
Coca-Cola has more than 16 million customers around the world that sell or serve their products directly to consumers. There are nearly six billion people in the world who are potential consumers of the Company’s products. Ultimately, their success in achieving their mission depends on their ability to satisfy more of the beverage consumption demands and the company s ability to add value for its customers.
From the above strategic analysis I would say that the company s strengths are
The brand name Coca-Cola Coke
The image of the company/product (the real thing)
Their position in the market
Their weakness
The fact that the product can be easily substituted (customers will go for a cheaper alternative if need be since the product is not that dissimilar in taste and appearance to rival products)
I see their main opportunity as the company forging new markets and their main threat is the presence and continuing growth Pepsi-Cola.