Custom Coca Cola essay paper sample
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The business environment is very dynamic. There are always a lot of threats to the company's growth and opportunities for growth. This paper is going to use the PEST analysis to evaluate the Coca Cola company threats and opportunities.
Expanding non-carbonated category: The non-carbonated beverage segment has been growing at a fast rate (Mennen 43). Opportunities for growth remain strong as people are becoming more health conscious thereby avoiding carbonated drinks in favor of non-carbonated. There is immense opportunity for the juice section, fortified drinks and energy drinks.
Strong growth in emerging markets: Emerging markets such as Brazil, China, Mexico and Russia has been experiencing strong growth that has increased their citizens' purchasing power leading to increased consumption. Opportunities for growth remain strong.
Expanding bottled water market: The market for bottled water has been growing tremendously due to rise in consumption trend favoring health. The global water market grew by 8.5% in 2005 with Coke's Dasani brand being the third most popular brand behind PepsiCo's Aquafina (Miriam 26).
Acquisitions: There are opportunities for acquisitions as demonstrated by the recent acquisition of Honest Tea. The company can use such acquisitions to increase its market share and to venture into new market segments. In Germany Coca cola acquired Apollinaris which sells sparkling and still mineral water in several Eurpean countries. Coca-Cola also acquired TJC Holdings, a bottling company in South Africa. These acquisitions give Coca- Cola growth opportunities either through new product launch or greater market penetration.
Growing population of Hispanics: The number of Hispanics, a major consumer of Coca Cola products, has increased and continues to increase in the U.S. In 2006 there were 11.6 Hispanic households in the U.S with a population of 42million and a buying power of $ 1trillion in 2008. This presents a huge market for Coca Cola (Miriam 75).
Strong brand recognition: Coca Cola is a strong brand present in about 200 countries (Miriam 47). It is well known and appreciated for quality and consistent. Sponsoring various games like the NBA and advertising in major world games like Olympics and World Cup creates more awareness of the brand a strength the company can use as a selling point.
Sluggish growth of carbonated beverages: As consumers are becoming more health conscious, they are tending to limit consumption of carbonated drinks for their association with obesity in the developed world. This is already affecting the sales of carbonated drinks. If the trend continues, it is going to pose a major threat to Coca Cola. Weak growth in developed countries: While growth has been strong in emerging markets, the same cannot be said of the developed countries in Europe and the U.S. Growth in the developed world has been sluggish.
Intense comppetition: The competition in the soft drinks market is fierce and will remain so. Coca Cola is under threat from PepsiCo in the U.S. market where PepsiCo innovation has outdone Coca Cola. PepsiCo entered the non-carbonated drinks well before Coca Cola. Its Aquafina water is the second most popular brand in U.S ahead of Coca Cola's Dasani. Intense competition in the non-carbonated segment is a threat even in emerging markets (Yoffie 36).
Safety issues: There have been concerns over the safety of some of the products in different countries. Coca Cola products made in Mexico are claimed to contain lead in the material used for writing on the bottle and on the product itself. In the U.S, the company was accused of packing tap water and selling it which led to a massive withdrawal of the water from the shelves. In India there have been accusations of presence of pesticide residue in Coca Cola's carbonated drinks.
Slow response to market trends: While PepsiCo is very quick in responding to market trends, Coca Cola's performance is wanting. The company response to emerging market trends is slow which threatens its future growth. Young people may see the company as old fashioned and therefore avoid its products. PepsiCo sales in 2005 surpassed those of Coca Cola for the first time in 112 years due to its ability to keep abreast with the emerging trends. Rising Costs of raw materials: Rising costs of sugar and packaging materials will have an effect on the Company's future growth.