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Transcript of Rooy Contemporary Assignment
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Contemporary Developments in Business and Management (SIM 337)
Name: Trịnh Quang Minh (Rooy)
Lecture : John Davison
Introduction
SWOT Analysis:
SWOT analysis stands for Strength, Weakness, Opportunities and Threat and it is used to
identified the current situation of company and assume company future based on the current
situation as well.
Strength
Coca-cola has been considered as a part of American culture for long time ago, so one of the
most important strengths of Coca-cola is brand recognition. Coca-cola brand image is shown
on items listing from souvenirs to clothing so that the Coca-cola can differentiate its product
brands to other competitors. Moreover, another point for Coca-cola strength is that Coca-cola
is owning four of top five non-alcoholic beverage brands: comprising Coca-cola, Diet Coke,
Sprite and Fanta. Therefore, it is proved that Coca-cola is prominent in having wide variety
products in market comparing with other competitors. Thirdly, product line of Coca-cola have
high market share in US market. According to Datamonitor (2011, June), Coca-cola market
share in 2010 was 42% comparing to Pepsico’s market share of 29.3%. Coca-cola also has the
largest distribution system to produce products in global level. Finally, Coca-cola has 500
brands and 3,500 beverages being sold to customer in over 200 countries around the world.
Moreover, there are 55 billion beverage servings used in globe per day and 1.7 billion of those
servings are trademarks belonged to Coca-cola.
Weakness:
Datamonior mentions that in 2010, smart water PET Bottles were recalled in North America
because Coca-cola products could not reach the FDA’s quality standard for bottled water.
Moreover, in recent years, customer awareness for their health has been increasing day by day,
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therefore, they tend to eliminate soft drink such as Coca-cola which can cause obesity and
diabetes for them.
Opportunity:
Complementary food products tends to increase the drink consumption when drink and food
products are bought together, therefore, the company will develop its brand awareness through
complementary food products because that will let revenue and sale distribution increase as well.
Under the pressure of customer awareness in term of their health, the company will invent new
product with no sugar such as Diet Coke in order to create new market orientation for these
customers.
Threat:
Health issue is the challenge for Coca-cola soft drink to sell these products to customers. Health
advocates suggests people to eliminate customer’s consumption of high fructose com syrup
(HFCS), a kind of sugar containing in Coca-cola products. Moreover, the United State
Government has increased a lot of regulations related to carbonated drinks, and some public
school systems as also prohibited soft drink sold on their campus as well. Besides, customer
preference also tends to consume healthier products, therefore, the company revenue eventually
decreases . Even though Coca-cola has some alternatives, especially Diet Coke, but that cannot
change situation because the soft drink possesses 77% of Coca-cola’s sale. Another point is that
water scarcity also has effect on Coca-cola company because Datamonitor predicts that the
demand for purified water will increase by 56% comparing to what people are currently
consuming, which leads the production costs in the future increase as well.
Five forces analysis:
According to Investopedia, 5 forces analysis is model identifying and analyzing 5competive
forces such as competition, potential of new entrants into industry, power of suppliers, power of
customers, and threat of substitute products. 5 force analysis used to determine corporate
strategy for companies in getting profitability and attractiveness.
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POTENTIAL ENTRANTS:
New entrants are not a strong competitive pressure for the soft drink industry. Coca-Cola and
Pepsi Co dominate the industry with their strong brand name and great distribution channels. In
addition, the soft-drink industry is fully saturated and growth is small. This makes it very
difficult for new, unknown entrants to start competing against the existing firms.
Another barrier to entry is the high fixed costs for warehouses, trucks, and labour, and
economies of scale. New entrants cannot compete in price without economies of scale. These
high capital requirements and market saturation make it extremely difficult for companies to
enter the soft drink industry therefore new entrants are not a strong competitive force.
Capital requirements for producing, promoting, and establishing a new soft drink traditionally
have been viewed as extremely high. According to industry experts, this makes the likelihood of
potential entry by new players quite low, except perhaps in much localized situations that matter
little to Coke or Pepsi. Yet, while this view may reflect conventional wisdom, some industry
observers question whether a new time is coming, with 'new age' beverages selling to well-
informed and health-informed and health-conscious consumers. This issue was beginning to
grab the attention of both Coke and Pepsi in the summer of 1992, when they both were not able
to explain a drop in their June 1992 sales.
SUBSTITUTES:
Numerous beverages are available as substitutes for soft drinks. Citrus beverages and fruit juices
are the more popular substitutes. Availability of shelf space in retail stores as well as advertising
and promotion traditionally has had a significant effect on beverage purchasing behaviour.
Overall total liquid consumption in the United States in 1991 included Coca-Cola's 10% share of
all liquid consumption.
“For years the story in the non-alcoholic sector centred on the power struggle between Coke and
Pepsi. But as the pop fight has topped out, the industry's giants have begun relying on new
product flavours and looking to noncarbonated beverages for growth.”
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Substitute products are those competitors that are not in the soft drink industry. Such substitutes
for Coca-Cola products are bottled water, sports drinks, coffee, and tea, juices etc.
Bottled water and sports drinks are increasingly popular with the trend to be a more health
conscious consumer. There are progressively more varieties in the water and sports drinks that
appeal to different consumer's tastes, but also appear healthier than soft drinks.
In addition, coffee and tea are competitive substitutes because they provide caffeine. The
consumers who purchase a lot of soft drinks may substitute coffee if they want to keep the
caffeine and lose the sugar and carbonation.
Blended coffees are also becoming popular with the increasing number of Starbucks, Barista and
CCD stores that offer many different flavours to appeal to all consumer markets. It is also cheap
for consumers to switch to these substitutes making the threat of substitute products very strong
(Datamonitor, 2005).
The growth rate has been recently criticized due to the market saturation of soft drinks.
Datamonitor (2005) stated, “Looking ahead, despite solid growth in consumption, the global soft
drinks market is expected to slightly decelerate, reflecting stagnation of market prices.” The
change attributed to the other growing sectors of the non-alcoholic industry including tea &
coffee is 11.8% and bottled water is 9.3%. Sports drinks and energy drinks are also expected to
increase in growth as competitors start adopting new product lines.
Profitability in the soft drink industry will remain rather solid, but market saturation has caused
analysts to suspect a slight deceleration of growth in the industry (2005). Because of this, soft
drink leaders are establishing themselves in alternative markets such as the snack, confections,
bottled water, and sports drinks industries.
In order for soft drink companies to continue to grow and increase profits they will need to
diversify their product offerings. So in order to compete with the substitutes industry, coca-cola
has diversified from just carbonated drink industry to other substitute and so have other brands
like Pepsi, Dr pepper/Snapple.
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BARGANING POWER OF BUYERS:
Individual consumers are the ultimate buyers of soft drinks. However, Coke and Pepsi's real
'buyers' have been local bottlers who are franchised -or are owned, especially in the case of
Coke- to bottle the companies' products and to whom each company sells its patented syrups or
concentrates. While Coke and Pepsi issue their franchise, these bottlers are in effect the 'conduit'
through which these international cola brands get to local consumers
Through the early 1980's, Coke's domestic bottlers were typically independent family businesses
deriving from franchises issued early in the century. Pepsi had a collection of similar franchises,
plus a few large franchisees that owned many locations. Until 1980, Coke and Pepsi were
somewhat restricted in owning bottling facilities, which was viewed as a restraint of free trade.
Jimmy Carter, a Coke fan, changed that by signing legislation to allow soft-drink companies to
own bottling companies or territories, plus upholding the territorial integrity of soft-drink
franchises, shortly before he left office.
Also, the three most important channels for soft drinks are supermarkets, fountain sales, and
vending. In 1987, supermarkets accounted for about 40% of total U.S. soft drink industry sales,
fountain sales represented about 25%, and vending accounted for approximately 13%. Other
retailers represent the remaining percentage.
While both Coca-Cola and Pepsi distribute their bottled soft drinks through a network of
bottling companies, Coca-Cola uses its own network of wholesalers for their fountain syrup
distribution, and Pepsi distributes its fountain syrup through its bottlers.
BARGANING POWER SUPPLIERS:
The principal raw material used by the soft-drink industry in the United States is high fructose
corn syrup, a form of sugar, which is available from numerous domestic sources. The principal
raw material used by the soft-drink industry outside the United States is sucrose. It likewise is
available from numerous sources.
Another raw material increasingly used by the soft-drink industry is aspartame, a sweetening
agent used in low-calorie soft-drink products. Until January 1993, aspartame was available from
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just one source -the NutraSweet Company, a subsidiary of the Monsanto Company- in the
United States due to its patent, which expired at the end of 1992.
Coke managers have long held 'power' over sugar suppliers. They view the recently expired
aspartame patents as only enhancing their power relative to suppliers.
Globalization:
1. What is globalization:
According to Hamilton, L and Webster, P (2009), globalization comprises the creation of
linkages or interconnections between countries. It is considered as a process in which barriers
(Physical, political, economic, cultural) separating different regions of the worlds are limited or
canceled in order to stimulate exchanges, in services, workforce, money and so on.
According to The Coca-Cola Company, in 1984 the Foundation was established in USA
considered as charitable organization. Globalization helps Foundation to support student
scholarships and other education programs and initiatives, HIV/AIDS prevention as well as
awareness programs in Africa and Latin America and so on. Therefore, Coca-cola company
bring not only its popular and famous image in term of product and service, but also emotional
and heart-to-heart picture to people in all over the all in general and customer of Coca-cola in
particular. However, globalization also affects badly to Cocacola company itself. Globalization
helps the company sell its carbonated drink in more than 200 countries and become popular in
the world. However, The globalization of the Coca-Cola Company has created hatred and
distain throughout the world. “Many countries have tried to ban” (Barlow, 2003; Zinn, 2002) the
use of Coca-Cola products, claiming that Coca- Cola is “threatening public health, aggressively
pursuing youth in schools as potential new customers and to encouraging students to understand
themselves principally as consumers rather than citizens.” (Barlow, 2003; Zinn, 2002) The Coca-
Cola Company faces accusations of “privatizing water supplies in Chiapas, Mexico, undermining
workers’ rights in Central and South America by threatening union
organizers with death, using sweatshop child labor and failing to provide adequate healthcare
benefits to workers with AIDS in South Africa.” (Barlow, 2003; Zinn, 2002)
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Competitive `Environment
Q1: Measure of industry concentration of CR3 is measured by taking the total share of 3 largest
companies in industry sales. For example, A, B and C are 3 largest firms in their field, so the
calculation for CR3 is CR3 = Market share of A + Market share of B + Market share of C.
Measure of industry concentration of CR5 is measured by taking the total share of 5 largest
companies in industry sales. For example, A, B, C, D and E are 5 largest firms in their field, so
the calculation for CR5 is CR5 = Market share of A + Market share of B + Market share of C +
Market share of D + Market share of E.
None of them is appropriate for Cocacola situation as well because in beverage market in
worldwide, there are 3 largest firms in market share which are Pepsi (31%) and Coca-cola is
(43%) and Dr.P/7 Up (15%), therefore, the measure of industry concentration of CR 2 is CR 2 =
Market share of Pepsi + Market share of Coca cola +Market share of Dr.P/7 = 31% + 43%+15%
= 89%.
Q2:
According to Dwivedi, D.N, oligopoly is considered as an industry where there are few
companies involve, therefore, those few companies depend not only on their own policies but
each other. Those firms in oligopoly can utilize both low and high price strategy to maximize
their profit.
According to Economic Discusstion (2012), Coca-cocla is in oligopoly market with Pepsi
because both of them possess most of the US market share in soft drink industry, that also
reassures that on the list of top beverage company position, Coca-cola co takes a lead, the
runners is Pepsi co. Moreover, the products Coca-cola and Pepsi are selling is homogeneous
products, so they can easily change the price to be compatible with kinked demand curve, that is
the reason why both of firms are always on the top selling on their products. For instance,
according to Christ, G (2011), in 2010 Coke sold 1.59 billion cases for 17% of market share.
Diet coke sold 926.9 million cases for 9.9 percent of market share, and Pepsi sold 891.5 million
cases for 9.5 % of market share; and they are on the top of sale from top 10 list of beverage
industry.
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Chris, G (2011) mentions that Cocacola and Pepsy both use low and high price strategy as
repeated action at the same time to keep the market share from the assaulting of new competitors
and maximize the profit. For instance, according to Singh, P and Delhi, N (2012) when summer
comes, this is the time for Coca and Pepsi increase the price of 600 ml PET bottles because
summer is the time for top sales, possessing about 30-40 percent of their annual sales.
Cocacola and Pepsy have also signed cartel contract in order to let the new potential competitors
not enter to the abundant beverage market of them. For example, Coke and PepsiCo have
proposed franchisee agreements with their existing bottle’s manufacture in certain area and own
an amount of percent of bottling companies. Therefore, new rivals fall uneasy task for
purchasing bottles from manufactures readily to distribute for them.
Q3:
Threat of new entrant
According to The Coca-Cola Company, Coca-cola owns more than 500 beverage brands
inclusive of over 3,500 beverages ranging from full, reduced, and no-calorie sparkling beverages
to energy drinks, teas, fruit drinks, water and so on. Moreover, there are different sizes in
various products in order to be compatible with customer demand. For instance, in US Coca-
cola produced the 8-ounce, 100-calorie aluminum cans of Coca-cola, Cherry Coke and Sprite in
2007 or Coca-cola mini cans in 2009. Therefore, the product differentiation is high in Coca-
cola leading the threat of new entrant is very low because it is difficult challenge for new
entrants to enter the market with an amount of different product to attract customers.
Brand identification of Coca-cola is very high because it possesses the most market share of
beverage drink market. Facebook more than 57 likes
Financial
Q1
Bronfenbrenner and Holzman (1963, p.599) defies “Inflation is a condition of generalized excess
demand, in which “too much money chases too few goods”, therefore, inflation affects
everybody and it poses a threat to the economic stability of a nation.
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Inflation has large impact for Coca-Cola business on beverage market because inflation causes
the increase of material cost and supplies’ cost, and leads to different consequences as well. For
instance, when price of aluminum increases because its suppliers have abundant firms want to do
business with them, Coca-cola must eventually pay high cost for suppliers for maintaining the
suppliers. Therefore, in order to compensate for the extra cost and get profit, the firm
consequently increases the price all kind of products as well. However, in some situations that
when customers must pay for higher price to consume Coca-cola drinks, they eventually spend
less money for another substitute they want to enjoy. As a consequence, they must reduce
expense for Coca-cola products to meet their demands with another products, that will cause the
lower revenue of Cocacola as well. Eventually, the company must lay off the employees or
reduce their salary to cover for the loss of profit. Therefore, it can be said that inflation is the
factor for success or failure of the company and it cannot be avoidable in market.
Exchange rate also influence to Coca-Cola business in America because it bring not only
advantage in international competiveness for the firm, but drawbacks as well. For instance,
assuming that the Coca-cola company in US produces an amount of concentrate which is 1
million dollar, and then sells to licensed Coca-cola bottlers in UK with the price after exchanging
(1 dollar = 0.7 (0.75 euroo)pound in 20 January, 2013) that is 700,000 pound. If the exchange
rate of dollar increase 10% comparing with dollar (1 dollar = 0.63 pound), Cocacola obviously
gets profit of 70,000 pound, however, Cocacola products is consumed less in UK market because
the price of the products is more expensive than real value when translated back to UK currency.
Therefore, it can be said that exchange rate changes happens accidentally and has effect on Coca-
cola business which is why the company should choose the right time with the right partner to do
business.
Q2: Financial and economic crisis effect, effect on company
According to Investopedia, economic crisis is considered as a circumstance when the value of
assets and financial firms decreased rapidly. Economy In Crisis (2012) mentions that economic
has effects on USA remarkably. Firstly, inflation is turning to job-destroy deflation that is
unable to employ all US people wanting job at that time. Secondly, interest rates are as low as it
was at post-World War 2 leading to lack of investment. Thirdly, Federal debt as a percent of
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GDP will soon hit levels last experienced immediately after World War II — (121 percent of
GDP in 1941).
Financial and economic crisis have large effect on Coca-cola company. Firstly, because
unemployment rate is high in America when economic crisis occurred, people would not spend
money for unnecessary products like Coca-cola soft drink for their essential standard, but focus
on food to live. Secondly, interest rate in USA was down, American people tried to invest all
money to bank for the purpose of getting more profit as much, which leads their spending on
products such as Coca-cola to decrease as consequence.
Q3
International Deposit Interest Rates Exchange explains that “Interest Rate refers to a specified
amount of money paid by institutions on the use of cash deposits over a period of time. The
Interest Rate also consists of the amount of money a borrower will pay a lender for the use of
their funds over a period of time”. Hamilton, L and Webster (2009) explains that when interest
rate increase, cost of borrowing to business also increases, which depress the demand of products
and services.
When interest rates in America changes, it affect strongly on Coca-cola firm borrowing in USA
because of the fact that Coca-cola always frequently take out long-term debt for infrastructure,
advertisement and other different project as well. Therefore, the higher the interest rate are, the
more cost the company will take from debt so that businesses of Coca-cola cannot commit the
funds to projects plans as well. Moreover, Coca-cola firm also has short-term load to cover for
shortfall in small expenses, so higher the interest rate, the more money the company must pay
back to lenders as well.
Interest rate also affects on business strategy of Cocacola firm in USA. Assuming that Cocacola
is planning to construct a entertainment building for children with total capital 10 million USA,
and the profit this construction can bring to Coca-cola is 5% per year better than 4% interest if
capital is put to bank. However, the interest rate of USD increase as 6% in 2013, therefore, it
makes the company consider on return on investment and put the capital for the construction
instead of carrying it out.
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Finally, interest rate also affect investment to Coca-cola so that when the company sells the stock
publicly to increase capital, share price is bounded to company’s stock, however, the interest rate
suddenly increases more than the dividend from share for investors, interesting level and demand
of investors for Coca-cola share is down and they eventually have tendency to put the money to
banks because guarantees for higher interest rate makes investors attractive and secure instead of
investing on share with lower interest.
It can be assured that interest rate affects on every business plans of Coca-cola Company, so the
company should consider and analyze projects with the best strategy in finance to avoid barriers
coming from interest rate.
Ecological
1. How might global warming and climate change impact on your organization or industry
According to Maslin, M (2007), global warming happens because of the massive increase in
greenhouse gases such as carbon dioxide that we are creating in atmosphere from trashes,
contaminated emission from companies and so on makes the world become hotter and hotter.
Global warming and climate change have effects on the Coca-cola Company in good and bad
sides. In aspect of good sides, when climate is becoming warmer, temperature is also high in
summer in USA and other countries, soft drink eventually becomes main consumption for
customers to fresh themselves before the hotness. Therefore, bottled water products in Coca-
cola can make profit from that and leads the sale of the company to soar rapidly.
In aspect of bad sides, Hamilton, L and Webster, P(2009) explain that global warming and
climate change caused by green-house gas from anthropogenic sources is carbon dioxin (CO2),
and Coca-cola and other companies must be responsible 40% for this emission which will
contaminate the water as well. Therefore, it is easy for company to create unqualified products
from polluted water unless the company must pay an amount of money for testing water quality
and follow the governmental policies of green-house emission concerns in order to create
qualified products to customers. Moreover, when green-house emission happens, an amount of
people get diseases related to respiration or they become more suspicious about Coca-cola drinks
which can be made from contaminated water as well.
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It can be concluded that global warming and climate change has influential impact for business
of Cocacola in both positive and negative sides. Therefore, the company should take advantage
for good sides such as increasing quantity of products in summers to maximize profits or limiting
CO2 emissions and following the policies for green house emission to protect customer vitality
and create their beliefs and loyalty.
2. Kyoto protocol (1997)
According to United Nations Framework Convention on Climate Change, Kyoto Protocol is
considered as “an international agreement linked to the United Nations Framework Convention
on Climate Change.”
According to Global Climate Change Research Area (1997), it proposed 5 key provisions to
protect environment. Firstly, Kyoto Protocol has purpose to cut enormous greenhouse gas
emissions from USA, Croatia, Australia, Iceland and so on at least 5% from year 2008 to 2012.
Secondly, USA suggested that all countries having high percentage of emission may set
voluntary reduction targets rather than voluntarily agreeing to binding limits. Thirdly, Kyoto
Protocol will be carried out for signature in March 1998 and March 1999 to create force for 55
Parties to the Convention, comprising parties that reduced at least 55 percent of CO2 emission in
1990. Fourthly, the next meeting of the treaty parties will choose the most appropriate to deal
with non-compliance. Finally, Kyoto Protocol supports several kinds of flexibility to achieve
reductions, but the specific factors about scope, principle and implementation have not been
defined.
Kyoto protocol provisions have impact for Cocacola Company in USA because those provision
helps the company know the voluntary reduction target at least 5% for green-house gas
emissions from 2008 to 2012. Moreover, Cocacola company must implement those provision
seriously under the control of USA so that if the company cannot follow provisions, it will be
pubnished by American Government Policies. However, flexibilities made from Kyoto Protocol
details of scope, principle and implementation is not defied, so it is difficult for Coca-cola firm
complete it on the right track.
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Legal
Q1.Health and Safety laws affect organization
Longman Dictionary of Contemporary English mentions that Health and safety at Work Act is “a
set of laws made in the UK in 1974 in order to protect people at work and make sure that they do
not have to work in dangerous conditions, without the proper clothing or safety equipment etc.”
According to The Coca-Cola Company, Coca-cola company follows the Health and Safety laws
of USA through creating “The Coca-Cola Safety Management System” or “TCCSMS”. This
safety management system recognizes and reduces the risks in operation and controls it effective
to create safety to visitors and workers as well. However, in order to implement Health and
Safety law, the company needs to pay a quite bit expense to provide safe machinery and
premises as well as protective devices for employees. Some costs are also added for training
employees how to use machinery and premises safely, maintaining machinery and premises, and
especially paying compensation for employee and visitors injuries as well. In another the aspect,
the result for implementing Health and Safety will eventually leads the company to achieve good
records that will make breakthrough in its reputation. Based on that, the company can create the
beliefs for current workers working in Coca-cola and attracting recruitment for good worker as
well.
It is concluded that Health and Safety laws has impact on Coca-cola because it makes the
company waste money in order to put these laws into operation, however, based on this
implementation, the company can get benefits such as creating beliefs to workers or reputations
for company as well.
Q2. Bribery and corruption can have damaging effects on international trade. What are some of
the national and international laws that are most relevant in this area.
According to The Coca-Cola Company, it applies Code of Business Conduct and Anti-Bribery
Policy to provide leading on how to approach business fairly, ethically and legally. For example,
the company conducts anti-bribery audits to increase the overall awareness, detect prospect
misconduct and control compliance with anti-corruption laws and Coca-cola policy. Moreover,
after becoming signatory of United Nations Global Compact, the company follows the laws of
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UNGC and cooperates with other firms and nongovernmental organizations to combat against
corruption. Coca-cola Company mentions that, the company also became signatory of World
Economic Forum Partnering Against Corruption Initiative (PACI) and it has been following the
principles and policy of PACI in order to fight against the corruption.
Social-cultural environment
Q1. Choose one of the social cuture
According to Publish your article, social-cutural environment is considered as “a collection of
social factors affecting a business and includes social traditions, values and beliefs,
level of literacy and education, the ethical standards and state of society, the extent of
social stratification, conflict and cohesiveness, and so forth.”
According to Neusner (2009), most of American people are religious and they considered God is
the most believable majesty is their life. Therefore, even though what happens in their life, they
eventually pray and request God’s salvation as well. Most of American people are Christian and
they often go to church every week for praying and sometimes organize baptism events for their
children as well.
Forbes, B. D and Mahan, J. H( 2005), Coca-Cola Company considers its business as a religious
duty through let religious influence be entered to customer lives. For instance, Coca-cola
brought to customers its religious and orthodox image of Santa Claus in 1931 through displaying
a fat, beaded, attractive old character decorated up in Coca-cola Red. It became the most
influential symbol for life intention of America soldiers in World War 2, and represented for the
most sacred time after wars. Therefore, Coca-coca becomes the most popular soft drink for all
Christian people in American, that is reason why Coca-cola is always on the top sale and has the
number one position on beverage market in USA.
Forbes, B. D and Mahan, J.H (2005) also mentions that there are some skeptic ideas justifying
that Cocacola is not a religion but a products that are effectively advertised, marketed and
distributed to customers. However, at the fact that advertising is becoming the new religion of
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modern capitalist society, and fetish becomes important point for Coca-cola to influence
customer’s spirit through symbol of coca-cola design.
In the aspect of organization inside, it is easy to employee and managers to work and sympathize
together when all of them have the same religion that is Christian, therefore, even though what
problems happens, arguments and quarrels are always eliminated to have good solution as God
teaching.
Finally, it can be concluded that there is no right and wrong aspects of Coca-Cola to customers
and employees because it uses the right strategy at the right place and culture. Even though
Coca-cola makes the blind faith in God through its products, it brings the best quality and service
to customers with happiness when drinking Coca-cola.
Q2: Increase of urbanization
According to Long (1998), urbanization is considered as “the process by which large numbers of
people become permanently concentrated in relatively small areas, forming cities”. Natural
increase of urbanization can happens if natural population growth in the cities ans higher than in
the rural area.
According to U.S. Environmental Protection Agency, the total part of land in USA that will be
improved and decorated into cities and it is considered to increase from 5.2 percent to 9.2 percent
before year 2035 because of urbanization in its country. Rural people migrate to cities because
they want to change his life and settle down with better job or they are desired by modernization
of metropolitan life. Therefore, Coca-cola can take advantage to recruit an amount of workforce
with small salary but satisfy them because they are received fully welfares they want to have
when migrating to cities such as salary better than rural area, good workplace, protective
assurance in working, reward, training (education) and so on, that makes they feel their dream
come true. Eventually, they will work for Coca-cola harder than urban or current employees so
that they leads the productivity increases so much. Moreover, when people migrates to cities in
American, they obviously have jobs with better payment and welfare so that their standard of life
is in higher level comparing to their previous life, therefore, they can consume basic needs like
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food and drink as well; therefore, Coca-cola can sell an amount of products to this new customer
target as well to increase the revenue.
However, disadvantage of migration also exists for Coca-cola Company because the company
must expense remarkably an amount of money and time to training from beginning for rural
people before they are applied to work. Moreover, control an amount of employee having
experience in work becomes difficult tasks for managers, therefore, it is reasonable if managers
put managers into right workplace to make them maximize their work as well.
It can be concluded that urbanization affects Coca-cola on 2 sides which are positive and
negative ways, but the company itself should maximize the good ways and minimize the bad
ways to lead the company to have high sale on beverage market.
Q3: Demographic changes
According to Smithsonian (2010), the United States is also expected to grow somewhat older.
The portion of the population in 2010 at least 65 years old—13 percent—is expected to reach
about 20 percent by 2050. However, even as the baby boomers age, the population of working
and young people is also expected to keep rising, in contrast to most other advanced nations
because America’s relatively high fertility rate 50%. Between 2000 and 2050, census data
suggest, the U.S. 15-to-64 age group is expected to grow 42 percent. the United States is likely
to have more than 350 million people under 65 with the next 4 decades.
Migration is becoming the main force in US life because it is estimated that 2 million people a
year will move from poorer to developed countries, and half of those mostly is educated, skilled
migrants will move to America in the next 40 years to settle down.
Those demographic changes have remarkable effects on Coca-cola business. Firstly, when baby
boomer age will increase 20% by 2050 from 13% in 2010, they will tend to be more worried
their health and longevity so they will not consume beverage drink of Coca-cola containing
unsuitable components for their health as well. However, 42% growth of US 15 to 64 group
leading to have more than 350 million people under 65 age in the next 4 decades creates an
impact for Cocacola sale because the company can take advantage to sell out an amount of
products serving for young and working people who have high demand for beverage drink.
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Finally, the increase of migration not only helps the company have new target customers to sell
products, but the company can recruit skilled and educated people from them because in 2000,
US was home of 12.5 million skilled immigrants, and large American Companies are
increasingly lead by people with roots in foreign countries, including 15 of the Fortune 100
CEOs in 2007.
TECHNOLOGY
1. New technology is a source of opportunities and of threats and challenges in business.´
Illustrate this statement with example and illustration based on your chosen organization
and industry.
Food Safety and Inspection Service defined new technology as “new or, new applications of,
equipment, substances, methods, processes, or procedures affecting the slaughter of livestock
and poultry or processing of meat, poultry, or egg products.”
According to Coca-Cola Company, Coca-cola Company has improved and experimented
beverage process water recovery system in order to manufacture qualified water that satisfies or
goes over the drinking water standards for utilizing in non-product operations such as bottle
washing or clean-in-place. This technology brings a lot of opportunities for the company in
business and economics. For instance, Coca-cola company in US can not only develop water
utilization efficiency to 35%, but also support for economic increase opportunity and local
communities. Moreover, this system also economizes 100 billion water liters annually if it is
applied to all bottling plants.
Along with opportunities, there are threats in setting up beverage process water recovery
system. It is likely difficult to implement this system with investment in North America or
Europe because of the existence of strict regulations and standards in those area. Moreover,
the company must take the highest responsibility for customer health when implementing this
water recovery system, therefore, it unintentionally creates pressure for Coca-Cola company
to create this system completely perfect.
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2. In relation to your chosen organization, and industry sectors, explain what is meant by the
following terms: “e-business”, “e-commerce”, “b2b and b2c”
Investorworld proves that e-commerce is the buying and selling of products and services through
electronic transaction on internet and so on. E-commerce is separated into 3 categories that are
business to business(B2B), business to customer (B2C) and customer to customer(C2C).
However, in Coca-cola firm, B2B and B2C is mostly used in the whole business transaction as
well.
B2B is a transaction happening between a firm and another firm without any third party such as
consumer or so on. The Coca-cola firm’s entrepreneur is owning an amount of retailers and 300
bottling partners from international traded business to small, family owned operations; and is
owning, leasing and implementing 500 plants all over the world in all over the world. Therefore,
it is necessarily needed to implement B2B through internet to have strong relationship with
partners, plants, wholesalers and retailers and have easy interaction about the price, the number
of materials, finished products needed to be delivered and so on to them.
B2C is a transaction happening between a firm and a consumer and B2C is opposite to B2B as
well. Cocacola company is implementing 2 kind of search engines for B2C that are crawler
based search engine such as Google and human powered directories such as Yahoo. Therefore,
customer can search information and price of Coca-cola through Google, Yahoo and other
website so that they can have an amount of links concerned to Cocacola in order to make online
transaction or know exactly what kind of products they will buy. Moreover, Cocacola firm also
created online advertisements through social network website such as Myspace, Facebook and
Twitter to affect its image to social life of customers. Therefore, customer can easily suggest
positive and negative ideas about Coca-cola products and service as well publicly to the firm in
order to help Cocacola co improve its mistakes quickly and have new step-up improvement in
the future.
Coca-cola adopts different kinds of electronic internet transfers payment for B2B and B2C such
as Visa, MasterCard, American Express, Discover, Paypal and so on through its encryption
secure website in order to make customer feel convenient and happy for their payment as well.
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3. New materials affect Cocacola
According to Coca-cola Company, in 2009 the company implements new material that is
PlantBottle ™ package, the first recyclable Pet plastic bottle made from plant. This new material
creates an impact for Coca-cola company because PlantBottle ™ is fully recyclable Pet
(polyethylene terephthalate), the company use less fossil fuel for making these bottle, which is
why Coca-cola’s dependence is reduced on non- renewable resources. Furthermore, PlantBottle
™ package is considered to be friendly with environment, which creates unforgettable image for
customers when using Coca-cola products, so the revenue will crease because existing of
PlantBottle ™ package.
In 2007, Coca-cola company produced the “Drink2Wear” fashion made from recycle plastic
bottles, and the main product is Drink2Wear T-shirts featured with slogan such as “Make your
Plastic Fantastic” or “Rehash Your Trash”. In 2008, the company widened product ranges to
comprise totes, loungewear, and caps. Those products have effect for the company by having
sale of more than 1 million products, resulting in more than $15 million in retail sales.
Furthermore, the company also saves the cost of 5 million PET bottles by reusing and diverting
them from its waste stream. Finally, the higher the fashion sale, the more people know about
coca-cola because Drink2Wear fashion indirectly advertise the Coca-cola to all people through
Coca-cola logo attached on the clothes.
Assuming that the company will implement new food product mixing with Coca-cola soft drink
into market, which will specially have impact for Coca-cola company. Firstly, those new
products will attract an amount of customers who are curious and ready to try new food products
from famous firm like Coca-cola. Moreover, creation of new food products will create
breakthrough in market and can lead the company to have competitive advantage when
comparing with Pepsi and others in term of food and beverage.
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