Strategies And Firm Performance Competitive -Myassignmenthelp.Com

Question: Discuss About The Strategies And Firm Performance Competitive? Answer: Introduction Contemporary business organizations have to face different and diverse external and internal factors in their business operations. Moreover, due to the fact that majority of the contemporary business organizations operates in the global scenario, the business factors faced by them is more varied and complex in nature[1]. In this case, business organizations initiate strategic management concepts in order to deal with these organizational challenges[2]. However, it is also important for the business organizations to effectively determine the external and internal factors in order to identify the strategic issues and align their competitive advantages to that. This report will discuss about the internal and external factors faced by Coca cola in their global business operation. In addition, their sources of gaining competitive advantages along with identification of the competitive advantages will also be done in this report[3]. Competitive analysis will also be done in order to position Coca cola in terms of the competition in the market. Different strategic management tools will be used in order to determine their competitive advantages along with providing a few recommended steps to overcome the strategic issues. Variation and diversity in the business factors are more applicable for the large multinationals such as Coca cola due to the reason that these organizations are having their facilities in different countries around the world. In the present time, Coca Cola is one of the leading soft drink manufacturers in the global scenario. They are founded in 1886 and are based in the United States and are having their facilities in huge number of countries around the world[4]. However, in the recent time, they are facing the challenges in terms of intense competition mainly from Pepsi cola and other soft drink brands. In addition, various environmental factors in terms of internal and external stakeholders are also being faced by them. It is becoming urgent for them to effectively align their competitive advantages in line to their internal and external forces. It is a publicly traded organization with having number of shareholders from around the world. Analysis of the external environment Political One of the key issues being faced by them is the difference in the political and legal regulations in different countries[5]. Thus, it becomes difficult for them to adhere with all the regulations for their daily business operation. Another key strategic issue being faced by them in terms of the political factor is the issuance of the stringent norms regarding the carbonated soft drinks. This is proving challenges for them changing their entire product portfolio. Coca cola has faced various issues in terms of the unethical business practices. This is due to the reason that in different countries, they are accused for unethical business practices. This is creating negative impression of them in the market. Economical As discussed earlier, Pepsi cola is the main competitor of the Coca cola. They are also having huge market presence globally. There are number of local competitors in different countries, which are posing challenges for Coca cola in different countries. With the increase in the competition, the profitability of them is reducing. However, having the affordable product portfolio is helping them to cover more number of customer segments. However, more concentration on the carbonated drinks only is restricting their expansion potentiality. Social One of the key issues in terms of the social factors is the reduction in the preferences of the customers towards carbonates drinks. Thus, the demand is falling. Taste and preferences pattern of the global customers are rapidly changing with the introduction of new products. Thus, it is becoming difficult for Coca cola to retain their existing customers[6]. In the recent time, customers are more preferring fruit juice and other energy drinks over the carbonated soft drinks. Brand loyalty among the younger customers is less due to the having the presence of number of options in the market and less switching cost. Technological Coca cola is having huge access to the capital and thus they are having larger capability to invest more in the latest technologies. However, in the food and beverage sector, technology is witnessing rapid change. It is a challenge for them to stay updated with the technology. In the recent time, technology is also being initiated in order to have less impact on the environment[7]. Thus, it is an extra cost for Coca cola to maintain in different countries. Due to the fact that Coca cola is selling customer products, they should also have to invest in enhancing and frequently upgrading their product packaging. Analysis of the internal environment Strengths Brand of value of Coca cola is huge and has presence in each and every corner of the world. Thus, it is beneficial for them to push their new products in the market effectively[8]. Enhanced brand value of them also helps them in effectively dealing with the authorities in different regions. Huge product portfolio of them helps to target diverse customers with different requirements. Majority of the products of Coca cola is affordable and mass market. Thus, the volume of the sales is more for them. Weaknesses Due to having the negative social impression regarding carbonated soft drinks, Coca cola is finding it difficult to increase their sales revenue. Though they are having diverse product portfolio, but majority of them is carbonated soft drinks[9]. Profit ratio from the products is low and thus, profit is not increasing with the increase in the sales volume. Accusations of number of unethical issues created negative word of mouth about the brand image of Coca cola. Opportunities Market for fruit drinks, energy drinks and other forms of nutritional drinks is rapidly increasing. Thus, Coca cola with their expertise will be able to tap in these markets. Coca cola is having own packaged drinking water and the market for it is increasing. Pepsi has already forayed in the snacks market and thus it is a huge opportunity for Coca cola to enter in this market and increase their sales potential. Coca cola is already having their facilities in different countries. However, having the major facilities in the developing countries will help them to reduce the cost of production. Threats The key resources for Coca cola are water and exploitation of the water resources will have negative impact in their future business operation[10]. Emergence of more number of competitors will further reduce the profitability of Coca cola. Change in the taste and preference pattern of the customers will further create uncertainly in the business. Analysis of the market trend and external forces Threat of new entrants There is huge cost involved in entering in the beverage sector. Moreover, to achieve the global operation and market presence such as Coca cola, new entrants will face difficulties. Moreover, the new entrants in the market will not being able to match with Coca cola in terms of production cost. However, the local competitors who have newly entered can pose challenge in the limited market. Thus, the threat of new entrants is moderate[11]. Threat of substitutes Beverage market is highly competitive in nature with the presence of similar kind of organizations. All the players in the market are offering similar products. Thus, customers are having more number of options along with low switching cost. Thus, the threat of substitutes is high[12]. Bargaining power of the customers Huge number of customers in the global market. Less dependence on particular customer segments. Huge brand value and brand loyalty helps in retaining the customers. Thus, the bargaining power of the customers is low. Bargaining power of the suppliers Coca cola is less depended on their suppliers due to the reason that their syrup is being made by them. Coca cola is having much more brand value and influence compared to their suppliers. Huge number of suppliers present in the market. Thus, the bargaining power of the suppliers is low. Industry rivalry Good number of competitors present in the market. Having similar product portfolio. Innovative and aggressive marketing activities are being initiated by them in order to stay ahead in the competition. Thus, the industry rivalry is high. Identification of the sources of competitive advantages Coca cola is having different sources from where they are gaining competitive advantages over their competitors. In this case, Porter generic strategies will be used in order to identify these sources[13]. Accounting to this model, there are three key sources of gaining competitive sources for the business organizations. These are cost leadership, differentiation and focus. Cost leadership Coca cola involves the strategy of cost leadership in order to reach out to maximum number of customers worldwide. According to their strategy, less profit ratio from the products can be adjusted from the high volume of sales. There are some key strategies being used by Coca cola in order to gain the cost leadership[14]. One of the key strategies is the mass production. Having production in huge numbers helps them to reduce the average cost of their products. Moreover, initiation of the lean production process along with having contract bottlers in place helps them to regulate the cost to a certain extent. All these factors help them in offering their products in affordable cost. Coca cola also maintain their average price levels across the entire life cycle. Thus, the customer base remains same for them. Differentiation Differentiation is another source of gaining competitive advantages for Coca cola. It helps them to have distinctive image in the market regardless of having substitute products. Key tools used by them for the product differentiation include difference in product packaging. Soft drinks of coca cola can be identified instantly by the customers from its bright red color. Another tool is the taste of the drinks. Though, there is much less difference in taste between the major soft drink brands, but the secret syrup of Coca cola is having an unique taste, which helps them to have differentiated image in the market. They also initiate differentiation strategy in terms of advertisement, promotion and distribution[15]. Coca cola invests huge amount of fund in their advertisements and promotional activities. This is reason behind the innovative approach of their advertisements and their extensive reach. Moreover, initiation of vending machines in different forms also helps them to create dif ferent image in the market. Market focus Coca cola is not having specific strategy in terms of the market focus. This is due to the reason that, Coca cola caters to the mass market and covers the maximum customer segments. They are having their market coverage or presence in niche market segments. Thus, from the above discussion, various sources of gaining cost leadership and product differentiation are being identified. Based on these sources, coca cola get to access to their competitive advantages. Strategic group diagram According to the segmentation theory, the target segment of Coca cola is the middle class customers or the customers belonging from the middle of the pyramid. Thus, according to this, the price of the products of Coca cola is being kept in the affordability of the major portion of the population[16]. On the other hand, one of the unique selling points of them is their taste. The above strategic group diagram also shows that Coca cola is being ranked high in terms of the taste compared to their competitors. In the above diagram, it shows that RC cola is being priced lowest in the competition, but in terms of the taste also, they are being ranked lowest. Thus, it can be assumed that Coca cola should give more leverage in terms of their taste to stay ahead in the competition. It can also be assumed that, if the price of the products of Coca cola is relatively higher than that of the competition, then also the existing customers can be retained due to their differentiation in terms of ta ste[17]. Value chain analysis Primary activities Inbound logistics Various ingredients are being sourced from the suppliers. Coca cola involves effective supplier relationship management in order to manage them without any issues. There are various standards being set by Coca cola, which should be complying by the suppliers. The approach of the inbound logistics remains same and universal. Their supplier relationship management is their competitive advantage[18]. Operations The core operation of coca cola is limited to the brand maintenance, marketing activities and the production of the syrup. Other activities of them are being outsourced or given on contract basis. Thus, the level of responsibility for them is less in their production process along with having less involvement of cost[19]. It also acts as their competitive advantage due to the reason that coca cola is being able to concentrate more on their innovative marketing activities. Outbound logistics Coca cola is known for their effective and efficient distribution management. The entire forward integration process is being controlled by them. External stakeholders including the customers and retailers are being included in gathering their feedback and opinion in order to enhance their outbound logistics. Thus, they are having competitive advantage of effective outbound logistics[20]. Marketing and sales Marketing and promotional activities of Coca cola are known for their innovative approach. Moreover, the involvement of both the online and offline marketing channels effectively helps them to reach to different set of the customers. Their marketing activities include innovative vending machines, social and cause based marketing, seasonal campaigning and personalized approach. These activities help them to stay ahead in the competition. Service Customer service of Coca cola involves gathering the feedback of the end customers in relation to the usage of their products. Moreover, there live portals and communities where customers can drop their suggestions and complains. Social media is being used in determining the need and requirement of the customers as well as creating personalized communication with them. Support activities Infrastructure Coca cola is having their facilities in huge number countries. However, majority of the facilities are being running on contract basis. In addition, the research and development, technology and human resources of them comprise of their key infrastructure. All these elements are providing competitive advantages for Coca cola. Human resource management Coca cola is having effective and stringent policies in regard to the recruitment and selection. Thus, they are having skilled and right employees in right place across every level. Moreover, there are various employee welfare activities being promoted by them, which ensure that employees are motivated and engaged in their workplace and their skills will help in gaining competitive advantages[21]. Technology development The research and development facilities of Coca cola help them in developing and initiating newer and latest technologies. Moreover, their access to the huge capital helps them in investing more in the development of technology. Procurement They are having effective ERP system in place, which ensures that procurement of the raw materials is being done properly and seamlessly. Analysis of sources of competitive advantages VIRO analysis will be used in determining the sustainability of the competitive advantage sources of Coca cola. Valuable Among all the identified resources, human resource and brand value of Coca cola can be considered as valuable. This is due to the reason that the skills and talents of the human resources will help them to deal with the future challenges effectively. Moreover, the brand value of Coca cola is the most valuable resources for them. It will help them to compete in the market along with penetrating the existing market. Brand value will help them in overcoming the negative impression gained due to unethical practices. Moreover, the human resources will be able to determine the need of the customers and offer service effectively. Inimitable The brand value of them cannot get imitated due to the huge capital and experience required. It will not be an easy task for the competing organizations. In addition, the procurement process is also being considered as their competitive advantages. This is due to the reason that, the syrup that is made by Coca cola is unique and secret and it provides the unique taste to their products. This positive brand value will help Coca cola to compete with the local competitors. Rarity The syrup that is being used is rare and the competing organizations cannot get access to it. Thus, it is helping Coca cola to create distinctive image in the market. In addition, the distribution process is also rare in nature due to the reason that competing organizations cannot to have that exact process. It will help them to effectively determine the market trend and offering the products accordingly. Organizational capability The infrastructure of Coca cola comprise of different resources. Moreover, with having the access to the huge capital sources, skilled employees and numerous facilities across the globe, Coca cola is having the capability to turn their competitive advantages in their revenue[22]. The organizational capability of Coca cola will be beneficial in dealing with the difference in legislations and regulations with having different facilities and diverse workforce Recommendations It is recommended that Coca cola should have personalized approach of their marketing activities in order to target the diverse customers around the world. Different regions around the world are having different cultures and they may not get targeted by global approach. Thus, the marketing activities should be designed according to the particular culture and customs of the target market. This will enhance the reach and effectiveness of the marketing activities. It is also recommended that Coca Cola should have more concentration on their forward integration. This is due to the reason that having own retailing process along with the third party vendors will help to have more market reach. In addition, having own forward integration will help to design the process according to the organizational vision. Coca cola should have sub brands in different pricing levels[23]. This will help to compete with different competitors at different price levels. Thus, more customers across different income levels can be targeted and will have more reach in the market. It is lead to the expansion of the brand of Coca cola in their existing strategic group. Conclusion Thus, from the above discussion, it can be concluded that the current business operation of Coca cola is already having a loads of sources for gaining competitive advantages. These competitive advantages are helping them in having a favorable position in the current strategic group against their competitors. This report discussed about the sources of gaining competitive advantages of Coca cola and it is being concluded that their approach of the business operation is enhancing their competitiveness in the market. Different marketing models are being used in determining the current market scenario for Coca cola and identifying their source of competitiveness. A few recommendations are also being discussed in this report, which will help in further enhancing the competitiveness in the market. Reference "The Coca-Cola Company", inThe Coca-Cola Company, , 2018, https://www.coca-colacompany.com/history [accessed 16 March 2018]. Alfes, Kerstin, et al. "The relationship between line manager behavior, perceived HRM practices, and individual performance: Examining the mediating role of engagement." Human resource management 52.6 (2013): 839-859. Allred, Fawcett, Wallin and Magnan. A Dynamic Collaboration Capability as a Source of Competitive Advantage. Decision Sciences Journal 42.1 (2011) Basu, Sanjay, et al. "Relationship of soft drink consumption to global overweight, obesity, and diabetes: a cross-national analysis of 75 countries." American journal of public health 103.11 (2013): 2071-2077. Batra, Kaushik, and Kalia. System Thinking: Strategic Planning. SCMS Journal of Indian Management (2010). al, Betl, and Richard Adams. "The effect of hedonistic and utilitarian consumer behavior on brand equity: TurkeyUK comparison on Coca Cola." Procedia-Social and Behavioral Sciences 150 (2014): 475-484. Banker, Rajiv, Raj Mashruwala, and Arindam Tripathy. "Does a differentiation strategy lead to more sustainable financial performance than a cost leadership strategy?." Management Decision 52.5 (2014): 872-896. Dlken, Fabian. Are porters five competitive forces still applicable? a critical examination concerning the relevance for todays business. BS thesis. University of Twente, 2014. de Oliveira Teixeira, Eduardo, and William B. Werther Jr. "Resilience: Continuous renewal of competitive advantages." Business Horizons 56.3 (2013): 333-342. Dobbs, Michael. "Guidelines for applying Porter's five forces framework: a set of industry analysis templates." Competitiveness Review 24.1 (2014): 32-45. Glen, Roy, Christy Suciu, and Christopher Baughn. "The need for design thinking in business schools." Academy of Management Learning Education 13.4 (2014): 653-667. Gummerus, Johanna. "Value creation processes and value outcomes in marketing theory: strangers or siblings?." Marketing Theory 13.1 (2013): 19-46. Habib, Salman, and Saira Aslam. "Influence of brand loyalty on consumer repurchase intentions of Coca-Cola." European Journal of Business and Management 6.14 (2014): 168-174. Insead, and Chatain. Competitors Resource-Oriented Strategies: Acting On Competitors Resources Through Interventions In Factor Markets And Political Markets. Academy of Management Review 33 (2008): 97-121. Knoke, David. Changing organizations: Business networks in the new political economy. Routledge, 2018. Lord, Robert G., Jessica E. Dinh, and Ernest L. Hoffman. "A quantum approach to time and organizational change." Academy of Management Review 40.2 (2015): 263-290. Martinez, Marian Garcia, ed. Open innovation in the food and beverage industry. Elsevier, 2013. McNally, Regina C., Serdar S. Durmu?o?lu, and Roger J. Calantone. "New product portfolio management decisions: antecedents and consequences." Journal of Product Innovation Management 30.2 (2013): 245-261. Pupo and Martin. Dynamics Of The Evolution Of The Strategy Concept 1962-2008: A Co-Word Analysis. Strategic Management Journal 33 (2012): 162-188 Roja, Alexandru Ionut, and Marian Nastase. "Leveraging Organizational Capabilities through Collaboration and Collaborative Competitive Advantage." Revista de Management Comparat International 14.3 (2013): 359. Rushton, Alan, Phil Croucher, and Peter Baker. The handbook of logistics and distribution management: Understanding the supply chain. Kogan Page Publishers, 2014. Stringfellow, Lindsay, and Mairi Maclean. "Space of Possibles? Legitimacy, Industry Maturity, and Organizational Foresight." Strategic Change 23.3-4 (2014): 171-183. Teeratansirikool, Luliya, et al. "Competitive strategies and firm performance: the mediating role of performance measurement." International Journal of Productivity and Performance Management 62.2 (2013): 168-184. Vogel, Rick, and Wolfgang H. Gttel. "The dynamic capability view in strategic management: A bibliometric review." International Journal of Management Reviews 15.4 (2013): 426-446.