Business Studies
Develop a Business Plan that will integrate analytics
and assess/evaluate an existing venture using a structured approach
Research a company and produce a report on your analysis of the potential success of that company.
*Heavily leverage the course textbook in your analysis in determining what constitutes a strong and viable business plan:
Textbook: Barringer, B. R., & Ireland, R. D. (2019). Entrepreneurship: Successfully launching new ventures (6th ed.). Don Mills, Canada: Pearson Education Inc.
*Select a company of your choice.
*Evaluate the potential for success for this company.
*Integrate Entrepreneurial attributes in your analysis in determining what constitutes a strong and viable business plan.
The analysis should include:
-a cover page
-executive summary
-introductory description of the venture
-industry analysis
-determination of their unique value proposition
-an evaluation of the company’s marketing plan, operational plan, and financial plan
-risk assessment (what risks do they face)
-conclusion
-reference page
Business Plan
Name
Department/Institution
Course
Instructor
Due Date
Executive Summary
Organizational success is a result of proper planning and execution of developed plans. In this paper, a business plan for Coca-Cola, the world’s leading beverage company, is presented to understand the strategies and the performance of the company. A better understanding of the company is acquired through an analysis of its internal and external environment, its financial plans, marketing plans, and unique value proposition, as well as the various risks that the company faces. This research presents information that enables readers to understand how Coca-Cola creates, develops, and implements strategic plans for the achievement of its objectives and a competitive advantage over competitors. The research begins with a brief discussion of the company, detailing its history and performance, after which an analysis of the beverage industry is presented to understand the position and performance of the Coca-Cola in its industry. The unique value proposition of the company is also presented, after which the marketing, operational, and financial plans of the company are discussed. Lastly, a risk assessment is conducted to understand the various risks that the company faces.
TABLE OF CONTENTS
Industry Analysis – Porter’s Five Forces. 5
The Bargaining Power of Suppliers. 6
The Bargaining Power of Buyers. 6
Evaluation of Strategic Plans. 7
Business Plan
Company Background
The Coca-Cola Company is an organization that manufactures, distributes, and markets non-alcoholic beverages, syrups, and concentrates. It is the largest beverage manufacturer in the world, with more than 2000 beverage brands that include waters, juices, diet and light beverages, juice drinks, coffees, teas, energy drinks, and sports drinks. The company also has ownership and shares in many bottling and canning companies. The Coca-Cola Company produces and sells finished beverages that bear the Coca-Cola trademarks in more than 250 countries. The operations of the company are organized and carried out through its four geographic business segments: Europe, Middle East, and Africa; North America; Latin America; and Asia Pacific (The Coca-Cola Company, 2020). Also, the company has a reporting structure that also includes a non-geographic business segment known as Global Ventures and Bottling Investments Group (BIG).
The Coca-Cola Company is one of the best-performing companies in the world, with the largest distribution network across the world. Its operations cut across all the sectors of the beverages and soft drinks industry. Over the years, the company has been leading in volume and value in the fruit and vegetable juice, carbonated drinks, ready to drink, and coffee drinks sectors. It is also a leading company in Asian specialty and functional drinks sectors. Financially, the company has been performing well over the last decade. In 2019, the company reported growth in net revenues and organic revenues in all its segments, growth in global value share, and an increase in earnings per share. The company’s net revenues grew by six percent in the second quarter of 2019, a growth that was driven by sales and price/mix growth (The Coca-Cola Company, 2019). Earnings per share increased by twelve percent during the same period, with value share in total nonalcoholic ready to drink beverages gaining significantly.
Industry Analysis – Porter’s Five Forces
Factors in the industry in which an organization operates affect its performance and achievement of success. The level of competition in an industry will determine the strategies that a company will develop to make a profit and achieve a competitive edge over competitors. In the soft drinks industry, competition is determined by the structure of the industry, which refers to the interrelation of the five forces that influence competition, as discussed below (Grundy, 2006).
The Threat of New Entrants
New companies are not strong competitive pressure in the industry because of huge capital requirements and the domination of Coca-Cola and PepsiCo (Baah & Bohaker, 2015). These two companies dominate the industry as a result of having strong brand names and superior distribution channels. They enjoy economies of scale, which enable them to afford the high fixed costs for labor, shipping and distribution, and warehouses while providing beverages at low prices. It is, therefore, very difficult for new firms to enter the industry and compete with the already established firms.
The Threat of Substitutes
The threat of substitutes in the soft drinks industry is very strong. Substitutes to Coca-Cola’s products include sports drinks, bottled water, tea, and coffee (Baah & Bohaker, 2015). Sports drinks and bottled water are becoming popular with the growing trend towards health consciousness and lifestyle change. There are also soft drinks manufactured by the competitors, which means that the industry has low switching costs between products.
The Bargaining Power of Suppliers
The suppliers of Coca-Cola are bottling equipment producers and packaging suppliers. Coca-Cola owns approximately 35 percent of Coca-Cola Enterprises, which is the largest bottler in the world. However, increased conflict and tension between Coca-Cola and Coca-Cola Enterprises, which is partly publicly-traded, together with the increasing power of independent bottlers, has resulted in the threat of suppliers being strong. With Coca-Cola continuously introducing new products, the bottlers are refusing to carry new products since their bottom line has been affected. This is a threat to the company’s success. However, the ease of switching suppliers weakens the threat significantly.
The Bargaining Power of Buyers
The customers of Coca-Cola are mainly large discount stores, grocers, and restaurants since the company distributes its beverages to stores for resale to the consumers. The bargaining power of buyers is high since they buy beverages in bulk. The shift towards healthier drinks has resulted in decreasing consumer demand and increased bargaining power of buyers (Baah & Bohaker, 2015). The company, in response to this shift, has introduced new healthier drinks such as Coca-Cola Zero and bottled drinking water.
Competitive Rivalry
The competition from rivals is the strongest competitive force for Coca-Cola. Even though the company owns the top four soft drink brands (Coca-Cola, Fanta, Diet Coke, and Sprite), PepsiCo is a strong competitor in the carbonated soft drinks category. PepsiCo continues to dominate North America, while most of Coca-Cola’s sales come from overseas countries. Consumer loyalty to brand names is a competitive pressure for firms in the industry, with Coca-Cola finding it difficult to capture PepsiCo consumers.
Value Proposition
Coca-Cola’s unique value proposition is communicated through its “The Coke Side of Life” statement. This value proposition statement represents happiness and enjoyment when one opens up a can of Coke or any product by the company. The company promises that its beverages are enjoyable and that they enable consumers to enjoy comfort and socialize easily when consuming them. Consumers are promised an exceptional experience and enjoyment when consuming Coca-Cola beverages.
Evaluation of Strategic Plans
Marketing Plan
The marketing objectives of Coca-Cola are to increase volume, maximize long-term cash flow, expand global sales of nonalcoholic ready to drink beverages, and increase shareholder value through an increase in profit margins. The marketing strategy used to realize these objectives is an investment program in high-margin beverages using programs such as heavy advertising, sales promotions, and point-of-sale merchandising. The company also continuously introduces new brands to increase its product offering and increase sales worldwide. Product rebranding and rejuvenation is a key strategy that Coca-Cola uses to increase the popularity of its poorly performing brands, mostly ready to drink teas and coffee and herbal beverages. Refreshment, Replenishment, and Health and Nutrition are key elements in the marketing of the company. Advertising strives to remind consumers of these key elements, depending on the beverage being promoted.
The company’s marketing plan and strategies are backed up by a well-established product distribution network that dates back to the 1890s. Currently, the company and its bottling partners operate the widest beverage distribution network in the world. Coca-Cola products are distributed and sold in more than 200 countries across six continents. They are then sold to restaurants, supermarkets, retail chains, schools and colleges, entertainment spots, and grocers. The company continues to expand its marketing and distribution channels in emerging economies.
Operational Plan
The Coca-Cola Company has a highly efficient operational plan. The company manufactures, markets, distributes and sells beverage concentrates and syrups as well as finished beverages that include soft drinks, water, sports drinks, juice drinks, plant-based drinks, dairy-based drinks, coffee, and teas. In concentrate and syrup operations, the company generates operating revenues through the sale of syrups and concentrates to authorized bottling partners who then combine them with still or sparkling water and sweeteners for packaging and sale as finished beverages (Our Company, 2020). In finished beverage operations, the company produces, bottles, and distributes products using company-owned or company-controlled bottling, sales, and distribution operations (Our Company, 2020). The operations of the company begin with the manufacture of syrups, concentrates, and beverage bases, after which the products are transported to bottling partners for packaging. The bottling partners process and package the products, after which they work with vending partners and customers to ensure that the ready beverages reach the end consumer.
Financial Plan
The Coca-Cola Company has been performing exemplary over the last decade. It is one of the most successful product launches in history. One of its latest products, Coca-Cola Zero, is currently available in more than 200 countries. The company has a portfolio of more than 3000 beverages and continues to introduce new brands every year. In 2019, the company reported growth in net revenues and organic revenues in all its segments, growth in global value share, and an increase in earnings per share. The company’s net revenues grew by six percent in the second quarter of 2019, a growth that was driven by sales and price/mix growth. Earnings per share increased by twelve percent during the same period, with value share in total nonalcoholic ready to drink beverages gaining significantly (The Coca-Cola Company, 2019).
For the future, the company aims to increase investment in the achievement of long-term goals such as increasing shareholder value and ensuring that its products are available in every country in the world. The company continues to build on its strong brand name and distribution network to remain competitive. Through acquisitions and diversification, the company aims to enter new business segments and industries. Focus on healthier beverages is key to the achievement of better financial performance, as the trend towards a better lifestyle takes over the beverage and food industries. With a strong capital base, the company can invest in the achievement of its financial and strategic goals.
Risk Assessment
Some of the most significant risks that The Coca-Cola Company faces include the rising cost of raw materials, threats to the carbonated beverage segment, food safety issues, and lack of innovation. Prices of packaging materials and sugar have been rising in recent years. These prices have a direct effect on the cost structure of the company’s products. They threaten the profitability of the company. Consumers across the world are looking for healthier beverages as a result of increasing health consciousness. This has resulted in a decreasing demand for carbonated and sugary drinks. Food safety is a growing concern in the soft drinks industry. Issues such as unsafe levels of benzene, additives, and preservatives continue facing beverage companies worldwide. This puts more pressure on the company to ensure food safety in the manufacture of its products. In recent years, Coca-Cola has been beaten by PepsiCo in innovation, with PepsiCo successfully adapting its new products to consumer health trends and overtaking Coca-Cola in market value in some regions. This trend threatens the performance of Coca-Cola.
Conclusion
Coca-Cola is one of the best-performing beverage companies in the world, with a marketing and distribution channel that reaches over 200 countries on six continents. The company produces, distributes, and markets soft drinks through its bottling partners and has a highly-effective operational plan. To ensure that the company continues performing well, the highlighted risks, such as lack of innovation and food safety issues, should be addressed using strategies aiming to improve company performance.
References
Baah, S., & Bohaker, L. (2015). The Coca-Cola Company. Culture, 16, 17.
Grundy, T. (2006). Rethinking and reinventing Michael Porter’s five forces model. Strategic Change, 15(5), 213-229.
Our Company. (2020). The Coca-Cola System. Retrieved June 10, 2020, from https://www.coca-colacompany.com/company/coca-cola-system
The Coca-Cola Company. (2019, June 23). Coca-Cola Reports Continued Momentum in Second Quarter. Retrieved from file:///D:/coca-cola-2019-q2-earnings-release.pdf
The Coca-Cola Company. (2020). Segments. https://investors.coca-colacompany.com/about/segments
