A Political Analysis For Coca-Cola Enterprise

A Political Analysis For Coca-Cola Enterprise Political analysis is refers to government policy such as the degree of intervention in the economy (Oxford, 2007). However, Coca-Cola is a very popular cola. It is a carbonated soft drink with non-alcoholic. So that, Coca-cola beverages was fall within the food category under Food and Drug Administration, also called as FDA or USFDA. The Food and Drug Administration is an agency of the United Stated Department of Health and Human Services, it also enforces other laws. In 2008 year, FDA had sent warning letter to Coca-Cola Company, the subject of the Coca-Cola Company is misleading that nutrition for Food Safety and Applied Nutrition. Therefore, the government is play important role in manufacturing on product in terms of regulations, such as potential fines to punish that companies do not meet a standard of laws. Political conditions for in international markets, including civil unrest, government charges and restriction on the ability. Sometimes they need to changes in law and regulations, such as changes in accounting standards, taxation requirements and environmental laws in domestic for foreign jurisdictions. Besides that, Coca-Cola Company also ability to penetrate developing and emerging markets to maintain their sales, such as North Asia, Eurasia and Middle Asia in 2005 Cokes sales increases around 11 percent, which also depends on economic and political conditions (Anonymous, n.d.). 2.3 Economic Analysis for Coca-Cola Enterprise Economic analysis included interest rates, taxation changes, economic growth, inflation and exchange rate (Oxford, 2007). In 2010 year, American has largest and most technological powerful economy in the world, with a per capital GDP of $46,900 (Geographical, 2010). However things changed. Contraction or negative GDP growth were defined by economist about that loosely recession. (Rex, 2001). When interest rates are lower, when economic stability Coca- Cola can loan money from bank to do investment in other product, technology or property. So that, when researching for new product would cost less the Coca-Cola Company will sell its products for less, people will spend to coca-cola will be more cause they would get cheap products from Coca-Cola. 2.4 Social Analysis for Coca-Cola Enterprise It includes the demographic and cultural aspects of the external marco environment. Changes in social trends can impact on the demand for a firms product and the availability and willingness to buy (Oxford, 2007). These factors affect customer need and the size of the potential market. In American, many citizens are practicing healthier lifestyle. Consumers from the age of 37 to 55 are increasingly concerned with nutrition causes they worry about their healthy from their food and beverage. It will continue to influence the non-alcoholic beverage industry by increasing the demand overall and in the healthier beverages. 2.5 Technological Analysis for Coca-Cola Enterprise Technology factors can reduce costs, improve quality with reduce minimum efficient production level and lead innovation to influence outsourcing decisions (Oxford, 2007). For Coca-Cola companies to effective the advertising, marketing and promotional programs. They make some products look attractive, such as cans and plastic bottles have increased sales for Coca-Cola as these are easier to carry and you can bin them once they are used. This helps in selling of the products. The international consideration At the company Coca-cola Company, all people are their competitive advantages to differentiate them in the marketplace (Caree, n.d.). They represent and help Coca-Cola Company build the worlds greatest brands and became well-known brands in the international market and business (Caree, n.d.). Recently, Coca-Cola Company has involves many activities in the international business. As we know that in November 16, 2010, Coca-cola India launches Nestea. Coca-Cola India proclaimed the brand of Nestea is the globally successful ready-to-drink iced tea in the country. Simply to define Nestea, Nestea is a brand of ice tea manufactured by Nestle and distributed by Nestle companys beverage department in the United States (Mahalo, 2010). Incidentally, Nestea is a brand licensed from Beverage Partners Worldwide (BPW) (Shilpa, 2010). The 50:50 joint ventures leverages the products manufactured by Nestle and the marketing initiatives of Coca-cola (Shilpa, 2010). In India, Nestea will be bottled in a plant in Andhra Pradesh (Shilpa, 2010). When Coca-Cola India joint ventures with Nestle, they consider quality of the product and also their future. According to Mr. Ricardo Fort, Vice President Marketing, Coca-Cola India, as a beverage company, our aim to be able to offer a beverage for every lifestyle and occasion, which also aids long term, sustainable business growth (IIFL, 2010). They are constantly to working on high-quality to their portfolio (IILF, 2010). In the journey of the joint ventures and expansion the brand of Nestea across the globe will face some problem in international business. One of the problems is relating to brand name. Brand plays an important role in the international business and also market. Cause a brand is the identity of a specific product, service or business. Concept of the brand is the personality that identifies a product, service or company and how to key constituencies. The Coca-cola logo is an example of widely-recognized trademark representing a global brand. When Coca-Cola Company acquired Nestle in India, the brand was well-known in the country. But the problem with the brand name acquisition is the likely fall in goodwill even, through there is local goodwill where the brand is used (Aswathappa, 2008). So the firm should consider the image they wish to create for their products to local or foreign (Aswathappa, 2008). Countries with higher levels of economic development tend to have a higher quality i mage for their Nestea then do less developed countries (Aswathappa, 2008). But image can change. In addition, there are always legal or cultural factors that force to alter the brand names under which it sells its product. Simply to define it, different places have different cultures. Firstly need to understand about cultural of other countries. Such as cultural is China is guan xi. So Indian cultural is defined by relatively strict social hierarchy. That they need to do the packaging, image and so on to attractive them with right cultural cause to make sure that Nestea is suitable for them and the global consumers. The growth of business Coca-Cola Company is a well-known company and also famous brand in the global. But they still require to establish to growth strategies based on their current performance in the industry and also and they want to development their soft drinks will be located in everywhere in the each country become more successful. As we know that the Coca-Cola Company is the worlds leading seller of soft drink, the best seller especially is coca-cola. It sells a range of product to meet a broad range of consumer needs. Once the company identifies there is need, Coca-Cola has to decide how it is going to meet this demand. Coca-Cola Company requires using that Adsoffs Product -Market Matrix. Firstly, we need to understand about Adsoff Matrix Product. The Adsoff Product/Market Matrix is a tool that helps businesses decides their product and market growth strategy and also to attempts to grow depend on whether it markets new or existing products in new or existing markets (Rabidbi, 2008). There are four main categories for selection; there are market penetration, market development, product development and business diversification (Rabidbi, 2008). Below table is after do analysis on the Coca-Cola Company: Existing product New product Existing market Market penetration Diet coke Product development Coca-cola Vanila Fanta Icy Lemon New market Market development Coca-cola share size 1.25 litre Bottle Diversification Winnie the Pooh Roo Juice Powerade Market penetration Market penetration is a business focuses on selling existing products into existing markets. This means increasing their income by, such as promoting the product (Marketing Teacher, 2010). However, the product is still same, do not have any change of the product, and they do not find any new customers and buyers (Marketing Teacher, 2010). This is the objective of higher market share in existing markets and also to secure dominance of growth markets. In Coca-Cola Company, situation of Diet Coke is under market penetration. Since being introduced in 1982 as a result of growing trend towards dieting and healthier living, Diet Coke has been a highly successful product for the Coca-Cola Company, selling millions of unit per year (Anonymous, n.d.). Throughout this time, Coca-Cola has constantly adapted aspects of the marketing mix for Diet Coke in order to continually match customer trends and fashions. Market Development Market development is a business seeks to sell its existing products into new markets. This means that the product not change, but it is marketed to a new places (Marketing Teacher, 2010). The market development is exporting the product to a new region, (Marketing Teacher, 2010). Two types soft drinks of Coca-Cola is under market development, there are Coca Cola Vanilla and Fanta Icy Lemon. Coca Cola Vanilla had successful launch in American, especially in Great Britain, this is because it is new Vanilla flavored version of the Coca-Cola Company (Anonymous, n.d.). Prior to doing so, Coca Cola carried out taste tests and developed the graphical look of the Diet Coke Brand. When they did this, they took great care to incorporate aspects of the Coca Cola brand, but still differentiating it so consumers would see it as an alternative to Coke. While Fanta Icy Lemon is a new flavor sparkling drink by Coca-Cola was a direct result of listening to consumers who called the companys Careline telephone service (Anonymous, n.d.). This business conducted taste tests prior to launch 2001 launch (Anonymous, n.d.). Product Development Product development is a new product into existing markets. This strategy may require the development of new competencies and requires the business to develop modified product which can appeal to existing market (Marketing Teacher, 2010). Coca Cola Share Size 1.5l Bottle is new product for the Coca-Cola Company. Desk research showed Coca Cola that a growing number of households contained 1-2 people, which led them to believe that a smaller version of the 2 litre family sized bottle would sell well to these groups (Anonymous, n.d.). In launching this product including simply sell existing brands such as Coca Cola, Diet Coke and others, Coke did need to alter the product itself, merely different aspects of the marketing mix (Anonymous, n.d.). Besides that, Coca-Cola has been developed to have vanilla,lime, cherry and diet varieties in the soft drinks market. Diversification Diversification is a new product in new markets. Related and unrelated diversification is two types of diversification (Marketing Teacher, 2010). Related diversification means that they remain in a market or industry with we are familiar, while unrelated diversification is where they have no previous industry nor market experience (Marketing Teacher, 2010). Winnie the Pooh Roo Juice and Powerade are new product into new market. Winnie the Pooh Roo Juice is target parents of children aged 2-5 years with a juice drink that was packaged in a fun and colorful manner (Anonymous, n.d.). They chose the characters from Winnie the Pooh for their universal appeal to children and made the product appeal to both children and their parents (Anonymous, n.d.). Brand of Powerade, Coca-Coal developed the energy drink Powerade in response to growth in the sport drink market (Anonymous, n.d.). Much research was carried out into potential competitors within this segment prior o the drink development and launch (Anonymous, n.d.). New venture As we know that Porters Five Forces tool is a simple but powerful tool for understanding about the power lies in a business situation and also to undertake a structural analysis of the soft drink industry coca-cola to gauge the strengths and weaknesses of the opposition and also determine the competitive structure of a given market. In currently, Coca-Cola Company has a discussion with potential development partners to assist in pursuing some of these opportunities to further strengthen the model to another country. The companys goal is to double the program and became more famous in globalization. Brunei is a country best choice for Coca-Cola Company. This is because just a few soft drink industries located in Brunei. So, this is a good investment for Coca-Cola Company. Just simple research about Brunei, Brunei has a small rich economy that includes a mixture between foreign with foreign entrepreneurship, government regulation, welfare measures and village tradition (Theodora, 2010). In currently, government in Brunei also has encouraged more foreign companies to invest in Brunei. Government of Brunei has makes some special offer to new businesses. If new businesses that are meet certain criteria quality for exemption of tax on profits for up to five years. (Travel Dojo, n.d.). In 2008, Coca-Cola saw growth in its licensing segment in Atlanta. For Brunei also will. I will suggest licensing is one of the entry modes into Brunei. In Coca-Cola Company has two licensing, there are in and out. Licensing in is a technology available to provides matters and improve their product, while licensing out is to provide other product out of non-alcoholic beverages (Frank, 2008). Bargaining power of Suppliers Supplier power is a mirror image of the buyer power. It more concentrated and controlled the supply, the more power it wields against the market. Firstly need to understand what the relationship of buyer to seller. This is very important between buyers to sellers. If there are relatively few suppliers compared to buyers since it will give them a lot of save cost and form of supply. Bargaining power of supplier plays important role for soft drink industry, Coca-Cola Company. They need ingredients from supplier to produce non-alcoholic beverages and bottles. Besides that, Coca-Cola Company can plan on switching cost. If in Brunei, Coca-Cola may attract more new customers. It may have new flavor in Brunei to attract consumers who stay in Brunei. This is because, different country may have different cultural with different flavor. Bargaining power of Customers Bargaining power is the ability to influence the setting price (Swathen, 2010). Scale and volume are important in this transaction. When Brunei has Coca-Cola Company, customers can buy coca-cola in bulk more cheaply than import and so has massive advantages. In Brunei, Coca-Cola Company may able to provide a very good deal if it is providing many places for many local authorities. In Brunei is a potential for the buyer to become a provider. This is because brand Coca-Cola is a famous brand. Simply say this technically known as backwards integration. In this case of Coca-Cola might set up their own selling network. In Brunei may be has loyalty consumers, Coca-Cola Company not need to waste a lot money in advertising to promote Coca-Cola. Selling of Coca-Cola will be increase. Coca-Cola Company just concentrate on their role of quality and service. Threat of New Entrants Simply to explain threat of new entrants is a function of both barriers to entry and reaction from existing competitors (Swathen, 2010). Besides that, power is one of the affected by ability of people to enter Brunei. In contrast, entry barriers exist whenever it is difficult or not economically feasible for an outsider to replicate the incumbents position (Porter, 1980b; Sanderson, 1998). Capital requirement is one the entry barriers. The capital cost of getting established in an industry can be so large as to discourage all but the largest companies. Following by switching costs, it refer to the one-time costs that buyers of the industrys output incur if they switch from one companys product to anothers. To overcome the switching cost barrier, new entrants may have to offer buyers a bigger price cut or extra quality or service. All this can mean lower profits margins for new entrants. But in Brunei, government has a special offer to new business, taxes are faced by them will be reduce. Threat of Substitutes Definition of threat of substitutes is the availability of a product that the consumer can purchase instead of the industrys product, such as the price of aluminum beverages cans is constrained by the price of glass bottles, steel cans and plastic containers. In todays society, beverages are essential for Mc Donald, restaurants and so on. In the soft drink industry the big providers are very similar and the cost of switching very small include for the contract, so that, Coca- Cola need to plan the cost of switching to substitute, such as Coca-Cola can try in Brunei to change another product to became more choice for consumers. Quality must maintain to become a substitute better, whether in new country to development. Competitive Rivalry Competitive rivalry is to help determine the extent to which the value created by an industry will be dissipated through head-to-head competition. In Brunei just has seldom soft drink industry. So that, jus t low costs to handle competitors to improve usage rates. But in Brunei will be slow to growth up in the market. Conclusion As a conclusion, an international business needs have prepare different report, cause it can make comparison with different country with another country. PEST, Porters 5 Analysis, and Adsoff Product/Market Matrix are play important to a business. 7.0 References List Anonymous, n.d., The Coca-Cola Company: Companies Histories, [Online] Available at: [Accessed 1 November 2010] Anonymous, n.d., History of Coca- Cola: The fathers of the Coca-Cola Company, [Online] Available at: http://www.angelfire.com/ca3/ETclanSETH114/cokehistory.html Accessed at: 1 November 2010 Anonymous, n.d., Coca-Cola History: The Coca-Cola Company has the worlds leading trademark with regards to softdrink sales, [Online] Available at: [Accessed 1 November 2010] Anonymous, 2010. Geographical Names: United Stated Economics 2010, [Online], Available at: [Accessed 2 November 2010] Anonymous, 2007. The Federal Reserve Board: The Federal Reserve System, [Online], Available at: [Accessed 3 November 2010] Anonymous, 2010. Mahalo: Nestea, [Online] Available at: [Accessed 3 November 2010] Anonymous, 2010. IILF: Coca-cola India launched Nestea, [Online], Available at: [Accessed 17 November 2010] Anonymous, n.d., Investor Relation: Coca-Cola Enterprise Inc. Report Second Quarter 2006 Results, [Online] Available at: [Accessed 2 November 2010] Aswathappa. K., 2008. International Business, Third Edition, Tata McGraw-Hill, page 451-459 [Accessed 3 November 2010] Anonymous, 2008. Rabidbi: Introduction to the Ansoff Matrix, [Online] Available at: [Accessed 3 November 2010] Anonymous, 2010. Marketing Teacher: Ansoffs Matrix Planning for Growth, [Online], Available at: [Accessed 19 November 2010] Anonymous, n.d, The Coca-Cola Company: Coca-Cola and Pepsi Look to Developing Countries to Maintain Sales, [PDF] Available at: [Accessed 19 November 2010] Anonymous, 2010. Countries of the World: Brunei Economy 2010, [Online], Available at: [Accessed 19 November 2010] Anonymous, n.d., Travel Dojo: Brunei Economy, [Online], Available at: [Accessed 19 November 2010] Antenna, n.d., Case Study: Coca-Cola Enterprise, [PDF] Available at: [Accessed 2 November 2010] Caree, E., n.d, Women Leaders: A People Platform, [Online] Available at: [Accessed 3 November 2010] Frank, 2008. Industry Feature: Patenting of Coca-Cola, [Online], Available at: [Accessed 19 November 2010] Mary. B., n.d., Investors: The History of Coca-Cola, [Online] Available at: [Accessed 1 November 2010] Oxford, 2007. Gillespie: PESTEL analysis of the macro-environment, [Online] Available at: [Accessed 2 November 2010] Rex. N., 2001. CBS Market Watch: U.S. Officially in a recession, [Online], Available at: [Accessed 3 November 2010] Shilpa, S., 2010. Coke-Nestle JV enters the bottled iced tea market in India, [Online], Available at: [Accessed 17 November 2010]