Changing Business Environment of Coca-Cola

Changing Business Environment of Coca-ColaSummaryThe objective of this research is to study and evaluate the ever-changing billet purlieu of Coca-Cola everyplace the past 5 years. To understand what business surroundings is virtuoso should have a clear idea initially round business. Business can be referred to as an stinting act performed by an organization to attain its goals regarding profit, point of intersectionion and so forth Any family would be moved(p) by the milieu surrounding it. PankajMehra (2008) defined Business Environment as The set of external calculates such as the economic factors, socio-cultural factors, goernment and legal factors, demographic factors, geophysical factors, which ar uncontrollable in nature and effects the business decisions of a firm or company. The research thus conducts a PEST compendium of Coca-Cola as well as identifies the environmental and ethical factor affecting the company. After the analysis, suggestions were given that w ould help the company to cope up with the challenges and changes that is being approach in the current business scenario.PankajMehra, Aspects of Business Environment, 2008, Omega PublicationsINTRODUCTIONDuring the recent years, there has been a tremendous increase in the phone number of people who are interested in Business. This was triggered by the flourishing of Far Eastern economies and especially the progress of China. So it is quite important for students to have an idea about business environment so that they can easily understand how business decisions are made and what the impact of each decision is. Generally business environment is divide into twain- Micro environment and Macro environment. Anformer(a) way is to categorize business environment into General and Specific environments. However there exists only minimal contrariety between these categorizations. There is another approach which views an organization as open system. This is referred to as Systems Model of organization and its environment.Thus business of an organization is thus influenced by a number of external factors which include political, social, and technological and many more. Hence every organization is keenly observing these dynamic forces in order to garb themselves against contingencies. There are a number of methods that help an organization to analyze its surrounding environment. This includes SWOT, PEST, SLEPT etc. PEST analysis has been used in this study and overly the ethical and environmental factors are identified.This report looks at the Multi-national beverage company Coca-Cola, the worlds most recognized brand. Coca-Cola is a multinational company operating in nigh 200 countries or territories. It is a beverage company and is into the production and distri moreoverion of non-alcoholic sucks. The main brand of the company is the aerated drink Coca-Cola or Coke. The company at present owns more than 400 brands across seven continents. Due to this fact, the c ompany is likely to be affected by the fluctuations in the business environment, globally as well as on each country. The company hence introduces innovative strategies and takes business decisions in order to cope up with the turbulent environment.http//en.wikipedia.org/wiki/The_Coca-Cola_ phoner trick Kew, John Stredwick, (2005), Business environment managing in a strategic context, CIPD PublishingORGANIZATION DESCRIPTION AND BACKGROUNDSOME FACTSFounded 1886Headquarters Atlanta, Georgia, USAChairman and CEO Muhtar Kentgross USD 31.0 Billion (FY 2009)Employees 92,400 (Oct 2009)Operations 200 Countrieshttp//en.wikipedia.org/wiki/The_Coca-Cola_CompanyCORPORATE VISION MISSIONVisionPeople Be a great place to work where people are inspired to be the best they can be.Portfolio Bring to the world a portfolio of quality beverage brands that anticipate and satisfy peoples desires and needs.Partners Nurture a winning net income of nodes and suppliers, together we create mutual, enduring v alue.Planet Be a responsible citizen that makes a difference by helping build and support sustainable communities. sugar Maximize long-term return to shareowners while being mindful of our overall responsibilities.Productivity Be a highly effective, lean and fast-moving organizationMissionTo renovate the worldTo inspire moments of optimism and happinessTo create value and make a difference.http//www.thecoca-colacompany.com/ourcompany/mission_vision_values.htmlDESCRIPTIONThe journey of Coca-Cola started when the syrup of Coca-Cola was mixed with soda. It was done in a apothecarys shop in Atlanta, USA. Even today, the company I headquartered in Atlanta. Thus the company began as a soda fountain beverage selling firm. It sold a glass of drink for five cents. The initial progress of the company was quite remarkable, but only when a solid and strong bottling system developed could it come in as one of the largest corporations as of today.Coca-Cola functions as a franchised distributio n system. Thus the company only produces the syrup and it is then sold off to thousands of bottlers around the world. As per the annual report of 2005, the company operates in more than 200 countries. The beverages which bear the trademarks or licenses of Coca-Cola account to almost 1.5 billion. It was declared that Coca-Cola became the first brand in join Kingdom to cross 1 billion in y beforehand(predicate) grocery sales in the year 2010.Coca-Cola today is the worlds most usual brand. The annual company report of 2006 stated that the second most recognized expression in the world after OK is Coca-Cola. The strength of the company lies in it branding. Coca-Colas branding system lies on three As- availability, acceptability and affordability. The company competes not only to every carbonated or soft drink available in the world but even considers water as its competitor. For it, every product that has a share in human liquid consumption is its rival.At present Coca-Cola serves al most one billion servings per day. That means every second cxxv00 bottles are being consumed. The company was able to achieve this only because they made use of the most finest and innovative technologies available. During these 125 years of existence, the company has gone done different strategic paradigm shifts that involve financial re-engineering to debts on offload bottling and from product expansion to progress through distribution.http//en.wikipedia.org/wiki/The_Coca-Cola_CompanyBrand Spotlight Coca-Colahttp//www.thecoca-colacompany.com/ourcompany/historybottling.htmlhttp//www.scribd.com/doc/14306067/Coca-ColaBusiness EnvironmentThe business environment of an organization is situational. That means every organization have a unique environment of its own. Due to this fact, the external factors influencing the company would in any case be different. The systems model of an organization and its environment views the organization as an open system. This model advocates that the re are two ways in which an organization communicates with its environment. It acquires inputs/ resources from the environment, transforms it into finished product/services and distributes the outputs back. These outputs are meant to meet the needs of customers (Figure 1.1).Environment Organization EnvironmentMoneyMachineryPeople engine roomMaterialsConversionGoodsServicesInformationWasteFigure 1.1 Systems ModelJohn Kew, John Stredwick, (2005), Business environment managing in a strategic context, CIPD PublishingAnalyzing the environmentIt is not a difficult task for the organization to analyze the task environment as they will have good knowledge about their customers, suppliers etc. only when analyzing the general environment is more complex. The different factors in the general environment will have to be first identified.One of the most popular tools for analysis is PEST. This method segregates the environment into four componentsPolitical/legalEconomicSocio-culturalTechnologic alPEST analysis was later modified into PESTLE analysis. This was done by splitting the political and legal factors as well as by adding a parvenue factor i.e. environment. The major(ip) reason behind this addition was the change magnitude fright over global warming and other ecological issues.By the year 2000, another method was introduced which was named STEEPLE. This method have a new factor i.e. ethics. This factor was added due to the growing awareness about corporate social responsibility and business ethics.John Kew, John Stredwick, (2005), Business environment managing in a strategic context, CIPD PublishingAnalysis of the environment of Coca-ColaSocial FactorsOver the past 5 years the numbers of people who are conscious about their health have increased exponentially. This is especially true in USA where more and more people are practicing healthier lifestyles. Researches indicate that soda and other change taste drinks are the chief calorie sources in the diet of an American. Due to this fact, doctors and nutritionists advice people to reduce the daily consumption of drinks like Coca-Cola since they can be harmful to their health. In USA, drinks like Coca-Cola and Pepsi were found to be the main reason for obesity among young children and women. Studies have as well revealed that regular intake of Coke and the like products reduce the preoccupation of minerals like Calcium, Magnesium, Ascorbic acid, Riboflavin and Vitamin A. Thus the company is facing a setback from the home country itself. In 2005, many lawyers and environmentalists supercharged a lawsuit against Coca-Cola and other soft drinks industry for excessive selling of their brands in schools.Coca-Cola also faced much resistance from the Eastern countries where there was a high consumption of tea leaf and other milk fermented drinks. So the company in 2010 introduced a new drink named Sprite Tea which was a mix of sprite and tea. Before that in 2008, it launched a tea brand named Yuang Ye and Jackie Chan was the brand ambassador of the product. This was launched in China and other eastern countries. In 2004, the company also launched a wellness drink in Japan for women.A disassociate from that there are number of social ventures into which the company is into. It is providing resources like books and scholarships to needy children. Apart from that it has introduced a program in Pakistan that is into providing canonical education to children. In 2004, the company donated 50,000 to SOS Kinderdorf, a childrens charity organization in Austria. A sum of 1 million USD was also donated for awareness against HIV/ back up in 2007.www.thecoca-colacompany.com//10/Coca-Cola_10-K_Item_01ab.pdfhttp//www.virtualvender.coca-cola.com/ft/index.jspwww.thecoca-colacompany.com//eu_business_social_review2005.pdfwww.thecoca-colacompany.com//2007-2008_sustainability_review.pdfhttp//blog.7xpub.com/2010/02/heaven-earth.htmlhttp//www.docshare.com/doc/8487/An-Analysis-of-The-Coca-Cola -Companys-MarketsTechnological FactorsCoca-Cola is always a pioneer institution in bringing out innovative technologies.In 2007, it came up with a new technology that would help customers to have ice-chilled coke wherever they want. This technology will work in such a way that when the lie of the bottle is opened, the mechanism inside will make ice out of the drink inside. The company also introduced this technology in 2008 with a new product called Sprite Super Chilled.In the same year, the company announced to use coolers and vending machines free of HFC in the venues of 2008 Olympic Games to show its commitment towards environment protection. The company developed this technology together with Green Peace.In the year 2009, the company introduced another technology into their vending machines. These Freestyle machines will be having touch screens and the customer can mix up to a variety of 100 drinks at a single time. Popsci.com has named this as the Most Advanced Soda Fountain E ver.In 2009 itself the company introduced bottles which are partially made from plants and hence can be recycled completely. This bottle also has a reduced carbon emission when compared with ordinary tractile bottles.The company has also introduced innovative technologies in the entertainment field. In 2006, the company installed Dhoom 2-Juke boxes in and around Delhi (India). A limited series of Coke bottles were then brought into the securities industry whose labels contained specific codes. When these labels are swiped into the Juke boxes, the customers could see the exclusive visuals of Dhoom 2 movie.http//www.techdigest.tv/2007/09/new_technology_1.htmlhttp//www.associatedcontent.com/article/1973430/cocacola_meets_technology_touch_screen.htmlwww.greenpeace.org//en/news//coca-cola-to-champion-our-cool/http//www.greentechnolog.com/2009/09/cocacolas_new_plant_bottle.htmlhttp//www.coca-colaindia.com/media/media_news_releases_detail.aspx?id=189Economic FactorsThe company went throu gh a major economic phase in the past five years.The income tax payment has increased from 1.5 billion USD in 2006 to 1.9 billion USD in 2007. But the capital expenditures have also increased from 1.4 billion USD in 2006 to 2 billion USD in 2008. lock in the company managed to have revenue of 31.9 billion USD in 2008.The above graph shows the fluctuations in the stock prices of Coke from September 2009 to February 2010.In 2008, the world faced the global economic crunch and this naturally had an impact on the company. The main reason for this was that 75% of companys sales is derived outside of North America.But, reports revealed that the company was not much affected by the economic downturn. The first quarterly results of 2009 showed that the sales have increased by 2 percent in USA and by 3 percent around the world. This was because the company positioned it well in the international markets.The company also had a remarkable increase in business in India. In 2009, the companys b usiness increased by 31 percent in this country despite the versatile environmental protests against it. But the final quarter results of 2009 showed a decrease of 18 percent in the companys profit worldwide.In 2010, the company registered revenue of 7.53 billion US dollars in the first quarter. This shows that the company expects to have a bright year ahead.http//www.theepochtimes.com/n2/content/view/16128/http//www.msnbc.msn.com/id/29161172/http//www.wikinvest.com/stock/Coca-Cola_Company_(KO)http//equityclock.com/pictures/CocaColaEnterprisesInc.TechnicalAnalysis_3A38/image_thumb_3.pngEnvironmental FactorsThe company has been incriminate of a number of environmental issues around the world.In India, Coca-Cola has been nicknamed even as Killer Coke in certain areas. It was feared that Coke contains hazardous levels of pesticides that could cause numerous health issues. A study conducted by Centre for Science and Environment (CSE), New Delhi, revealed that Coke and Pepsi contains t oxins like lindane, DDT, malathion etc. These pesticides if consumed could even result in Cancer or irreparable damage to immune system. CSE also found that the Coke that is sold in India contained 30 times the permitted level of pesticide residues as per European Union regulations.1n 2005, the Kerala State government banned the production and selling of Coke but it was overturned by the state high court in the same year itself.The company was also blamed for over use of water resources and thus depleting the ground water table. The 16$ bottling plant in Kerala was shut down in 2004 due to spartan decay in both quantity and quality of water in the surrounding areas. The plant there uses almost 900,000 litres of water every year for its purposes. correspond to the renowned environmentalist Vandana Shiva, it takes almost 9 litres of water to produce one litre of Coca-Cola. In the holy city of Varanasi, India, the Coca-Cola plant near the Ganges has been accused for emitting waste wa ter which contained toxins into the river. The packaging of the bottles has also been a cause of concern to the public and alleges to have serious environment impact. The company still claims to be environmental friendly in all its ventures. The Coca-Cola environmental foundation is said to be actively participating in environment issues like waste management, recycling etc.http//en.wikipedia.org/wiki/Criticism_of_Coca-Colahttp//www.thecoca-colacompany.com/citizenship/foundation_local.htmlhttp//en.wikipedia.org/wiki/FileCocaColaIndia.gifPolitical FactorsAs far as the political factors are concerned, they affect the company in meager way. It is because the governmental activity which is the major part of political environment has a tiny impact over the company.Over the recent years the company met with a lot of protests in India and Middle East. Still it was able to outrival PepsiCo by a small percent. In the last century there have been issues in Israel regarding the construction o f a plant over there. The company was accused of boycotting Israel in order to appease the Arab League. These still had an impact over the market of Middle East.The environmental laws have some impact over Coke and other companies operating in the same industry. Over the past two years, the government of India has introduced some modifications to the existing laws that are likely to affect Coke. But the company is introducing changes in the plants as well as implementing proper wastage handling system and this would reduce the impact of these laws.Tax system in India is a little complicated because it involves a variety of regulations. The license needs to be updated every time the production capacity is increased. This can pose certain problems to the company.http//en.wikipedia.org/wiki/The_Coca-Cola_CompanyEthical factorsThe Coca-Cola Company has been involved into a number of ethical issues over the past. The major controversies include those like violation of human rights and fo llowing unethical business practices. The company has been charged of monopolistic and other discriminatory practices which affected its goodwill.In 2005, the European Union found that the companys business methods suppressed competition and hence the company had to end its traffic with bars and shops for stocking its drinks. In the same year itself, Coca-Cola Export Corporation was charged a fine of 68 million dollars for unfair commercial practices.In the early 2000s the company was also criticized for racial discrimination in its US offices and had to pay a hefty fine of 192.5 million dollars.The company is also involved in a number of cases related to environmental degradation, ground water depletion, overuse of pesticides etc. in India. This had affected the reputation of Coca-Cola in India in a major way.http//www.thecoca-colacompany.com/citizenship/foundation_local.htmlhttp//en.wikipedia.org/wiki/Criticism_of_Coca-ColaConclusionTo summarize it can be said that Coca-Cola Comp any has gone through a number of challenging situations in the past five years. The major challenge was the protests from the environmentalists for exploiting the resources. The company has tackled this issue to an extend by agreeing to the demands of the protesters and the governments. But it should put in more effort to get back the reputation it had in three world countries. Innovative technologies that are eco-friendly must be introduced.The company is now into more and more green initiatives which are a very positive sign. If such efforts continue, it would undoubtedly be the most reputed and recognized brand in the world.RecommendationsIn this current dynamic world scenario, its always best if the organization is well sensible about the changes that are being taken place in its business environment. By this way the company can foresee the trends and come up with new strategies to cope up with them. It is recommended that Coca-Cola Company gives importance to some factors. Th ese includeIntroduce new programs aimed at public welfare and thus show their true concern for the society. Through this way try to be a model for other companies in following CSR activities.Follow the environmental regulations and norms properly. Make the public aware that the company has and is following strict environmental ethics.New technologies that produce superior quality products and that do not affect the environment must be invented.Understanding the little needs of customers and try to find solutions to them in a harmless way.ReferencesBibliographyPankajMehra, Aspects of Business Environment, 2008, Omega PublicationsJohn Kew, John Stredwick, (2005), Business environment managing in a strategic context, CIPD Publishing