This is a strategic planning and provide a useful framework for analyzing the environmental impact of the team or organization. As an example of political (and legal), a factor that we can use the following:
- Environmental Management and Protection
- Fiscal Policy
- The international trade rules and restrictions
- Contract Law
- Consumer protection
- Labour
- Organization of public relations
- Political stability
In terms of economic factors:
- Economic growth
- Interest rates and moetary policy
- Public spendin
- Unemployment Policy
- Taxation
- Inflation
With regard to social factors:
- Income distribution
- Population, population growth and age structure
- Changes in lifestyle
- Education
- Housing
Finally, technical factors are:
- Government spending on research
-focus on technological effort of the industry
- New inventions and development
- The speed of technology transfers
CASE STUDY: PEPSI COMPANY
SOME IMPORTANT FACTS:
Pepsi has been more interest in international markets like Europe, Mexico, China, Saudi Arabia and India.
• Pepsi has a 37% share of the global market for operating systems in 190 countries around the World. "
• In their product, packaging, marketing and advertising of Pepsi, trying to stand out because they think their customers a "better quality" merit. And they hope, in almost all areas within their organization to improve.
• "As their manufacturing and packaging, strict quality control to meet Pepsi Cola products follow the same standards of quality that customers expect." Pepsi has also followed strict procedures for quality in production and filling their pockets. These inspections and audits of each bottle. These quality control measures ensure that the integrity of Pepsi, are observed.
• "decide Pepsi-Cola Bottlers of local products on the packaging and sale on its territory to the needs of local consumers and other market factors.
As a company, what do Pepsi do to promote their products?
• Pepsi has a market share large enough to challenge the Coca-Cola. They use celebrities like Robbie Williams, David Bekham, Britney Spears, etc., to inform their target audience. In addition, it should be noted that Pepsi is ahead in the football market by Coca Cola. The company uses the Internet, newspapers, their products through sponsorship, radio, etc. to promote
• Pepsi beyond their products in stores, support discounts like "buy get one free." It also has excellent prices, catches the eye of the consumer.
PEST ANALYSIS
Political factor for Coca-Cola
soft drinks such as Coca Cola are the responsibility of the Food and Drug Administration in the United States. Thus, the U.S. government has played an important role in the production of these products from a political standpoint. And if these companies were not the standards of the law, they face the penalty has been established.
Examples of some of the factors that may affect the Coca-Cola
- Changes in laws and regulations, and changes in accounting, tax obligations (including changes in tax rates, new tax laws and revised tax law interpretations) and environmental laws in national courts or abroad.
- Changes in the soft atmosphere. This includes all other competitive products and pricing pressures and their potential to increase or maintain their share of turnover in the global market in response to actions taken by competitors.
- Political conditions, especially in international markets, such as civil unrest, changes in government and the restrictions on transfer of capital across borders.
- Your ability to present some of the developing countries and emerging, and it also depends on economic and political conditions and how they are put into a position or structure of strategic alliances with local companies and bottling the need to improve infrastructure to provide for the production, distribution, group sales of equipment and technology.
Economic Analysis for Coca-Cola
Federal Reserve System of the United States dropped interest rates ten times 2002 experiments on the economic situation in the United States. To speed 2%. The purpose of this reduction was to stimulate demand Economy. Therefore, companies such as Coca-Cola to improve more and the use of debt financing by the availability of credit. And yes, Coca-Cola
may invest in other areas of loan and interest the prices are low. It may also be money for research to develop new improve products or technology. Since the study of new Products do not cost much Coca-Cola Company will put on the market their products to people under and be encouraged to buy products Coca-Cola because they are cheaper. Before the terrorist attacks of September 11, 2001, the United States, beginning to see the economy a bit. Consumers have begun to renew their normal habits, shopping centers, auto shops and meals away from home Restaurants. Nevertheless, many continue to treat their money carefully.
They believed that come with an even lower inflation, the consumer is return of confidence for next year. Alcoholic beverages have a high turnover in countries outside U. S. Standard & Poor's industry surveys, for large soft drink company; there was an improvement of the economic situation in many key international markets such as Japan, Brazil and Germany. "These Markets continue to play an important role in the success and stability
Growth for most soft drinks.
Social Analysis for Coca-Cola
Many citizens of the United States practice a healthy lifestyle. The soft drink that much bottled water and soda instead of beer to go and other alcoholic beverages affected.In addition, increasing time management and about 43% of all households.
The demand for bottled water and other products, more convenientand healthier in important everyday average.
Consumers aged 37 to 55 and all food related. He announced a significant population of the age group of baby boomers. Like many an old age pension toachieve in life, they are always interested in increasing their longevity. It will continue to affect beverages because of increased demand as a whole and healthy beverages.
Technological Analysis for Coca-Cola
Some factors that could cause actual results to differ materially from anticipated results as follows:
- The effectiveness of Agency programs, marketing and advertising of advertising. New technology and Internet television, the special effects used for advertising in the media. They make products more attractive. This helps in the sale. This announcement makes the product attractive. This technology is used in the media to sell their products.
- The introduction of cans and plastic bottles of Coca-Cola have increased because they are easier to carry, and you can throw them away when they are used.
- As technology becomes more advanced, the introduction of new instruments all the time. As part of the introduction of mechanisms for the production of Coca-Cola Company has increased, it was a few years
CCE has six factories in the UK are drinking with the help of the state of technology, the products of the highest quality and guaranteed fast delivery. Europe's biggest soft drinks factory in CCE Wakefield, Yorkshire, opened in 1990. Wakefield has a box plant control technologies for producing Coca-Cola faster than a rifle bullet.
SWOT Analysis:
The SWOT analysis should be conducted after an analysis of the stamp, as well asexternal environmental effects on the strengths, weaknesses, opportunities and risksof this company.
S.W.O.T. Analysis, where the company evaluates its strengths, weaknesses,opportunities and risks, is well known in the business planning process. Many companies use this method in the strategic planning exercise as a method of forminga strategy and decisions on new projects or initiatives. It is powerful because it asinternal (strengths and weaknesses) and waits for external (opportunities and threats)forces.
As powerful as S.W.O.T. Analysis for business planning, sales no less powerful and marketing solutions. This traditional tool for any business, sales and marketing activities, they can strengths, uncover new opportunities and minimize weaknesses and threats eliminated.
In fact, when someone approaches the SWOT analysis, it should ask the following questions.
Strengths:
What are the benefits / company and product that nobody else? What makes the company unique? And if the sales department of the company interest on the things that make her more attractive proposition for customers.
Power of the examples may be:
- A strong brand.
- The share market.
- Good reputation.
- The competence and capacity.
• Weaknesses: Where can I download the company? If he made mistakes in the past? What is the "missing" from the company that other companies?
Weaknesses might include:
- Little or no market share.
- No brand loyalty.
- Lack of experience.
• Opportunities:
What trends are the strengths of the company? What is the potential "expansion"? The possibility that external factors, so that your business is growing or could / should.
Possibilities could be:
- A growing market.
- The increase in consumer spending.
- Sales at the international level.
- Changes in society can benefit your organization.
• Risks:
What are the challenges facing the company? What the firm's competitors?What is common competitive environment? Threats to external forces, the success of the company, such as competition, may affect the operational performance, increased costs for goods, etc.
Threats may include:
- Participants
- The government of the former policy: taxes, laws.
- Changes in the business is not profitable for your business.
SWOT ANALYSIS FOR PEPSI COLA
SWOT analysis is a technique frequently used in general management and marketing of many scenarios. SWOT is the study of current activities of the organization, its strengths and weaknesses, and then using this data and external research institutes, including the possibilities and risks.
Strengths:
Coca-Cola has a demanding part of American culture for over a century. Product image is loaded with more romantic, and this photo took a lot of people deeply to heart. The image of Coca-Cola is displayed on T-shirts, hats and memorabilia collectors. This is a very recognizable brand is one of the most powerful Coca-Cola."Enjoy over 685 million times a day at the World of Coca-Cola is a simple andpowerful symbol of quality and enjoyment"(Allen, 1995).
In addition, according to Bettman, et al. et al (1998) bottling Coca-Cola is one of itsstrengths. This allows them to do business globally, while a local approach. Bottling companies all contractors is locally owned and independent rights to sell Coca-ColaCompany products. Since coke is not the direct responsibility of their bottlingnetwork, its main source of income for the sale of concentrate its bottlers
Weaknesses:
Although domestic companies grow and prosper, and many international markets(volumes in Latin America 12%), Coca-Cola has recently had some "lower unitvolumes in Indonesia and Thailand due to power 'reduced purchasing consumers."According to a Fortune article said, "In Japan, sales of camera body with 3% in the second quarter [of 1998] ... scary because while Japan generates around 5% of the world is three times more profit. Latin America, Southeast Asia and Japan make upabout 35% of the volume of coke and any of these markets to meet expectations(McLean, 1998).
Coca-Cola on the other side of the tooth, which is an important issue for health care.He also received a continuous glucose drink Coca-Cola can cause health problems.When addicted to Coca-Cola is also a health problem, because the beverageCoca-Cola a day affect your body after a few years.
Opportunities:
Brand awareness is an essential factor for the competitiveness of Coca-Cola. Brand name Coca-Cola is also about 94% of the modern world known. The main task in recent years the brand even more famous. The packaging changes have alsoaffected sales and industry positioning, but overall, the public is generally not dependent on new products (Allen, 1995).
System bottling Coca-Cola also allows the company to reap the benefits of growth opportunities to infinity worldwide. This strategy gives Coke the opportunity to servediverse geographic area (BETTMER, and. et al, 1998)
Threats:
Currently, the risk of new strong competitors in the soft drinks are not very important.The threat of substitutes, but a very real threat. Soft drinks are very strong, butconsumers are not necessarily to marry. Possible substitutes that continuously put pressure on both Pepsi and Coke, tea, coffee, juice, milk, hot chocolate ("ColaWars", 1991).
While Coca-Cola and Pepsi control nearly 40% of the total beverage market,changes in health-consciousness could have a serious impact on the market. Of course, like Coca-Cola and Pepsi have already diversified into these markets,making them larger market share and offset losses due to fluctuations in the market("Cola Wars", 1991).
Purchasing power of consumers is also one of the main threats in the industry. Therivalry between Pepsi and Coca-Cola has a very slow activity, the administrationcontinuously changing attitudes and requirements need to respond to their customers or risk losing market share in a competitive environment. In addition, consumers can easily switch to other beverages with little or consequence ("Cola Wars", 1991)
PORTER Five Forces model:
Porters Five Forces model used an excellent model to analyze the specific environment of the industry. For example, if we were in the computer industry, we use Porter's model to help more than us:
1) competitive rivalry
2) If the supplier
3) The power of buyers
4) Threats of substitutes
5) The threat of new entrants.
five most important factors are the key factors influencing the performance of the industry, it is common sense and practical information about these factors before the entry into force of the industry.
Competitive rivalry
Starting point for analysis of the industry, look in the rivalry. If the light entering theindustry is competitive rivalry is likely to be high. When replaced, it is easy for clientssuch as change of coke on the water, then again the competition is fierce. In general,competitive rivalry is high when:
• There is little difference between sales to customers.
• Competitors size roughly equal to each other.
• When all the strategies of competitors like.
• It is costly to leave the industry, so they are difficult to stay in the (exit barriers)
Power of suppliers
Suppliers are also important for business success. The raw materials needed tocomplete the transformation of the organization's products. Suppliers have power.This power comes from:
• If one of the few suppliers or suppliers who provide raw materials.
• If costly for firms to switch from one operator to another (also known as transfer costs)
• If there is no substitute for their product.
Power of buyers
to influence buyers or customers, and control of industry in certain circumstances.This occurs when:
• There is little product differentiation and substitutes can be found easily.
• Customers are price sensitive.
• Go to another product is not expensive.
Threat of substitutes
Are there alternative products that customers can buy for your product, the samebenefits for the same price or lower? The threat of replacement is high in the following cases:
• The price of a replacement product.
• It is easy to replace the switch for consumers from one product to another.
• Buyers are willing to replace.
Threat of new entrant
The threat of a new organization in this area is high when it is easy for companies togive the industry the obstacles around him are weak.
The organization is that loyal customers to existing products, the speed with whichthey can achieve economies of scale, they have access to suppliers, government regulations that prevent or encourage them to enter the industry.
Porter's Five Forces analysis, SWOT analysis succeed in finding a piston, and other methods of analysis are performed.
Soft drinks case study:
1. Soft Drink Industry Five Forces Analysis:
Soft drinks industry is very profitable, especially for producers, when focused on the bottler. This is surprising, given the fact that the product as a product that can beobtained even a little, is sold. There are several reasons for this, using analysis of five forces, we can show clearly how each force contributes to profitability.
Barriers to Entry:
Several factors make it very difficult to include in the competition for the beverage market:
• Fill power: two Coca-Cola and PepsiCo is a franchise agreement with existing bottler, a particular geographic area should be granted for an indefinite period. These agreements prohibit the filling of the adoption of new competing brands of similar products. In addition, the recent consolidation among bottlers and backward integration with Coca-Cola and Pepsi Bottling to buy a significant portion of society, it is very difficult for companies in a bottler willing to sell their products to discover .
Another approach is to try to build their bottling plants would be very capital intensive work effectively with new capital requirements for the plant in 1998 as a U.S. $ 75 million.
• The cost of advertising: advertising and marketing expenses (Case Schedule 5 and 6) in the industry in 2000 amounted to approximately $ 2.6 billion (0.40 in case of emergency * 6 , 6 billion), mainly for Coca-Cola, Pepsi and its bottlers. The average cost from the point of advertising market share in 2000 amounted to EUR 8.3 million (Fig. 2). It is extremely difficult for participants to compete with the incumbents and get some visibility.
• Branding / loyalty: Coca-Cola and Pepsi have a long history of heavy advertising, and it took an enormous amount of brand equity, loyal customers worldwide. This makes it virtually impossible for new entrants to the market standard in this game.
• a conservation area retail (retail): Retailers enjoy significant margins of 15-20% on these soft drinks on the shelves to offer. These areas are very important to their bottom line. It is difficult for newcomers to convince retailers to carry out or replace them with new products from Coca-Cola and Pepsi.
• Fear of reprisal: To provide the market with giants like Pepsi and rival Coca-Cola is not easy because it could lead to a price war, the outcome affect the beginners.
Manufacturer:
• Commodity Composition: Most raw materials needed to produce a concentrate of basic foodstuffs such as color, taste, caffeine or additives, sugar and packaging. Essentially, these are the main products. The manufacturers of these products have no pricing power, which are suppliers to the industry low.
Buyer:
The main channels of the beverage industry (Appendix 6), food stores, fast food wells, trade, business and other for market share. Profitability in each of these segments clearly shows the power of buyers and payment terms for different buyers to negotiate different prices for their power base.
• Grocery stores: These are buyers in this segment are some that are consolidated with general stores and some local supermarkets, because they offer a premium conservation area, they have lower prices, operating profit before tax (NOPBT ) for producers to focus on this segment is $ 0.23 / case
• Convenience: This segment is highly fragmented, and purchaser must pay more here NOPBT $ 0.69 per case.
• Fountain: This segment of buyers are less profitable because of their large quantity hey prevent them from having to negotiate their freedom. Coke and Pepsi consider, first, that segment of the "remuneration of the sample with low margins. NOPBT in this segment is $ 0.09 / case.
• Exchange: This channel is the customer directly with no power with the buyer and dollars and 0.97/case NOPBT.
Deputy:
A large number of substitutes, such as water, beer, coffee, juice, etc. for the consumer, but it is countered concentrate huge advertising providers, brands and products that most consumers do not have solutions in place alternatives. In addition to soft drink companies to diversify the economy by making it replaces itself, to protect themselves from the competition.
Rivalry:
Industrial manufacturers concentrate can be classified as a duopoly with Pepsi and Coke, that competing companies. The market share of the remaining competition is too low to cause any disruption or structure of prices in the industry. Pepsi and Coca-Cola, primarily occurred over the years on the differentiation and advertising, not on price, except during the period in 1990. This is a huge dent in profits prevented. However, price competition, especially in their international expansion strategies.
2. Bottling to focus on marketing activities
Concentrate business is very profitable compared to the bottling business. The reasons for this:
• increasing the number of dependents, if the manufacturer focus that promotes competition and reduces margins in the bottling business in comparison
• the enormous costs of capital to create a fill effect, while the cost of capital is minimal focus of the company
• costs of production and sales represent about 65% of sales in the achievement of the company focus is about 17%
• Most of the mark was still in the business objects created focused manufacturer
Possible reasons for vertical integration:
• A decrease in the number of bottles of 2000 in 1970 to less than 300 in 2000 to focus on the influence of filler producers were concerned and began acquiring shares in the bottling business.
• They offer an attractive package for consumers.
• For new competition entering the business if they supervise anticipate filling.
3. Effects of competition between Coca-Cola and Pepsi industry profit:
In the 1960's and 70's, Coke and Pepsi a differentiation strategy and advertising content. "Pepsi Challenge" in 1974 was a good example of this strategy, organized by the tests of blind tasting, Pepsi, to distinguish itself as a product of better taste of Coca-Cola.
But competition in the early 1990s used in the bottler Coca-Cola and Pepsi low-price strategy in the supermarket channel for private labels, it has affected profitability of the bottler. Net income as a percent of sales for the completion of this period was in the low single digits (-2.1 to 2.9% Fig. 4). Pepsi and Coke, but to maintain profitability through sustained growth in the Frito Lay and international sales, respectively.Bottlers, but decided in the late 90s, the price war, which is not good for the industry not to increase prices.
Cox was successfully internationally, compared to Pepsi, because before, when Pepsi was able to focus on international trade after the Second World War until the early 70s. Pepsi could these errors by emerging countries where it does not correct a competitive disadvantage against Cox because he was unable to make any hasty path to the European market.
2. Bottling to focus on marketing activities
Concentrate business is very profitable compared to the bottling business. The reasons for this:
• increasing the number of dependents, if the manufacturer focus that promotes competition and reduces margins in the bottling business in comparison
• the enormous costs of capital to create a fill effect, while the cost of capital is minimal focus of the company
• costs of production and sales represent about 65% of sales in the achievement of the company focus is about 17%
• Most of the mark was still in the business objects created focused manufacturer
Possible reasons for vertical integration:
• A decrease in the number of bottles of 2000 in 1970 to less than 300 in 2000 to focus on the influence of filler producers were concerned and began acquiring shares in the bottling business.
• They offer an attractive package for consumers.
• For new competition entering the business if they supervise anticipate filling.
globalization on industry structure 5.Impact:
Globalisation brings Coca-Cola and Pepsi both challenges and unique opportunities.In a sense, globalization has changed the structure of the industry because of the following factors.
• Intensity of rivalry: Cox was dominant (53% market share in 1999). on the international market to Pepsi (21% market share in 1999) This may be because he used Pepsi, entry into markets late and her own bottling and distribution channels, especially compared to developed markets . This put Pepsi on a substantial disadvantage compared to the U.S. market.
Pepsi, however, try this by competing more aggressively in emerging economies, where the dominance of Coca-Cola is not as pronounced cons, with growth evident in emerging markets will be more pronounced than in developed markets competition at international level.
• Barriers to entry barriers to entry are not as strong in emerging markets, and it is increasingly difficult for Coca-Cola and Pepsi, where they encountered legal problems, cultural and all existing competition, bringing their own distribution network, the networks are already configured. There will be no impact on bottlers in the United States.
• Suppliers: As a tool of first no problems in this regard, it is no different
• Clients: international trade management and sales are lower fountain because they are not consolidated, as in the U.S. market. This will ensure that Coca-Cola and Pepsi, more influence prices with customers
• Other: As many markets are culturally very different, and a large number of alternates will be added to the fact that the carbonation is not the first choice to showcase the thirst in these cultures, other serious problems.
Consumption is very low in emerging markets are very small compared to the U.S. market. Much money should be spent on advertising to people accustomed to soft drinks.
Analysis of the value chain
Michael Porter also introduced in 1985 in his book, the concept of "competitive advantage"of the value chain. He suggested that the activities of the organization ofservices and products that produces the organization, and all of these activitiesoperate at an optimum level if the organization to obtain a competitive advantage. Ifthey are successful, the resulting value must be the cost of providing their customersmust exceed for the organization and again freely and voluntarily. Michael Porter hassuggested that the organization is divided into "core activities"and "support activitiesis.
Main activities
Logistics: refers to products provider organizations willing to reach for the preparationof the final product.
Operations: The raw materials are received in the final product manufactured. Theadded value to the product at this time because it moves through the production line.
Outbound Logistics: After the products have been manufactured, they are ready to bedistributed to distribution centers, wholesalers, retailers or customers.
Sales and marketing: the market must ensure that the product is aligned with the rightgroup of customers. Marketing is used to create an effective strategy is to communicate clearly, no competitive advantage to the Task Force for the use of thepromotional mix.
Services: When selling the product or service, support services does the organizationhave to offer. This may take the form of after-sales get training and warranties.
With the above events, or a combination thereof, may be crucial for the companycompetitive advantages, which Porter said to grow in his book.
Support activities
to win the support of core activities by supporting the organization a competitive advantage to help you. These include:
Procurement: This department should be a source of raw materials for theorganization and the best price for them. For the price they have to get the bestpossible quality
Technology development: the use of technology for competitive advantage within theorganization. It is very important in the modern world based on technology. Thetechnique reduces the production quantity to use, value added, to develop or research and development, new products, or by use of the Internet, giving customersaccess to online facilities.
Human Resource Management: The organization will recruit, train and develop the right people for the organization if they are to succeed in their goals. Employees mustbe motivated and paid "market rate", if they remain in the organization and want toadd value for them in their professional lives. In services such as airlines, it is"personal", the competitive advantages that should be on the field can offer.
Firm infrastructure: Each organization should ensure that their financial, legal structures and governance, efficiency and helps drive the organization forward.
As you can see the value chain covers the entire organization and how the core andsupport activities can work together effectively to help, for the excellent organization of competitive advantage.
As one of the most important concepts which have been in the value chain in a series of events converged businesses and organizations in the introduction of products or services on the market, where any and all activities within the chain, articles iliZnachenie product. Assuming that the chain of the product offers greater value than the sum of the value added of all activities. Michael Porter (1985) argues that analysis of the value chain is a powerful tool for analyzing sources of competitive advantage according to discover new ways to create and maintain competitiveness and organizational structure more effective.
Society engagement for a leading company in the world-class customer service and sales, which are reflected in a continuum to promote excellence in the supply chain. The purpose of the value chain of coke in the four regions, namely the shareholders, business operations and core processes divided (Figure 1 attached).
1) to deliver superior returns to its shareholders of the mission of the value chain, Coca-Cola. To achieve this goal are a strong brand and revenue management, which consists of sales volumes, prices and costs.
2) Consumers and customers are coordinating the value chain through brand preference, widespread market penetration and an excellent price-value.
3) line pilots are identified as strategic, process excellence and quality of the organization.
service systems to consumers and customers, supply and operational planning, inventory management and logistics, manufacturing and infrastructure planning and development: 4) The basic process is divided into five main sections.
There are four systems of the supply chain, Coca-Cola. These suppliers, customers, Coca-Cola Retailing Research Council, and customer training and development (see Figure 2). coke suppliers are business partners that provide companies with raw materials such as ingredients, packaging, equipment and services. Authorized and direct suppliers with all laws and regulations that meet the specific employment practices only. In addition, these providers meet provider guidelines.
Customers coke by the reaching, retailers and restaurants to large international companies, small businesses and independent in a market perspective of local suppliers of a truck. Cox is working with them to create mutual benefits with its partners filling. To assist them in their initiative to help the customer, the account management team provides a service and support, including customer needs.
Coca-Cola Retailing Research on scientific advice on matters that have a significant impact on food retailing. As part of a collaborative process with customers. The goal of this collaboration is the marketing and supply chain customers to improve collaboration. accelerated innovation, ensuring the highest selection of drinks for each client to another co.
Promotion of small customers in terms of making your business more efficient and more profitable customers, the work of learning and development. Cox has been established in various areas of customer development centers in training. This exchange of information on the planned expansion of the range of drinks, offer information on nutrition and beverages are sold to ensure accountability.
The initiatives taken by the value chain Coca-Cola can be summarized into 11regions:
Provide parts and materials
Cox has a relatively broad spectrum of cooperation among its suppliers. Companies are generally no difficulties in obtaining raw materials have experienced. Thank youfor supporting the sales of Coca-Cola bottlers "and service, purchasing cokematerials, such as nutritive sweeteners, nutritive sweeteners and no padding and requirements of various companies like NutraSweet Company, Ajinomoto Co. , Inc.,Nutrinova food and food ingredients, Tate and Lyle.
