This assessment will cover the following questions:
- Coca cola is a soft drink company. Critically analyse the above factors by Coca cola company to suitably realise the opportunities available and overcome the risks in the foreign market selected.
- Evaluate the theories, concepts and contexts which frame the international institutional trade and multi-national investment environment including political, economic, social, technological and environmental factors.
- Generate the modes of engagement, key decision and strategy frameworks applied in international markets and the interconnectedness between these and the economic, legal, governmental, political, regulatory, cultural and other environments in which Coca cola operates.
In the report the strategy which is being used by Coca Cola for internationalization will be discussed. Coca Cola has been deemed as the world’s number one soft drink. It has been analyzed that company is going to expand their market in Malaysia. In this firm is making use of integrative/responsive approach in order to establish their market share. In the report, the impact of globalization on Coca Cola will also be discussed. It has been analyzed that in order to expand market internationally the company will also face various challenges. In order to expand firm needs to have deep knowledge about the technology, trends and needs, demands of consumers. They also need to analyze the cultural aspects of the country in which Coca Cola is going to expand. Firm also have to gain knowledge about the trade policies which is existing in region which they are planning to expand.
International marketing can be defined as that process which can be used by business to promote their products internationally. This supports business in establishing their market in global areas. Present report will lay emphasis on Coca Cola. It is a soft drink company that has been started on 8 May, 1896. Firm has been headquartered in United States. Present report will lay emphasis on the potential risk which is being involved in expanding to foreign market. It will also analyze the factors that can affect the growth of business. Report will also highlight the opportunities that can be explored by Coca Cola while expanding in international market. (Business Credit 2016).
1.1 Literature review:
As per the view of Bartlett, C., S. Ghoshal, and P. Beamish (2018) the integrative responsive framework can be used by various organizations so that they can expand market in global areas. This approach can also support Coca Cola to help and analyse the needs of local market. Company can become responsive of demands of local market needs. This can help firm in creating loyalty and also it supports firm in growing and achieving their needs and objectives. To expand globally Coca Cola also needs to enhance their technology and must get involved in standardization of products. There are various approaches which is also being included in IR framework and that can be used by Coca Cola . Like for example international, global, transnational and multi domestic approaches. Each framework has their own advantage and dis-advantage.
According to Bartlett and Ghoshal (2018), in order to successfully expand market, deep research also needs to be done by various organizations who are expanding in global areas. This will support Coca Cola in gaining competitive advantage. It will also support their growth and also to have control the profitability aspects. If Coca Cola is expanding globally they also need to have proper knowledge about the trade laws which is being implemented in international market. Transitional approach is one of the most important strategy that can be used by Coca Cola in order to trade internationally. Also company needs to make appropriate pricing strategy so that they can create consumer loyalty in new market.
1.2 Entry Modes:
It is very important for the organization to expand internationally so that they can increase profit and also can mark their presence in international market. There are various modes of entry like joint-venture, franchising, merger and acquisition. All the modes of entry have their own advantages and dis-advantages. Coca Cola can also make use of direct exporting that can increase sales of their products, goods and services. Firm also needs to think about the investment which will be made while they are making use of various modes of entry. They need to forecast about the future challenges that they are going to face in international market. (Business Credit 2016).
1.3 Foreign direct investment (FDI)
Foreign direct investment is that business in which one organization is involved in controlling the ownership of one business by being in another country. This type of investment can include merger and acquisition and also providing the people of different region the new and updated technology to be used. But when Coca Cola is investing in foreign then there might arise conflict, as business is expanding then chaos might get increased. Foreign direct investment can also increase operational cost of company as they are investing in different regions. They might also face various barriers while expanding their business in foreign market. This can also increase economic growth of country in which Coca Cola is going to expand. It can also increase gross domestic income of that regions. (Business Credit 2016).
1.3.1 Foreign Exchange rate (FX):
Foreign exchange rate can be defined as that rate in which one currency can be transferred at the rate of another currency. If foreign exchange rate changes then Coca Cola might face high amount of risk and it can also hamper the working of organization. Risk is being divided in following aspects:
Transaction exposure can arrive when the rate if exchange has a great impact on the final value that is being related with transaction. It must be analyzed by Coca Cola that relevant measures are being taken by them in order to expand(Choi, A. 2018).
Economic exposure can also be faced by Coca Cola, in this there might occur chances that these type of risk can affect the present value which is being merged with cash flow. It can reduce liquidity of company. It can also cause instability to firm and can cause them several problems.
1.4 Joint Venture:
Coca Cola in order to internationally expand their market can make use of various mode of entry. One of the entry mode is Joint venture. In this Coca Cola might get collaborated with other local or international firm which is already been established in market where firm is expanding. In this type of venture, Coca Cola can share their risk with other partner. So this can be really beneficial for business as risk is being shared. Also it has bene analyzed that this strategy also have various dis-advantages like it gives the other partner control of leading and managing business. (Business Credit 2016).
1.5 Political Influences:
It has been analyzed that there are various political factors like rules, laws and regulations passed by government that can affect working of Coca Cola. They must engaged in following all federal laws related to food which is being implemented by government of different country or regions. If it is not being followed by company then this can hamper goodwill of the firm. (Halepete, J., Iyer, S., and Park, C., S., 2018).
1.6 Economic Influences:
There are various factors like labor rate, fiscal policy, exchange rate that can affect working of various organizations that is going to expand their market internationally. Like for example if labor rate in any regions increases then this can enhance the operational cost of business. This can also reduce productivity aspects of business, so company needs to think upon it.
1.7 Socio-Cultural Influences:
There are various social factors that can impact working of Coca Cola internationally. (Svensson, G., 2017). Company needs to have an idea about the values, thoughts behaviour of people that are living in Malaysia. Also firm needs to engage in analysing, the trends which is being followed by the individuals so that they can establish their market share. Also company needs to analyse the trends followed by them.
1.8 Technological Influences:
Coca Cola needs to make use of updated technology in order to grow. In this they can make use of automation and artificial intelligence so that they can also achieve their objectives and goals. It can also support them in increasing their profit.
1.9 Market details
A significant change has been observed in the income statement for fourth quarter of the company for the year 2017. It is making organisation as one of the promising and profitable organisation giving huge benefits to its shareholders. There has been an improvement in operating margin by 12% by the end of year 2020.
3.1 Global Strategy of COCA-COLA:
Malaysia is one of the fastest growing economy of the world and with impressive GDP and product expansion rate. The long term market exposure, experience and strong brand value is the key strength of Coca-Cola which has helped organisation to establish its dominance in various markets. Most of the business of organization relies on its multi local business which is effectively collaborated with the local bottling partners. For global success the organization has specific global strategy as per the particular geographic region. For instance the promotional campaigns and brand value creation program of the organisation are based upon culture or social aspects of the region. It helps company to deliver highly specific marketing and business outcomes.
Instead of applying a standard global strategy for all activities of marketing mix Coca-Cola uses mix approach. For example it uses product standardization so that its quality and services remains same throughout the world. However for promotional and people aspect it has differentiation strategy so that market penetration can be achieved with more efficiency. The key global strategy used by Coca-Cola for gaining competitive advantage is to include and respect diversity in its practices without compromising the service and product standards (Rugman, A. M., Collinson, S and Hodgetts, R. M. 2016). Further the organisation is very innovative and creative in terms of packaging, product specification, marketing and other business aspects. Coca-Cola also adopts a uniform global strategy to ensure that its services and products are highly specific and of good quality so that it can build customer loyalty and enjoy uninterrupted long term success.
3.2 Competitor Analysis:
Pepsi is one of the biggest threat and competition for Company, especially in Malaysia. Pepsi got success in the Malaysian market as joint venture and with its Pepsi food limited. Later with the growth Pepsi bought its partners and became successful and fully owned organisation ending its joint venture relationships. It helped Pepsi to grow enormously and to act as huge competitor for the Coca-Cola's.
3.3 Risks and opportunities involved
Pepsi has been one of the biggest risk for the organisation however Coca-Cola also have huge opportunities for the growth by acquiring more markets through service improvements and new product or brand development. With increasing health consciousness among people there is greater demand of such healthy soft drinks. Thus Coca-Cola can capture a complete new target market by developing such new products. Though it can be a tough nut for the organisation to improve its product range and to enter into healthy products choices but the choice has vast scope for the growth. Coca-Cola has also made successful acquisition of Pepsi bottlers which has helped to enhance its market dominance. Thus in future as well organisation can make such ventures and can generate the maximum revenue.
4.1 Discussion and analysis
This is important for the organization to keep tracking the availability of the resources in order to manage their production line efficiently. The suppliers of the organization in limited numbers and so the bargaining power of the supplier is high for company. This is important for the organization to increase the number of supplier to reduce the power of the suppliers. It is not possible for the organization to replace their supplier in order because these suppliers in small numbers. The impact of limited supplier is directly related to the profit and production line of organization. There are different processes can be used by the organization to improve their current situation in order to reduce the current they are facing with their suppliers. One of the process they can use is making alliance with the suppliers. This process will improve their capabilities in the market place. By complete take over of the supplier they will not face any issue in the manufacturing process of their products. By this process company will be able to take advantages that are previously gained by the suppliers. This can reduce the production cost of company and help them to generate high marginal profit. This process can cost company in two different ways. One is at process of purchasing and other process is about cost of bureaucratic in order of purchasing. This could be related to the syncing the new implementation in the structure of company.
this is important for the company to sole its current and future possible issues in order to make effective changes in the promotion of its products in the current market and community. For the improving the company processes and performance in target market organization can include their employees in decision making process to gain more ideas and suggestion to improve the capability of organization. As per the present structure of company this process can help them to generate more revenue by implementing innovation in the organization procedure. By making its employees aware, organization can effectively reduce the operational and performance issues in the market place. By following this process they will be able to take decision very fast and immediate basis.
This most important thing for the organization to maintain the satisfaction level of employees high in order to achieve higher productivity in the market place. This can not be consider as the issue of organization but it is really effective to provide better solution for the dropping or declining performance of company in target market. By this process all the leaders of organization will feel that are part of organization and it will help them to stay motivated and encouraged to give their best for company. The criticism faced by the organization has shown some negative impact on its performance of the organization it also has damaged performance and penalties along with strikes. One of partner of company was involved in the issues and it has negatively promoted the performance and reputation of company in the market place.
There are different possibilities' organization have to reduce its issues in the target market. Buy over is one of the best solution for this issues related to reputation of company in the market place. This will also help them to take lead in the competitive market to get competitive advantage. Buy over process will also establish them on the international level. By using effective promotional events' organization can get better recognition in the international market.
Also Read - Role of Strategic Marketing in Every Business
It can be concluded that global strategy of Coca Cola is highly effective in terms of customer engagement and promoting customer loyalty. The organisational strategy to integrate culture and high quality standards for its brand, service and products have been successful in creating a long lasting impression on the customers. It has been also analysed that in future the organisation may experience good competition from Pepsi and other new emerging health drinks. Thus for dealing with such challenges organisation must adopt more innovative and comprehensive strategies. It can also be concluded that company must also improve its marketing strategy to retain its good position in the market.
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