Coca Cola Internal Analysis

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Internal analysis of the Coca Cola Company internal Environment Using Resource Based View analysis

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Executive Summary Coca-cola Company is leading manufacturer, distributor, and marketer of non alcoholic drinks in the United States of America and all over the world. It is a multinational Giant company that has market presence in almost all countries of the world. The company has also diversified from its initial soft drinks to manufacture fruit juices and other non-soda drinks. Its objective has been to maintain its global leadership in supply of beverages and other non-soda drinks through maintaining high quality production methods that ensure the name and products remain a household brand. Introduction Resource based view approach has been a method most managements have used to formulate their companies’ strategies (Barney, 1991). This is because Resource Based View regards a company’s internal environment rather than the external environment. The advantage of using internal environment as a source of strategy formulation is that the company is able to consider factors which are within its controls; which constitute its strengths and weaknesses (Connely, 2010). This paper presents an internal analysis of Coca cola Company with specific regard to the Economic value of the company, its resources and capabilities that make it distinct from other companies giving it competition through provision of similar soft drinks. Economic value Added In 2010, The Coca Cola Company posted an increase in revenues as compared

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to the previous year. The profits came to $6.48 billion. The cost of capital for Coca cola Company is estimated to be 8.7% and the capital totaled $72.929 billion. Ensuing is the EVA calculation for the company. Net Operating Profit After Tax (NOPAT) – (capital * cost of capital) = 4.08 – (72.929*.087) billion. This comes to $0.2 billion. The company’s EVA comes to $0.2 billion. Coca cola Company Resources Being a global leader in production of beverages and soft drinks, Coca Cola Company has various resources that play a major role in every production stage to ensure that the production and delivery of its various product and subsequent client services are of high standards. The company has both tangible and intangible resources that help it in the various production stages and subsequent delivery of the products to the targeted consumers. Tangible resources The tangible resources include physical, human and Financial Resources. Coca Cola Company has many physical resources it possesses and manages. These physical resources include buildings and equipment. Coca cola has managed to construct buildings in almost all regions. The presence of self owned production plant means that the cost of production is maintained low. This enables the company to offer high quality products at low prices. The presence of self owned equipment ensures that the company does not lease or rent any equipment and thus managing to cost of

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production low. The company’s strong financial position ensures that it has stable financial resources to carry out the production process without major problems in terms of cash shortages. The positive cash flows usually ensure that a company has cash available for any activity that needs cash (Lawton, 2006). This position enables it to avoid unnecessary debt financing. The company also maintains a motivated work force. This has been a major force in driving its products into shelves and subsequently into the shopping lists of consumers. The company has highly invested in employee training and development as this is an important factor in ensuring that the workers involved in the production deliver a high quality work, and those that are concerned with...
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