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External Environment Analysis of Coca-Cola

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External Environment Analysis of Coca-Cola
External Environment Analysis
Trident University International
MGT599 Mod 2 Case

Executive Summary In this section of the company analysis we will be examining several of the external factors present in the Coca-Cola Company’s environment. We will conduct a Porter’s 5-forces analysis, a PEST analysis which will include a look at political, economic, social, and technological factors, and will show how the Coca-Cola Company has a solid grasp on its place in the market along with its major competitor.

NAICS Code Coca-Cola Refreshments USA, Inc. is located in Atlanta, Georgia. The Company’s North American Industry Classification Code (NAICS Code) is 312111, Soft Drink Manufacturing. (Manta, Inc., 2012)

Porter 5-Forces Analysis Threat of New Entrants (low threat): This threat is quite low in the soft drink manufacturing industry as the cost of entry is very prohibitive. Coca-Cola has the financial means to snuff out nearly any attempt by a new company to enter the market, and Pepsi-Cola – their largest competitor - would quickly team up with Coca-Cola to help with that effort. Both companies have invested hundreds of millions of dollars over the years to create brand loyalty, and both have made huge strides around the world, gaining millions of new customers outside of the United States. (Manta, Inc., 2012) Most new entrants would find it difficult to provide significant enough margins to retailers. If a new entrant began gaining ground, Coca-Cola could simply raise margins enough to buy all of the available shelf space until the new entrant was out of business. If the product were viable enough, Coca-Cola has more than enough financial means to purchase the newcomer and the rights to its product line. Bargaining Power of Suppliers (low threat): There are a large number of suppliers for the ingredients that go into Coca-Cola’s products, and those commodities are inexpensive. Coloring, sugar, high-fructose corn syrup, caramel color,



References: Euromonitor. (2011, January). Soft Drinks in India. Retrieved January 25, 2012, from Euromonitor International: http://www.euromonitor.com/soft-drinks-in-india/report Free Library. (2005, October 1). Carrying out a PEST analysis. Retrieved January 26, 2012, from The Free Library by Farlex: http://www.thefreelibrary.com/Carrying+out+a+PEST+analysis-a0141751272 Gaudet, B. (2009, July 9). Coca-Cola: Solid Company at a Reasonable Price. Retrieved January 25, 2012, from Seeking Alpha: http://seekingalpha.com/article/147851-coca-cola-solid-company-at-a-reasonable-price Gillespie. (2007). Porter 's Five Forces analysis of market structure. Retrieved January 25, 2012, from Oxford University Press: http://www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_11.htm Manta, Inc. (2012). Coca-Cola Refreshments USA, Inc. Retrieved January 25, 2012, from Manta.com: http://www.manta.com/c/mm371b2/coca-cola-refreshments-usa-inc Merrett, N. (2008, August 4). Soft drink formulation: Industry braced for long-term changes. Retrieved January 25, 2012, from Beverage Daily: http://www.beveragedaily.com/Markets/Soft-drink-formulation-Industry-braced-for-long-term-changes Open Secrets. (2012, January 23). Coca-Cola Co. Retrieved January 26, 2012, from OpenSecrets.org: http://www.opensecrets.org/lobby/clientsum.php?id=D000000212&year=2011 PEST Analysis. (2011). Political, Economic, Social, Technological Factors. Retrieved January 26, 2012, from Value Based Management: http://www.valuebasedmanagement.net/methods_PEST_analysis.html Sheth, J., & Sisodia, R. (2002, February 25). THE RULE OF THREE: Surviving and Thriving in Competitive Markets. Retrieved January 26, 2012, from Business Week: http://www.businessweek.com/magazine/content/02_08/b3771041.htm Srivastava, A. (2009, April 19). Porter 's 5 Force Model. Retrieved January 25, 2012, from Slideshare.net: http://www.slideshare.net/amitanshu/porters-5-force-model

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