International Business in Focus

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CONTENTS PAGES

1.0 The market problem of Coca Cola in United States 2-6 1.1 The launch of the new Formula of Coca Cola brings
The market failure
1.2 PESTLE analysis for Coca Cola Company
1.2.1 Political
1.2.2 Economical
1.2.3 Social
1.2.4 Technological
1.2.5 Law
1.2.6 Environmental
1.3 Regulatory authority addressed the market failure of Coca Cola Company in United States
2.0 The notion of market failure in general and the justification for Intervention in the case of Coca Cola Company 6-9 2.1 Market failure in general

2.2 Features that cause the market failure
2.2.1 Externalities
2.2.2 Public goods
2.2.3 Imperfect knowledge
2.3 Intervention from the competition authorities
2.4 Mergers and acquisition case of Coca Cola
3.0 Alternative policy choices on Coca Cola in United State 10 4.0 Reference 11

1.0 The market problem of Coca Cola in United States
1.1 The launch of the new Formula of Coca Cola brings the market failure

An example of market failure, we can see when the American public’s give reaction to the negative change that the new Cola was a major market failure. The introduction of the New Coke formula just a marketing ploy that resulted in a significant gain in sales. The launched of the New Cola was a nightmare when the Coca Cola Company replaced the taste with a formula as New Coke of the most popular soft drink. Sweetened, carbonated drink, the Coca Cola’s Trade name was originally made with coca leaves and flavored with cola nuts, and containing caramel and caffeine. The Coca Cola Company was made the big mistakes when they add the taste to a high-fructose corn syrup to make Coke tastes sweeter and smoother, more like its arch rival, Pepsi. Coca Cola seems battered to take into account that many people preferred old Coke that did them so passionately and they swore that they could not stomach new Coke. The market share was falling when the old Coke is no longer on the shelves because the old Coke was the no.1 soft drink in the land since 1987. Thence, consumer became even more loyal to the brand after it was temporarily taken from them.

1.2 PESTLE analysis for Coca Cola Company
1.2.1 Political

The non-alcoholic beverages like Coca Cola is under the Food and Drug Administration (FDA). Their manufacturing procedure of these products in the terms of regulation does not comply as the government has situated. This make the government has control over their manufacturing procedure and will be fined if they neglect. They change the laws and regulations including change the taxation requirement, environment laws and accounting standard. Other than that, they have the ability to go through emerging and developing market that relies on political and economic state of affairs. Based on that, local bottlers need to form effective premeditated business alliances to uphold share sales compared to rivals in the international market. Civil conflict, governmental changes and restriction concerning the ability to reposition capital across limitations was influenced the Coca Cola’s operation.

1.2.2 Economical

On Monday 26 (2001), Coca Cola Company operations was declared influenced by the recession. However, because of rapid aggressive action, the positive growth anticipated by the United States Economy to returned in positive growth in 2002. In order to maintain their company during the global recession, capital and invest become rescuer to save the other products because of the low interest rates. Also, the new product and technology can be advanced in research needed. By applying the market price strategy, the products can be sell at a lower price to gain more customer purchase their product in order to produce new product in cost effective. This company has proven outside...
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