PESTEL Analysis for Coke
Coca-Cola, the largest manufacturer, distributor and marketer of beverage concentrates and syrups in the world. Coca-Cola is recognized as the world’s most valuable brand. They market four of the world’s top five non-alcoholic sparkling brands, including diet and light beverages, mineral water, enhanced waters, juices and juice drinks, teas, coffees and energy and sport drinks. Through the world’s largest beverage distribution system, consumers in more than 200 countries enjoy the company’s beverages at a rate of approximately 1.5 billion servings each day. The Company generates revenues, income and cash flows by selling beverage concentrates and syrups as well as finished beverages.
Even Coca Cola, the worlds’ largest beverage company has to consider about their macro environment and its opportunities and threats. They too have to analyze their Political, Economical, Social Environment and Legal Factors in order to catch up with the fast changing world.
Non-alcoholic beverages fall within the food category under the FDA. The government plays a role within the operation of manufacturing these products in terms of regulations. There are potential fines set by the government on companies if they do not meet a standard of laws.
The following are some of the factors that could cause Coca-Cola Company’s actual results to differ materially from the expected results describes in their underlying company’s forward statement:-
Changes in laws and regulations, including changes in accounting standards, taxation requirements, (including tax rate changes, new tax laws and revised tax law interpretations) and environmental laws in domestic or foreign jurisdictions.
Changes in the non-alcoholic business environment. These include, without limitation, competitive product and pricing pressures and their ability to gain or maintain share of sales in the global market as a result of action by competitors.
Political conditions, especially in international markets, including civil unrest, government changes and restriction on the ability to transfer capital across borders.
Their ability to penetrate developing and emerging markets, which also depends on economic and political conditions, and how well they are able to acquire or form strategic business alliances with local bottlers and make necessary infrastructure enhancements to production facilities, distribution networks, sales equipment and technology.
A threat that the Coca-Cola Company had to face recently due to the changes in the political factors was the War against Iraq made USA and UK very unpopular in Middle East as well as in other Muslim countries. Because Coca-Cola is known as the very American company, this had a huge effect on the sales of its products.
Last year the US economy was strong and nearly every part of it was growing and doing well. However, things changed. Most economists loosely define a recession as two consecutive quarters of contraction, or negative GDP growth. In 2008, we are witnessing a global economic crisis which was suggested by several important indicators of economic downtown worldwide. These included high oil prices, which led to both high food prices (due to a dependence of food production on petroleum, as well as using food crop products such as ethanol as an alternative to petroleum) and global inflation; a substantial credit crisis leading to the bankruptcy of large and well established investment banks as well as commercial banks in various nations around the world; increased unemployment; and the possibility of a global recession.
As the inflation rate grows higher and higher, consumer buying power will represent a key threat in the industry. The rivalry between Pepsi and Coke has produce a very slow moving industry in which management must continuously respond to...