Strategic Management: The case of Coca-Cola

Introduction

The Coca Cola Company is a leading multinational company in manufacture, distribution, and marketing of non-alcoholic beverages. The compay owns over 400 brands, including waters, juice drinks, diet, teas, energy and coffees. The Cmpany has recorded tremendous progress in respect of sales units, buyer loyalty, growth in product portfolio, and profitability. This paper seeks to examine its strategic process and growth stategy that could account for this trendy growth.

Strategic Management Process

This is a process of defining an organization’s strategy. It also refers to a process by which the management selects a set of viable strategies that will facilitate its performance (De Wit & Meyer, 2010).

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This is a continuous process that analyzes and appraises both the business and the industry in which an organization operates, and puts up goals to meet current and future competition (Singh, 2008). To enable its future business success, Coca Cola has adopted a strategic management process that follows a four-step process; environmental scanning, strategy formulation, strategy implementation, and strategy evaluation.

Figure: Diagrammatic logical flow of strategic process

Environmental scanning-Coca-Cola Company undertakes a focused diagnosis of its current and potential business environment before launching its business. All external and internal influences relevant to its operations are analyzed on a continuous basis. Since the company operates globally, global environmental factors likely to impact on its business gain great emphasis to enable it succeed in its expansion process (Singh, 2008). Environmental scrutiny involves facets such as tax policies, employment laws, environmental regulations, and political stability.
Strategy formulation- it is a process of selecting the best course of action to accomplish organizational objectives and purpose (Hill & Jones, 2009). In Coca Cola, the process of strategic formulation begins with creation of a mission and vision statements. This mission statement clarifies the purpose of the organization, its values, and often serves to communicate with internal and external parties and stakeholders about its strategic direction (De Wit & Meyer, 2010). The vision of the company has been beneficial in supporting strategy formulation in which it says it focuses to remain a low-cost leader with an aim to gain customer loyalty and increase sales.
Strategy implementation– it is the process of making the chosen strategy functional or operational as originally planned. It entails modeling the structure of organization, resource distribution, designing decision making process, and management of human resources. To achieve its strategy implementation process, Coca Cola Company has ensured quality management system that helps in guiding and coordinating its activities to guarantee quality. It also develops a control framework for guiding organizational and managerial systems and processes. The company believes that succeeding in a new market relies on a proper formulation of excellent strategies and keeping them (De Wit & Meyer, 2010). Therefore, quality controls have been the guiding principles that have enabled its multilateral strategy.
Strategy evaluation-it is usually the last phase of strategic process. In this process, the fundamental activities that Coca has considered are: appraisal of external and internal environment necessary for strategy formulation, performance measurement, and conducting remedial action. This evaluation process is imperative in ensuring that an organization succeeds in meeting its objectives.

Growth Strategies

Coca-Cola Company utilizes the Multi-domestic strategies in nurturing its businesses. In this strategy, subsidiaries independently produce products in different countries based on the prevailing different environmental factors. The strategy considers numerous factors such as culture, status, economic status among other factors. The choice of this approach has been recognition of the fact that domestic corporations are supposed to be responsive to the demands of the local market (Singh, 2008).

Strategic growth through diversification

The company has sustained its growth through diversification in several but related products. This process has been adopted in order to expand its product portfolio with an aim of remaining relevant to the expanding needs of the global market. To achieve this, the company ensures that each of its portfolios is strategically linked to other products, logo, and thematic image of quality reputation and wholesomeness (Singh, 2008).

The choice of this strategy has been advantageous in several ways. Firstly, it is meant to leverage itself against the vulnerabilities and threats of competition. Secondly, the company has been able to benefit from the economies of scale. Lastly it has the potential of utilizing its expertise and technology gained in one market in order to enter a different market and product.

Growth through Differentiation strategy

It is simply a process in which an organization distinguishes its products, services or offering from its competitors. This strategy has enabled the Company to gain pricing power. To achieve in this strategy, the company has carefully ridden on the advantages of product quality improvement, brand strength and buyer loyalty (Hill & Jones, 2009). Coca has also successfully used effective and deficient distribution of its products as a means of differentiating its self from rival parties such as Pepsi.

Decentralization- the Company believes in a decentralized strategic management process in which domestic corporation are given the mandates by the parent company. It uses this strategic management process on the basis that coordination between the parent company and its numerous foreign subsidiaries is generally costly and complex process.

References

De Wit, B., & Meyer, R. (2010). Strategy: Process, Content, Context, An International Perspective. New York, NY: Cengage Learning EMEA.

Hill, C., & Jones, G. (2009). Strategic Management Theory: An Integrated Approach. New York, NY: Cengage Learning.

Singh, M. (2008). Strategic Management and Competitive Advantage. New Delhi: Global India Publications.

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