Introduction
Coca-cola Company is a multi-national company involved in the production, packaging, and distribution of the coca cola nonalcoholic beverage among other products. This coca cola beverage is known worldwide for its unique taste. Many other beverage companies have tried emulating the coca cola brand but have gone out of business since they lack the secret ingredient found in coca cola that makes it taste as good as it does.
The company and its subsidiaries operate in a franchised system where they produce a syrup concentrate that is then sold to many bottlers located in different parts of the world (Pendergrast, 2013). These bottlers operate solely for bottling Coca-Cola beverages.
Coca Cola Company’s main beverage is coke. Other soft drink products include Fanta in different flavors, black currant, passion, pineapple, orange, and sprite. The coca cola company is known for producing healthy beverages such as Minute Maid, Diet Coke, and Dasani water among others.
In the United Arab Emirates, Aujan Coca-Cola Beverage Company (ACCBC) and Rani Refreshments, established in 2012 after a successful partnership with Coca Cola continue to rise regarding their products and services in the Middle East. The Aujan Coca-Cola Beverage Company (ACCBC) is among the top 100 companies in Saudi Arabia. The beverage company serves a market of over ten countries including Egypt, Oman, UAE, Iraq, and Kuwait among others. Together with the Rani Refreshments (RR), the Aujan Group’s beverage business is the leading beverage distributor in the UAE.
Mission/Vision
The vision of the Aujan Group Holdings is to create memorable moments. The mission statement has four parts targeting the consumer, the community, partners, and shareholders of the company. According to the company’s website, Aujan Group Holding (2015), the company offers quality services and products for the people and the communities.
They ensure that the partners and shareholders feel part of the team that seeks to deliver profitable growth in terms of investments while making long-lasting relationships for the long-term success of the company. Additionally, the company embraces the vision and mission of the coca cola company in ensuring that they inspire the world, create moments of happiness while making a difference.
Coca cola’s biggest competitor is Pepsi, and the vision statement aims to deliver top financial performance while taking into consideration the sustainability of the business on the environment and society. The mission of the company aims at producing affordable and healthy beverages and foodstuffs distributed over the world (PEPSICO, 2014). The aim of Pepsi company is to create a better tomorrow than today.
INTERNAL ASSESSMENT
The Organization’s Structure
Aujan group is made up of a combination of companies whereby Aujan Coca Cola Beverages Company is a member. The chart does not provide a clear picture of the management structure and the different departments found in the company.
This chart requires improvement in order to be able to display the management system of each company in the organization and this will lead to improvement in their management since different specialists of business management will be in a position to view it and advice accordingly.
Internal Factor Evaluation (IFE) MATRIX
Internal Factor Evaluation (IFE) matrix is a strategy-formulation instrument used to evaluate how a company is performing in regards to the identified internal strengths and weaknesses of a company, (Shojaei, M., et al 2013).
| Internal Strengths
Largest bottler in the middle east Strong management team Supplies major airlines Increasing cash inflow Good reputation Highly competitive Very loyal employees Strategic geographical location Record of minimal complaints Financial ratios |
Weight (%) | rating | Weighted score |
| 10
12 4 8 4 5 4 3 4 5
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4
4 3 4 3 3 3 4 3 4 |
0.40
0.48 0.12 0.32 0.12 0.15 0.12 0.12 0.12 0.20 |
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| Internal Weaknesses
Market saturation Limited diversification Absence of strategic partner |
15 20 6 |
1 2 1 |
0.30 0.40 0.06
|
| Major weaknesses(1), minor weaknesses(2), minor strengths(3), major strengths(4) | |||
| TOTAL WEIGHTED SCORE | 100 | 2.91 | |
The score is 2.79, which implies that the organization has a strong internal position.
EXTERNAL ASSESSMENT
External Factor Evaluation (EFE) matrix is a strategic management tool mostly utilized to access the progress of a business unit. It is useful in determining and prioritizing the opportunities and threats facing a company. It differs from IFE in that, while IFE deals with the internal factors, EFE is concerned with the external factors, (Shojaei, M., et al 2013).
| Opportunities
Company Consolidation Increase in travel to other UAE states Increased demand in UAE Establishment of new branches in UAE Growth of low cost sector |
Weight (%)
11 12 10 16 8 |
Rating
4 3 2 4 3 |
Weighted score
0.44 0.36 0.20 0.64 0.24 |
| Threats
Government oversight Economic downturn Rise in the price of inputs Increase in taxation Insecurity |
5 15 8 5 10 |
3 2 1 2 3 |
0.15 0.30 0.08 0.10 0.30 |
| Poor (1), below average (2), above average (3), superior (4) | |||
| TOTAL WEIGHTED SCORE | 100 | 2.81 | |
Then total weighted score is 2.81, which indicates that the company has very slightly less than average capability to respond to external factors an implication that it has a strong external position. From the matrix, establishment of other company braches can lead to a significant positive change of returns. The major threat that the company should be cautious is insecurity due tom the increasing rate of terrorists attack worldwide that can lead to reduction in sales.
Aujan Coca-Cola Beverage Company (ACCBC) has several soft drink beverage competitor companies in the United Arab Emirates. Two of these companies are the Agthia Group PJSC and Al Rawabi Company.
STRATEGY FORMULATION
- SWOT Analysis
SWOT analysis is a structured method used for the sole purpose of evaluating the strengths, weaknesses, opportunities, and threats that are involved in a company. It is a method to analyze the competitive position of a company using the strengths, weaknesses, opportunities and the threats to assess both the external and internal aspects of running a company. This section aims at providing information on Coca Cola’s SWOT matrix.
Strengths
Coca Cola is a global brand and, therefore, has a wide market share. Besides, the brand has been able to capitalize opportunities in every market that they invest. One of its strengths is their well-established supply chain (Pendergrast, 2013). The Coca Cola in UAE is supplying products in UAE and regions beyond providing the company with a platform to compete effectively with the consumers.
It is also important to note that the climatic condition in the UAE, especially in the afternoon, is very hot. As a result, customers’ demand for their fluids like soda and water relatively increases. This company has managed to spot the opportunity and hence, has designed a supply chain that allows it to reach out to a bigger market.
Coca Cola has a strong brand image and as a result, convincing the customers to consume the company’s products was more or less quite an easy process. The company has adequate market experience and exposure for quite a long period compared to their competitors supplying substitute products. The strong brand image has also provided Coca Cola Company with a platform to withstand pressures from the increasing market demand without jeopardizing the quality of their products.
Other strengths include; location of the company in a geographical area characterized by continuous hot and dry weather conditions (climate) and loyal employees.
Weaknesses
The company is dealing with a lot of pressure trying to compete with other emerging comopanies in the same market. This is mainly because majority of these upcoming competitors are using price as an incentive to convince customers to consume their products. On the other hand, the price model adopted by Coca Cola aims at ensuring that the company maximizes on normal profits and, therefore, cannot go below a certain price level. The company has hundreds of products being produced while their competitors major in a few products. It, therefore, becomes almost impossible for the company to compete effectively when the pricing approach is considered.
Opportunities
The UAE market is growing and, in fact; prospects show that the market is likely to continue growing with one of the major reasons for the increase being the consumption of the products. However, for Coca Cola to capitalize their markets in UAE, it is important for this company to revise its pricing model so that it can be able to compete effectively with the competitors in the market. With changes in technology, the company needs to embrace new technologies and adjust their production model towards producing quality products based on customer requirements (CSIMarket, 2014).
Threats
The biggest threat for Coca Cola is the issue of the UAE to subscribe to the principle of a free market. Therefore, inducing a lot of freedom for new companies to join the market. Coca Cola, on the has the advantage of producing multiple products and, therefore, has to ensure that all there are of good quality. The freedom to join the market is eventually resulting to the company losing part of its marketing share. Other threats include taxation, increase in terrorism, government oversight, and economic downturn that may be due to inflation problems.
The following table represents a SWOT matrix with the above-discussed strategies.
| Strengths
Largest bottler in the middle east Strong management team Increasing cash inflow Good reputation Highly competitive Very loyal employees Strategic geographical location Record of minimal complaints |
Weaknesses
Market saturation Limited diversification Absence of strategic partner |
| Opportunities
Company Consolidation Increase in travel to other UAE states Increased demand in UAE Establishment of new branches in UAE Growth of low cost sector |
Threats
Government oversight Economic downturn Rise in the price of inputs Increase in taxation Insecurity |
- SPACE Matrix
A SPACE matrix is a tool in management used to analyze an organization. It used in determining the kind of a strategy that a particular company or organization is in a position to undertake. The main aim of the matrix is to provide guidelines to some of the strategic options that the company can take towards improving their performance in the market. The term SPACE is an abbreviation from the Strategic, Position, and Action Evaluation matrix.
| INTERNAL STRATEGIC POSITION
Competitive Advantage (CA) (-6 worst, -1 best) -1 Quality of the product -1 Market share -3 Brand -1 Product life cycle Average -1.5 |
EXTERNAL STRATEGIC POSITION
Industry Strength (IS) (+1 worst, +6 best) +6 Entrance barrier +5 Growth potential +1 Financing accessibility +5 Consolidation Average +4.25 |
| Total X-axis score: 2.75 | |
| Financial Strength (FS)
(+1 worst, +6 best) +5 Cash inflow +5 Return on Investment +5 Turnover +4 Working Capital Average 4.75 |
Environmental Stability (ES)
(-6 worst, -1 best) -2 Inflation -1 Technology -3 Competitive pressures -4 Taxation Average -2.5 |
| Total Y-axis score : 2.25
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SPACE Matrix
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The matrix above was developed using the calculated values for the competitive advantage (CA), industry strength (IS) on the X-axis and the environmental stability (ES) and financial strength on the Y-axis. The SPACE matrix shows that the Coca Cola Company should lead an aggressive strategy (point of intersection between the X and Y-axes values. The company has enough competing strength in the market. It requires the company to use its internal strengths to create a market penetration and strategize a development mechanism.
- BCG Matrix
BCG matrix is a tool used in determining the life cycle theory of a product to enable prioritizes which products in a particular company product variety is often getting funding and attention. The model is laid on the classification of the company’s products, which results into four categories, (Henderson, B. D. 1989).
Each product has its own life span, and each stage of life represents a different kind and level of risk and returns. A company should ensure that there is maintenance of a balanced products portfolio and this involves both high growth and low growth products.
BCG matrix enables categorize products into four categories in a portfolio of the particular company. BCG STARS; this category consists of products having market share in a developing market. BCG QUESTION MARKS: these are products with a low market share in a growing market. They are the brand products that are not yet familiar to the consumers. They have a high demand but with low returns attributed to the limited market. The best handling method for such goods is by investing more on them to gain market share.
BCG CASH COWS: these have a high market share in a mature market. They generate many returns if they compete well since they have a high profit margin. Most businesses maximize on these. BCG DOGS: they include goods with low growth markets hence; they have a low share in the market. These should be minimized or completely avoided, as they add no value to final return otherwise they reduce (loss).
Adopted from (Stern, C. W., & Deimler, M. S. (Eds.). 2012
- Grand Strategy Matrix
This strategy matrix is developed via examination of the ability of a company to develop slowly or fast whilst checking on the competitive strengths and weaknesses. With this matrix, all organization is divided into four quadrants. The strategies to be considered are for a given organization are listed in a sequential manner to increase the attractiveness of each, (Komendova, A. A. 2013)
Quadrant –1 contains the conditions for the company in a rapid market growth. The company should focus on current market and appropriate
Quadrant -2 contains conditions for the company having weak competitive situation and a rapid market growth. The company at this point needs to evaluate the present approach the market seriously. Quadrant-3 this contains the organization’s weak competitiveness and slow and gradual market growth. In this type of a situation, the company competes in slow-growth industry and has a weak ability to impose competition. Drastic variations are needed to avoid any possible liquidation.
Quadrant-4 has the organization’s strongest competitive situation and a slow market development. The company has the potential to launch different programs in the promising development areas, due to the high cash inflow and reduced internal growth needs.
Recommendations
The SWOT strategy provides the strengths, weaknesses, opportunities, and threats associated with the company. Knowledge of the factors is very much useful for it necessiates the management to identify the areas, which need to be improved.
Strategic, Position and Action Evaluation (SPACE) provides the knowledge of where the company is and where it needs to pursue more to achieve the main objective of every business organization of making profit.
The BCG is a recommendable strategy since it helps the company management in strategizing the products that have low or no market value to avoid them and maximize on the ones which have a high market value and competition.
Grand strategy matrix helps in determining the growth of the company and hence useful to determine if the growth rate is fast or slow and hence adjust where need be.
The above strategies are recommendable for utilization in the management of the company though not much adequate. They need to be strengthened through combining them with other strategies like the Quantitative Strategic Planning Matrix (QSPM) and Balanced Scorecard.
References
Aujan Group Holding. (2015). About Aujan Group Holding. Retrieved from http://www.aujan.com/about-us/vision-mission/
Baldwin, C. Y., Clark, K. B., Magretta, J., Dyer, J. H., & Fisher, M. L. (2000). Harvard business review on managing the value chain. Harvard Business Press.
CSIMarket, Inc. (2014). Coca Cola, Co (KO) Dividend Comparisons to Industry Sector and S&P. Retrieved from http://csimarket.com/stocks/KO-Dividend-Comparisons.html
Henderson, B. D. (1989). The origin of strategy. Harvard business review, 67(6), 139-143.
http://web.abo.fi/~mbrannba/GSM/henderso.pdf
Komendova, A. A. (2013). Viral Marketing Campaign Plan and Its Results: Relationship Games Ltd.
http://www.theseus.fi/bitstream/handle/10024/68020/Komendova_Alena_Alisa.pdf?sequence=1
Natarajan, R., & Barger, B. (2008). Improving performance through the Baldrige organizational profile: An application in business education. Academy of Educational Leadership Journal, 12(1), 63. http://www.innovation.cc/news/innovation-conference/longford.pdf
Pendergrast, M. (2013). For God, country and Coca-Cola: the definitive history of the great American soft drink and the company that makes it. New York: Basic Books.
PEPSICO. (2014). Our Mission and Values | PepsiCo.com. Retrieved from http://www.pepsico.com/Purpose/Our-Mission-and-Values
Shojaei, M., Abbaszade, S., & Aghaei, S. S. (2013). USING ANALYTICAL NETWORK PROCESS (ANP) METHOD TO PRIORITIZE STRATEGIES RESULTED FROM SWOT MATRIX CASE STUDY: NEDA SAMAK ASHENA COMPANY. Interdisciplinary Journal of Contemporary Research in Business, 4(9), 603. Retrieved from http://search.proquest.com/openview/7cbe0ac35047e85795177da62fba32c5/1?pq-origsite=gscholar
Stern, C. W., & Deimler, M. S. (Eds.). (2012). The Boston consulting group on strategy: Classic concepts and new perspectives. John Wiley & Sons.