Analysis of Business Environment for Coca-Cola Company Research Paper

Analysis of Business Environment for Coca-Cola Company - Research Paper Example The company currently estimates the average drink sales per day at about 1.8 billion with more than 500 brands by 2011, four of which are the world’s top-five sparkling brands. Coca-Cola is one of the only trademarks with the universal presence and became a billion dollar brand in 2010. It has sponsored the biggest sporting events in the world, the Olympic Games and the FIFA world cup for more than 80 years (The Coca-Cola Company, 2012, par.2). The Company has undertaken many social responsibility initiatives including the Haiti Hope Project in 2010 which aimed at developing a sustainable mango industry in Haiti. The company attributes its business success to five main factors which are unique and recognized brand , quality, marketing, global availability and ongoing innovation. This paper will explore the business environment in which Coca-Cola Company operates focusing on among other things its SWOT, competitiveness and value chain. Assessment of the General Environment The general environment consists of the external factors which affect any business. These factors are dynamic and range from Demographic, Economic, Political/legal, Socio-cultural, Technological and Global. All these affect the business of Coca-Cola Company in one way or the other, but two of the most important factors for the Coca-Cola would be the economic and technological factors. The behavior of economies of the countries in which the company transacts business has a great influence on the performance of company products in those countries. Rise in inflation and interest rates trends increases operating costs and reduces production within the industry as well as affecting demand for beverages sold in those markets. When the countries face trade deficits or surpluses, it has an impact on the exchange rate which may be favorable or unfavorable thus increasing or reducing costs of raw materials and products because of increases or decreases in the value of exports/imports. The com pany’s products in those markets are affected accordingly. Economies facing budget deficits, as opposed to surpluses, may increase taxes in order to make up for the deficits, again impacting on Coke’s business in terms of increased business costs. Increase in rates of consumption may favor the uptake of beverages sold by Coca-Cola, but increase in savings by the populace will be detrimental to the company’s business. Changes in GDP levels, as well as business cycles are additional aspects that have an influence on the industry and business in which the company operates under the economic factor. Technologically, industry as well as firm benefits and/or vulnerabilities would be associated with taking or failing to take advantage of new generational purpose technologies, research and development, converging technologies and process architectures as part of the aspects of technology. In addressing business environment, competition is a key element that always comes to mind. The five forces of competition that are employed to establish the position of the company relative to its competitors in the industry as given by Porter are potential of new entrants, bargaining power of