Overview of Coca-Cola Company
Coca-Cola is a multinational company that deals with the manufacturing, marketing, and retailing of non-alcoholic beverage syrups and concentrates.
Over the years, the company has grown to become the largest beverages manufacturer in the world.
It manufactures in excess of 500 brands sold in more than 200 countries and territories.
Key to this growth is the franchising Coca-Cola strategy. The company has also focused on acquisition of strategic companies as an expansion approach.
Some key background information for The Coca-Cola Company is as illustrated below.
|Company name||Coca-Cola Company|
|Founder||John Stith Pemberton
Asa Griggs Candler
|Products||Soft drinks, Juice and Dairy, Water, Energy Drinks, and Tea and Coffee.|
PESTEL Analysis for Coca Cola
Just like a PESTLE analysis for Amazon, a PESTEL analysis for Coca Cola is an important tool in the analysis of the company’s macro environment.
Note that the macro environment has a profound impact of Coca-Cola strategy in multiple ways.
Such an analysis would focus on Political, Economic, Social, Technological, Environmental, and Legal factors as elaborated below.
Political factors cannot be overlooked in the situation analysis of Coca Cola. As is the case with other businesses, the government has a major influence on the way the company operates.
In particular, government regulation through the Food and Drug Administration (FDA) has set a number of guidelines that The Coca-Cola Company has to abide by.
Note that such regulations vary from one country to another.
It has been observed that the impact of political factors is usually more significant in foreign markets.
With this in mind, the PESTLE analysis for Coca Cola has to examine how various business regulations in different countries are likely to affect the company’s operations.
Such an analysis would be critical in assessing risks entailed in different markets before venturing into them.
Per se, the situation analysis of Coca Cola should consider political factors such as:
1. Political stability
2. Country’s legal framework (particularly in the areas of contracts)
3. Level of bureaucracy
4. Pricing laws and regulations
5. Trade regulations and tariffs
6. Laws on intellectual property
7. Taxation laws
8. Labor laws
9. Consumer protection laws
10. Anti-trust laws
As well, economic factors are very critical when conducting a PESTEL analysis for Coca Cola. These factors directly influence the market for the company’s products.
For this reason, the potential impact of the general economy has to be factored in Coca-Cola strategy analysis.
Global economic crisis due to different factors, including natural disasters, recessions, and the 2019 COVID-19 pandemic are likely to have significant short-term and long-term impacts on the company.
Therefore, when conducting a situation analysis of Coca Cola, you have to assess the impact of prevailing economic circumstances on the customers.
It is also important to consider the different economic factors that could affect the company’s cost of production.
That said, economic factors likely to affect The Coca-Cola Company include:
1. Exchange rates and foreign country’s currency stability
2. Economic system and size of the country
3. Level of government market interference
4. Maturity of financial markets
5. The country’s infrastructure
6. Skill level of the labor force
7. The economy’s level of education
8. Cost of labor
9. Inflation rate
10. Economic growth rate
11. Interest rates
12. Rate of unemployment
The PESTEL analysis for Coca Cola should also assess the potential impact of different social factors on the company’s business operations.
Social trends and changes in social behavior among customers should be considered when devising Coca-Cola Strategy.
In this, social trends such as adoption of healthy feeding habits that advocate for low intakes of processed sugars could have a significant impact on The Coca-Cola Company.
This is with the spread of scientific knowledge on the relationship between such sugars intake and the development of health conditions like diabetes.
In addition, different cultural elements should be deliberated when introducing new products as well coming up with advertisement approaches for the company’s products.
Particularly when venturing into different countries, the situation analysis of Coca Cola has to examine the particular customers’ culture.
Accordingly, some of social factors that could be considered in Coca-Cola strategy analysis include:
2. Social class
5. Leisure and recreation
Technological factors are key in the PESTEL analysis for Coca Cola. Note that the company is a giant multinational that enjoys and extensive market, which requires it to produce its products in mass.
Therefore, technology is part and parcel in numerous areas of operations and must therefore be considered in any form of Coca-Cola strategy analysis.
It is evident that technology has been evolving rapidly and in the process disrupting the production process in different industries.
This is no exemption to the beverages industry and The Coca-Cola Company should examine how rapidly technology is likely to disrupt the industry.
Per se, technological factors to consider in Coca-Cola industry analysis may include:
1. Impact of technology on production costs
2. Technological changes adopted by competitors
3. Impact of technology on the company’s value chain
4. Impact of technology on the company’s products
5. The rate of diffusion of entailed technology
A PESTEL analysis for Coca Cola would never be complete without considering the various environmental factors likely to affect its operations.
This is in consideration of the growing attention to sustainability and environmental interests in the business world.
The Coca-Cola Company has to reflect on its CSR particularly in regards to the environment. This is with the knowledge that there are different environmental expectations and laws in respective markets.
Accordingly, the company has to deliberate on the impacts it has on the environment in relation to waste production and exploitation of natural resources like water.
It is also important to evaluate the company’s environmental impact in areas where it sources raw materials that comprise agricultural products.
Some of the environmental factors to consider include;
1. Laws on environmental pollution
2. Climate change
4. Waste management
6. Regulations on sourcing raw materials
7. Attitudes towards environmental conservation
As well, legal factors should be central to a PESTEL analysis for Coca Cola. Such factors usually entail the different compliances the company has to observe in its operations.
First, there are various regulations that the Coca-Cola Company has to adhere to when operating within the beverages business.
A proper Coca-Cola industry analysis has to assess the different permits and conditions required in order to operate in the beverages sector.
Also, the company has to consider the operational regulations in different countries and regions before expanding their operations into those markets.
All these are important in understanding the areas in which the Coca-Cola Company is likely to face legal action, which is in most cases quite expensive.
That said, some legal factors to consider may include:
1. Employment law
2. Data protection laws
3. Consumer protection laws
4. Health and safety regulations