Business level strategies for Coca-Cola company.

Corporate and business-level strategies are vital for the success of companies in a competitive market. Business level strategies are concerned with the position that the firm holds in the industry in relation to its competitors. It puts into consideration the five forces of competition. The customers are the most integral part of the business-level strategies within an organization. On the other hand, corporate-level strategies are actions taken by a firm in a competitive market to gain a competitive advantage against its competitors. This paper will discuss the business-level strategies and the corporate-level strategies employed by the Coca-Cola Company. The Coca-Cola Company operates in over 200 territories and has a wide range of products. Its primary focus has always been in the beverage industry (Al Tunaiji, 1). It will discuss how such strategies have contributed to the company’s growth and how they could be used to maintain or improve the company’s performance.

Business-Level Strategies

Coca-Cola makes use of Porter’s generic business-level strategies. The company employs differentiation, cost leadership, and integrated (hybrid) business-level strategies (Hitt, Ireland & Hoskisson, 4). The company has differentiated its brand and its products in all the markets that it operates. The company is unique compared to its major competitors in the food and beverage industry. Coca-cola is the oldest and one of the most successful beverage companies in the world. It has been in existence for over a century offering its customers the best unique product, therefore creating brand loyalty.  The company also differentiates itself through its marketing campaigns and advertisements, which are incomparable to its competitors. Its product designs are well researched and often leave a mark in the memory of the consumers. The company can make sure that its products are at the standard price using the cost leadership strategy. Coca-Cola makes sure that its prices on its products are relatively lower compared to those of the competitors (Al Tunaiji, Naama, 1). Lastly, the integrated cost leadership and differentiation business strategy involve the production of unique products at lower prices than competitors’ substitutes. The Coca-Cola Company employs a combination of the two strategies to promote brand loyalty and to also attract new consumers to their products.

From the stated business-level strategies, the differentiation strategy is the most effective for Coca-Cola in the long-run. The beverage industry faces a lot of competition from existing firms and others that join the market. Differentiation will thus allow Coca-Cola to give its consumers a reason to choose the brand over others in the market.  The differentiation is a way through which the company can defend high prices on some of its products. A good example is the Monster drink, which is an energy drink but on a higher-end compared to other competitors. However, the differentiation in the product design and advertisement justifies the price of the products. More consumers are looking for energy drinks that are likely to buy it compared to others in the market.

Corporate-Level Strategies

Corporate-level strategies are plans that firms have to meet specific business goals (Hitt, Ireland & Hoskisson, 4). They are long-term in nature and allow for adjustment based on market conditions. The strategies create an overview picture of the future goals of the company. The Coca-Cola Company applies the following corporate-level strategies: The first is the business growth strategy aimed at expanding the revenues and sales of the company. Coca-Cola achieves the above by employing vertical and horizontal growth strategies. The company extends its reach by aiming at entering new and developing markets. It also uses the business diversification strategy, which looks at the company’s services and products and how they are marketed and sold. Coca-Cola is a single business strategy focusing mainly on the beverage side of the industry. All the company produces are beverages such as sodas and juices. The business stability strategy leads to the objective of a firm majorly being the maintenance of the market share (Wheelen et al., 6). The Coca-Cola Company is almost at its optimal market share goals and would have to employ the last strategy if operations are only carried out in the beverage sector.

From the above, the diversification strategy is of utmost importance to the Coca-Cola Company. The future is changing, and so are the demands and preferences of the consumer. For instance, most consumers are growing a healthier conscious, which requires the company to adopt the same when coming up with their beverage products. Most of the sales and revenues of the Coca-Cola Company come from the soft drink sector. A collapse in the sector would be devastating to the company. The company should employ a dominant business diversification strategy to safeguard its future. The company’s overreliance on only one segment of the industry could have catastrophic results if the sector fails. The current state of the economy is unpredictable, and diversification reduces the risk of a market or economy’s unpredictability by spreading such risks among various products and services. Diversification will also allow for more options for services and products, and therefore Coca-Cola will gain more consumers and a more significant market share in the long run. The strategy gives a massive boost to the company’s image and also increases revenues and profitability. It is also a way Coca-Cola could protect itself from the impact of competitors.

Competitive Environment

The Coca-Cola Company faces significant competition from many players in the food and beverage industry. The major competitors of the company are Nestle SA and PepsiCo. Nestle is the leading brand in terms of revenues when it comes to the food and beverage industry. PepsiCo, however, offers much more direct competition to Coca-Cola. The two companies produce the same line of products. They deal with refreshment drinks and carbonated sodas. Even though each company has its recipes and tastes to its products, the competition is stiff as the products can act as perfect substitutes.

PepsiCo employs business strategies that are similar to those of the Coca-Cola Company. The company employs cost leadership and differentiation strategies (PepsiCo, 5). Just like Coca-Cola, PepsiCo builds products that are unique to their targeted consumers. The company employs focused differentiation, where it targets a segment of their market. Comparing the two companies, Coca-Cola is more superior to the business level strategies compared to PepsiCo. As seen earlier, Coca-Cola makes products of superior quality compared to other companies in the market. Both companies have quality customer care services as they aim to retain and attract more consumers to their products. The Coca-Cola Company also has superior product design. Coca-Cola’s management desires to always make their beverage products memorable in the minds of the consumers. The company is one of the biggest brands of all times in the past and the future, based on how they communicate their message to their consumers.

An excellent example is the coke bottle that has been unique all through the years. A consumer easier identifies a coke bottle or product on sight. The company also differentiates itself through its infectious product campaigns. ‘Share a Coke’ has been one of the most successful campaigns any company has ever had. Such campaigns are fostered by social media, a place where most of the consumers of carbonated beverage products can be found. Everywhere you go in all cities and towns that Coca-Cola operates in, you will see an advertisement or a campaign related to it. Though PepsiCo too has brand campaigns, they do not have as much impact as the Coca-Cola Company.

Under the differentiation business-level strategy, Coca-Cola has the upper hand, primarily because of its rich history. The company uses such history to perfect its future and to acquire consumers. Its brand and design has not changed and remains unchanged since it was used. The swirly font and the red disc on the company logo remain memorable in consumers’ minds. However, PepsiCo has the upper hand in the corporate level strategy. The company employs the diversification strategy, where it ventures into different product lines. PepsiCo owns snack brands that are complementary to its beverage products (PepsiCo, 5). In doing so, the company is likely to averse the risk of failure of one sector of the industry and rely on the revenues from the other sector (Deepak & Jeyakumar, 2). The Coca-Cola Company, on the other hand, has its focus on beverage products, especially its carbonated drinks. It has not ventured into other food and beverage sectors like the competitor.

Market Cycles

Slow market cycles occur when a firm’s competitive advantage is shielded from imitation either due to regulatory policies or because such imitation is expensive for competitors (Hitt, Ireland &  Hoskisson, 4).  In a slow market, the choice in the competitive market would not change. For instance, in a slow market, the business level strategy would remain the same as Coca-Cola would be shielded from PepsiCo imitation. Coca-Cola has the upper hand in the differentiation strategy, where it has superior quality and product designs. Such superiority would be protected in a slow market as it would be expensive for PepsiCo to adopt such strategies. Therefore, the decision would not change as Coca-Cola would still have the upper hand. When it comes to the corporate strategy, the decision would also remain the same in a slow market cycle. PepsiCo would have the competitive advantage of being highly diversified. As seen earlier, PepsiCo employs the diversification strategy having different lines of products in different segments of the industry. Therefore, the company would be protected from Coca-Cola as it would be expensive for the latter to venture into product diversification.

A fast cycle market is characterized by an unstable, unpredictable, and hypercompetitive business environment. The competitive advantages that affirm might have are not shielded from competition (Dess, 3). In a fast cycle market, the decision under the competitive environment section would differ as both PepsiCo and Coca-Cola would be able to imitate each other’s competitive advantage. In such markets, collaboration mindsets are put into action. The companies freely acquire or buy out other smaller competing firms, and the remaining giants have to fight for their consumers. The decision would be indifferent when it comes to the corporate level strategy of diversification, where Coca-Cola would be able to adopt the diversification strategy employed by PepsiCo. On the other hand, the business level strategy would not change due to the history and brand strength that Coca-Cola has created over the years.

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