Assignment on strategic management

Anglia Ruskin University

Course -- M.B.A

S.I.D--

Contents:

Introduction

Objectives of the assignments

Scope of the assignment

Definition of Strategic Assignment

Importance of Strategic Assignment

Various roles in Strategic Assignment

Company Overview

Mission of Coca-Cola company

Strategies Of Coca-Cola company

SWOT analysis of Coca-Cola company

Pest Analysis

Conclusion

References

Introduction:

Strategic management is the process of defining an organization's objectives and further developing policies, strategies and plans to achieve these objectives, and allotting resources so as to achieve the goals of the company.

According to G. Tyage, Strategic management consists of the investigation, decisions, and actions an organization undertakes in order to create and sustain competitive advantages.

Strategic management is combination of science and arts which increases an organization’s chances of success as it involves detailed planning of each andevery variable of the organization that can help in the achievement of goals andobjectives.

Definition of Strategic Management

Strategic management is the process of specifying an organization's objectives, preparing policies and plans to achieve these objectives, and allocating resources so as to implement the plans. It is the highest level of managerial activity, usually performed by the company's Chief Executive Officer (CEO) and his executive team. It provide long run direction to the whole company.

Origin Of Strategic Management :

The increasing importance of strategic management may be a result of several trends. Increasing competition in most industries has made it diffi cult for some companies to compete. Modern and cheaper transportation and communication have led to increasing global trade and awareness. Technological development has led to accelerated changes in the global economy.Regardless of the reasons, the past two decades have seen a surge in interest in strategic management.

Three Perspectives on strategic management

Traditional Perspective

Resource basedview

Stakeholder view

Origin Economics, other business disciplines and consulting firms

Economics , distinctive competencies and general management capability

Business ethics and social responsibility

View of Firm An economic entity

A collection of resource, skills and ability

A network of relationships among the firm and its shareholders

Approach to Strategy Formulation

Situation analysisof internaland externalenvironmentsleading toformulation ofmission andstrategies

Analysis oforganizationalresources, skills, andabilitiesAcquisition ofsuperior resources,skills, and abilities

Analysis of theeconomic power,political infl uence,rights, anddemands of variousstakeholders

Source of Competitive advantage

Best adapting theorganization to itsenvironment bytaking advantage

Possession ofresources, skills, andabilities that are

Superior linkageswith stakeholdersleading to trust,goodwill, reduced

of strengths andopportunitiesand overcomingweaknesses andthreats

valuable, rare, anddifficult to imitateby competitors

uncertainty,improved businessdealings, andultimately higherfi rm performance

Source : http://media.wiley.com

OBJECTIVES OF THE ASSIGNMENT:

Every successful study should have specified and well-defined objectives. A careful statement of the objective helps in preparing a well-decorated assignment promoting others to take decision on it. The specific objectives of the study include:

To learn about the strategic management issues of multinational company.

To characterize the challenges of international strategic management.

To know about international strategic management process .

To know about Coca-Cola Company’s strategies management process.

SCOPE OF THE ASSIGNMENTThis study has focused upon the Management Issues which are persecuted by the Coca-Cola Company for capturing the world wide market. Through my assignment I have tried to find out the global challenges of International Strategic Management and to determine the basic strategies and describe the international strategic management process of the Coca-Cola Company.

Five Essential Fields of Strategic Management :

Goal-setting Goal-setting permits a firm to express its vision: identify what needs to be accomplished, define short-and long-term objectives, and relate them to what the organization wants to do.

Analysis

Analysis directs to gather and consider information so that a firm apprehends the situation. Assess external environments and internal situations to identify the strengths and weakness of the company and the opportunities and threats face to reach the goals.

Strategy Formulation

To determine a strategy, a firm establishes options, and make decisions, review the results of the analysis, identify the issues that a firm implementing partners need to address, and draft them in terms of their urgency and magnitude.

Strategy Monitoring

Monitoring provides checking the progress toward achieving the firm’s goals and determining whether any changes in the environment is necessary for the firm’s strategy.

IMPORTANCE OF STRATEGIC MANAGEMENT:

Strategic management accommodates the knowledge and experience procured in various functional areas.

It helps in understanding how policies are drafted and in creating appreciation of complexities of environment that the senior management staff faces in policy framing.

A well-formulated strategy can bring various benefits to the organization in present as well as in future.

1. Strategic management takes into account the future and anticipates for it.

2. A strategy is made on rational and logical manner, thus its efficiency and its success are ensured.

3. Strategic management reduces frustration because it has been planned in such a way that it follows a procedure.

4. It brings growth in the organization because it seeks opportunities.

5. With strategic management organizations can avoid helter & skelter and

they can work directionally.6. Strategic management also adds to the reputation of the organization

because of consistency that results from organizations success.

7. Often companies draw to a close because of lack of proper strategy to run it. With strategic management companies can foresee the events in future and that’s why they can remain stable in the market.

8. Strategic management looks at the threats present in the external environment and thus companies can either work to get rid of them or else neutralizes the threats in such a way that they become an opportunity for their success.

9. Strategic management focuses on proactive approach which enables organization to grasp every opportunity that is available in the market.

Various Roles In Strategic Management:

Senior administration plays an important role in Strategic Management.

Role of Board of Directors: Board of Directors is the highest Authority in a company. They are the owners/ shareholders/ lenders. . They are the link between the company and the outside environment.

Role of C.E.O: Chief Executive Officer is the most important Strategist and he is responsible for all aspects from formulations/Implementation of policies for to review of Strategic Management. He is the leader, motivator & Builder who forms a channel between company and the board of directors and responsible for managing the external atmosphere and its relationship.

Role of Entrepreneur: They are independent in their thoughts and action while they set / start up a new business. A Company can promote the entrepreneurial spirit and this can be internal mindset of an organization. They provide a sense of direction and are very active in implementation of various policies.

COMPANY OVERVIEW:

The Coca-Cola Company (Coca-Cola) is a leading manufacturer, distributor and marketer of Non-alcoholic beverage concentrates and syrups, in the world. The company owns or licenses more than 400 brands, including diet and light beverages, waters, juice and juice drinks, teas, coffees, and energy and sports drinks. The company operates in more than 200 countries. Approximately 74% of its products are sold outside of the US.

The company is headquartered in Atlanta, Georgia and employs 71,000 people as of September 2010.The company recorded revenues of $24,088 million during the fiscal year ended December 2010.

Mission Of Coca-Cola Company:

To create and design various consumer products, customer services and bottling system strategies, processes and tools in order to initiate competitive advantage and deliver superior value to.

Source: www.coca-cola.uk.

There are various factors which affects the strategies of Coca-Cola Company in case of international operation. Language is one of the main considerations or

Factors Affecting International Strategic

Management

Labour RelationsTransportation and Communication

ContractsAdvertisingControlMoneyMarketFinancing

LabourGovernmentEconomyPoliticsCultureLanguage

barrier when it does business in any domestic country . The compny in that case generally use domestic language to expand its business in any regional market. But when it does business outside the country it follows Polycentric policy that is using different types of languages in different countries. Side by side culture is also relatively homogeneous in domestic operation and quite diverse, both between countries and within countries. Political stability and government policies also to be considered by the Coca-Cola Company.

Strategies of Coca Cola Company

The four different strategies of coca-cola are shown in the following figure :

From these four strategies Coca-Cola Company only follows the Multi-domestic strategy. They produce their own products independently in different countries. All countries products are not same. They produce their products by following different strategy for different countries, based on the internal and external environment of that particular

Global StrategyTransnational

Strategy

Multi-domestic Strategy

√

Home Replication Strategy

country. Coca-Cola Company developed their strategy by considering the nature of the people of different county’s people, culture, status,taste and so many other related factors.

Corporate Level Strategy

Corporate level strategy aims to define a discipline of business, a firm intends to operate. Corporate level strategies are concerned with the selection of business in which the company should compete with the development and coordination of that portfolio of business. A firm might adopt any of three forms of corporate strategies:

A single business strategyRelated diversification strategy andUnrelated diversification strategy.

Coca-Cola Company succeeds related diversification strategy that is calls for the firm to operate in several different but fundamentally related businesses. Each of its operations are linked with other Coca-Cola characters, the Coca-Cola logo, and a theme of wholesomeness and a reputation for providing good quality family products. Coca-Cola Company follows this strategy because it has several

advantages. At first, the firm depends less on a single products so it is less

vulnerable to competition or economic threats. Secondly, related diversification

may produce economies of scale for a firm. Thirdly, related diversification may allow a firm to use technology or expertise developed in one market to enter a second market more cheaply and easily.

Corporate level strategies of Coca-Cola Company is following:

Figure: Corporate Strategy of Coca-Cola Company

Business Unit Level Strategy

A strategic business unit may be a division, product line, or other profit center that can be planned independently from the other business units of the firm. Corporate strategy deals with the overall where as business strategy focuses on specific business, subsidiaries or operating units within the firm. Business seeks to answer the question “how should we compete in each market we have chosen to enter?” The firms develop unique business strategy for each of its strategic business units, or it may pursue the same business strategy for all of them.

Functional Level Strategy

The functional strategies attempts to answer to question “How we manage the function?” The functional level of the organization is the level of the operating divisions and departments. The strategic issues at the functional level are related to business processes and the value chain.

Corporate Level Strategy of Coca-Cola Company

Financial Strategies

Reward System Strategies

System Strategies

R&D Strategies Marketing Strategies

Developing International Strategies

Developing international strategies is not a one-dimensional process.. Simply put, put strategy formulations deciding what to do and strategy implementation is actually doing it. Firms generally carry out international strategic management in two broad strategies-

Strategy Implementation

A firm develops the tactics for achieving the formulated international strategies is known as strategy implementation. Strategy implementation is usually achieved via the organization’s design, the work of its employees, and its control systems and processes.

Coca-Cola Company’s basic strategies are to develop a mission statement for entering a new market depending on a fully fledged market survey. Identifying external and internal environment strength, weakness, opportunity, and threats is the next management strategies.

Depending on the scope and opportunity the company will go forward as well as try to resolve the weakness and threats. After entering into a new market Coca-Cola Company try to achieve strategic goals and guide its daily activities with proper observation.

Figure: Quality Management System of Coca-Cola Company

SOURCE =www.coca-cola.co.uk

Through this model, we see that the company is first to take the response of customers and retailers through market survey. Then the management accumulates the best quality resources for making their products. This process includes-

Skilled employee involvement for production and quality control. High quality materials for production Up to date technology for quality control Effective methods and newly developed strategies

They will follow some continuous steps in developing the international strategy formulation. Those steps help the Coca-Cola Company to enter and establish their business in the multinational market.

COCA-COLA COMPANY, THE SWOT ANALYSIS

SWOT ANALYSISThe Coca-Cola Company (Coca-Cola) is a top most leading manufacturer, distributor and marketer of Non-alcoholic beverage concentrates and syrups, in the world. Coca-Cola has a strong brand name and brand portfolio. Business-Week and Inter brand, a branding consultancy, recognize Coca-Cola as one of the leading brands in their top 50 global brands ranking in 2010.

Analyzing the primary competitor and identifying their Strengths, Weaknesses, Opportunities, and Threats (SWOT Analysis) help determine target markets, marketing plan, and customer service, sales forecasting and sales planning. Examining the following points will aid in the competitive analysis:

Identifying the level of rivalry among competing sellers in the industry. Review strategies of companies to encourage customers to switch from a

immediate competitor company. Analyze ease of entry for new competitors in the soft drinks market.

STRENGTHS

Distribution network: The Company has a very strong and reliable distribution network. The network is formed on the basis of the time of consumption and the amount of sales made by a particular customer in one transaction. It has a distribution network consisting of a number of efficient salesmen, 400,000 retail outlets and 2000 distributors. Strong Brands: The products produced and marketed by the Company should have a strong brand image. People all around the world should recognize the brands marketed by the Company. Strong brand names like Coca-Cola, Fanta, and diet coke add up to the brand name of the Coca-Cola Company as a whole.

Low Cost of Operations: The production, marketing and distribution systems are very proficient due to forward planning and maintenance of consistency of operations which minimizes wastage of both time and resources leads to lowering of costs or cost control.

WEAKNESSES

Low Export Levels: The brands produced by the company are the same brands produced worldwide thereby making the export levels low. In India, there exists a major controversy concerning pesticides and other harmful chemicals in bottled products including Coca-Cola and some other beverages also.

Small Scale Sector Reservations Limits Ability To Invest And Achieve Economies Of Scale: The Company’s operations are carried out on a small scale and due to Government restrictions and ‘red-tapism’, the Company finds it very difficult to invest in technological advancements and achieve economies of scale. Huge corruption problem around the world is also a burning issue these days.

OPPORTUNITIESLarge Domestic Markets: The domestic market for the products of the Company is very high as compared to any other soft drink manufacturer. Coca-Cola u.k.

claims a 52 per cent share of the soft drinks market; this includes a 42 per cent share of the cola market.

Higher Income among People: Development of developing countries such as India and Brazil as a whole has lead to an increase in the per capita income thereby causing an increase in disposable income of the working population there. Unlike olden times, people now have the more power of buying goods of their choice without having to worry much about the flow of their income. The beverage industry can take advantage of such a situation and enhance their sales.

THREATS :Imports: For example: As Brazil is developing at a fast pace, the per capita income has increased over the years and a majority of the people is educated, the export levels have gone tremendously high. Companies are now trading to a large extent and the demand for foreign products has increased over the years.

Tax and Regulatory Sector: The tax system in developing countries such as in India is accompanied by a variety of tough regulations at each stage on the from production to consumption. When a license is issued, the production capacity is mentioned on the license and every time the production capacity needs to be increased, the license poses a huge problem. Renewing or updating a license is now very difficult and costly also.

Slowdown In Rural Demand: The rural market may be very attractive but it is full of various problems such as low disposable income in rural areas and unemployment.

COCA-COLA COMPANY, THE PEST ANALYSIS

A scan of the external macro-environment in which the firm operates can be expressed in terms of the following factors:

Political Economic Social Technological

The acronym PEST is used to describe a framework for the analysis of these macro environmental factors. A PEST analysis fits into an overall environmental scan, which consists of significant political, economic, social and technological analysis for a firm to reach their desirable position or to attain the goals and objectives.

    Environmental Scan

          /   \

External Analysis     Internal Analysis

/                       \

Macro environment Microenvironment

|

  P.E.S.T.

Political Factors

It is one of the significant parts of a company where, in which country they operate their business unit. Political factors include government regulations and legal issues and define both formal and informal rules under which the firm must operate. Some examples include:

tax policy

employment laws

environmental regulations

trade restrictions and tariffs

political stability

Economic Factors

Another most imperative element for PEST analysis is economic factors. Economic factor affects the purchasing power of potential customers and the firm's cost of capital. The following are examples of factors in the macro-economy:

economic growth interest rates exchange rates inflation rate

Social Factors

Social factors include the demographic and cultural aspects of the external macro environment. These factors affect customer needs and the size of potential markets. Some social factors include:

health consciousness population growth rate age distribution career attitudes emphasis on safety

Technological Factors

Technological factors can lower barriers to entry, reduce minimum efficient production levels, and influence outsourcing decisions. Some technological factors include:

R&D activity automation technology incentives rate of technological change

CONCLUSIONBecause of such a high competition (just like the brand Coca-Cola), Coca-Cola should not take a direct and tough attack upon it. There is no good to either side. The best way is to keep a peaceful relationship with it and always compare with others; we should find their disadvantages and show our advantages on this aspect. An organization’s strategic thinking is governed by the situation prevalent in its external environment. The external environment comprises of the strategic moves adopted by the organization’s competitors. The organization has to carefully study these moves and accordingly prepare strategies to gain competitive advantage. For the same, the organization needs to conduct an industry and competitive analysis. Lastly Coca-Company should largely focus on its current strategy only.

REFERENCES:

Cooper, R. D., Schindler, S. P. (2001), “International Business Research Method” Seventh Edition, New York: McGraw-Hill Irwin

Gerard Prendergast and Leyland Pitt (2007) “International Journal of Strategic Management: a World Issue”, Vol. 26 No.6, 1996, pp. 60-72. © MCB University Press.

James Prendergast and Eammon Murphy and Malcom Stephenson (1996) “International Journal of Quality & Reliability Management”, Vol. 13 No. 5, 1996, pp. 77-90, © MCB University Press.

Annual Report of Coca-Cola Company (2005-2009)

www.coke/homeContent.asp.htm