Coca Cola SWOT 2016 (Strengths and weaknesses)

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COCA COLA SWOT ANALYSIS (2016) with infographics

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Coca Cola SWOT (Introduction) – Coca Cola (NYSE:KO), the beverage giant is a global brand with a strong brand image. The iconic Coca Cola logo and its popular drinks are a familiar scene in every part of the world. Despite the heavy competition from Pepsi, it has sustained its position as the leading beverage brand. Its diverse product portfolio and distinct marketing strategy have made it an industry leader. For years, its products have enjoyed high popularity for their unique flavors. However, the recent global financial turmoil and a strengthening dollar affected its profits. Another major challenge facing Coca Cola is  the changing consumers’ preference.  More and more customers are adopting healthier drinks in place of Soda. Coca Cola recently adopted some strategic changes, adding more low calorie products to its portfolio. It seems bullish about the year ahead and is ready to take the challenge. This year, Coca Cola ranks at the 62nd position on the Fortune 500 list, 18 ranks below Pepsico. Its closest rival is at the 44th rank.

Key Information:

Name of CEO: Muhtar Kent

Industry: beverages

Headquartered at Atlanta, Georgia.

Employs – 123,200

Market Value — as of March 31, 2016 ($M) ——–$200,845
Revenues ($M) 2015————–$44,294
Profits ($M) 2015————–$7,351
 
Coca Cola swot analysis 2016

COCA COLA Strengths:

–  Strong brand image

–  Largest market share

–  Strong brand portfolio

–  High customer loyalty

–  Extensive distribution network

–  Investment in marketing and advertising

– High company valuation

The most important strength of Coca Cola is its brand image and the high brand awareness. The brand is present in nearly every part of the world and enjoys a very high degree of popularity. Coca Cola also holds the largest market share of around 48% in the beverages industry. Another key strength of Coca Cola is its strong product portfolio. To match the competition from the health drinks, it introduced Diet Coke to Coke Zero Sugar, Fanta Orange Zero, Lilt Zero, Schweppes Diet Lemonade and Powerade Zero. It has presented low calorie options for nearly all its major and well known products.

Coca Cola sums up its key strengths on its website in the following lines:

“The Coca-Cola Company (NYSE: KO) is the world’s largest beverage company, refreshing consumers with more than 500 sparkling and still brands and more than 3,800 beverage choices. …., our company’s portfolio features 20 billion-dollar brands, 18 of which are available in reduced-, low- or no-calorie options. Our billion-dollar brands include Diet Coke, Coca-Cola Zero, Fanta, Sprite, Dasani, vitaminwater, Powerade, Minute Maid, Simply, Del Valle, Georgia and Gold Peak.. Together with our bottling partners, we rank among the world’s top 10 private employers with more than 700,000 system associates”.

Source: Coca Cola Company

Coca Cola SWOT Analysis
Coca Cola ! Enjoy!

In this way, the coca cola company holds some significant strengths that give it a competitive edge in the market. Its  flavorful drinks enjoy a very high level of customer loyalty. A key reason behind its impressive international presence is its robust distribution network. Coca Cola utilizes unique marketing and advertising strategies. It has continued to make major investments in marketing and advertising as well as customer engagement. From time to time viral marketing videos to social media campaigns, Coca Cola has used all of them to attract customers. It also gains publicity through sponsorship and other methods. Currently valued at $83.84 billion, Coca Cola enjoys high brand value. An excellent distribution network is also an important strength of the brand. These are the key strengths of Coca Cola and also the reasons behind its success.

 – Weaknesses:

Competitive pressure from rival brand pepsi.

–   Low product diversification

–    Currency fluctuations

–  Low presence in health drinks

–  Water management issues.

The rivalry and competitive pressure against Coca Cola has kept rising. However, Coca Cola did not make any major strategic move to beat the competition. It has continued to rely on the popularity of its existing brands, apart from the introduction of a few low calorie options. Recently, the brand increased the number of low calorie or calorieless options in its product portfolio. Still, considering the growing presence of health drinks and sports drinks, competition might grow further in future. The brand has already faced issues regarding over-consumption of water. Its product diversification relative to its competitors has been low. Fluctuations in the value of dollar have also hit Coca Cola hard, causing loss of profits. Last year (2015), Coca Cola saw a drop in its revenue. The industry has seen customers move towards the health drinks. However, this is an area where the brand presence of Coca Cola is relatively low. It also faced lawsuits over product quality recently. The uproar over the use of pesticides is yet to die. Continuing lawsuits and legal hassles also challenge its reputation especially in the growing markets.

– Opportunities:

–   New opportunities in growing markets

–   Product diversification

–   Packaged water

Coca Cola has major opportunities before it in the emerging markets. It can profit through brand expansion in these markets. Apart from it, product diversification into healthy drinks and packaged water can also bring revenue and profits. Adding food products to its portfolio like Pepsi did could also be a good option. Introduction of health drinks and juices can particularly benefit it by establishing it as a health friendly brand.

 – Threats:

Increased competition from the less known brands.

–   Increased costs of labor and raw material.

– movement towards health drinks

The threat of competition against Coca Cola has kept rising. Apart from Pepsi, competitive pressure from other brands like Dr Pepper Snapple Inc., Monster Beverage Corp., and Suntory Beverage & Food Ltd has also increased. The resources are getting costlier including water. The rising  costs of production and labor resources are also an important threat. The threat from the continuing lawsuits is not small either. So, there are some major threats before Coca Cola. However, the biggest one is water scarcity.

 – Recommendations:

Based on the above SWOT analysis it is visible that Coca Cola has some very important strengths. Its brand image and popularity helped it through the financial crisis. However, with consumers growing more and more health conscious, it is important that it adds more health drinks to its portfolio. Apart from that, it can add snacks like chips or drinks like coffee and juices. The entire Soda industry is threatened by the popularity of health drinks. In this regard Coca Cola might need to focus on marketing of its products to stay profitable. Expanding its product portfolio can be really good for the brand. Moreover, water management is a key area that requires focus. Coca Cola is aggressive about its plans for the year. Based on the popularity of its products, a few strategic moves could help it better handle competition in the emerging markets .

Abhijeet Pratap

Abhijeet has been blogging on educational topics and business research since 2016. He graduated with a Hons. in English literature from BRABU and an MBA from the Asia-Pacific Institute of Management, New Delhi. He likes to blog and share his knowledge and research in business management, marketing, literature and other areas with his readers.