Company Overview
Coca-Cola drink was created in May 1886 by Dr. John Pemberton in Atlanta, Georgia. In
1891, entrepreneur Asa G Candler gained ownership of the Coca-Cola business. Ernest
Woodruff bought Coca-Cola for $25 million in 1919.
Coca-Cola gradually grew and became one of the worlds largest soft drinks company.
Although Coca-Cola also deals with non-carbonated drinks, its primary products are
carbonated drinks.
PEST Analysis
The PEST Analysis is an analysis to examine the macro-environment of Coca-Colas
operations (Johnson, Scholes and Whittington, 2008).
Political
Like most companies, Coca-Cola is monitoring the policies and regulations set by the
government. There are no political issues in this instance.
Economic
There is low growth in the market for carbonated drinks, especially in Coca-Colas main
market, North America. The market growth recorded at only 1% for North America in
2004.
Social
There are changes in consumers lifestyles. Consumers are more health conscious. This
affects the Coca-Colas sales of the carbonated drinks as consumers prefer non-carbonated
drinks such as tea, juices and bottled drinks. Demand for carbonated drinks decreases and
this leads to a decrease in Coca-Colas revenues.
Technological
As the technology advances, new products are introduced into the market. The advance in
technology has led to the creation of cherry coke in 1985 but consumers still prefers the
traditional taste of the original coke.
Porters Five Forces
Porters Five Forces are the five forces that make up the competitive environment. It is used
to better understand Coca-Colas competitors and operations (Please refer to Diagram1)
(Porter, 1998).
Threat of Entry
It is not easy for new competitors to enter the industry and compete with Coca-Cola, thus
the threat of entry is low. High capital is required to enter the industry and to sustain the
business in the long run. It is also difficult to secure distribution as the distributions
channels have been secured by existing players in the industry. As such, new competitors
are not able to enter the market to weaken Coca-Colas position.
Threat of Substitutes
Consumers can choose from the variety of drinks that are available in the market. Due to
the change in consumers lifestyles, the threat of substitute is high. Consumers prefer
healthier drinks compared to carbonated drinks, which resulted in a decrease in its revenue.
Power of Buyers
The power of buyers is high due to the switching cost of buyers buying another product is
low. Buyers can easily buy any drink products, which are readily available in the market.
Power of Suppliers
Power of suppliers is high. Few bottlers supply bottles to Coca-Cola and its competitors in
