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Contemporary Developments in Business and Management (SIM 337)

Name: Trịnh Quang Minh (Rooy)

Lecture : John Davison

Introduction

SWOT Analysis:

SWOT analysis stands for Strength, Weakness, Opportunities and Threat and it is used to

identified the current situation of company and assume company future based on the current

situation as well.

Strength

Coca-cola has been considered as a part of American culture for long time ago, so one of the

most important strengths of Coca-cola is brand recognition. Coca-cola brand image is shown

on items listing from souvenirs to clothing so that the Coca-cola can differentiate its product

brands to other competitors. Moreover, another point for Coca-cola strength is that Coca-cola

is owning four of top five non-alcoholic beverage brands: comprising Coca-cola, Diet Coke,

Sprite and Fanta. Therefore, it is proved that Coca-cola is prominent in having wide variety

products in market comparing with other competitors. Thirdly, product line of Coca-cola have

high market share in US market. According to Datamonitor (2011, June), Coca-cola market

share in 2010 was 42% comparing to Pepsico’s market share of 29.3%. Coca-cola also has the

largest distribution system to produce products in global level. Finally, Coca-cola has 500

brands and 3,500 beverages being sold to customer in over 200 countries around the world.

Moreover, there are 55 billion beverage servings used in globe per day and 1.7 billion of those

servings are trademarks belonged to Coca-cola.

Weakness:

Datamonior mentions that in 2010, smart water PET Bottles were recalled in North America

because Coca-cola products could not reach the FDA’s quality standard for bottled water.

Moreover, in recent years, customer awareness for their health has been increasing day by day,

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therefore, they tend to eliminate soft drink such as Coca-cola which can cause obesity and

diabetes for them.

Opportunity:

Complementary food products tends to increase the drink consumption when drink and food

products are bought together, therefore, the company will develop its brand awareness through

complementary food products because that will let revenue and sale distribution increase as well.

Under the pressure of customer awareness in term of their health, the company will invent new

product with no sugar such as Diet Coke in order to create new market orientation for these

customers.

Threat:

Health issue is the challenge for Coca-cola soft drink to sell these products to customers. Health

advocates suggests people to eliminate customer’s consumption of high fructose com syrup

(HFCS), a kind of sugar containing in Coca-cola products. Moreover, the United State

Government has increased a lot of regulations related to carbonated drinks, and some public

school systems as also prohibited soft drink sold on their campus as well. Besides, customer

preference also tends to consume healthier products, therefore, the company revenue eventually

decreases . Even though Coca-cola has some alternatives, especially Diet Coke, but that cannot

change situation because the soft drink possesses 77% of Coca-cola’s sale. Another point is that

water scarcity also has effect on Coca-cola company because Datamonitor predicts that the

demand for purified water will increase by 56% comparing to what people are currently

consuming, which leads the production costs in the future increase as well.

Five forces analysis:

According to Investopedia, 5 forces analysis is model identifying and analyzing 5competive

forces such as competition, potential of new entrants into industry, power of suppliers, power of

customers, and threat of substitute products. 5 force analysis used to determine corporate

strategy for companies in getting profitability and attractiveness.

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POTENTIAL ENTRANTS:

New entrants are not a strong competitive pressure for the soft drink industry. Coca-Cola and

Pepsi Co dominate the industry with their strong brand name and great distribution channels. In

addition, the soft-drink industry is fully saturated and growth is small. This makes it very

difficult for new, unknown entrants to start competing against the existing firms.

Another barrier to entry is the high fixed costs for warehouses, trucks, and labour, and

economies of scale. New entrants cannot compete in price without economies of scale. These

high capital requirements and market saturation make it extremely difficult for companies to

enter the soft drink industry therefore new entrants are not a strong competitive force.

Capital requirements for producing, promoting, and establishing a new soft drink traditionally

have been viewed as extremely high. According to industry experts, this makes the likelihood of

potential entry by new players quite low, except perhaps in much localized situations that matter

little to Coke or Pepsi. Yet, while this view may reflect conventional wisdom, some industry

observers question whether a new time is coming, with 'new age' beverages selling to well-

informed and health-informed and health-conscious consumers. This issue was beginning to

grab the attention of both Coke and Pepsi in the summer of 1992, when they both were not able

to explain a drop in their June 1992 sales.

SUBSTITUTES:

Numerous beverages are available as substitutes for soft drinks. Citrus beverages and fruit juices

are the more popular substitutes. Availability of shelf space in retail stores as well as advertising

and promotion traditionally has had a significant effect on beverage purchasing behaviour.

Overall total liquid consumption in the United States in 1991 included Coca-Cola's 10% share of

all liquid consumption.

“For years the story in the non-alcoholic sector centred on the power struggle between Coke and

Pepsi. But as the pop fight has topped out, the industry's giants have begun relying on new

product flavours and looking to noncarbonated beverages for growth.”

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Substitute products are those competitors that are not in the soft drink industry. Such substitutes

for Coca-Cola products are bottled water, sports drinks, coffee, and tea, juices etc.

Bottled water and sports drinks are increasingly popular with the trend to be a more health

conscious consumer. There are progressively more varieties in the water and sports drinks that

appeal to different consumer's tastes, but also appear healthier than soft drinks.

In addition, coffee and tea are competitive substitutes because they provide caffeine. The

consumers who purchase a lot of soft drinks may substitute coffee if they want to keep the

caffeine and lose the sugar and carbonation.

Blended coffees are also becoming popular with the increasing number of Starbucks, Barista and

CCD stores that offer many different flavours to appeal to all consumer markets. It is also cheap

for consumers to switch to these substitutes making the threat of substitute products very strong

(Datamonitor, 2005).

The growth rate has been recently criticized due to the market saturation of soft drinks.

Datamonitor (2005) stated, “Looking ahead, despite solid growth in consumption, the global soft

drinks market is expected to slightly decelerate, reflecting stagnation of market prices.” The

change attributed to the other growing sectors of the non-alcoholic industry including tea &

coffee is 11.8% and bottled water is 9.3%. Sports drinks and energy drinks are also expected to

increase in growth as competitors start adopting new product lines.

Profitability in the soft drink industry will remain rather solid, but market saturation has caused

analysts to suspect a slight deceleration of growth in the industry (2005). Because of this, soft

drink leaders are establishing themselves in alternative markets such as the snack, confections,

bottled water, and sports drinks industries.

In order for soft drink companies to continue to grow and increase profits they will need to

diversify their product offerings. So in order to compete with the substitutes industry, coca-cola

has diversified from just carbonated drink industry to other substitute and so have other brands

like Pepsi, Dr pepper/Snapple.

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BARGANING POWER OF BUYERS:

Individual consumers are the ultimate buyers of soft drinks. However, Coke and Pepsi's real

'buyers' have been local bottlers who are franchised -or are owned, especially in the case of

Coke- to bottle the companies' products and to whom each company sells its patented syrups or

concentrates. While Coke and Pepsi issue their franchise, these bottlers are in effect the 'conduit'

through which these international cola brands get to local consumers

Through the early 1980's, Coke's domestic bottlers were typically independent family businesses

deriving from franchises issued early in the century. Pepsi had a collection of similar franchises,

plus a few large franchisees that owned many locations. Until 1980, Coke and Pepsi were

somewhat restricted in owning bottling facilities, which was viewed as a restraint of free trade.

Jimmy Carter, a Coke fan, changed that by signing legislation to allow soft-drink companies to

own bottling companies or territories, plus upholding the territorial integrity of soft-drink

franchises, shortly before he left office.

Also, the three most important channels for soft drinks are supermarkets, fountain sales, and

vending. In 1987, supermarkets accounted for about 40% of total U.S. soft drink industry sales,

fountain sales represented about 25%, and vending accounted for approximately 13%. Other

retailers represent the remaining percentage.

While both Coca-Cola and Pepsi distribute their bottled soft drinks through a network of

bottling companies, Coca-Cola uses its own network of wholesalers for their fountain syrup

distribution, and Pepsi distributes its fountain syrup through its bottlers.

BARGANING POWER SUPPLIERS:

The principal raw material used by the soft-drink industry in the United States is high fructose

corn syrup, a form of sugar, which is available from numerous domestic sources. The principal

raw material used by the soft-drink industry outside the United States is sucrose. It likewise is

available from numerous sources.

Another raw material increasingly used by the soft-drink industry is aspartame, a sweetening

agent used in low-calorie soft-drink products. Until January 1993, aspartame was available from

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just one source -the NutraSweet Company, a subsidiary of the Monsanto Company- in the

United States due to its patent, which expired at the end of 1992.

Coke managers have long held 'power' over sugar suppliers. They view the recently expired

aspartame patents as only enhancing their power relative to suppliers.

Globalization:

1. What is globalization:

According to Hamilton, L and Webster, P (2009), globalization comprises the creation of

linkages or interconnections between countries. It is considered as a process in which barriers

(Physical, political, economic, cultural) separating different regions of the worlds are limited or

canceled in order to stimulate exchanges, in services, workforce, money and so on.

According to The Coca-Cola Company, in 1984 the Foundation was established in USA

considered as charitable organization. Globalization helps Foundation to support student

scholarships and other education programs and initiatives, HIV/AIDS prevention as well as

awareness programs in Africa and Latin America and so on. Therefore, Coca-cola company

bring not only its popular and famous image in term of product and service, but also emotional

and heart-to-heart picture to people in all over the all in general and customer of Coca-cola in

particular. However, globalization also affects badly to Cocacola company itself. Globalization

helps the company sell its carbonated drink in more than 200 countries and become popular in

the world. However, The globalization of the Coca-Cola Company has created hatred and

distain throughout the world. “Many countries have tried to ban” (Barlow, 2003; Zinn, 2002) the

use of Coca-Cola products, claiming that Coca- Cola is “threatening public health, aggressively

pursuing youth in schools as potential new customers and to encouraging students to understand

themselves principally as consumers rather than citizens.” (Barlow, 2003; Zinn, 2002) The Coca-

Cola Company faces accusations of “privatizing water supplies in Chiapas, Mexico, undermining

workers’ rights in Central and South America by threatening union

organizers with death, using sweatshop child labor and failing to provide adequate healthcare

benefits to workers with AIDS in South Africa.” (Barlow, 2003; Zinn, 2002)

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Competitive `Environment

Q1: Measure of industry concentration of CR3 is measured by taking the total share of 3 largest

companies in industry sales. For example, A, B and C are 3 largest firms in their field, so the

calculation for CR3 is CR3 = Market share of A + Market share of B + Market share of C.

Measure of industry concentration of CR5 is measured by taking the total share of 5 largest

companies in industry sales. For example, A, B, C, D and E are 5 largest firms in their field, so

the calculation for CR5 is CR5 = Market share of A + Market share of B + Market share of C +

Market share of D + Market share of E.

None of them is appropriate for Cocacola situation as well because in beverage market in

worldwide, there are 3 largest firms in market share which are Pepsi (31%) and Coca-cola is

(43%) and Dr.P/7 Up (15%), therefore, the measure of industry concentration of CR 2 is CR 2 =

Market share of Pepsi + Market share of Coca cola +Market share of Dr.P/7 = 31% + 43%+15%

= 89%.

Q2:

According to Dwivedi, D.N, oligopoly is considered as an industry where there are few

companies involve, therefore, those few companies depend not only on their own policies but

each other. Those firms in oligopoly can utilize both low and high price strategy to maximize

their profit.

According to Economic Discusstion (2012), Coca-cocla is in oligopoly market with Pepsi

because both of them possess most of the US market share in soft drink industry, that also

reassures that on the list of top beverage company position, Coca-cola co takes a lead, the

runners is Pepsi co. Moreover, the products Coca-cola and Pepsi are selling is homogeneous

products, so they can easily change the price to be compatible with kinked demand curve, that is

the reason why both of firms are always on the top selling on their products. For instance,

according to Christ, G (2011), in 2010 Coke sold 1.59 billion cases for 17% of market share.

Diet coke sold 926.9 million cases for 9.9 percent of market share, and Pepsi sold 891.5 million

cases for 9.5 % of market share; and they are on the top of sale from top 10 list of beverage

industry.

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Chris, G (2011) mentions that Cocacola and Pepsy both use low and high price strategy as

repeated action at the same time to keep the market share from the assaulting of new competitors

and maximize the profit. For instance, according to Singh, P and Delhi, N (2012) when summer

comes, this is the time for Coca and Pepsi increase the price of 600 ml PET bottles because

summer is the time for top sales, possessing about 30-40 percent of their annual sales.

Cocacola and Pepsy have also signed cartel contract in order to let the new potential competitors

not enter to the abundant beverage market of them. For example, Coke and PepsiCo have

proposed franchisee agreements with their existing bottle’s manufacture in certain area and own

an amount of percent of bottling companies. Therefore, new rivals fall uneasy task for

purchasing bottles from manufactures readily to distribute for them.

Q3:

Threat of new entrant

According to The Coca-Cola Company, Coca-cola owns more than 500 beverage brands

inclusive of over 3,500 beverages ranging from full, reduced, and no-calorie sparkling beverages

to energy drinks, teas, fruit drinks, water and so on. Moreover, there are different sizes in

various products in order to be compatible with customer demand. For instance, in US Coca-

cola produced the 8-ounce, 100-calorie aluminum cans of Coca-cola, Cherry Coke and Sprite in

2007 or Coca-cola mini cans in 2009. Therefore, the product differentiation is high in Coca-

cola leading the threat of new entrant is very low because it is difficult challenge for new

entrants to enter the market with an amount of different product to attract customers.

Brand identification of Coca-cola is very high because it possesses the most market share of

beverage drink market. Facebook more than 57 likes

Financial

Q1

Bronfenbrenner and Holzman (1963, p.599) defies “Inflation is a condition of generalized excess

demand, in which “too much money chases too few goods”, therefore, inflation affects

everybody and it poses a threat to the economic stability of a nation.

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Inflation has large impact for Coca-Cola business on beverage market because inflation causes

the increase of material cost and supplies’ cost, and leads to different consequences as well. For

instance, when price of aluminum increases because its suppliers have abundant firms want to do

business with them, Coca-cola must eventually pay high cost for suppliers for maintaining the

suppliers. Therefore, in order to compensate for the extra cost and get profit, the firm

consequently increases the price all kind of products as well. However, in some situations that

when customers must pay for higher price to consume Coca-cola drinks, they eventually spend

less money for another substitute they want to enjoy. As a consequence, they must reduce

expense for Coca-cola products to meet their demands with another products, that will cause the

lower revenue of Cocacola as well. Eventually, the company must lay off the employees or

reduce their salary to cover for the loss of profit. Therefore, it can be said that inflation is the

factor for success or failure of the company and it cannot be avoidable in market.

Exchange rate also influence to Coca-Cola business in America because it bring not only

advantage in international competiveness for the firm, but drawbacks as well. For instance,

assuming that the Coca-cola company in US produces an amount of concentrate which is 1

million dollar, and then sells to licensed Coca-cola bottlers in UK with the price after exchanging

(1 dollar = 0.7 (0.75 euroo)pound in 20 January, 2013) that is 700,000 pound. If the exchange

rate of dollar increase 10% comparing with dollar (1 dollar = 0.63 pound), Cocacola obviously

gets profit of 70,000 pound, however, Cocacola products is consumed less in UK market because

the price of the products is more expensive than real value when translated back to UK currency.

Therefore, it can be said that exchange rate changes happens accidentally and has effect on Coca-

cola business which is why the company should choose the right time with the right partner to do

business.

Q2: Financial and economic crisis effect, effect on company

According to Investopedia, economic crisis is considered as a circumstance when the value of

assets and financial firms decreased rapidly. Economy In Crisis (2012) mentions that economic

has effects on USA remarkably. Firstly, inflation is turning to job-destroy deflation that is

unable to employ all US people wanting job at that time. Secondly, interest rates are as low as it

was at post-World War 2 leading to lack of investment. Thirdly, Federal debt as a percent of

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GDP will soon hit levels last experienced immediately after World War II — (121 percent of

GDP in 1941).

Financial and economic crisis have large effect on Coca-cola company. Firstly, because

unemployment rate is high in America when economic crisis occurred, people would not spend

money for unnecessary products like Coca-cola soft drink for their essential standard, but focus

on food to live. Secondly, interest rate in USA was down, American people tried to invest all

money to bank for the purpose of getting more profit as much, which leads their spending on

products such as Coca-cola to decrease as consequence.

Q3

International Deposit Interest Rates Exchange explains that “Interest Rate refers to a specified

amount of money paid by institutions on the use of cash deposits over a period of time. The

Interest Rate also consists of the amount of money a borrower will pay a lender for the use of

their funds over a period of time”. Hamilton, L and Webster (2009) explains that when interest

rate increase, cost of borrowing to business also increases, which depress the demand of products

and services.

When interest rates in America changes, it affect strongly on Coca-cola firm borrowing in USA

because of the fact that Coca-cola always frequently take out long-term debt for infrastructure,

advertisement and other different project as well. Therefore, the higher the interest rate are, the

more cost the company will take from debt so that businesses of Coca-cola cannot commit the

funds to projects plans as well. Moreover, Coca-cola firm also has short-term load to cover for

shortfall in small expenses, so higher the interest rate, the more money the company must pay

back to lenders as well.

Interest rate also affects on business strategy of Cocacola firm in USA. Assuming that Cocacola

is planning to construct a entertainment building for children with total capital 10 million USA,

and the profit this construction can bring to Coca-cola is 5% per year better than 4% interest if

capital is put to bank. However, the interest rate of USD increase as 6% in 2013, therefore, it

makes the company consider on return on investment and put the capital for the construction

instead of carrying it out.

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Finally, interest rate also affect investment to Coca-cola so that when the company sells the stock

publicly to increase capital, share price is bounded to company’s stock, however, the interest rate

suddenly increases more than the dividend from share for investors, interesting level and demand

of investors for Coca-cola share is down and they eventually have tendency to put the money to

banks because guarantees for higher interest rate makes investors attractive and secure instead of

investing on share with lower interest.

It can be assured that interest rate affects on every business plans of Coca-cola Company, so the

company should consider and analyze projects with the best strategy in finance to avoid barriers

coming from interest rate.

Ecological

1. How might global warming and climate change impact on your organization or industry

According to Maslin, M (2007), global warming happens because of the massive increase in

greenhouse gases such as carbon dioxide that we are creating in atmosphere from trashes,

contaminated emission from companies and so on makes the world become hotter and hotter.

Global warming and climate change have effects on the Coca-cola Company in good and bad

sides. In aspect of good sides, when climate is becoming warmer, temperature is also high in

summer in USA and other countries, soft drink eventually becomes main consumption for

customers to fresh themselves before the hotness. Therefore, bottled water products in Coca-

cola can make profit from that and leads the sale of the company to soar rapidly.

In aspect of bad sides, Hamilton, L and Webster, P(2009) explain that global warming and

climate change caused by green-house gas from anthropogenic sources is carbon dioxin (CO2),

and Coca-cola and other companies must be responsible 40% for this emission which will

contaminate the water as well. Therefore, it is easy for company to create unqualified products

from polluted water unless the company must pay an amount of money for testing water quality

and follow the governmental policies of green-house emission concerns in order to create

qualified products to customers. Moreover, when green-house emission happens, an amount of

people get diseases related to respiration or they become more suspicious about Coca-cola drinks

which can be made from contaminated water as well.

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It can be concluded that global warming and climate change has influential impact for business

of Cocacola in both positive and negative sides. Therefore, the company should take advantage

for good sides such as increasing quantity of products in summers to maximize profits or limiting

CO2 emissions and following the policies for green house emission to protect customer vitality

and create their beliefs and loyalty.

2. Kyoto protocol (1997)

According to United Nations Framework Convention on Climate Change, Kyoto Protocol is

considered as “an international agreement linked to the United Nations Framework Convention

on Climate Change.”

According to Global Climate Change Research Area (1997), it proposed 5 key provisions to

protect environment. Firstly, Kyoto Protocol has purpose to cut enormous greenhouse gas

emissions from USA, Croatia, Australia, Iceland and so on at least 5% from year 2008 to 2012.

Secondly, USA suggested that all countries having high percentage of emission may set

voluntary reduction targets rather than voluntarily agreeing to binding limits. Thirdly, Kyoto

Protocol will be carried out for signature in March 1998 and March 1999 to create force for 55

Parties to the Convention, comprising parties that reduced at least 55 percent of CO2 emission in

1990. Fourthly, the next meeting of the treaty parties will choose the most appropriate to deal

with non-compliance. Finally, Kyoto Protocol supports several kinds of flexibility to achieve

reductions, but the specific factors about scope, principle and implementation have not been

defined.

Kyoto protocol provisions have impact for Cocacola Company in USA because those provision

helps the company know the voluntary reduction target at least 5% for green-house gas

emissions from 2008 to 2012. Moreover, Cocacola company must implement those provision

seriously under the control of USA so that if the company cannot follow provisions, it will be

pubnished by American Government Policies. However, flexibilities made from Kyoto Protocol

details of scope, principle and implementation is not defied, so it is difficult for Coca-cola firm

complete it on the right track.

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Legal

Q1.Health and Safety laws affect organization

Longman Dictionary of Contemporary English mentions that Health and safety at Work Act is “a

set of laws made in the UK in 1974 in order to protect people at work and make sure that they do

not have to work in dangerous conditions, without the proper clothing or safety equipment etc.”

According to The Coca-Cola Company, Coca-cola company follows the Health and Safety laws

of USA through creating “The Coca-Cola Safety Management System” or “TCCSMS”. This

safety management system recognizes and reduces the risks in operation and controls it effective

to create safety to visitors and workers as well. However, in order to implement Health and

Safety law, the company needs to pay a quite bit expense to provide safe machinery and

premises as well as protective devices for employees. Some costs are also added for training

employees how to use machinery and premises safely, maintaining machinery and premises, and

especially paying compensation for employee and visitors injuries as well. In another the aspect,

the result for implementing Health and Safety will eventually leads the company to achieve good

records that will make breakthrough in its reputation. Based on that, the company can create the

beliefs for current workers working in Coca-cola and attracting recruitment for good worker as

well.

It is concluded that Health and Safety laws has impact on Coca-cola because it makes the

company waste money in order to put these laws into operation, however, based on this

implementation, the company can get benefits such as creating beliefs to workers or reputations

for company as well.

Q2. Bribery and corruption can have damaging effects on international trade. What are some of

the national and international laws that are most relevant in this area.

According to The Coca-Cola Company, it applies Code of Business Conduct and Anti-Bribery

Policy to provide leading on how to approach business fairly, ethically and legally. For example,

the company conducts anti-bribery audits to increase the overall awareness, detect prospect

misconduct and control compliance with anti-corruption laws and Coca-cola policy. Moreover,

after becoming signatory of United Nations Global Compact, the company follows the laws of

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UNGC and cooperates with other firms and nongovernmental organizations to combat against

corruption. Coca-cola Company mentions that, the company also became signatory of World

Economic Forum Partnering Against Corruption Initiative (PACI) and it has been following the

principles and policy of PACI in order to fight against the corruption.

Social-cultural environment

Q1. Choose one of the social cuture

According to Publish your article, social-cutural environment is considered as “a collection of

social factors affecting a business and includes social traditions, values and beliefs,

level of literacy and education, the ethical standards and state of society, the extent of

social stratification, conflict and cohesiveness, and so forth.”

According to Neusner (2009), most of American people are religious and they considered God is

the most believable majesty is their life. Therefore, even though what happens in their life, they

eventually pray and request God’s salvation as well. Most of American people are Christian and

they often go to church every week for praying and sometimes organize baptism events for their

children as well.

Forbes, B. D and Mahan, J. H( 2005), Coca-Cola Company considers its business as a religious

duty through let religious influence be entered to customer lives. For instance, Coca-cola

brought to customers its religious and orthodox image of Santa Claus in 1931 through displaying

a fat, beaded, attractive old character decorated up in Coca-cola Red. It became the most

influential symbol for life intention of America soldiers in World War 2, and represented for the

most sacred time after wars. Therefore, Coca-coca becomes the most popular soft drink for all

Christian people in American, that is reason why Coca-cola is always on the top sale and has the

number one position on beverage market in USA.

Forbes, B. D and Mahan, J.H (2005) also mentions that there are some skeptic ideas justifying

that Cocacola is not a religion but a products that are effectively advertised, marketed and

distributed to customers. However, at the fact that advertising is becoming the new religion of

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modern capitalist society, and fetish becomes important point for Coca-cola to influence

customer’s spirit through symbol of coca-cola design.

In the aspect of organization inside, it is easy to employee and managers to work and sympathize

together when all of them have the same religion that is Christian, therefore, even though what

problems happens, arguments and quarrels are always eliminated to have good solution as God

teaching.

Finally, it can be concluded that there is no right and wrong aspects of Coca-Cola to customers

and employees because it uses the right strategy at the right place and culture. Even though

Coca-cola makes the blind faith in God through its products, it brings the best quality and service

to customers with happiness when drinking Coca-cola.

Q2: Increase of urbanization

According to Long (1998), urbanization is considered as “the process by which large numbers of

people become permanently concentrated in relatively small areas, forming cities”. Natural

increase of urbanization can happens if natural population growth in the cities ans higher than in

the rural area.

According to U.S. Environmental Protection Agency, the total part of land in USA that will be

improved and decorated into cities and it is considered to increase from 5.2 percent to 9.2 percent

before year 2035 because of urbanization in its country. Rural people migrate to cities because

they want to change his life and settle down with better job or they are desired by modernization

of metropolitan life. Therefore, Coca-cola can take advantage to recruit an amount of workforce

with small salary but satisfy them because they are received fully welfares they want to have

when migrating to cities such as salary better than rural area, good workplace, protective

assurance in working, reward, training (education) and so on, that makes they feel their dream

come true. Eventually, they will work for Coca-cola harder than urban or current employees so

that they leads the productivity increases so much. Moreover, when people migrates to cities in

American, they obviously have jobs with better payment and welfare so that their standard of life

is in higher level comparing to their previous life, therefore, they can consume basic needs like

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food and drink as well; therefore, Coca-cola can sell an amount of products to this new customer

target as well to increase the revenue.

However, disadvantage of migration also exists for Coca-cola Company because the company

must expense remarkably an amount of money and time to training from beginning for rural

people before they are applied to work. Moreover, control an amount of employee having

experience in work becomes difficult tasks for managers, therefore, it is reasonable if managers

put managers into right workplace to make them maximize their work as well.

It can be concluded that urbanization affects Coca-cola on 2 sides which are positive and

negative ways, but the company itself should maximize the good ways and minimize the bad

ways to lead the company to have high sale on beverage market.

Q3: Demographic changes

According to Smithsonian (2010), the United States is also expected to grow somewhat older.

The portion of the population in 2010 at least 65 years old—13 percent—is expected to reach

about 20 percent by 2050. However, even as the baby boomers age, the population of working

and young people is also expected to keep rising, in contrast to most other advanced nations

because America’s relatively high fertility rate 50%. Between 2000 and 2050, census data

suggest, the U.S. 15-to-64 age group is expected to grow 42 percent. the United States is likely

to have more than 350 million people under 65 with the next 4 decades.

Migration is becoming the main force in US life because it is estimated that 2 million people a

year will move from poorer to developed countries, and half of those mostly is educated, skilled

migrants will move to America in the next 40 years to settle down.

Those demographic changes have remarkable effects on Coca-cola business. Firstly, when baby

boomer age will increase 20% by 2050 from 13% in 2010, they will tend to be more worried

their health and longevity so they will not consume beverage drink of Coca-cola containing

unsuitable components for their health as well. However, 42% growth of US 15 to 64 group

leading to have more than 350 million people under 65 age in the next 4 decades creates an

impact for Cocacola sale because the company can take advantage to sell out an amount of

products serving for young and working people who have high demand for beverage drink.

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Finally, the increase of migration not only helps the company have new target customers to sell

products, but the company can recruit skilled and educated people from them because in 2000,

US was home of 12.5 million skilled immigrants, and large American Companies are

increasingly lead by people with roots in foreign countries, including 15 of the Fortune 100

CEOs in 2007.

TECHNOLOGY

1. New technology is a source of opportunities and of threats and challenges in business.´

Illustrate this statement with example and illustration based on your chosen organization

and industry.

Food Safety and Inspection Service defined new technology as “new or, new applications of,

equipment, substances, methods, processes, or procedures affecting the slaughter of livestock

and poultry or processing of meat, poultry, or egg products.”

According to Coca-Cola Company, Coca-cola Company has improved and experimented

beverage process water recovery system in order to manufacture qualified water that satisfies or

goes over the drinking water standards for utilizing in non-product operations such as bottle

washing or clean-in-place. This technology brings a lot of opportunities for the company in

business and economics. For instance, Coca-cola company in US can not only develop water

utilization efficiency to 35%, but also support for economic increase opportunity and local

communities. Moreover, this system also economizes 100 billion water liters annually if it is

applied to all bottling plants.

Along with opportunities, there are threats in setting up beverage process water recovery

system. It is likely difficult to implement this system with investment in North America or

Europe because of the existence of strict regulations and standards in those area. Moreover,

the company must take the highest responsibility for customer health when implementing this

water recovery system, therefore, it unintentionally creates pressure for Coca-Cola company

to create this system completely perfect.

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2. In relation to your chosen organization, and industry sectors, explain what is meant by the

following terms: “e-business”, “e-commerce”, “b2b and b2c”

Investorworld proves that e-commerce is the buying and selling of products and services through

electronic transaction on internet and so on. E-commerce is separated into 3 categories that are

business to business(B2B), business to customer (B2C) and customer to customer(C2C).

However, in Coca-cola firm, B2B and B2C is mostly used in the whole business transaction as

well.

B2B is a transaction happening between a firm and another firm without any third party such as

consumer or so on. The Coca-cola firm’s entrepreneur is owning an amount of retailers and 300

bottling partners from international traded business to small, family owned operations; and is

owning, leasing and implementing 500 plants all over the world in all over the world. Therefore,

it is necessarily needed to implement B2B through internet to have strong relationship with

partners, plants, wholesalers and retailers and have easy interaction about the price, the number

of materials, finished products needed to be delivered and so on to them.

B2C is a transaction happening between a firm and a consumer and B2C is opposite to B2B as

well. Cocacola company is implementing 2 kind of search engines for B2C that are crawler

based search engine such as Google and human powered directories such as Yahoo. Therefore,

customer can search information and price of Coca-cola through Google, Yahoo and other

website so that they can have an amount of links concerned to Cocacola in order to make online

transaction or know exactly what kind of products they will buy. Moreover, Cocacola firm also

created online advertisements through social network website such as Myspace, Facebook and

Twitter to affect its image to social life of customers. Therefore, customer can easily suggest

positive and negative ideas about Coca-cola products and service as well publicly to the firm in

order to help Cocacola co improve its mistakes quickly and have new step-up improvement in

the future.

Coca-cola adopts different kinds of electronic internet transfers payment for B2B and B2C such

as Visa, MasterCard, American Express, Discover, Paypal and so on through its encryption

secure website in order to make customer feel convenient and happy for their payment as well.

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3. New materials affect Cocacola

According to Coca-cola Company, in 2009 the company implements new material that is

PlantBottle ™ package, the first recyclable Pet plastic bottle made from plant. This new material

creates an impact for Coca-cola company because PlantBottle ™ is fully recyclable Pet

(polyethylene terephthalate), the company use less fossil fuel for making these bottle, which is

why Coca-cola’s dependence is reduced on non- renewable resources. Furthermore, PlantBottle

™ package is considered to be friendly with environment, which creates unforgettable image for

customers when using Coca-cola products, so the revenue will crease because existing of

PlantBottle ™ package.

In 2007, Coca-cola company produced the “Drink2Wear” fashion made from recycle plastic

bottles, and the main product is Drink2Wear T-shirts featured with slogan such as “Make your

Plastic Fantastic” or “Rehash Your Trash”. In 2008, the company widened product ranges to

comprise totes, loungewear, and caps. Those products have effect for the company by having

sale of more than 1 million products, resulting in more than $15 million in retail sales.

Furthermore, the company also saves the cost of 5 million PET bottles by reusing and diverting

them from its waste stream. Finally, the higher the fashion sale, the more people know about

coca-cola because Drink2Wear fashion indirectly advertise the Coca-cola to all people through

Coca-cola logo attached on the clothes.

Assuming that the company will implement new food product mixing with Coca-cola soft drink

into market, which will specially have impact for Coca-cola company. Firstly, those new

products will attract an amount of customers who are curious and ready to try new food products

from famous firm like Coca-cola. Moreover, creation of new food products will create

breakthrough in market and can lead the company to have competitive advantage when

comparing with Pepsi and others in term of food and beverage.

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