Coca-Cola Company Analysis -1100 words
Coca-Cola Company Analysis
Description of Coca Cola
Coca Cola is an American International company and is the world’s biggest beverage firm. The company is in more than 200 nations’ markets and licenses for more than 500 non-alcoholic beverage products considerably the sparkling drinks and an assortment of still drinks such as enhanced juice and water as well as sports and energy drinks. Coca Cola markets and possesses four of the top non-alcoholic drinks, which include Diet Coke, Coke, Sprite, and Fanta (Cola and Schweppes, 2014). Through its continued network, the company has owned bottling as well as distribution operations and independent delivery, dealers, and retailers.
The company’s main competitors
Coca Cola main competitor is Pepsi, which has its operations as large as those of Coca Cola. The two brands have competed along with several categories, including health, energy drinks, juices, and bottled water. Other major competitors include Red Bull, Dr. Pepper, Nestle, Unilever Group, and Monster Beverage Group. According to the market share survey, Coca Cola has the biggest market share, followed by Pepsi since they have a number of products in the market. Other competitors have been limited by the market share and limited product portfolio. Most of the brands are only limited to juice drinks and bottled waters in different markets.
Coca Cola Finacial Performance.
| Financial Analysis | 2019 | 2018 | 2017 | 2016 | 2015 |
| Net Income (US$ in Millions) | 8, 985 | 6, 476 | 1, 283 | 6,550 | 7,366 |
| Net Operating revenues (US$ in Millions) | 37, 266 | 31,856 | 35,410 | 41,863 | 44, 294 |
| Net Profit Margin | 23.936 | 18.758 | 3.4464 | 15.5913 | 16.5959 |
Table 1: Financial Analysis; source, (NYSE, 2020)
Coca Cola’s net income decreased from $7,366M in 2015 to $6,550M in 2016 and from 2016 to 2017 to $1,283M. However, it increased to $6,476M in 2018 and has now exceeded the highest net income over the five years to $8,985 in 2019. The company realized a decrease in net operating revenues for the last four years since 2015. However, in 2019, the company has realized an increase in its operating revenues from $31,856M in 2018 to $37,266M in 2019. Coca Cola’s net profit margin hit its five-year low in 2017 after a decrease to 3.4464%. Looking back at the company’s net profit margin, there is a decrease from 2015 until 2017, where it began rising up to 23.936% in 2019 from 3.4464% in 2017.
| Liquidity Ratio | 2019 | 2018 | 2017 | 2016 | 2015 |
| Current Ratio | 0.76 | 1.05 | 1.34 | 1.28 | 1.24 |
| Quick Ratio | 0.56 | 0.66 | 0.90 | 0.98 | 0.89 |
Table 2: Liquidity Ratio; source, (NYSE. (2020).)
Coca Cola’s current ratio is around 1.0 for the last five years despite the decrease to 0.76 in 2019. The difference between the company assets and liabilities are not substantial since the current ration barely exceeds one. This indicates that the company has relatively more assets than its liabilities, thus can pay off its short term liabilities. The current ration hovers around 0.8o over the past five years, which shows that the company has a large amount of inventory since its current ratio is less than the current ration.
Market share
Coca Cola has controlled 50% of the worldwide market share of the carbonated beverages in the world as compared to Pepsi, the main competitor that controls about 20 percent of the market. Considerably, the company has a strong brand identity and image as compared to its competitors. The product portfolio of the company makes the company one of the most famous soft beverages and recognizable brand in the universe.
Resources, core competencies, and distinctive competencies
The key resources in the company comprise of physical assets, which are monetary resources, raw materials, and technological resources. The brand has a global network of distributors and bottlers, which has enabled it to maintain its international presence (Mooney, 2007). It has also managed a strong global supply chain network which supports international distribution and manufacturing network. Coca cola’s distribution and bottling network holds a vital position in the achievement of the brand globally. The core competence that offers a competitive edge is its strong brand name and marketing abilities. The core capability of the company is confident in the number of assured sales (Mooney, 2007). This means that the company has a clear picture of the number of products they are sure will be retailed out through its efficient and effective supply chain network. The company’s value chain brings about a distinctive competence since the brand never travels far to come to the end consumer. Their supply chain has allowed the business to modify its service to the necessities of the consumer. The value chain has ensured that the quality drinks are manufactured as well as accessible in the market.
VRIO Framework
The main competitive advantages for the company include the global distribution network, the brand image, large product range, marketing skills and skilled human resource (The Coca-Cola Company, 2014)
| Value
· strong distribution network- Yes · Financial resources- Yes · large product range- Yes · Marketing efforts- Yes · Skilled human resources- Yes · Brand Image- Yes
|
Rarity
· strong distribution network- No · Financial resources- Yes · large product range- No · Marketing efforts- Yes · Skilled human resources- Yes · Brand Image- No
|
| Imitability
· Strong distribution network- Yes · Financial resources- No · large product range- Yes · Marketing efforts- No · Skilled human resources- Yes · Brand Image- No |
Organization
· strong distribution network- Yes · Financial resources- Yes · large product range- Yes · Marketing efforts- Yes · Skilled human resources- Yes · Brand Image- Yes |
From the VIRO analysis of Coca Cola, it is clear that the distribution network, financial resources, brand image, product range, and marketing skills will continue to yield a competitive advantage for the company. The core competencies, capabilities and resources are difficult to imitate thus leading to a competitive edge for Coca Cola. The Internal capabilities and resources add value by enabling the company to exploit opportunities to beat the competitors in the market.
References
Cola, C., & Schweppes, C. (2014). The Coca Cola Company. Human Rights Policy.
Mooney, A. (2007). The core competence, distinctive competence, and competitive advantage: What is the difference?. Journal of education for business, 83(2), 110-115.
NYSE. (2020). Coca Cola Co. (KO) Financial Performance Analysis. Available at: https://www.stock-analysis-on.net/NYSE/Company/Coca-Cola-Co/Financial-Statement/Income-Statement
The Coca-Cola Company. (2014). Company History and Heritage. Available at: https://www.coca-colacompany.com/content/dam/journey/us/en/our-company/history/coca-cola-a-short-hisotry-125-years-booklet.pdf