Strengths Weaknesses/Limitations, Opportunities, and Threats involved in the business Coca Cola SWOT ANALYSIS The Coca-Cola Company (Coca-Cola) is a leading manufacturer, distributor and marketer of Non-alcoholic beverage concentrates and syrups, in the world. Coca-Cola has a strong brandname and brand portfolio. Business-Week and Interbrand, a branding consultancy, recognizeCoca-Cola as one of the leading brands in their top 100 global brands ranking in 2006. TheBusiness Week-Interbred valued Coca-Cola at $67,000 million in 2006.
Coca-Cola ranks wellahead of its close competitor Pepsi which has a ranking of 22 having a brand value of $12,690million The Company’s strong brand value facilitates customer recall and allows Coca-Cola topenetrate markets. However, the company is threatened by intense competition which could havean adverse impact on the company’s market share. Strengths Weaknesses World’s leading brand Large scale of operations Robust revenue growth in three segment Negative publicity Sluggish performance in North America Decline in cash from operating activities Opportunities Threats
Acquisitions Intense competition Growing bottled water market Growing Hispanic population in USIntense competition. Dependence on bottling partners Sluggish growth of carbonated beverages Strengths World’s leading brand Coca-Cola has strong brand recognition across the globe. The company has a leading brand value and a strong brand portfolio. Business-Week and Interbrand, a branding consultancy, recognize. Coca-Cola as one of the leading brands in their top 100 global brands ranking in2006. The Business Week-Interbrand valued Coca-Cola at $67,000 million in 2006.
The company’s strong brand value facilitates customer recall and allows Coca-Cola to penetrate new markets and consolidate existing ones. Strengths World’s leading brand Coca-Cola has strong brand recognition across the globe. The company has a leading brandvalue and a strong brand portfolio. Business-Week and Interbrand, a branding consultancy,recognize. Coca-Cola as one of the leading brands in their top 100 global brands ranking in2006. The Business Week-Interbrand valued Coca-Cola at $67,000 million in 2006.
Coca-Colaranks well ahead of its close competitor Pepsi which has a ranking of 22 having a brand value of $12,690 million Furthermore, Coca-Cola owns a large portfolio of product brands. The companyowns four of the top five soft drink brands in the world: Coca-Cola, Diet Coke, Sprite and Fanta. Strong brands allow the company to introduce brand extensions such as Vanilla Coke, CherryCoke and Coke with Lemon. Over the years, the company has made large investments in brandpromotions. Consequently, Coca-cola is one of the best recognized global brands.
Thecompany’s strong brand value facilitates customer recall and allows Coca-Cola to penetrate newmarkets and consolidate existing ones. Coca-Cola Company, The SWOT Analysis Large scale of operations With revenues in excess of $24 billion Coca-Cola has a large scale of operation. Coca-Cola is the largest manufacturer, distributor and marketer of nonalcoholic beverage concentrates and syrups in the world. Coco-Cola is selling trademarked beverage products since the year 1886 in the US. The company currently sells its products in more than 200 countries.
Of the approximately 52billion beverage servings of all types consumed worldwide every day, beverages bearingtrademarks owned by or licensed to Coca-Cola account for more than 1. 4 billion. The company’s operations are supported by a strong infrastructure across the world. Coca-Cola owns and operates 32 principal beverage concentrates and/or syrup manufacturing plantslocatedthroughout the world. In addition, it owns or has interest in 37 operations with 95 principalbeverage bottling and canning plants located outside the US.
The company also owns bottledwater production and still beverage facilities as well as a facility that manufactures juiceconcentrates. The company’s large scale of operation allows it to feed upcoming markets withrelative ease and enhances its revenue generation capacity. Robust revenue growth in three segments Coca-cola’s revenues recorded a double digit growth, in three operating segments. These threesegments are Latin America, ‘East, South Asia, and Pacific Rim’ and Bottling investments. Revenues from Latin America grew by 20. % during fiscal 2006, over 2005. During the sameperiod, revenues from ‘East, South Asia, and Pacific Rim’ grew by 10. 6% while revenues from thebottling investments segment by 19. 9%. Together, the three segments of Latin America, ‘East,South Asia, and Pacific Rim’ and bottling investments, accounted for 34. 8% of total revenuesduring fiscal 2006. Robust revenues growth rates in these segments contributed to top-linegrowth for Coca-Cola during 2006. Weaknesses Negative publicity The company received negative publicity in India during September 2006.
The company wasaccused by the Center for Science and Environment (CSE) of selling products containingpesticide residues. Coca-Cola products sold in and around the Indian national capital regioncontained a hazardous pesticide residue. These pesticides included chemicals which couldcause cancers, damage the nervous and reproductive systems and reduce bone mineral density. Such negative publicity could adversely impact the company’s brand image and the demand for Coca-Cola products. This could also have an adverse impact on the company’s growth prospectsin the international markets.
Sluggish performance in North America Coca-Cola’s performance in North America was far from robust. North America is Coca-Cola’score market generating about 30% of total revenues during fiscal 2006. Therefore, a strongperformance in North America is important for the company. Coca-Cola Company, The SWOT AnalysisIn North America the sale of unit cases did not record any growth. Unit case retail volume inNorth America decreased 1% primarily due to weak sparkling beverage trends in the second half of 2006 and decline in the warehouse-delivered water and juice businesses.
Moreover, thecompany also expects performance in North America to be weak during 2007. Sluggish performance in North America could impact the company’s future growth prospects andprevent Coca-Cola from recording a more robust top-line growth. Decline in cash from operating activities The company’s cash flow from operating activities declined during fiscal 2006. Cash flows fromoperating activities decreased 7% in 2006 compared to 2005. Net cash provided by operatingactivities reached $5,957 million in 2006, from $6,423 million in 2005.
Coca-Cola’s cash flowsfrom operating activities in 2006 also decreased compared with 2005 as a result of a contributionof approximately $216 million to a tax-qualified trust to fund retiree medical benefits. Thedecrease was also the result of certain marketing accruals recorded in 2005. Decline in cash from operating activities reduces availability of funds for the company’s investingand financing activities, which, in turn, increases the company’s exposure to debt markets andfluctuating interest rates. Opportunities Acquisitions
For the last one year, Coca-Cola has been aggressively adopting the inorganic growth path. During 2006, its acquisitions included Kerry Beverages, (KBL), which was subsequently,reappointed Coca-Cola China Industries (CCCIL). Coca-Cola acquired a controlling shareholdingin KBL, its bottling joint venture with the Kerry Group, in Hong Kong. The acquisition extendedCoca-Cola’s control over manufacturing and distribution joint ventures in nine Chinese provinces. In Germany the company acquired Apollinaris which sells sparkling and still mineral water inGermany.
Coca-Cola has also acquired a 100% interest in TJC Holdings, a bottling company inSouth Africa. Coca-Cola also made acquisitions in Australia and New Zealand during 2006. These acquisitions strengthened Coca-Cola’s international operations. These also give Coca-Cola an opportunity for growth, through new product launch or greater penetration of existingmarkets. Stronger international operations increase the company’s capacity to penetrate internationalmarkets and also gives it an opportunity to diversity its revenue stream.
Coca-Cola Company, The SWOT Analysis Growing bottled water market Bottled water is one of the fastest-growing segments in the world’s food and beverage marketowing to increasing health concerns. The market for bottled water in the US generated revenuesof about $15. 6 billion in 2006. Market consumption volumes were estimated to be 30 billion litersin 2006. The market’s consumption volume is expected to rise to 38. 6 billion units by the end of 2010. This represents a CAGR of 6. 9% during 2005-2010.
In terms of value, the bottled water market is forecast to reach $19. 3 billion by the end of 2010. In the bottled water market, therevenue of flavored water (water-based, slightly sweetened refreshment drink) segment isgrowing by about $10 billion annually. The company’s Dasani brand water is the third best-sellingbottled water in the US. Coca-Cola could leverage its strong position in the bottled water segment to take advantage of growing demand for flavored water. Growing Hispanic population in US