Coca Cola External Environment Analysis Through PESTLE

Coca Cola external environment analysis through PESTLE tool.

Introduction about Coca-Cola

Coca-cola is a carbonated soft drink company founded 33 years ago in 1886 by John Smith at Atlanta.

Further, the coca-cola company was established in 1892 by Asa Griggs Candler at Atlanta. This company is known for producing syrup concentrates which are then sold to bottlers for further sale at the global level. The current revenue of the company stands at around US $31.85 billion. Also, the employees of the company total of more than 60000 in contemporary times. Moreover, Coca-Cola has gained a considerable share for its beverage products in the industry and has achieved the position of biggest beverage company at a global level. Also, the company has developed an extensive product portfolio by bringing new products at a regular pace of time. The main products of this company include diet coke, Coca-Cola Zero, Fanta, sprite, PowerAde, minute maid, etc. (Coca-Cola Beverages and Products, 2019).

The primary purpose of preparing this report is to analyze the external business environment of Coca-Cola by evaluating various external factors affecting the working of the organization. Some of the recommendations have been provided in this report for the Coca-cola company. These recommendations will help in further strengthening its position in the beverage industry.

Article Summary

The article talks about Coca- Cola, which is a carbonated soft drink company founded in 1886. The environmental analysis is done in this article with the use of PESTLE analysis with which different environmental factors are discussed, including political factors, economic factors, social factors, technological factors, legal factors, and environmental factors.

External environment analysis:

External analysis is a strategic analysis tool that helps in analyzing the external environment of the business organization. It includes analysis of both micro and macro factors of a business firm that helps in analyzing the organization. Further, external environment analysis also helps in analyzing the industrial and competitive position of a business firm and along with this, it helps to enhance the value chain of the organisation. The macro-environment report of the business firm includes a study of various political, social, economic, environment, technology and legal factors affecting the organization (External Environment Analysis, 2019). Detailed analysis of the external environment of Coca Cola will help in determining the strategic position of the company through an evaluation of all the macro environment analysis of the organization.

Coca-Cola external environment analysis through PESTLE analysis model:

External factors of the organization affect the whole operations and working of the company. It is a must for an organization to comply with all external factors to stay in the industry and to remain competitive. Various external environment factors affecting the working of the Coca-Cola company are discussed as follows:

  • Political factors:

    Coca-Cola Company is a non-alcoholic beverage company that runs under the guidance of the Food and Drug Administration. This administrative agency is a federal agency of United States that is responsible for protecting the health of the public by ensuring that correct and accurate information is made available to the organization ("Food and Drug Administration | USAGov", 2019). Along with the regulations of the FDA, Coca Cola has to comply with various other rules of government authorities to ensure that the health and safety of employees are maintained in the organization. In addition to this, Coca-Cola has to maintain compliance with various other legislations such as tax policies, trade restrictions, environmental laws, labour laws, accounting standards etc. to maintain positive work environment and to run all the operations of the organization in the smoothest manner.

  • Economic factors:

    Various economic factors such as recession, tax rates, inflation, interest rate, etc. also affect the sales of Coca-cola company. Coca-Cola operates at the global level, and the universal condition of the economy is not much strength in the current times. Also, it is expected that the worldwide growth of the economy will slow down by 2.6 % by the end of this year ("Global Economic Prospects", 2019). Along with this, fluctuations in the exchange rate of various currencies also affects the working of coca-cola at the global scale. In addition to this, there are rising prices of different raw materials such as plastic and oil may affect the result in lower profit margins to Coca-cola. However, the rising standard of living and purchasing power of consumers is a decisive growth factor for Coca-cola.

  • Social factors:

    Consumers in current times are becoming more health-conscious, which is a major threat to the company. Consumers may avoid taking beverages and may prefer to have juice and other fresh products. Also, operations at a global level may affect Coca Cola through changes in the taste and preferences of customers. However, Coca-cola has launched the number of healthy products such as coca-cola zero and diet coke with the aim to target a large group of health-conscious customers. Also, the company provides tastier drinks to customers which further helps in meeting the needs of a large segment of customers.

  • Technological factors:

    Technological changes take place at a rapid pace in the industry. Coca-cola also adapts to various technological changes at regular pace by innovation in technology as well as its product base. Technological innovation in machinery has helped Coca-cola to manufacture quality products for customers. The company has also adopted the PlantBottle technology with the aim to reduce the use of petroleum (Coca Cola PlantBottle, 2019). This packaging technology has helped Coca-cola to reduce its reliance on fossil fuel materials. Along with this, Coca-cola has adopted the use of various digital technologies to provide new and innovative experiences such as sip and scan experience to customers (Tech and Big Data, 2018).

  • Legal factors:

    The hereditary factors for Coca-cola include the number of legislations imposed upon the company by the FDA and other regulatory authorities. Besides the regulations of FDA, there are various other legislations such as federal trade act, food regulations, environment protection laws etc. that influences the operations of Coca-cola. The company ensures that compliance with all legislation is maintained in all activities. Also, the reputation of a company is built upon the trust of employees and its customers. Coca-cola also complies with various principles of United nations declaration and provides a number of rights to its employees to maintain an ethical work environment ("Supplier Guidelines", 2019). The company also has prohibited child labour and forced labour in the organization to comply with various labour laws.

  • Environmental factors:

    Various ecological laws are developed in current times due to rising awareness for environmental actions. Business firms have to comply with all the environmental laws to reduce negative impacts on the environment and to successfully run their operations in the industry. Coca-cola also has to comply with various environmental regulations, such as laws relating to waste management and water protection laws in the industry. Also, Coca-cola has to comply with multiple environmental legislation during the manufacturing of its products. For reducing negative impacts on the environment and for reducing dependence on various non-renewable resources, Coca-cola has adopted improvement in its packaging processes. Plantbottle technology has also been adopted by Coca-cola to reduce reliance on the number of fossil fuels. However, various environment lawsuits are running against the company in current times which may affect the reputation of the company (Coca-Cola Continues Environmental Abuses, 2007).

Recommendations:

In the above section of the report, various external environmental factors that may affect the working of Coca-cola have been evaluated. It has been identified that multiple external factors have the potential to change the operation of coca-cola. Also, it has been determined that non-compliance with any of the element may harm the reputation of the company. following are some of the recommendations that have been devised for Coca-cola to help the company comply with external environment influences and achieve a competitive position in industry:

  • Coca-cola should devise a number of strategies to increase its focus on environmental aspects. Also, plans should be developed by Coca-cola to reduce negative impacts on the environment.
  • Coca-cola should review the needs and preferences of its customers and must develop its products according to the needs and taste of customers. Also, the company should boost the supply of its healthy drinks such as diet coke etc. to meet the needs of health-conscious customers.
  • The marketing team of the company should increase the promotional activities of its products to create awareness of various products among rural people.
  • The company should also develop a number of strategies to cautiously use water due to the scarcity of this resource. Also, water is one of the main ingredients for the company in many liquids and beverages.

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References
  • Coca Cola PlantBottle. (2019). Coca Cola PlantBottle Technology | AIM2Flourish. Retrieved 30 December 2019, from https://aim2flourish.com/innovations/coca-cola-plantbottle-technology
  • Coca-Cola Beverages and Products. (2019). Coca-Cola Beverages & Products │ World of Coca-Cola. Retrieved 30 December 2019, from https://www.worldofcoca-cola.com/about-us/coca-cola-beverages-products/
  • Coca-Cola Continues Environmental Abuses. (2007). India Resource Center - Coca-Cola Continues Environmental Abuses in India. Retrieved 30 December 2019, from http://www.indiaresource.org/news/2007/1046.html
  • EXTERNAL ENVIRONMENT. (2019). Retrieved 30 December 2019, from https://ccocaworld.wordpress.com/external-environment/
  • External Environment Analysis. (2019). External Environment Analysis Definition | Marketing Dictionary | MBA Skool-Study.Learn.Share. Retrieved 30 December 2019, from https://www.mbaskool.com/business-concepts/marketing-and-strategy-terms/8566-external-environment-analysis.html
  • Food and Drug Administration | USAGov. (2019). Retrieved 30 December 2019, from https://www.usa.gov/federal-agencies/food-and-drug-administration
Article By:

Paul Smith

Ex- Management faculty of University of Sydney. Along with an extensive interest in management studies, he is a sports enthusiast who loves to spend time in the basketball court. Just like smart playing the opposition in basketball, he smartly instills


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FAQ


What is the PESTLE Analysis of Coca Cola?


Q

The PESTLE analysis of coca cola explains the impact of various external market factors on the working of Coca cola. These external market factors include political, economic, socio-cultural, technological, legal and environmental factors that impact the working of Coca cola in the global market.


How do you write an external environmental analysis?


Q

The external environment analysis of Coca-cola can be written by following various steps which include evaluating external factors, collecting data, identifying opportunities, recognizing various threats and preparing the final report.


What impact does Coca Cola have on the environment?


Q

Although Coca Cola has adopted various strategies to fulfil its environmental responsibilities, still various actions of Coca Cola have a negative impact on the environment. The company has also been accused of dehydrating communities due to huge consumption of water, drying up farmers' wells, etc.