pestel analysis for coke

7/28/2019 PESTEL Analysis for Coke

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PESTEL Analysis for coke

Coca Cola is the largest manufacturer, distributor and marketer of beverage concentrates and syrups in the

world. Coca-Cola is recognized as the worlds most valuable brand. They market four of the worlds top five

non-alcoholic sparkling brands, including Diet Coke, Fanta and Sprite. The Company owns or licenses more

than 450 brands, including diet and light beverages, mineral water, enhanced waters, juices and juice drinks,

teas, coffees and energy and sports drinks. Through the worlds l a r g e s t b e v e r a g e d i s t r i b u t i o n

s y s t e m , c o n s u m e r s i n m o r e t h a n 2 0 0 c o u n t r i e s e n j o y t h e c o m p a n y s beverages at arate of approxi mately 1.5 bill ion servings eac h day. The Company ge nerates revenues, income

and cash flows by selling beverage concentrates and syrups as well as finished beverages.

Even Coca Cola, the worlds largest beverage company has to consider about their macro environment and its

opportunities and threats. They too have to analyse their political, economical, social, technological,

environmental and legal factors in order to catch up with fast changing world.

Political analysis for Coca-Cola:

Non-alcoholic beverages fall within the food category under the FDA. The government plays a role within the

operation of manufacturing these products in terms of regulations. There are potential fines set by the

government on companies if they do not meet a standard of laws.

The following are some of the factors that could cause Coca-Cola companys actual results to differ materially

from the expected results described in the underlying companys forward statement:-

Changes in laws and regulations, including changes in accounting standards, taxation requirementsand environmental laws in domestic or foreign jurisdictions.

Changes in the non-alcoholic business environment. These includes, without limitations, competitiveproduct and pricing pressures and their ability to gain or maintain share of sales in global market as a

result of action of competitors.

Political conditions, especially in international markets, including civil unrest, government changesand restrictions on the ability to transfer capital across borders.

Their ability to penetrate developing and emerging markets, which also depends on economic andpolitical conditions, and how well they are able to acquire or form strategic business alliances with

local bottlers and make necessary infrastructure enhancements to production facilities, distribution

networks, sales equipment and technology.

A threat that the Coca-Cola Company had to face recently due to changes in the political factors was War

against Iraq made USA and UK very unpopular in Middle East as well as in the other Muslim countries.

Because Coca-Cola is known as the very American company, this had a huge effect on the sale of its

products.

Economic Analysis for Coca-Cola:

Last year the U.S. economy was strong and nearly every part of it was growing and doing well. However,

things changed. Most economists loosely define a recession as two consecutive quarters of contraction, or

negative GDP growth. In 2008 we witnessed a global economic crisis which was suggested by several

important indicators of economic downturn worldwide. These includes high oil prices, which led to both high

food prices and global inflation; a substantial credit crisis leading to the bankruptcy of large and well

established investment banks as well as commercial banks in various nations around the world; increased

unemployment; and the possibility of global recession.

As the inflation rate grows higher and higher consumer buying powers also represents a key threat in the

industry. The rivalry between Pepsi and Coke has produce a slow moving industry in which management

must continuously respond to the changing altitudes and demands of their customers or face losing market

share to the competition. Furthermore, consumers can switch to other beverages with little cost or

consequences.


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The non-alcoholic beverage industry has high sales in countries outside the U.S. According to Standard and

Poors Industry surveys, Formajor soft drink companies, there has been economic improvement in many

major international markets, such as Japan, Brazil and Germany. These markets will continue to play a major

role in the success and stable growth for a majority of the non-alcoholic beverages industry.

Social Analysis for Coca-Cola:

Many U.S. citizens are practicing healthier lifestyles. This has affected the non-alcoholic beverage industry in

that many are switching too bottled water and diet colas instead of beer and other alcoholic beverages. The

need for bottled water and other more convenient and healthier products are in importance in the average day

to day life. Possible substitutes that put pressure on Coke include tea, coffee, juices, milk and hot chocolate.

Increasing awareness among consumers, public health professionals and government agencies of the potential

health problems associated with obesity and inactive lifestyles represents a significant challenge to the coca

cola company. The company has recognised that obesity is a complex public health problem. Their

commitment to consumers begins with the companys broad product line, which includes a wide selection of

diet and light beverages, juice and juice drinks, sport drinks and water products.

A common criticism of Coke based on its allegedly toxic acidity levels has been found baseless by

researchers. The drink has also aroused criticism for its use of caffeine, due to the possibility of physical

dependence. There is also some concern regarding the usage of high fructose corn syrup in the production of

Coca-Cola. In India, there exists a major controversy concerning pesticides and other harmful chemicals in

bottled products including Coca-Cola.

Technological analysis For Coca-Cola:

Some factors that cause companys actual results to differ materially from the expected results are as follows:

The effectiveness of companys advertising, marketing and promotional programs. The newtechnology of the internet and television which use special effects for advertising through media.

The advertising makes the product attractive. This technology is being used in media to sell their

products.

Introduction of cans and plastic bottles have increased sales for Coca-Cola as these are easier tocarry and you can bin them once they are used.

As the technology is getting advanced there has been introduction of new machineries all the time.Due to introduction of this machineries the production of the Coca-Cola company has increased

tremendously.

A Latest technical achievements made by the Coca-Cola company and Ardagh Glass was the new

environmentally friendly version of the iconic Coca-Cola Contour bottle which has won number of awards

for its light weight.

Environmental Analysis for Coca-Cola:

The Coca-Cola systems environmental commitments are focused on the areas in which they have the most

significant opportunities to make a difference-water stewardship, sustainable packaging, and energy

management and climate protection. The company has made progress in each of these areas, but Coca-Cola

has recognized that there is much more to do.

However, with a system of Coca Colas size and reach, we must also step back and look at how cokes local

operations add up to global impact. For example:

In 2007, the system used approximately 300 billion litres of water. Coca Cola is one of the worlds largest purchasers of sugar and high fructose corn syrup. Coke Company is among the worlds largest purchasers of citrus and coffee.


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Coca Cola is the largest consumer of aluminium cans, PET bottles and refillable glass bottles in thenon-alcoholic beverage industry.

The company has more than 10 million vending machines, coolers and fountain dispensers in usearound the world.

Objectives for water stewardship:

Reduce the amount of water used to produce their beverages. Recycle water used in the manufacturing processes so it can be returned safely to the environment. Replenish water in communities and nature through a global network of local partnerships and

projects.

Objectives for packaging methods:

Reduce-To design consumer-preferred packages that use the least amount of resources, whilemaintaining product quality.

Recover-To build packaging management systems to collect post-consumer packaging. Reuse- To use most post-consumer packaging and packaging materials again to deliver sustainable

value.

While the company has worked hard to advance community recycling programs, they know that public

education is a key to prevent litter. Coca Cola system supports numerous litter prevention and community

beautification organizations around the world, including Keep Australia Beautiful in Australia, the Tidy

Britain Group in the Great Britain and Keep America Beautiful in the United States.

Legal Analysis for Coca Cola:

Here are some legal affairs that the Coca Cola Company had to face recently.

In the 1970s, India required Coca Cola to share its secret formula with the local subsidiary so as tocontinue doing business here. Coca Cola refused and halted operations in India for almost 16 years.

The European Commission has altered EU member countries to ban Coca Cola drinks because ofrecent poisoning of 100 children in Belgium and cause seems to be the wrong carbon dioxide which

was used in Coca Cola soft drinks.

Recently there was a demonstrations all around the India, protestors demanded Coca Cola to stopproduction. Demonstrators believe that Coca Cola is depleting groundwater.

In India, there exists a major controversy concerning pesticides and other harmful chemicals in bottledproducts including Coca Cola.

pestel analysis for coke

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