7003MKT Opportunity Analysis for Coca Cola

1.0 Introduction and Company Background

1.1  Introduction

The objective of this plan is to present a complete opportunity analysis for the organization by using various tools including the PESTLE analysis and SWOT analysis for exploring the external environment and performing a company analysis to critically examine the internal environment. The project engages in a comprehensive assessment of the market place in which the organization operates to understand the dynamics of the company and present a recommendation for introducing a new product owing to a change in consumer preferences.

The goal of these frameworks is to present an overview of the external environment in which the organization operates to guide strategy and support the formulation of decision-making. For example, the SWOT analysis is conducted to showcase the strengths, weaknesses, opportunities and threats faced by a firm to examine how the company can better position itself to avail prominent external opportunities while acknowledging the threats that it is facing (Nyarku & Agyapong, 2011).

Accordingly, the PESTLE analysis also serves as a comprehensive tool that enables the organization to understand elements which can either hinder or improve business performance by assessing the dynamics of the external environment (Nyarku & Agyapong, 2011). By acquiring information regarding these factors, the organization can engage in the development of strategies to meet organizational objectives and also develop an understanding about the efficacy of existing strategies and their alignment with the corporate objectives.

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1.2  Company Background

As a food and beverages manufacturer serving the Asia Pacific, Coca Cola Amatil is a leading brand in the industry. Apart from Australia, where the company’s headquarters are based, the organization also has operations in Fiji and Samao, Papa New Guinea, New Zealand and Indonesia. The company’s operations commenced in 1904 under the banner of the British Tobacco Company and eventually progressed through the strategy of consistent diversification. Eventually, the company was acquired by Coca Cola Pty. Bottlers which is based in Perth.

The first rebranding of the company happened under the name of Allied Manufacturing and Trade Industries or AMATIL. The company continued to buy franchises of Coca Cola and as the shareholding of Coca Cola received a major percentage, the organization went through another rebranding phase and was renamed as Coca Cola Amatil. The current strategic business objectives of the company are led by an ambition to become the leading food and beverages brand by developing a product portfolio that serves a diverse range of customers. Accordingly, the brand portfolio of the company is also strong and continues to expand.

2.0 Situation Analysis

2.1 Market Analysis

Coca Cola Amatil is one of the leading food and beverages companies in the Asia Pacific region (Koller, Goedhart and Wessels, 2015). The company’s operations are headquartered in Australia and are spread across the Asia Pacific. In the food product line the company primarily has sauces and jams whereas the categorization of the company’s product lines in beverages includes; 1) energy drinks 2) alcoholic drinks 3) regular beverages 4) sparkling – non alcoholic and 5) still – non alcoholic.

The food and beverages industry in Australia is marked by the presence of local and international players. The industry accounts for 18 percent of the economy’s total manufacturing sector (IBP Inc., 2019) and has a market valuation of approximately $50 billion. The market continues to move towards an upward trajectory and is forecasted to remain one of the fastest growing industries in the region (IBP Inc., 2019). The market has evolved through the inclusion of local and foreign players and is currently identified as a growing market. A critical consideration with reference to the competitive factors in the market is that it faces a threat from cheap imports that primarily originate in Asia. Demand for alcoholic beverages especially increases during summertime in Australia which indicates that consumption patterns are subject to shifts in the season (Fry, 2011).

2.2 Macro Environment Analysis

2.2.1 Political, Legal and Economic Analysis

• Relaxation of import regulations on food and drinks, especially the items imported from China may overpower the influence of Coca Cola Amatil and influence the sales of its products (Bobik, 2014)

2.2.2 Social Analysis

• Consumption of sweetened and carbonated drinks is being increasingly rejected by Australian consumers that are health conscious and acknowledge the impact of such items on their health (Miller et al., 2020)
• Many Australian consumers are switching towards a lifestyle change and consciously rejecting the consumption of alcoholic beverages (Fry, 2011)
• Consumers of sweetened and carbonated drinks primarily belong to socially disadvantaged economic backgrounds and individuals belonging to a higher socioeconomic class tend to be more conscious about their food choices and avoid consuming processed food and carbonated or sweetened beverages frequently (Miller et al., 2020)

2.3 Micro Environment Analysis

2.3.1 Company Analysis

The 3 major positives regarding the company are as follows:

• Coca-Cola Amatil has a diverse product portfolio in the beverages category and caters to the tastes of a diverse consumer base through multiple product lines
• The company has a large footprint across the region of Asia Pacific and its products have a strong brand image and persona in the minds of consumers
• The size and scale of Coca Cola Amatil allows the company to benefit from economies of scale by spreading its fixed assets across a diverse range of products (Haskel and Westlake, 2018)

The 3 major negatives regarding the company are as follows:

• Coca Cola Amatil does not have a consistent brand identity or brand story as some of its products have significant brand recall and their is a concern related to product cannibalization
• The company has a poor demand forecasting mechanism in comparison with competing brands which increases its variable costs including warehousing and storage
• The company is slow to react to changing market dynamics and introduce new products in its portfolio based on the changing demands and preferences of Australian consumers who are leaning towards more healthy beverages and foods (Birch, Memery and Kanakaratne, 2018)

Coca Cola Amatil is one of the leading food and beverages companies in Australia with a diverse product line however; it faces the increasing pressure of changes in consumer preferences and competition from imported and local brands.

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2.3.2 Competitor Analysis

The food and beverages industry has continued to grow in size since the early 2000 while the number of competitors entering the industry has doubled (Australian Institute of Health, 2012). The industry is characterized by a fierce level of competition at present. There are currently 412 companies belonging to the industry at present (Crunchbase, 2020) and much of the new entrants that are foreign have their origins in China (Bobik, 2014).

The type of competition primarily affecting the business is that of product competition because the companies are primarily competing on their brand power and the perception of the product that they are able to create in the minds of the consumer. A critical barrier to entry in this market is significant capital requirement which needs to be injected into the business for the purpose of manufacturing and packaging the product. Coca Cola Amatil has been able to address this owing to its longstanding position in the market and extensive capital investments since the 1980s. The sheer scale of the company’s operation provides it with a competitive advantage over other organizations because it is able to reap the benefits of economies of scale by spreading its fixed cost across a number of products.

 

Key Players

 The main sources of competition in the market are direct competitors and potential entrants. The threat from each of these competitive forces is comparable because direct competitors have the ability to take over the sales of the company’s products however; the entry of competitors who provide cheap imports especially from China is also a growing concern for local manufacturers (Bobik, 2014).

 Direct competitors of the company such as Nestle and Pepsi Co. are able to reap benefits from their marketing strategy, their longstanding position in the market and their significant financial investment. However, competitors from Asia and especially China are able to compete on price. The market conditions that have contributed to the success of competitors from China is based on the observation that many of the consumers of sweetened and carbonated drinks belong to low socioeconomic backgrounds (Miller et al., 2020) and prefer to purchase products that can offer them a cost saving.

 

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