Step 8 Prepare SWOT Matrix, SPACE Matrix, BCG Matrix, IE Matrix, Grand Strategy Matrix, QSPM Matrix, give

advantages and disadvantages of alternative strategies. SWOT Matrix

Figure COCACOLA SWOT MATRIX

Figure COCACOLA VS PEPSICO COMPARISON 2013

www.Businessinsider.com

SPACE Matrix Axi s X Internal Strategic Position Competitive (CA)

from -6 worst to -1 best

External Strategic Position Industry (IS)

from 1 worst to 6 best

Market Share Brand Image Technological know how Customer Loyaltee Product Life Cycle Control Over Supplier

-1 -1

Growth Potential Resource Utilization Financial Stability Consolidation Profit Potential Ease of Entry Average + Average IS

4 6 6 4 5 2 4. 50 3.1 7

-2 -1 -2 -1 1.3 AVERAGE 3 X Axis Value: = Average CA - 1.33 = Financial (FS)

4.5

Environmental (ES)

from +6 worst to +1 best

from -6 worst to -1 best

Working Capital Return on Investment Return on Assets Leverage Liquidity Net Income Inventory Turnover

5 6 5 4 4 6 4

Technological Changes Competitive Pressure Inflation Rates Barriers to Entry Price Elasticity of Demand Demand Variability

-1 -4 -2 -2 -1 -1 1. 83 3.0 2

4.8 AVERAGE 6 Average Y Axis Value: = Average FS + Average ES 4.86 - 1.83 =

Table Space Matrix Data

Space Matrix Illustration:

(3.17, 3.02)

Table Space Matrix

BCG Matrix In the big picture, Coca-Cola is growing at rate ranging from 4.4% to 4.8% during the period 2004-2006. This indicates that the growth rate is high compared to Pepsico the main competitor. While maintaining highest market share, which results in classifying the Coca-Cola Company as in STARS Position in the BCG Matrix.

However, the different products in Coca-Cola have different popularity and market growth. Among 500 brands, Coke comes #1 which can be put in Cash Cow Category, and the revenues made by Coke is used to cover the low selling brands within coca cola like LIMCA which can be classified as Question Mark. IE Matrix

GSM Matrix:

(3.17, 3.02)

The Coca-Cola Company falls in Quadrant 1, which indicates that the company needs to focus on more achievements by developing products, and market penetration strategies. To reduce risk, Coca Cola can go for diversification strategies to different products, and the company can afford to be aggressive if necessary.

QSPM Matrix

Internal/External Factors Strength Worlds leading brand Global Distribution Innovation Large scale of operations Brand Loyalty Research & Development Strong financial position & profit Heavy advertising & promotion activities Geographical expansion Weaknesses Decline in cash Negative Publicity (Bad image in India) Dispute above wholesale prices Other coca cola products lack of popularity New coke formula results in bad image of coke Health issues Discontinued some products Word of mouth (-ve publicity)

Weig ht

Product Developm ent AS TAS 3.0 0 3.0 0 4.0 0 3.0 0 2.0 0 3.0 0 4.0 0 2.0 0 3.0 0 1.0 0 1.0 0 3.0 0 4.0 0 2.0 0 3.0 0 4.0 0 3.0

Diversificat ion AS TAS

0.36 0.24 0.18 0.18 0.16 0.2 0.12 0.18 0.12 0

0.09 0.08 0.06 0.06 0.08 0.05 0.03 0.06 0.06

0.27 4.0 0.24 0.24 0.18 0.16 0.15 0.12 0.12 0.18 0

0 3.0 0 3.0 0 3.0 0 2.0 0 4.0 0 4.0 0 3.0 0 2.0 0

0.06 0.07 0.05 0.06 0.03 0.07 0.03 0.06

0.06 2.0 0.07 0.15 0.24 0.06 0.21 0.12 0.18

0 3.0 0 4.0 0 3.0 0 3.0 0 4.0 0 3.0 0 3.0

0.12 0.21 0.2 0.18 0.09 0.28 0.09 0.18

0 Total 1.00

Opportunities China and Europe has excellent potential growth Health conscious consumersw Partnership with food chains Bottled water drinking has increased 11 percent Increase usage of smaller beverage products Diversifying into complementary food products Improving economic conditions after economic meltdown Threats There is Low growth rate in the carbonated drinks market Huge numbers of substitutes Intensive competition such as Pepsi etc Increasing demand for non-carbonated products e.g. juices Increasing inflation is causing demand for the products to fall Increasing prices of raw material such as sugar and metals Many smaller players are furious competitors 0.07 0.06 0.12 0.08 0.04 0.04 0.05 2.0 0 2.0 0 1.0 0 3.0 0 1.0 0 4.0 0 2.0 0 0.14 0.12 0.12 0.24 0.04 0.16 0.1 2.0 0 2.0 0 1.0 0 3.0 0 1.0 0 4.0 0 2.0 0 0.14 0.12 0.12 0.24 0.04 0.16 0.1 0.08 0.1 0.07 0.08 0.07 0.06 0.08 2.0 0 3.0 0 3.0 0 1.0 0 4.0 0 3.0 0 1.0 0 0.16 0.3 0.21 0.08 0.28 0.18 0.08 1.0 0 4.0 0 4.0 0 3.0 0 4.0 0 3.0 0 1.0 0 0.08 0.4 0.28 0.24 0.28 0.18 0.08

Total

1 1.0 0

1.0 0

Total Sum of Attractiveness Score

5.96

6.55

From the above table, it is clear that attractiveness of diversification is more than of product development.

Step 9: Recommend specific strategies and long-term objectives. Show how much your recommendations will cost. Clearly itemize these costs for each projected year. Compare your recommendations to actual strategies planned by the company. Recommended Strategies: Horizontal Diversification: Coca-Cola has already done very well in Integral Diversification, while it is poor in horizontal diversification. Launching noncore but related products like food or snacks is attractive for the business as found in the QSPM in the last part. However this strategy should be broken down in several long-term objectives. International Product Development: This strategy is a must to be focused on to retain the status of being the best provider in the globe. The product development should be given cultural touches in addition to maintaining the theme of Coca-Cola Brand. This could be classified by continental.
Diversification Costs , by Recommendation, 2007-2016 (millions of dollars) Recommendation Diversification International Product Development TOTAL 2007 3750 1615 5365 2008 3800 1700 5500 2009 3820 1710 5530 2010 3850 1735 5585 2011 3883 1740 5623

Cost Estimate, by Action Item, 2007-2016 (millions of dollars) Action Item A1 A2 A3 A4 A5 A6 Total (Diversification) B-1 B-2 B-3 B-4 B-5 B-6 Total (Development) Asia ME Africa US Latin America Emerging Markets Recommendation Coffeeshops Fastfoods Busicuits healthy diet meals Home ready made food bakeries 600 1300 350 1200 110 190 3750 200 300 300 300 200 315 1615 605 1300 350 1200 145 200 3800 200 340 315 325 200 320 1700 605 1310 350 1200 155 200 3820 200 340 315 325 200 330 1710 617 1300 275 1000 405 253 3850 200 340 315 325 225 330 1735 620 1303 275 975 450 260 3883 200 345 315 325 225 330 1740

Grand Total (Billions of Dollars)

5.365

5.5

5.53

5.585

5.623

One of the recommended strategies is already an original strategy by Coca-Cola which is product development. However, the horizontal diversification is yet away from Coca-Cola plans as the Company focuses on vertical integration and diversification.

Step 10: Specify how your recommendations can be implemented and what results you can expect. Prepare forecasted ratios and projected financial statements. Present a timetable or agenda for action.