MG 69016 MG 69016 What I Didn’t Learn in Business School: How Strategy Works in the Real World A Book Report By: Kaitlin Bauer What I Didn’t Learn in Business….
Business Policy Coco Cola
In strategic planning organizations make use of different techniques such as establishing the weaknesses, strengths, threats and opportunities as well as the social, economic, political and technological investigation of the environment surrounding the organization.
In this perspective, the major objective of strategic planning in any organization is to establish and define a clear course of its future operations. As a result, strategic planning in any organization seeks to address several questions concerned with how, to whom and what to do in order to achieve the future growth path that will accelerate the profitability and expansion of the company. In the development of organizational strategies, environmental analysis is therefore key to the development of the organizational future (John, 2001).In this regard, analysis of strategies must be carried both externally and internally in order to identify threats and opportunities that prevail in and around the organization. Many companies have faied to initiate effective strategic planning techniques and the effects of the current recession has therefore downed on them. Such companies include General Motors and AIG to mention a few. In the subsequent section, this work will seek to explore strategic planning in Coca Cola Company.
2. 0 The importance of strategic planning in Coca-Cola Company Strategic planning is important for Coca Cola Company due to the fact that as a global Company, effective strategic planning helps in counteracting the challenges that are common in foreign countries such as competition and government regulations.Another importance of Strategic Planning is that it helps the Coca Cola Company to survive the current changes in the communication technology by highly investing in internet marketing and advertising. For Coca-Cola Company to maintain its wide range of beverages and customers, Strategic Planning is one of the best concepts that its management has seriously invested in. This in return has benefited the company by giving it clear direction and purpose (Roger, 1995) Furthermore, strategic Planning helps Coca-Cola Company in balancing productivity costs and other related initiatives with the revenue generated. In this way unnecessary costs are avoided thus resulting to increased profitability. In context of Coca-Cola Company strategic planning involves the allocation of resources which includes people and capital.
Strategic planning is also essential for Coca cola Company since: It helps the company in facing its competitors. Through better understanding of the Weaknesses, Strengths, Threats and Opportunities of its competitors the company has been able to diversify its range of products as well as producing high quality products which have proved hard to emulate by the competitors (John, 2001) According to John, the importance of Strategic planning is quite significant since it helps the Company’s management in addressing the following three questions. The first question is how do Coca-Cola Company excel? The second question involves what does the company do in order to be the market leader in the soft drink?The management is able to address the question “for whom do we do it? ” Basically in strategic planning the three questions can be generalized by reframing them into one major question that is “How can Coca-cola company avoid the negativities of competition or similarly which additional measures can be put in place in order to beat competition? ” (Bradford, Robert, Duncan, Peter, Tarcy and Brian, 2007). The company has six highly recognized strategic planning strategies that have to a great extent contributed to the continued success of the company. The autonomy that is experienced by most of the Coca-Cola distributors have enabled the freely integration of these priorities into their business plans.The six strategies are as follows. The first ones is that the Company will always use Coca-Cola as its brand name and its main activity will be production of carbonated soft drinks.
The second strategy is to broaden its brands in order to increase its profit. It is through this initiative that the company has added new products which include bottled water, coffee, tea, juice and juice drinks. The third strategy is the adoption of cost effective and driving efficiencies as a result of economies of scale. The fourth strategy is serving its customers with consistence and creativity in this way it has been able to help the growth of its customers as well as its own expansion.The fifth strategy is making heavy investment in production technology in this way it has been able to meet the demand of its customers. Being a company that highly values good relationship with its bottling partners and its employees the company has emulated the strategy of teamwork as the sixth strategy in order to increase its sales and profits 3. 0 Can an organization survive without strategy planning? Coca-Cola Company and any other international company cannot survive without strategic planning since this is the only way that the company will be able to successfully and actively face the challenges that have resulted to the downfall of big entities such as Morgan Stanley, AIG and even the recent disintegration of General Motor.
The company can hardly survive without trategic planning due to heavy competition and modern marketing technologies that have been adopted by many companies in the beverage industry so as to improve on both quality and quantity of the products. As an example let us look at the General Motors as one of the recent victim of failure to adopt strategic planning (Bradford and Duncan, 2000). The fall of General Motors can be traced to the ineffective strategic planning methods that have been adopted by the corporation making it to declare itself bankrupt. Effective strategic planning was the missing concept that would have saved the 235,000 employees as well as the shareholders and other stake holders who had interest in the corporation. The question of recession and the reduced demand in the world market cannot be ignored as one of the major causes of the downfall of GM.However, the failure to plan and to put in place effective control measures has to a great extent contributed to its poor performance. Effective strategic planning is crucial tool that keeps companies ready to tackle micro and macro economic obstacles such as inflation and recession which GM, AIG and Morgan Stanley banks failed initiate leading to their collapse (Hitt, Tihanyi, Miller and Connelly, 2006).
4. 0 Different processes and modes of planning, and its effect on the strategic planning process There are various processes and techniques of planning that an organization can adopt depending on the prevailing market, social and economic conditions (John, 2001).4. Customers’ relations strategy This mode of planning considers the importance of customers in a firm. A company adopting this strategy aims at keeping its customers satisfied as well as maintaining the customers’ loyalty towards its products. The effect of this planning technique towards the strategic planning process is that it helps in achieving and maintaining the high number of customers thus increasing its total sales (http://www. civicus.
org) 4. 2 Cash-cow strategy This is a strategy that oversees the use of profits gained from the operations of the companies so as to improve its management as well as to expand the range of its products.The effect of this mode of planning on the strategic planning is that it ensures continuity of the company operations and hence it acts as an appropriate tool to face off the competitors (John, 2001). 4. 3 Star strategy This is a planning technique that involves increased reinvesting of the profits so as to be able to address future challenges that companies faces in foreign and domestic market. The effect of this technique on the strategic planning is that it helps companies to put in place effective and strong financial strength needed when penetrating global market. 5.
0 Mode of planning followed by the Coca Cola Company and how this process can be improved.In its operations Coca Cola Company has adopted the customers’ relations strategy. The company highly values its customers and as a result it has invested in tailor made drinks that aims at fully satisfying its customers. In its marketing strategies, the company has adopted the target marketing and product variety marketing processes. Target marketing involves selection of part of the whole market and producing tailor made products that satisfies its customers in that particular market. In its endeavors as the market leader in the soft drink industry, Coca cola Company has embarked in producing a wide range of products which makes it possible to stay ahead of its competitors.The process of planning used by Coca Cola Company can be improved by adopting pricing strategies that will make it easier to penetrate the market where its competitors are offering products at low prices.
6. 0 Task 2 External environment is composed of government or political, economic and social environment. This section looks at the impact of these factors on the task environment of an organization. 6. 1 Government/political environment In its operations an organization should put into consideration government regulations that directly or indirectly affect its activities. The legal requirements of a company which include trade licenses and permits should be timely acquired to avoid any fine or legal implications in an organizations which results to delay and time wastage.Another way through which government regulations affects the task environment of an organization is by regulating the quality of the products and services that are produced by an organization.
In this way the company has an obligation to ensure that the legal specifications and the safety of its products are well adhered to in order to safeguard its customers (http://www. planware. org/strategicplan. htm) 6. 2 Economic environment Economic environment that affects the organization task environment includes inflation, recession and the unemployment level. During inflation the costs of production goes up making an organization reduce its productivity thus reducing its sales as well as profits.Recession on the other hand intensively affects the task environment of a company by slowing down production activities thus affecting its sales in both domestic and foreign market.
This can be demonstrated by the extent to which recession has negatively affected the operations of big corporations such as General Motors and AIG. Unemployment level reduces the disposable income of individuals thereby reducing their demand of goods and services which results to reduced operations of an organization (Hitt, Tihanyi, Miller and Connelly, 2006). 6. 3 Social Environment The social factors also affect the task environment of an organization. These factors include level of education, eating habits, religious and cultural beliefs of communities.The education level of the society highly affects the demand of the firms products for instance where majority of people are educated and have high level of income, the demand for basic needs and luxuries goes up. Similarly, cultural beliefs and religious beliefs affect the demand of some products and services more than others especially where some cultures do prohibit the use of certain products.
Social factors therefore affect the task environment of an organization by affecting the demand and the supply of goods and services (Patrick, Burkhart and Suzanne, 1993). 7. 0 How can Managers identify and track these external strategic factors Managers can identify the external environment by analyzing the external environment.In this, managers will be able to identify the opportunities, strengths and weaknesses related to these factors and their relevancy in the performance of a firm. In addition managers should freely intermingle with the external environment as well as the general society during the social corporate responsibilities. In this way it will be easy to identify and track the external factors and be able to come up with strategic planning techniques to address these factors (Wang and Jiatao, 2008) 8. 0 Factors in the external environment that would influence strategy planning in Coca-Cola Company and part they play in strategic planning in the CompanyThe factors that would influence strategy planning by Coca-Cola Company can be viewed in two dimensions.
The first one is from economic perspective. This involves the increase or decrease in the demand of coca-cola brands as result of inflation or reduced purchasing power. The reduction in consumers’ purchasing power causes a decrease in demand for coca-cola brands resulting to a decrease in sales level. In this case the Coca-Cola management needs to put in place effective strategic planning in its pricing concept such as reducing prices or initiating more promotions. The second dimension is the composition of the society. A society with more young people is a favorable market for Coca-Cola brands such as Coke and Fanta.In this way management of Coca-Cola Company should initiate effective strategies in order to increase the sales level and at the same time satisfy its young market without neglecting its old customers by initiating more energy drinks for young people (http://www.
wowessays. com/dbase/ab1/iev224. shtml)9. 0 ReferencesInformation on strategic planning for non-profit or for profit organizations available from http://managementhelp. org/plan_dec/str_plan/str_plan. htm (Retrieved on 5th August 2009)Information on strategic planning process available from
com/strategy/strategic-planning”>http://www. quickmba. com/strategy/strategic-planning (Retrieved on 5th August 2009)