Discuss the PESTEL changes of an organization over the last decade. PESTEL Analysis for Coke Coca-Cola, the largest manufacturer, distributor and marketer of beverage concentrates and syrups in the world. Coca-Cola is recognized as the world’s most valuable brand. They market four of the world’s top five non-alcoholic sparkling brands, including diet and light beverages, mineral water, enhanced waters, juices and juice drinks, teas, coffees and energy and sport drinks. Through the world’s largest beverage distribution system, consumers in more than 200 countries enjoy the company’s beverages at a rate of approximately 1. billion servings each day. The Company generates revenues, income and cash flows by selling beverage concentrates and syrups as well as finished beverages. [pic] Even Coca Cola, the worlds’ largest beverage company has to consider about their macro environment and its opportunities and threats. They too have to analyze their Political, Economical, Social Environment and Legal Factors in order to catch up with the fast changing world. Political Analysis 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 Company’s actual results to differ materially from the expected results describes in their underlying company’s forward statement:- Changes in laws and regulations, including changes in accounting standards, taxation requirements, (including tax rate changes, new tax laws and revised ax law interpretations) and environmental laws in domestic or foreign jurisdictions. Changes in the non-alcoholic business environment. These include, without limitation, competitive product and pricing pressures and their ability to gain or maintain share of sales in the global market as a result of action by competitors. Political conditions, especially in international markets, including civil unrest, government changes and restriction on the ability to transfer capital across borders.
Their ability to penetrate developing and emerging markets, which also depends on economic and political 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 the changes in the political factors was the War against Iraq made USA and UK very unpopular in Middle East as well as in other Muslim countries.
Because Coca-Cola is known as the very American company, this had a huge effect on the sales of its products. Economical Analysis Last year the US 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 are witnessing a global economic crisis which was suggested by several important indicators of economic downtown worldwide.
These included high oil prices, which led to both high food prices (due to a dependence of food production on petroleum, as well as using food crop products such as ethanol as an alternative to petroleum) 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 a global recession. As the inflation rate grows higher and higher, consumer buying power will represent a key threat in the industry.
The rivalry between Pepsi and Coke has produce a very slow moving industry in which management must continuously respond to the changing attitudes and demands of their consumers or face losing market share to the competition. In addition, consumers can easily switch to the other beverages with little cost or consequence. Social Analysis Many people nowadays are practicing healthier lifestyles. This has affected the non-alcoholic beverage industry in that many are switching to bottled water and diet colas instead of beer and other alcoholic beverages.
The need for bottled water and other more convenient and healthy products are in important in the average day-to-day life. Possible substitutes that continuously put pressure on Coke include tea, coffee, juices, milk and hot chocolate. Consumers from the ages of 37 to 55 are also increasingly concerned with nutrition. There is a large population of the age range known as the baby boomers. Since many are reaching an older age in life they are becoming more concerned with increasing their longevity.
This will continue to affect the non-alcoholic beverage industry by increasing the demand overall and in the healthier beverages. 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 industry. The company has recognized that obesity is a complex public health problem. Their commitment to consumers begins with the company’s broad product line, which includes a wide selection of diet and light beverages, uices and juice drinks, sports drinks and water products. Coke has hot lot of sugar by which continuous drinking of Coca-Cola may cause health problems. Being addicted to Coca-Cola also is a health problem because drinking of it has an effect on your body after few years. Technological Analysis The effectiveness of company’s advertising, marketing and promotional programs. The e new technology of internet and tv which use specific effects for advertising through media. They make some products look attractive. This helps in selling of the products.
This advertising makes the product attractive and is being used in media to sell their products. 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 then it was few years ago. A latest technical achievements made by the Coca-Cola Company 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 The Coca-Cola system’s 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. In 2007, the company used approximately 300 billion liters of water in their plants to produce beverages. To meet their water needs while helping to conserve watersheds and improve community water access; water stewardship leads the list of the companies’ sustainability efforts.
In 2007, Coca-Cola announced their aspirational goal to return to communities and nature, an amount of water equal to what is used in the company’s beverages and their production. Coca-Cola calls this water neutrality. Coca-Cola vision is to advance a packaging framework in which their packaging is no longer seen as waste, but instead as a valuable resource for future use. To realize this zero waste vision, they have been guided by a commitment to continuous improvement.
They continues to make strides by advancing packaging initiatives focus on reduce, recover and reuse. They invested in designing and producing sustainable fashion apparel made from recycled PET bottles too. Legal Changes Analysis Marketing decisions are strongly affected by developments in the political and legal environment. This environment is composed of laws, government agencies and pressure groups that influence and limit various organizations and individuals. Sometimes these laws also create new opportunities for business.
Here are some legal affairs that Coca-Cola had to face recently: The European Commission has alerted EU member countries to ban Coca-Cola drinks because of recent poisoning of 100 children in Belgium and cause seems to be the wrong carbon dioxide which was used in the soft drinks. In 2003, the Centre for Science and Environment (CSE) a non-governmental organization, said Coca-Cola contained toxins including lindane, DDT, malathion and chlorpyifos – pesticides that can contribute to cancer and a breakdown of the immune system.