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The report concludes that: An environmental analysis Is necessary within all organizations: small or large. This Is due to the fact that the current marketing environment is ever changing and organizations need to be prepared for the unexpected so as to ensure that they don’t slip behind the competition and lose market share. There are many important factors related to the use of a strategic planning system including: It allows firms to pre plan and establish objectives in advance, thus they have some kind of vision as of where they are going and where they want to go.
Allows firms to create and deliver alee to customers. Combinations of strategies are required l_e_ cost leadership, differentiation and focus in order to achieve market share in today’s dynamic environment. A marketing plan provides clear guidance to an organization and their management. Additionally, it ensures that all decisions that are made are consistent with the strategy and objectives set. Throughout the report there are many limitations also detailed – particularly the classical critique from Henry Mentoring.
Strategic thinking is perhaps better than strategic planning as planning boxes any chances of an Injection f creatively Into the process. The planning process doesn’t allow for an organization to set itself away from the competition but rather standardizes the process and makes all competitors within a sector similar. Recommendations Coca-Cola should adopt a strategic thinking approach rather than a formalized planning approach. This allows the firm to set itself apart from the competition, attract customers and gain a strong market position. Bout how the organization may utilities marketing planning and environmental analysis. ” Holey et al. (2012, pop) expressed that the main purpose of developing a racketing strategy for an organization is “to ensure that its capabilities are matched to the market environment in which it operates”. Throughout this report there will be an analysis and discussion of the impact of both internal and external environmental factors on an organization and how this affects the development of a strategy.
Furthermore, there will be a critical evaluation of the usefulness of a strategic plan within Coca-Cola and also, a study of the claim that strategic planning is outdated (Mentoring, 1994). Coca-Cola is a largely iconic brand – known to 94% of the population (Gomez and Baa, 2012). The company was founded in 1886 by John Phenomenon and is the global key player within the beverage industry, with their net operating revenue amounting to 48. 02 billion US dollars in 2012 – with 45% of the overall global revenue generated by the North America segment (Satanist, 2013).
In order to operate successfully internationally, the organization divided itself into 5 Strategic Business Units based on their geographical positioning: North America, Africa and Eurasia, Pacific, Europe and Latin America (Coca-Cola, 2012). Each unit is then able to target the specific cultures and provide different products accordingly. This report will be mainly focusing on the North America segment, which accounted for 21% of the overall sales in 2012 (Coca-Cola, 2012).
Within the US, the company’s 4 leading brands include Coca-Cola, Sprite, Fantasy and Diet Coke – with the classic Coca-Cola holding a market share of in the US, 2012 (Stanza, 2013). The company has a strong mission: to refresh the world; to inspire moments of optimism; to create value and make a difference. In order to achieve this, a set of objectives have been established: focus on the brand, work smart, act like owners and be the brand (Coca-Cola, 2012). It is important to understand that for any strategic plan to succeed; the objectives must be developed for the purpose of fulfilling the company’s mission Loamier, 2012).
Over the years, the company has been fully dedicated to achieving this mission and in turn, has attracted a loyal army of customers. Therefore, it is easy to conclude that their core competency clearly arises from the well marketed brand they have devised. There are a vast range of carbonated drinks on the market; however Coca-Cola always seems to come out on top. This is due to the fact that customers have a level of trust and confidence in the many to deliver a high quality product.
Continuing on, a major influence upon a firm’s strategy is the manager’s ability to analyses and respond to changes in the environment. Failure to do so will often lead environment through assessing which elements are “impacting… Upon the firm and assessing their effects” (Nickname, 2000, Pl 56). Following this, it is vital to consider what the future may hold, however this may be problematic and the odds may vary from industry to industry, era to era. Firms must continually question the assumption that the markets in which they are operating in today may not necessarily be as refutable in the future.
In addition to this, it is necessary to assess both micro-environmental and macro- environmental changes. In regards to Coca-Cola, micro-environmental changes refer to those specific to the beverage industry, for instance competition. The competition within the soft drinks industry in particular is ‘increasing on all fronts’ (Boomer et al. , 2001) thus it is the manager’s responsibility to respond in a manner that will avoid losing market share I. E. Through price, product developments, new advertising etc. A major competitive force to Coca-Cola is the soft drink firm, Pepsi.
Both Pepsi and Coca-Cola operate within India, however Pepsi leads the market share within the area: accounting for 15% compared to Coca-Cola’s 8%. In addition to this, Pepsi recently revealed plans to invest heavily within the area to provide food and beverage products tailored to cater for local taste (McLain and Esters, 2013). Therefore, it would be useful for Coca-Cola to re-evaluate their strategy for the Indian market and attempt to gain market share. Moreover, macro environmental forces need considered when analyzing the environment.
Majority of the time, such changes are unpredictable thus, flexibility as become a more important organizational strength than forecasting (Doyle and Stern, 2006 pop). Such issues to the environment could arise politically; changes in law and regulations regarding the non-alcoholic business sector, socio culturally; customers driven to healthier lifestyles, thus it may be appropriate to carry out a marketing campaign for diet drinks, technologically; new technology allows for better and more creative advertising, legally; the soft drink inter brand competition act (1980), economically and demographically.
For a firm to remain successful, they must e willing to be flexible with their strategy, as Darwin once claimed that ‘it is not the strongest of species that survive, nor the most intelligent, but the ones most responsive to change’ (Darwin, 2011). Competitiveness in the current marketing environment is inevitable thus, the ability to maintain market share lies in the ‘pursuit and execution’ of an appropriate strategy (Whish and Chem., 2011). Strategic planning is recognized as a necessity rather than a luxury for large companies as it helps provide a framework for decision making throughout the company.
In particular, a well devised plan provides guidance to arioso management levels and ensures that decisions are consistent with the aims and strategies set. In addition to this, dedicating time and effort to creating a plan ensures that objectives are set and thus are more likely to be met (Steiner, 1997). In addition to this, Mentoring (1994 pop) outlined his view that the main importance towards the future in an organized manner thus understanding the “future implications of present decisions” and “present implications of future decisions”.
In other terms, such a plan provides a discipline for long term thinking and ensures hat companies are ready for the inevitable, preparing for the undesirable and controlling what they can (Mentoring, 1994). It is particularly useful for Coca-Cola to make use of a differentiation strategy as this allows the firm to market their product in a way that enables it to be recognized as unique and different, thus enabling them to demand higher prices in return.
However, it is common for management to realize that one strategy is not enough to deal with the environment forces in the current marketing environment. Companies can quite simply not succeed without segmenting their market and tailoring products ND offers to each sector. Additionally, it is not enough to offer low prices in the hope of attracting short term custom as they will be taken over by competition (Doyle and Stern, 2006). Such strategies enable firms to build up their market acceptance and create value for customers, which is necessary to build a strong market position.
However, many have disputed the importance of the necessity of planning. Steiner (1997, pop) concluded that plans may not be effective when “excessively ritualistic and formal” as these may result in managers gaining tunnel vision and only aiming o achieve set goals, rather than continually re-examining the environment to understand new opportunities and strengths in the market place. In addition to this, Mentoring (1994) famously critiqued the notion of a strategic planning system on the basis that it demolishes the opportunity for strategic thinking.
He goes onto claim that managers have a tendency of confusing vision with the manipulation of numbers, whereas the most successful strategies are those based on a clear vision rather than a structured plan. Moreover, Mentoring claimed that “planning has long since fallen from its desalt” (1994) however, he shared the view that rather than demolishing the idea of a plan entirely, it is perhaps time to update and modify it so as to be in touch with the current marketing environment.
The refinement of the planning system should thus allow management to think and act strategically as strategic thinking allows room for intuition, creativity and flexibility (Porter, 1987). Of course such a system of strategic thinking would overcome the common problems associated with strategic planning such as unrealistic expectations, lost opportunities for profit, vulnerability to environmental change etc.
The very essence of a well formed marketing plan should be that it presents a different perspective for each firm, rather than falling into the ‘competitive convergence trap’ (Doyle and Stern, 2006 pig 133) which results in competing companies becoming more and more standardized and similar with their strategies and tactics. With this taken into consideration, it is clear that for Coca-Cola to advance further the will loosen up the process and inject an aspect of innovation and creativity into the action plan.
Additionally, this will allow managers to be more flexible in regards to hangers in the environment, yet it will still allow them to achieve the objectives set and clearly define their purpose. For a strategic plan to be effective it is essential that it is Well-tuned’ (Holey et al. , 2012) with the needs and requirements of the customers, resources and capabilities of the organization seeking to utilize it. It is easy to devise a clear, concise strategy however, if a number of steps aren’t carried through the maintain it then it is useless.
Firstly, success depends on the how well the firm monitors and controls the implementation I. E. Through market performance and financial performance. Additionally, it is necessary for a number of contingency plans to be created in the event of an unexpected market occurrence and to understand potential competitive moves. Continuing on, according the Doyle and Stern (2006) there are various factors that are needed to create a successful plan. To begin with, the plan must be fit to the market environment. In the case of Coca-Cola, the product they offer is superior to any other on the market thus meeting customer needs.
However, if the customers didn’t perceive a Coca-Cola product as having competitive advantage they would go elsewhere. It is of the utmost importance to understand that organizations need to be fast and decisive when reacting to changes in the environment and consumer needs as time has become a competitive weapon’ (pop). Companies whom are able to respond quickly earn more profits on average and generally have a larger market share. In addition to this, firms need to recognize that there is a real need to adapt in today’s marketing world.
Industries that were previously viewed as being impenetrable have been defeated and many companies have been left behind due to their inability to change. In order to beat out competitors one must be able to adapt its skills, assets and distribution channels. Finally, there is this issue with efficiency versus effectiveness. Efficiency reflects productivity whereas the latter is concerned with satisfying customer needs. A well-formed business strategy will, ideally, be interested in firstly getting recognized as a serious competitor in the industry before trying to rush the effectiveness aspect of their business.
An example of a well formed business strategy is that of Dell Computers (The Examiner, 2011). Such a strategy makes use of strategic thinking – rather than a airmailed, pre-set plan and thus sets itself apart from the competition. The ideology behind their marketing plan is that of ‘Just in time manufacturing with Just in time ordering’ and this is not only an efficient strategy, but an effective one. Mainly, it avoids the issue of being left with outdated materials as the technological environment advances at such a fast rate.
Additionally, this mass customization attracts customers as they are receiving a differentiated product. However it also has many weaknesses. In order to find the balance between effectively and efficiently planning, it is perhaps a more viable solution to utilize tragic thinking within Coca-Cola, rather than the formalized sequence of ‘planning. Such a system will allow managers to think creatively and provide the firm with competitive advantage as they will be stepping away from the norm and singling the company out against the competition.