Coca Cola is the business firm that provides food and beverage to the customers. This company has adopted the business model, on the basis of which employees make efforts in order to achieve the organizational goals. In this paper, the general pattern of change in Coca Cola and basic short run and long run behavior is identified. Along with this, major factors affecting the competitiveness of business and its two closest competitors are also discussed in this paper. The researcher also identifies the pricing strategies of Coca Cola and its strategies to maximize the profits of business.
Coca Cola adopted the business model, in which it includes different strategies and policies that are useful in achieving the aims and objectives in an effective manner. In the business model it included different key partners, key activities, value proposition, customer relationship and customer segment. In the key parameters it includes the manual distribution center owners (Kluyver, 2010). Similarly in key activities, the company makes bottling, distribution, marketing, producing and supplying. With the help of business model, the company manages various activities in an effective manner and also makes coordination among various departments.
Coca Cola Business Model
(Source: Kontes, 2011)
In the above mentioned business model, the company has developed different departments for different activities in order to make the effective contract.
Factors Affecting Competitiveness
Coca Cola adopt effective marketing strategies in order to give tough competition to the rivalry firms. There are some factors such as marketing strategies; financial performance, company image, globalization and innovation affect the degree of competitiveness. Coca Cola has to make timely changes in its marketing strategies, so that other firms cannot be able to imitate and develop the substitute (Mills, 2002). At the same time, financial performance also affects the degree of competitiveness. The company has to focus towards all these factors in order to sustain its business in competitive market environment and develop the sound image of the company.
There are three different measures such as productivity, consumer welfare and profit. Coca Cola focus towards these three factors in order to achieve success in the competitive market environment. Food and beverage industry is evolving by focusing towards the consumer welfare. Coca Cola changed its overall manufacturing system and provide healthy drinks. In these measures, the company earns profit after providing efficient services to the customers (Cryns, 2002). They are focused towards earning long term profits and making effective utilization of resources for producing healthy drinks. Its effective marketing strategies help in building the competitive advantage and giving competition to rivalry firms.
Pepsi and Coke are the closest competitors of Coca Cola that give tough competition and make innovative strategies. Coca Cola set a pricing strategy according to the target market. Moreover, it charges the prices according to the quality of products and it also sets around the same level as its competitors. Coca Cola is considered as different but still it is the affordable brand that any type of customer could easily purchase the product (Lang, 2007). It is identified that Coca Cola remain tremendously fluent and consistent with pricing strategy. The main aim of Coca Cola behind its pricing strategy is to maximize the shareholder value.
Further, in order to grab the large part of the market share, Pepsi has dropped its product prices in some markets. Therefore, Coca Cola also make efforts to provide quality products at lower prices to the customers. It will make the pricing strategies according to its target market, which will indirectly helpful in attracting the large part of customers (Smith, 2011). At the same time, Coke set the prices after conducting the market research, so that it will identify the pricing strategy of its competitors. Coca Cola may adopt both the strategies of its competitors in order to set the suitable pricing strategy for its products and services.
Coca Cola may adopt some other pricing policies in order to maximize the overall profitability. It is identified that penetration pricing, price skimming, economy pricing and premium pricing are the different types of pricing strategies. An organization can adopt suitable pricing strategies and set according to the target market. In penetration pricing strategy, organizations can set prices in order to penetrate the large part of the market (Ulph, 2011). It is the strategy in which, company sets low prices for entering into the new market. Economy pricing strategy is the most common strategy from which, almost every type of company is familiar with. It is the strategy in which company can take the low cost approach and attract the specific market segment.
At the same time, the company can adopt the premium pricing strategy in which, company sets higher prices that its competitors. It can be useful in capturing higher level market. With the help of all these strategies, Coca Cola can be able to give proper satisfaction to its customers and also earn high profits. It is necessary for the company to adopt the suitable pricing strategy (McLeish, 2010). It is because prices of products play an important role in achieving the success in the business. Moreover, it will also useful in attaining the aims and objectives and influencing the buying behavior of customers.
In the hypothesis, short run behavior basically includes the market situation in which demand of products and services are not much. If the company introduces a new product then overall sale will not be more and company cannot be able to capture the large part of market area. At the same time, if company introduces a popular product with effective marketing strategy than it will products will sell out within a limited time period (Dobkin, 2007). This will be useful in capturing the market and also making a sound image of the firm. Moreover, Coca Cola cannot be able to make changes within the short run and employees will not understand and accept the changes within a short term period. On the other hand, in the long run behavior, if the product is not in demand than its demand will remain constant for long term period and the company will suffer with the loss. For example, in Belgium, demand of Coca Cola product was stopped due to its unhealthy drinks. Coca Cola suffered huge loss in the long term due to its unhealthy drinks (Smith, 2011). Similarly, high valued items in long run behavior will be helpful in achieving long term profitability. It is identified that, high valued items do not sell at lower prices even in the long run behavior. Demand of high valued items does not change even in the long run behavior.
From the above discussion, it is concluded that Coca Cola has adopted the business model in which it includes various policies and strategies. Its business model has helped in achieving the aims and objectives. Its major competitors are Coke and Pepsi and its pricing strategy helped in minimizing the overall profitability. Coca Cola can adopt the price skimming and economy pricing strategy for attracting the large part of customers. Therefore, organizations should adopt the suitable pricing strategy in order achieve the aims and objectives in an effective manner.
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