The External Environment
External environment is also identified as the “macro environment” because it involves the broad concept of the business environment. It includes the socio-cultural forces, global economic forces, global technological forces, and global political and legal forces. In this kind of environment, the organizations are bound to have an in-depth understanding about the major external and uncontrollable factors that can influence their decision making and duly affects their performance and strategies. These factors are also called as PESTLE forces that are needed to be analyzed. The PESTLE analysis is an applied abbreviation for the political, economic, social, technological, legal, and environmental forces, conditions or changes that may happen within the environment of an organization.
Coca Cola
The Coca Cola Company recognized the external environment that can have great impact in their present and future performance. As a respective company, Coca Cola already prepared certain actions to the future constraints by identifying the factors that are either threats or strengths on their business and that may leave an impact in the entire organization. In the examination of the changes in the market, the analysis is comprehensively detailed.
Political Analysis
The changes in laws and regulations, such as accounting standards, taxation requirements and environmental laws and foreign jurisdictions might affect the book of the company as well as their entry in the foreign country. Other than that, the changes in the nature of business as non-alcoholic beverages can gain competitive product and pricing pressures and the ability to improve or maintain the share in sales in global market as a result of action by competitors. The political conditions of the country are also basis of the study, especially in internal markets and other governmental changes that affects their ability to penetrate the developing and emerging markets that involves the political and economic conditions. However, Coca Cola continuously monitoring the policies and regulations set by the government.
Economic Analysis
Economic analysis examines the local, national and world economy impact which is also includes the issue of recession and inflation rates. The non-alcoholic beverage industry has high sales in countries outside the U.S. According to the Standard and Poor's Industry surveys, "For major soft drink companies, there has been economic improvement in many major international markets, such as Japan, Brazil, and Germany." These markets will continue to play a major role in the success and stable growth for a majority of the non-alcoholic beverage industry. There is a low growth in the market for carbonated drinks, especially in Coca Cola’s main market, North America. The market growth recorded at only 1% in 2004 for North America.
Sociological Analysis
This analyzes the ways in which changes in society affect the organization such as changing in lifestyles and attitudes of the market. 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. The demand for carbonated drinks decreases and this pulled down the revenues of Coca Cola.
Technological Analysis
Technology is the main focus of the analysis where the introduction and the emerging technological techniques are valued. This creates opportunities for new products and product improvements in terms of marketing and production. As the technology advances, new products are introduced into the market. The advancement in technology has led to the creation of cherry coke in 1985 but consumers still prefers the traditional taste of the original coke.
Legal Analysis
Legal aspect focuses on the effect of the national and world legislation. The Coca Cola Company receives all the rights applicable in the nature of their business and every inventions and product developments are always going into the patented process. The patented products can be expensive but with the branding of that the company nurtured through the years, the Coca Cola and its other branches scattered throughout the world are confident that they can still experience the increase in sales.
Environmental Analysis
Environmental analysis examines the local, national and world environmental issues. According to the data of the Coca Cola Company, all of the facilities are strictly monitored according to the environmental laws imposed by the government. The environmental concern of the organization is included in their corporate social responsibility and aims to minimize their contribution on waste.
Recommendations
The application of an intensive planning and support from the other international business such as partnership, many organizations survive in the battlefield of business competition. The analysis regarding the external environment helps the organization develop and manage the different changes.
Works Cited:
Abdullah, F., 2009. Case Study Strategic Management Coca Cola Company. [Online] Available at: http://www.scribd.com/doc/18633636/CocaCola-Case-Study. [Accessed 28 Jan 2010].
PEST Analysis on Coca Cola. [Online] Available at: http://web.ics.purdue.edu/~pbawa/421/pepsi%20cola%20pest%20case%20study.htm. [Accessed 28 Jan 2010].
SAP, 2001. Customer Success Story: Coca Cola, Systems Applications and Products. [Online] Available at: http://www.sap.com/uk/about/success/downloads/8cocacola.pdf. [Accessed 28 Jan 2010].
Thomsom, S., 2002. The External Environment [Online] Available at: http://www.swlearning.com/pdfs/chapter/0324070993_2.PDF. [Accessed 28 Jan 2010].
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