Strategic Management SLP4

The world of business is characterized by competition between companies, where each tries to attract and maintain more customers in order to maximize profits. To achieve this, firms need to create fresh ideas, which will give them a competitive advantage over their rivals. These plans may revolve around Porter’s generic strategies of cost leadership (lowest prices), differentiation and focus (cost focus and differentiation focus) (Porter, 1985). An example of a business firm that has for a long time made strategic choices that have propelled it to great success in the world is the Coca-Cola Company. The Coca-Cola brand dominates the beverage sector all over the world. The question then is, “What strategies are used by the Coca-Cola Company in order to gain a competitive advantage over its rivals?’’

According to a speech delivered by Muhtar Kent, the Chairman and CEO of the Coca-Cola Company, he attributes much of success to the innovative nature of the company that has seen it create over 500 brands  as well as over 3,500 types of beverages that are sold all over the world. Additionally, Muhtar mentioned that the company had recently developed the Coca-Cola Freestyle Fountain that gives over 125 beverages. Furthermore, the company decided to collaborate with energy companies, such as the Bloom Energy Company, to reduce the consumption of energy in the production process (Muhtar, 2011). The company has also implemented the use of recyclable materials for its packaging bottles. These recyclable materials have been used in making other products such as the ‘111 Navy Chair’ that was manufactured in partnership with EMCO using recycled materials (The Coca- Cola Company, 2010). All of these are aimed at protecting the environment, hence gaining a green advantage. Secondly, the management of the Coca-Cola Company continues to invest all over the world, even in the remotest places. The company, though based in America, has established subsidiaries across the globe. This large market base has seen the company’s products dominate the world beverage sector, especially when it comes to soft drinks.

The strategic choices that are progressively made by the management of the Coca-Cola Company follow Porter’s generic strategies of differentiation and focus. The creation of over 500 brands that are unique has seen the company attract a large customer base. Additionally, the company has employed the strategy of differentiation focus by creating over 3,500 types of beverages for different groups of customers. These beverages range from juices to soft drinks as well as bottled water.

The above strategies choices have enabled the company to maintain its innovative and creative nature through the creation of diverse and unique beverages and brands. In addition, it is evident that though the company’s products’ prices are a bit higher than those of rivals, such as PepsiCo, the creation of unique tasting products has helped in keeping Coca-Cola at the top. Moreover, the use of competitive strategies has ensured that the Coca-Cola Company enjoys some command in the market. For instance, the use of Coca-Cola fountains in shops and restaurants has helped the company in profit maximization. It is also worth noting that the innovative nature of the company has protected it against its rivals.

Summary

Through this Module, I have learnt that a company’s strategic choices are made depending on internal and external factors. Internally, such factors like organizational culture affect the way the management makes choices, aimed at gaining a competitive advantage against rivals. For instance, if a company’s culture is conservative and does not allow flexibility, then creativity and innovation will be impossible. However, external factors like government policies, such as those regarding environmental protection, rivals’ products, as well as the market base affect the strategies employed by a company in order to beat competitors. Conclusively, it is evident that if a certain company wants to gain a competitive advantage, it has to go beyond marketing to encourage creativity and innovation as well as explore new markets worldwide. However, this depends on the strategic choices made by the management.