Coca Cola PESTLE Analysis

Legal

REFERENCE

[1] http://pestleanalysis.com/pestle-analysis-of-coca-cola/

[2] http://research-methodology.net/coca-cola-pestel-analysis/

[3] http://www.coursework-writing-advice.compestanalysiscourseworksample/

[4] http://research-methodology.net/coca-cola-pestel-analysis/

[5] http://pestleanalysis.com/pestle-analysis-of-coca-cola/

[6] http://www.slideshare.net/pratishmanchalwad/coca-cola-pest-swot-analysis

[7] https://www.scribd.com/doc/18975870/Pestal-Analysis-of-Coke

[8] https://www.scribd.com/doc/18975870/Pestal-Analysis-of-Coke

Marketing decisions are strongly affected by developments in the legal environment. Sometimes these laws also create new opportunities for a business. For example, in 1970’s, India wanted Coca Cola to share its secret formula with the local minors in order to continue its operations in India. However, Coca Cola refused to share the formula, which resulted in Coca Cola stopping its operations in India for 16 years. In addition, in 1999, the European Commissions alerted the EU to bad Coca Cola drinks because of recent poisoning of 100 children in Belgium which was caused by the wrong carbon dioxide used in the soft drinks. [7]

Technological

Environmental

First of all, as the technology is developing and improving along the coming years, new technology has allowed Coca Cola to manufacture its products in higher quantities and at faster speeds, meaning that the production of Coca Cola has been improved and now works at a higher rate and less employees are needed as most production happens due to machinery. This allows Coca Cola to save some revenue on employee’s wages. Coca Cola has located 6 factories in the UK with new machineries which ensure fast deliver times and high quality products. [5] Moreover, due to the internet development Coca Cola is now more likely to connect with its customers through social media such as Facebook or Twitter. For example, the ‘share a Coke’ products gave Coca Cola high visibility as people were posting pictures with their names on the Coca Cola bottle etc. This project also worked out due to easy internet access as customers were able to order their personalised bottle online with easy access to do so. Furthermore, Coca Cola’s sales are increasing as advertising through web, radio or TV keeps evolving allowing effective advertising for companies. [6]

An essential environmental impact that Coca Cola is affected by is climate change along with global warming as people are now more aware of it and get educated about it more, therefore the company should cut their CO2 emissions and think about how their transport their resources and goods in a more eco-friendly way in order to keep good reputation and safe environment. Also, Coca Cola was also affected by global warming as they recently started to pay more attention towards recycling and their bottle soft drinks can be refilled if you bring it back to the shop in some countries such as America or Asia. Moreover, water accessibility is also an issue for all soft drink companies, therefore competition might also suffer from water accessibility due to climate change. In 2007, Coca Cola used approximately 300 billion liters of water and as a result of this, they then made a goal, promising to return to the communities and nature an equal amount of water in the company's production. They do this by trying to reduce the amount of the water they use, recycling the water used so it can be safely returned to the environment and replenishing water in communities through a global network of local partnerships. [8]

Social

Economical

Political

Main social factor that affects Coca Cola is the way that they operate in different countries, meaning that they also operate in different cultures and have to appeal to different people. Therefore, this influenced coca Cola to develop and produce new flavours that will suit the needs and wants of those different cultures. These needs and wants has been found out by a market research carried out by the company in order to find out how to adapt to different international markets and how to satisfy its new customers. For example, staying in the country of Coca Cola’s origin, people in America are now seeking a healthy lifestyle therefore Coca Cola has invented Diet Coke and Coca Cola Zero in order to comply with the needs of its target audience. Also, as currently the world has a ‘baby booming’ population and as this generation will grow up their will be more educated (due to increase in education around the world) and therefore more aware of the positive effects of a healthy lifestyle and will be more focused around such lifestyle. This means that they will be more likely to seek healthy or diet drinks. On the other hand, there’s also an ageing population in the UK, meaning that Coca Cola has less customers are seniors are less likely to drink fizzy drinks such as Coca Cola. Furthermore, as young people, mostly students are now more likely to get a part time job or even a full time job after universities, due to increase in better and more easily accessible education, they will have a lot of disposable income which can be used for goods such as Coca Cola products. However, this might not always be the case as University fees cost £9,000 , therefore all students will spend their after-education time paying the fee off, meaning less disposable income.

First of all as Coca Cola operates in over 200 different countries, it has to invent new flavours for its product in order to adapt those to its national customers, e.g. Diet Coke. [1]

Moreover, there are economic factors that can affect Coca Cola which the company cannot control, for example a countries' economic growth, interest rates and tax rates as well as currency exchange rates. A strong currency rate can make exporting products more difficult as the transportation price would also go up. For example, the currency rate in Venezuela meant that Coca Cola's profits decreased by 55% in 2014. In addition, higher interest rates would deter Coca Cola from taking loans as then they would have to pay off more than usual.

For example, during recession in 2001 the US government planned to turn the economy around by 2002, therefore Coca Cola took low loans in 2001 to fund growth in 2002. They used the money for market research and product development.

A positive economical change would be high national income growth as then the demand for Coca Cola's products would be a lot higher, because business managers would have more money that could be used to supply their businesses with Coca Cola products. [2] Another recent economical factor that can influence Coca Cola is BREXIT as now it is cheaper for other countries, including the USA to buy and import goods from the UK due to devalued pound which now is much cheaper than it was while the UK was part of the European Union.

To start of with the political factors than can influence Coca Cola, the company is controlled under the Food and Drug Administration (FDA), therefore the Government controls the manufacture procedures of Coca Cola. If Coca Cola fails to follow any of these regulations, they will have to pay a fine and their reputation will be slightly damaged, especially in the eye of the law. Changes in law such as taxation laws or environmental laws might have a great impact on the company. Changes in taxation or accounting can lead to pressure being put on the company in terms of pricing and sustaining a level of sales in the market globally, while maintaining the competitive edge. Changes in the Government could lead to a restriction within exporting and importing goods freely and easily around the countries. This would mean less chance for Coca Cola to enter new markets. [3] Also, wars lead to a negative impacts on the company, for example, Israeli attacks on Gaza in 2014 have caused some of the businesses in Turkey and more than 100 hotels in Mumbai stop selling products of Coca Cola Company. [4]

Coca Cola

This presentation is based on the PESTLE analysis of the Coca Cola Company. I will outline and explain how different factors can affect Coca Cola and influence their decision making process. PESTLE analysis is categorized into six different factors which are; political, economical, social, technological, legal,and environmental.