Coca Cola like all other companies within US boarders must contented with the Federal Reserve Bank’s monetary policies. Monetary policy refers to the increasing and decreasing of money supply in the economy to either speed up or slow down the overall economy. This affect or influences interest and inflation rates. Monetary policies implemented by the Fed can affect Coca Cola’s ability to expand, invest, borrow, and even save money. When the monetary policy calls for low interests’ rates, they positively affect Coca Cola’s capital growth and enables the company to purchase new ventures and acquisitions to bolster their company’s position as the number one beverage company. In the past low interest rates created opportunities to acquire other brands like Honest Tea in 2011, ZICO coconut water in 2013, and stakes in Monster Beverage in 2014. When the monetary policy calls for high interests’ rates like the ones we are currently experiencing, they can hinder Coke’s ability to invest in its key market country in addition to producing in other countries as well. Inflation rates also affect Coca-Cola’s new research on products development and technology (Anders, 2013, p. 9). A prime example of fiscal policy affect the Coca Cola company is the government taxing “alcohol and sugar-sweetened beverages helps to reduce consumption and prevent the onset of related chronic diseases such as cardiovascular diseases, cirrhosis of the liver, obesity and diabetes,” according to the Center for Global Development.
References
Anders, J. (2013). Coca-Cola's Marketing Strategy: An Analysis of Price, Product and Communication. GRIN Verlag.
The Coca‑Cola Company –Tax Policy. (2021). Paragraph 19(2) of Schedule 19 to the Finance Act 2016. https://www.coca-cola.co.uk/tax-policy
Hello Kevin. great work and great examples. Lowered interest rates are great for companies to take advantage of competitive overseas prices, pushing the competition out of the way. Should the interest rates rise, however, this can cause a lot of internal issues like with rising food prices. I would contend Coca-Cola does not have these issues since they are a large company that pushes out large quantities of product regardless of economic climate (Graduateway, 2018).
Graduateway.(2018, Feb 04). CocaCola – Monetary Policy And Its Affects. Retrieved from https://graduateway.com/cocacola-monetary-policy-and-its-affects/
Hi Kevin, it sounds like you have the workings of a good overall project. While reading your post, I was thinking about the short-term and long-term benefits/costs of raising or lowering interest rates. For instance, when interest rates are lowered, borrowing money becomes less expensive and leads to financial benefits such as the ones you discussed in your post. However, that appears to be a more immediate and short-term benefit as declining interest rates tend to speed inflation, which has more long-term costs (Seabury, 2022, para. 39). With increased interest rates, the opposite is true; it becomes more expensive to borrow money but over in the long run inflation is curbed. Obviously, it is impossible to find the perfect balance. We are seeing the attempt to try and balance the economy more by the Federal Reserve as they raised benchmark interest rates by three-quarters of a percentage point and “indicated it will keep hiking above the current level” (Cox, 2022, para. 4). The result of these price hikes will be short-term costs but will lead to the long term benefit of curbing our inflation. If Coca-Cola had the power to raise and lower interest rates, do you think they would be following along the same path as the federal reserve? That is, are rate hikes now going to lead to better net profitability in the long-run for Coca-Cola?
Reference
Cox, Jeff. (2022). Fed raises rates by another three-quarters of a percentage point, pledges
more hikes to fight inflation. CNBC. https://www.cnbc.com/2022/09/21/fed-rate-hike-september-2022-.html
Seabury, Chris. (2022). How Interest Rates Affect the U.S. Markets. Investopedia.
https://www.investopedia.com/articles/stocks/09/how-interest-rates-affect-markets.asp#:~:text=The%20Effect%20of%20Expectations,-Rising%20or%20falling&text=When%20interest%20rates%20are%20rising,causing%20stock%20prices%20to%20rise.