Introduction
Coca-Cola’s history dates back to 1886, when the company sold the first Coke, intending to sell as many beverages to enthusiasts (Jurevicius, 2022). To date, that objective has not changed, considering that the brand has continued to set its eyes on manufacturing non-alcoholic beverages for markets worldwide. Despite the company’s headquarters being based in Atlanta, Georgia, it has managed to reach out to different segments in the beverage market by offering popular drinks like Diet Coke, Sprite, Dasani, Fanta, and more. Having selected Coca-Cola as the multinational for research, this paper intends to establish its comparative advantage over rivals, the supply and demand of its beverages, and the gross domestic product of the United States as Coca-Cola’s domicile country. It also highlights the GDP of Coca-Cola’s key markets and offers insight into how fluctuations in GDP, economic growths, investments, and patents influence profitability.
Comparative advantage
Coca-Cola draws its comparative advantages from specialized knowledge of the formula used to make Coke, among other beverages it manufactures. The formula is patented, meaning the company can sue any other organization that makes a similar beverage using the patented ingredients for infringement. While Pepsi rivals Coca-Cola, the taste of the two brands is always unique, asserting differentiation (Jurevicius, 2022). One can easily determine the beverage they are taking not based on branding alone but on productivity and processes that have helped yield the final product (Tabarrok & Cowen, 2021). Another reason for Coca-Cola’s comparative advantage is globalization, which has widened the scope of its target market to the entire world. Ideally, globalization has facilitated optimization and platform business techniques, allowing the distribution of ingredients created and partnering with local companies worldwide to create more inventory and reduce costs.
Supply and demand for beverages
As already highlighted in the discussion, the supply and demand of Coca-Cola are pegged on benefits it draws from its patenting rights and what globalization has brought on board, allowing the company to access markets not just in the United States but in other parts of the world as well. Therefore, the company addresses demand and supply issues by selling patented concentrates and syrups worldwide bottling facilities (Jurevicius, 2022). Satisfying demand is therefore based on ensuring the availability of the concentrates for markets in which Coca-Cola does not have bottling firms, ensuring availability of the finished product through retailers in locations where it owns bottling firms, and finally, using globalized channels to reach out to the world. Shifts in demand and supply may be influenced by factors such as higher levels of competition from the likes of Pepsi, so supply is limited in those locations where Pepsi has a significant market share.
Gross Domestic Product
As a measure of an economy’s size, GDP refers to the total value of production. In the United States, representing Coca-Cola’s domicile nation, the current GDP stands at over $25 trillion (The World Bank, 2022). Coca-Cola’s key markets include the North and Latin American, European, Middle East, and African nations. Except for North American nations that may be considered part of the United States, the combined GDP of the rest would average that of the United States. Part of the U.S.’s GDP sums that of several other nations because of patents they own towards goods and services, as we have seen with Coca-Cola. The nation is also at the heart of offering technologies useful for supply chains and distribution of products.
Conclusion
In summary, Coca-Cola reflects the place of the United States and its capacity to offer world value compared to other countries. In most instances, companies from the country always control production rights. They have modern technologies and the best-trained experts to facilitate trade and economic growth.
References
Jurevicius, O. (2022, August 16). SWOT Analysis of Coca-Cola (6 Key Strengths in 2022). Strategic Management Insight. Retrieved from
https://strategicmanagementinsight.com/swot-analyses/coca-cola-swot-analysis/
Tabarrok, A. & Cowen, T. (2021). Modern Principles of Economics (5) ed. Macmillan Learning.
The World Bank. (2022). GDP (current US $). Retrieved from
https://data.worldbank.org/indicator/NY.GDP.MKTP.CD
Conor Simmons
Blog Post 1
I just went on vacation to a wedding for labor day and we actually had the Pepsi v. Coke debate amongst ourselves and in a rather large family Coke won the day! You make great points in that Coca-Cola has a substantial advantage in the fact that its home and originating in the United States. Many countries around the world have localized soft drink manufacturers but Coke has also flourished alongside these native soft drink manufacturers worldwide. It makes me wonder if the economy of scale and heavy consuption of the United States and North America have more of a relevance in its success or just the fact that we all remember the excellent marketing campaigns of polar bears jamming out in the North Pole during Christmas time. Great post Nicole.