Company Overview:
The Coca-Cola Company is the largest, most popular international beverage corporation in the world. Founded 129 years ago, it supplies over 200 countries worldwide with more than 500 products. Coca-Cola has over 80,300 employees across the globe. The company and its subsidiaries produce syrup concentrate and sell it to various bottlers throughout the world who own local Coca-Cola franchises.
Does the company have a comparative advantage over its rivals?
Coca-Cola has a comparative advantage over its rivals by being the most popular soft drink brand in the world and the number one global brand in 2010 (Interbrand.com). The company’s advertising has “been among the most prolific in marketing history, with a notable and major impact on popular culture and society as a whole” (Stringer, 2015). Coca-Cola also produces a number of other soft drinks including Fanta and Sprite, which each have multiple different flavors. Coca-Cola’s main competitors are PepsiCo and Cadbury Schweppes. The Coca-Cola Company has competitors not only in the soft drinks industry like PepsiCo, Inc., but in nutrition companies like Kraft Foods, Groupe Danone, and Nestle.
Explain the supply and demand for its key product or service?
Coca-Cola is a normal good, so the demand will increase when the income of the consumer increases. Brand loyalty and the taste and preference of the consumer also influence the demand, for example, if loyal consumers prefer the taste of Coca-Cola products over that of its competitors, even when the price is increased, the demand will remain the same. Consumers who want healthier options increase the demand for Coke Zero.
Provide the GDP of its home country and a key market (country).
Coca-Cola’s biggest market is the United States with a revenue of $11.5 billion. Europe is a key market with $2.45 billion in Coca-Cola sales. The GDP of the United States is $20.94 trillion, and the GDP of Europe is $15.167 trillion.
How does fluctuations in GDP, economic growth, investments, and patents affect the company’s profitability?
The COVID-19 pandemic greatly affected Coca-Cola in terms of sales. “The Coca-Cola Company got slammed by the pandemic for its most recent fiscal quarter, with revenue down 28% from last year and earnings down 32%.” (Demetrakakes, 2020). ****This is due to many restaurants and theaters that were shut down due to the pandemic. Other factors affecting the company are a decline in the income of the population, thus leading fewer people to purchase coke products. Interest rate changes also affect the company’s ability to borrow and influence businesses that buy their products. In 2020, Coca-Cola has continued to launch new products and partner with new businesses to grow the company. *Coke.com*. Coca-Cola is hoping the interest rates remain low because it is borrowed money in large amounts from short-term funding like money market funds (also referred to as commercial paper. “Commercial paper is a short-term promissory note” (Dictionary.com)). This has allowed them to make more money from interest income from what they pay out in interest expenses. Fluctuations in the GDP affect companies within the country because a healthy economy is a sign that business is thriving. The patent issue does not affect Coca-Cola. Currently, there is no patent on the Coca-Cola formula, because when a patent runs out, the formula is available to the public. The company guards the recipe as a trade secret and very few people know what ingredients make up the formula.
References:
Georiainoff, A. O. (2021, November 3). Coca-Cola HBC 3Q Group sales rose 16%; backs 2021 guidance. MarketWatch. Retrieved November 5, 2021, from https://www.marketwatch.com/story/coca-cola-hbc-3q-group-sales-rose-16-backs-2021-guidance-271635924465#:~:text=The%20FTSE%20100%20Coca-Cola%20bottler%20said%20net%20sales,on%20a%20foreign-exchange-neutral%20basis%2C%20revenue%20grew%20by%2017%25.
Europe, Middle East & Africa. The Coca-Cola Company. (2020). Retrieved November 5, 2021, from https://investors.coca-colacompany.com/about/segments/europe-middle-east-africa.
Demetrakakes, P. (2020, July 22). Pandemic Hits Coca-Cola Hard. Foodprocessing.com. Retrieved November 5, 2021, from https://www.foodprocessing.com/industrynews/2020/pandemic-hits-coca-cola-hard/.
Market Us. (2021, October 6). Coca-Cola Company statistics and Facts. Market.us. Retrieved November 5, 2021, from https://market.us/statistics/food-and-beverage-companies/coca-cola-company/.