Environmental Changes Scanning for Business -Samples for Students

Question: Discuss about the Environmental Changes Scanning For Effective Business. Answer: Any organizational environment depends on few external and internal factors. Proper scanning must be implemented in order to develop an effective business (Wheelen Hunger, 2017). The organizational environmental scanning can be defined as the collecting, interpreting and evaluating the subjective and factual information within the external and internal environment of the organization in order to identify the threats and opportunities for the organization. An effective environmental scanning also includes the consumer analysis, product innovation and industry analysis. Scanning of the external and industry environment can be done through the PEST analysis and Five Force analysis. This essay will analyze the scanning of Coca-Colas external and industrial environment and how the company is responding towards these factors in developing a globally successful business. Coca-Cola is in the 64th position the Fortune 500 list of 2017 (Fortune.com, 2017). Coca-Cola has been dominating the beverage companies in the world for many years. The following analysis of Coca-Cola external and industry environment will help to understand its huge profit generative strategies. The company sells various products like Coca-Cola, Sprite, Fanta, Diet Coke, water, diet coke, juice and health drinks (Coca-Cola, 2017). The environmental scan includes the monitoring, disseminating and analyzing the environmental factors in order to understand how Coca-Cola grew to be a leading brand in the soft drink industry. Scanning of external and industry environmental changes Coca-Colas scanning of external environment factors can be categorized as micro and macro environment. The type of external environment has great contribution over the companys business strategies, performance and decision making is considered as the macro environment. The customers, market trends, suppliers and competition create the micro environment. The economic, social, technological, legal, environmental and political factors influence the macro environment. The internal environment is consisted of management, production competency, inter organizational communication and coordination. A systemantic PESTLE analysis OF Coca-Cola will help to understand the scanning process of the companys external environment (Ho, 2014).. Figure: PESTLE Analysis of Coca-Cola (Source: Made by Author) Political Coca-Cola has to go manage several political issues in its home country as well as in the foreign countries. The international groups, the political scenario of certain countries or regions and lobby groups proves influence strongly. USs invasion of Iraq led to the movement named one day without Coca-Cola caused great loss for the company. The Gaza attack also resulted in hampered business of Coca-Cola in Turkey (Timmons, 2014). Economic This factor proves to be uncontrollable for the company. The tax rates, interest rates, countrys economic growth, labor cost, exchange rate of currency control the economic factor of the companys business. 20th centurys economic crisis has affected Coca-Cola global business greatly. In 2014, Venezuelas the fall in currency rate decreased Coca-Colas revenue by 55% (McGrath, 2015). (Source: Forbes, 2017) Social The consumers health consciousness is rapidly growing and they are looking for more refreshing options with better health benefits. The drink has proven to be potential of causing obesity or heart diseases, which led to significant change in soft drink consumption habit (Gertner Rifkin, 2017). The consumption of Coca-cola has been declined in last few years. Figure: Soft drink consumption decline Source: (HuffPost, 2014) Technological The technological advancements have resulted in newly developed machineries. Coca-Cola is utilizing more of these machineries to bring best quality of products. Coca-Cola is applying such technologies coupling with innovative marketing strategies to ensure more productivity. The packaging system is also adapting newer technologies and making it more attractive for different range of customers. Legal Coca-Cola ensures that all the legal requirements related to customer health and safety, production-distribution and employment are met. The Food Safety or Federal acts of USA are followed by the company (Coca-Cola, 2017). The company does business all over the world, so it should regularly evaluate ad update all the legal factors regularly. Environmental As water is necessary in the manufacturing process of Coca-Cola, the water accessibility is a great issue for the company. The company has to abide by all the environmental laws. In developing countries the soft drink manufacturing costs less also the regions with humid and hot climate can be helpful for the companys business. Five force analyses by porter can be used to scan the environment of the industry. Figure: Porters Five Forces Model in Coca-Cola (Source: Made by Author) Threats of Competitors There are so many powerful soft drink companies like PepsiCo and Cadbury. PepsiCo dominates certain regions of the America and generated more revenue from Coca-Cola regarding the customer loyalty, even PepsiCo stands higher than Coca-Cola (Team, 2016). Threats of new company The new entrants are incapable of creating strong pressure in the beverage industry. Coca-Cola is world famous brand and maintains a strong distribution channel all over the world. The cost for warehouse, labors and vehicles are also high and fixed rate, which could be difficult for the new companies to deal with. Threat of substitute companies For Coca-Cola substitutes like water, coffee, sports drink possess great threat. The baby boomers are showing this trend more. The substitutes are offering many varieties which are satisfying the diverse consumer taste. The caffeine of Coffee and the healthier products of energy drinks are creating strong threat for Coca-cola. Suppliers threat The majority of the bottling industry of USA and Europe is controlled by the Coca-Cola Enterprises and Coca-Cola only owns few percentage of the company. Coca-Cola launches new products at certain interval; so many products often make the supply chain system complicated. Buyers bargaining power The restaurants, stores or grocers mainly buy the soft drink products. They control the bargaining as large stores buy large amount of their products. If the number of the consumers gets decreased, the power of the buyers gets stronger. Coca-Cola must evaluate and consider consumer behavior to manage the buyers. Conclusion The scanning of the external and industrial environment of Coca-Cola has highlighted few important issues and how the company is resolving them. The scanning is helping the company to identify the problems inside and outside the organizational structure. Coca-Cola is applying various business strategies and management skills in order to manage a stable and productive environment which ensures its great effective business. References Brands: The Coca-Cola Company.The Coca-Cola Company (2017). Retrieved 8 August 2017, from https://www.coca-colacompany.com/brands/the-coca-cola-company Fortune 500 Companies 2017: Who Made the List. (2017).Fortune. Retrieved 8 August 2017, from https://fortune.com/fortune500/list/ Gertner, D., Rifkin, L. (2017). Coca?Cola and the Fight against the Global Obesity Epidemic.Thunderbird International Business Review. Ho, J. K. K. (2014). Formulation of a systemic PEST analysis for strategic analysis.European academic research,2(5), 6478-6492. McGrath, M. (2015).Currency Swings Take The Air Out Of Coca-Cola Fourth Quarter Profit.Forbes.com. Retrieved 8 August 2017, from https://www.forbes.com/sites/maggiemcgrath/2015/02/10/foreign-exchange-takes-the-air-out-of-coca-cola-fourth-quarter-profit/#72daa54384f4 Public Policy Engagement - The Coca-Cola Company. The Coca-Cola Company (2017). Retrieved 8 August 2017, from https://www.coca-colacompany.com/investors/political-engagement-policy Team, T. (2016).How PepsiCo Is Improving Its Brand Loyalty.Forbes.com. Retrieved 8 August 2017, from https://www.forbes.com/sites/greatspeculations/2016/03/16/how-pepsico-is-improving-its-brand-loyalty/#7658c2c31555 The Decline Of Soda In 1 Chart. (2014).Huffington Post India. Retrieved 8 August 2017, from https://www.huffingtonpost.in/entry/soda-decline_n_4808978 Timmons, H. (2014).Israels attacks on Gaza are leading to Coca-Cola boycotts.Quartz. Retrieved 8 August 2017, from https://qz.com/239722/israels-attacks-on-gaza-are-causing-coca-cola-boycotts/ Wheelen, T. L., Hunger, J. D. (2017).Strategic management and business policy. pearson