Environmental Scan Report
The company that you choose should be a known organisation (Australian/international). You will be working on the same organisation until week 8 including assessments 1 and 2.
My advice is to choose a company that is well known and that you can find a lot of information on the portal about. And it is quite important that you use this company for your second assessment. You might also find it helpful if you choose a company from your country as you will be more familiar about it.
Introduction to the business – you should provide relevant information about the chosen company which sets up a ‘scene’ for micro-environmental analysis. e.g. not providing long history of company. Relevant information may give a start up year, place, person. It should then move to more current data and situation which blend into coming up analysis.
Identification and analysis of micro-environmental factors – identify factors from competitors (new/old), customers, distribution channels, suppliers, intermediaries and the public which influence the chosen business AND then analyse their impact in terms of factors not limited to the ones listed on assessment brief. These impacts could be positive or negative.
Business Environment Analysis
Coca-Cola limited company was incorporated in the year 1986 when a curious pharmacist, Dr. John Pemberton, mixed some substances to create a distinctive testing soft drink which could be sold as soda fountains. The company is a manufacturer, distributor and marketer of non-alcoholic beverages. Coca-Cola offers sparkling beverages and a variety of still beverages including juices and juice drinks, water, enhanced water, ready to drink teas and coffees and energy sports drinks (Coca-Cola Company SWOT Analysis, 2018). The main brands through which this company trades with, are Sprite, Coca-Cola zero, diet coke, Fanta, vitamin water, PowerAde, Dasani among others. The company trades in numerous countries including Australia. The company has been trading in Australia for the past 80 years despite the stiff competition and some micro-environment challenges it faces in this country. This report therefore, analyzes the business environment of Coca-Cola Company in Australia.
Identification and Analysis of Micro Environmental Factors
The micro-business environment refers to the factors or elements in an organization’s immediate area of operations which affect its performance and the decision making freedom. These factors include customer behavior, competitors, and channels of distribution, suppliers, and the general public among others. The following are some of the micro environmental factors for Coca-Cola in Australia.
Australia has one of the wealthiest and most digitally-advanced consumers. Consumption in Australia is propelled by buoyant consumer confidence, high wages and low rates of unemployment. Lifestyle is also being reshaped by an ageing but multi-cultural population, as well as growing environmental and ethical considerations (Levy & Tapsell, 2007). The population has a mixture of both price sensitive consumer and non-price sensitive consumers. Bases on this, Coca-Cola limited charges a universal favorable price of $ 3.55. The company also trades online to enable the consumers which are technology oriented to enjoy this service. Coca-Cola does research and innovation and also applies technology, in order to meet the demand for quality products in Australian market. The company has been able to evolve, together with the evolving tastes of the Australians, in order to gain their loyalty. This has enabled the company to be consistently profitable.
The suppliers in Australia are known for strict adherence to contracts and timely delivery of products. This, therefore, calls for timely settlement of their dues. Coca-Cola Amatil (the branch in Australia), manages its suppliers within a simple framework known as partner growth. The framework segments the entire supply base, and allows the company invest time and effort appropriately. The various segmentations include; partner suppliers, who help the company in growth; strategic suppliers, who have proven a track record of high performance and excellent reputation of quality goods and services and tactical suppliers, who supply the company quality, but short term goods and services (Venugopal, 2010). With quality supply, the company has been able to ensure quality production with the objective of maintaining consumers’ loyalty.
The Australian market happens to be very competitive. According to Coca-Cola Company SWOT Analysis (2018), some of the main competitors of Coca-Cola limited in Australia include; Pepsi company, Schweppes, Nudies Foods Australia, Kirks, Bundaberg, and Golden Circle among others. Despite this, Coca-Cola has maintained its leadership coverage of 43% for more than 5 years. In order to gain competitive advantage, the company employs creativity and advanced technology on its production. The company also charges a penetrative price of $ 3.55 for its sodas, which is the most consumed product. The price charged is policy based as the company intends to maintain its profitable operations.
Mascarenhas (2011) argues that Australian consumers are of high social status, owing to the low rate of unemployment. However, the reduced rate of retirement benefits has led to reduction in purchasing power for a certain percentage of the country’s population. Despite this, the demand for high quality products, delivered on time is still dominant. The country does not have a belief on any form of beverage, which works to the advantage of the company. Coca-Cola has been able to provide quality products and tastes which is preferred by most Australians.
The beverage industry of Australia is very free, making investors to be at liberty to enter and leave at their will. New entrants into the industry such as Nudies Foods Australia and Kirks have intensified competition more. However, the company maintains competitive advantage by having a sustainable relationship with its customers. This has been achieved through having penetrative price strategy, as well as research and innovation, which ensures quality products and services.
The Challenges Facing the Company and Solutions
The following are some of the challenges which are facing the Australian subsidiary of Coca-Cola limited and the possible solutions:
Despite an industrial experience of more than 80 years in Australian market, Coca-Cola Amatil has been reducing a decline in the sales level, in the past one decade. This is due to the fact that, most consumers are opting for water, as opposed to sodas, which forms the bulk of the company’s products in the market (Barclay & Brand-Miller, J2013). Many consumers are working towards reducing their sugar intake, in a bid to reduce the possibility of suffering from lifestyle diseases such as diabetes. In order to solve this problem the company should produce more of diet sodas and water, as opposed to the normal sodas.
High Operational Costs
Coca-Cola Amatil has been facing a skyrocketing cost of operations. This is owing to the fact that the Australian wage bracket is very high. Besides, the market is very dynamic, which makes the company to spend a lot in research and innovation. The solution to this problem, is to major on economies of scale, market research and product promotion, which will increase the company’s turnover. The company should also segment its market, so as to diversify its risks levels.
Very Stiff Competition
The company is facing a very stiff competition level from its competitors. This has made its turnover levels and its market dominance to be at risk, as the companies gain momentum day by day. These companies sell products which are perfect replacement of Coca-Cola products (Venugopal, 2010). The solution to this challenge is to continue charging the current penetrative price, do product promotion and sell quality products.
From the above analysis, it is possible to conclude that, Coca-Cola limited has a brighter future, if it will be able to think ahead of its competitors. The company should also continue employing more advanced innovation and technology on its operations, so as to meet the expectation of the Australian market.
Barclay, A. W., & Brand-Miller, J. C. (2013). Trends in added sugar supply and consumption in Australia: there is an Australian Paradox. BMC Public Health, 13(1), 1–3.
Coca-Cola Company SWOT Analysis. (2018). Coca-Cola Company SWOT Analysis, 1–8.
Levy, G., & Tapsell, L. (2007). Shifts in purchasing patterns of non-alcoholic, water-based beverages in Australia, 1997–2006. Nutrition & Dietetics, 64(4), 268–279.
Mascarenhas, O. A. J. (2011). Business Transformation Strategies : The Strategic Leader As Innovation Manager. New Delhi: Sage Publications Pvt. Ltd.
Venugopal, P. (2010). Marketing Management : A Decision-making Approach. New Delhi, India: Sage Publications Pvt. Ltd.