Strategic Analysis Of Coca Cola Amatil: External And Internal Environment Essay.

1. Briefly describe the background information of the organisation (or SBU) chosen. This information should be brief and relevant to the discussion of your assignment and thus may include ownership, history, size, business scope, major products/services, and major markets of the organisation (or SBU).
2. Conduct an external environment analysis including a macro-environment analysis and Porter's 5 forces analysis:
(a) Conduct a macro-environment analysis for the entire industry within which the organisation (or SBU) operates. You should use the PESTEL model and focus on understanding the purpose of this analysis, the identification of key factors and their implications in terms of key opportunities and threats, and discussion of their overall impact on industry growth in the future. Draw your conclusions based on your macro-environment analysis.
(b) Undertake an industry analysis using either Porter’s 5 forces model or Hubbard's industry analysis approach. You should pay attention to the purpose of this analysis, the inter- connectedness of different aspects of the competitive forces, and their overall impact on the industry and the organisation selected in terms of main driving forces in the competitive environment. Draw your conclusions based on your industry analysis.
3. Conduct an internal environment analysis. You should identify, differentiate and evaluate the key resources and competencies of the organisation (or SBU) that are most likely to provide sustainable competitive advantage.
4. Summarise your findings based on your external and internal environment analysis. Identify the key issues that the organisation (or SBU) faces and give your recommendations.

Strategic analysis is the usage of various tools for preparing business strategies through evaluating the opportunities and threats faced by an organization. The organization chosen for this study is Coca Cola Amatil. The study will describe the background of the organization and analyze its macro environment through PESTLE analysis model. It will evaluate the threats and opportunities faced by food and beverage industry. Apart from that, the study will also evaluate the industry analysis of the organization through Porter’s 5 forces model. Furthermore, the study will analyse the internal environment of the organization for evaluating the competitive advantage of the organizational resources and capabilities. A summary of overall analysis of the finding will also be provided in this study. Lastly, the study will provide effective recommendation for the organization towards minimizing the organizational issues.

Coca-Cola Amatil (CCA) is considered to be the largest bottle opener in Asia-Pacific region, operating in six different countries, which are Australia, Indonesia, New Zealand, Fiji and Samoa and Papua New Guinea (Crozier & Crozier, 2016). The organization was established in 1904 and is having it’s headquarter in New South Wales (NSW), Australia with revenue of more than AU$5.17 billion in the year 2015 (Ccamatil.com, 2017). By the end of 2015, the organization had 14900 employees and profit of more than AU$81.23 million. The current valuation of the company is shown in Appendix 1.CCA is having one of the most diversified portfolios in the soft drinks industry with products comprising of energy drinks, sport drinks, spring water, iced tea, fruit juices, coffee, tea, and flavored milk. CCA also provides vegetable snacks, ready-to-eat fruits and wide variety of sparkling products.

With the rise in health-conscious people mostly in Australia, the return on investment of the organization is reducing considering the past trend in figure 2. The amount of sales for carbonated drinks is impacting the market share of CCA.

The market competition of CCA is with Frucor, Enza Foods and Charlie Trading Company, however still the organization is having 46% market share in Australia, as depicted in figure 3.

The sales mix of CCA considering the business units indicate that 56% of its sales are achieved from soft drinks, which indicates that the other units need to be promoted, featured and enhanced.

CCA is having the following list of Small Business Units (SBUs):

• Water
• Non-alcoholic beverages
• Alcoholic beverages
• Hot beverages
• Food

Table 1: PESTLE Analysis of Food and Beverage Industry

(Source: Berchicci, 2013)

According to Adebanjo et al., (2016), political stability and economic growth of Australia will ensure sustainable and profitable return on investment of Food and Beverage industry in future. Moreover, the increasing spending power of Australian people will ensure increasing sales volume of the industry. However, Lim, (2015) opined that the people are also more inclined on healthy life style, which encourage them to buy healthy drinks. Moreover, the consumer tastes are frequently changing, which can hamper the business growth of this industry in future. Furthermore, Dananjaya and Kuswanto, (2015) opined that changing government rules and enhancing Goods and Service Tax of Australia can lower the business profitability of the Industry.

External Environment Analysis

From the analysis of macro environment, it can be seen that stable government condition has enhanced the business sustainability of Food and Beverage Industry. Therefore, stable political condition seems to be the opportunity for profitable business of Coca Cola Amatil. Furthermore, the growing economic condition of Australia has enhanced the earnings and spending power of the Australian people. Therefore, it has increased the sales volume of the organization towards more profitable business. However, increasing interest rate and changing consumer taste can hamper the business profitability of the industry as well as the organization.

There are several factors in beverage industry, which discourage the new entrants in this industry. Moreover, Wang et al., (2015) opined that the new entrants need significant amount of investment to be made for starting need business. Therefore, it is quite difficult for the new entrants in the new market. On the other hand, Dikova, (2015) opined that new entrants face tough competition from the already existing and reputed beverage organization like Coca Cola Amatil. Moreover, the strong brand image of such reputed organizations seems to be tough competitive factors for the new entrants. Therefore, Coca Cola Amatil faces lower threats from the new entrants in Food and Beverage Industry.

The main substitute products of Coca Cola Amatil are fruit juice, soda and different hot and cold beverages. The numbers of substitute products are increasing very fast in the market. Moreover, as per Acapmag.com.au, (2015) the qualities of such substitute products are also generally good, which can attract huge customer base. In such situation, Coca Cola Amatil does not have entirely unique flavour in their drinks, which can enhance the priority of substitute products to the customers. Therefore, Coca Cola Amatil faces high threats from the substitute products.

There are extremely tough competition among the organizations in Food and Beverage Industry. According to Heffernan, (2017), there are intense rivalries among the major players in the market. Coca Cola Amatil faces tough competition from the major market players like PepsiCo, Nudie Food Australia and Nestle Water France. Such competitor companies are also offering same types of product in affordable prices. Therefore, Coca Cola Amatil faces tough competition from these competitor companies. However, Schilke, (2014) opined that large industry size of the industry can help the organizations towards running smooth business even in tough competitive market.

According to Becherer and Helms, (2016), there are numerous numbers of suppliers in beverage industry for supplying raw materials to be beverage organizations. Therefore, Coca Cola can easily shift from one supplier to other supplier. Therefore, suppliers get less scope of bargaining with the organization. On the other hand, Lim, (2015) opined that suppliers are also more inclined towards supplying their raw materials to the reputed organizations like Coca Cola Amatil. Therefore, they have less bargaining power with the organizations.

According to Dikova, (2015), individual customers buy less quantity of the products of Coca Cola Amatil. Moreover, they are not also price sensitive and only concentrate on the quality. Therefore, the increased quality of the organization limits the bargaining power of the individual customers. However, Kuratko et al., (2014) opined that larger retailers buy bulk amount of the products of this organization. Therefore, they have high bargaining power with Coca Cola Amatil. Moreover, the organization faces moderate bargaining power from the buyers.

Internal Environment Analysis

4.6 Conclusion Based on Industry Analysis

While summarizing the industry based analysis, it can be seen new entrants face tough competition in entering in food and beverage industry. Moreover, high brand value of Coca Cola Amatil act as tough competition from the new entrants. Therefore, Coca Cola Amatil faces less threat from the new entrants. Apart from that, there are tough competitions among the major players in the food and beverage industry. Such competition has fostered high price war among the major players in the industry. The high quality of Coca Cola Amatil limits the bargaining power of the buyers.

Table 2: Internal Environment Analysis

(Source: Kuratko et al., 2014)

The above table provides internal environment analysis of Coca Cola Amatil through VRIO analysis. From this table, it is evident that strong brand image attracts huge customer base. Moreover, the strong brand image different this organization from other competitors and gains competitive advantage. On the other hand, the unique product quality of Coca Cola Amatil has helped it in standing out at unique position in the market. Moreover, the unique taste of the drinks of this organization has differentiated it from its rivals. Therefore, such unique product quality has enhanced the competitive advantage of the organization. Furthermore, strong distribution network of the organization has reduced the operational cost of the organization, which has led the organization in initiating cost leadership strategy. Such strategy has assisted the organization in gaining competitive advantage.

From the overall analysis, the following key issues of Coca Cola Amatil have been undefined:

Frequently changing government rules of Australia hampers the business process of Coca Cola Amatil. Moreover, the changing government rules create some boundaries and limitations for the current business process of the organization (Wubben et al., 2015). Therefore, such changing rules and regulations actually hamper the productivity of the organization through hampering the business process.

Customer tastes and preferences are changing frequently day by day. They mostly prefer healthy drinks for living healthy lives. In such situation, Coca Cola Amati has limited variety of healthy drinks (Wang et al., 2015). Therefore, such limited numbers of healthy drinks hampers the overall sales volume of the organization.

The major market players in the food and beverage industry have creates huge competitive pressure on Coca Cola Amatil. Moreover, the competitive organizations like PepsiCo and others provide almost same quality of drinks in affordable price (Becherer & Helms, 2016). Therefore, customers often choose the drinks of such competitive organizations, which hamper the sales volume of the organization.

The customer relationship management strategies of Coca Cola Amatil are not up to the satisfactory level of the customers. Moreover, the organization is not capable of handling the customer obligations in the social media channels (Dikova, 2015). It is actually hampering the reputation level of the organization.

Coca Cola Amatil should adopt adaptive and agile business model, which is will be able to effectively cope up with the frequent changing rule and regulations of Government. Such business model will help the organization in aligning their business process with changing rules and regulations of the country. It will help the organization in earning adequate profit even in changing government rules and regulations.

Summary of Findings

Customers’ changing tastes and preferences are becoming one of the most important issues for Coca Cola Amatil. Moreover, the organization has lack of healthy sufficient varieties of drinks. Therefore, it is incapable of meeting the needs and demands of the health conscious customers. Therefore, the organization should enhance their product line and incorporate more numbers of healthy drinks. It will definitely enhance the sales volume through increasing customer base.

Coca Cola Amatil is facing extreme competitive pressure from the major market players like PepsiCo, Nudie Food Australia and Nestle Water France. Moreover, these organizations are also providing same quality drinks with affordable prices. Therefore, the organization should different itself from those of their competitors through enhancing the quality of the products. Such unique product quality will enhance the competitive edge of the organization in the market.

Coca Cola Amatil should effectively interact with the customers for gaining the insights of the customers and aligning the product featured with the customer needs. In this way, the organization will be able to meet the customized needs and demands of the customers. On the other hand, the organization should also crucially handle the customer objections in the social network sites before in becomes the reasons for customer dissatisfaction.

7.0 Conclusion

While concluding the study, it can be said that the political stability of Australia has fostered sustainable profitability of Food and Beverage industry. Moreover, economic growth of Australia has enhanced the return on investment of Coca Cola Amatil. However, frequent changes in government policies and regulations hamper the business practice of the organization, which hampers its profitability. Moreover, inclination of the customers towards more healthy drinks has reduced the sales volume of Coca Cola Amatil. On the other hand, the organization also faces high competitive pressure from the major market players in the market. Therefore, the organization should increase their product line and product quality for increased sales volume.

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