PESTEL Analysis for coke

Coca Cola is the largest manufacturer, distributor and marketer of beverage concentrates and syrups in the
world. Coca-Cola is recognized as the world’s most valuable brand. They market four of the world’s top five
non-alcoholic sparkling brands, including Diet Coke, Fanta and Sprite. The Company owns or licenses more
than 450 brands, including diet and light beverages, mineral water, enhanced waters, juices and juice drinks,
teas, coffees and energy and sports drinks. Through the world’s l a r g e s t b e v e r a g e d i s t r i b u t i o n
s y s t e m , c o n s u m e r s i n m o r e t h a n 2 0 0 c o u n t r i e s e n j o y t h e c o m p a n y ’ s beverages at a
rate of approximately 1.5 billion servings each day. The Company generates revenues, income
and cash flows by selling beverage concentrates and syrups as well as finished beverages.

Even Coca Cola, the world’s largest beverage company has to consider about their macro environment and its
opportunities and threats. They too have to analyse their political,economical,social, technological,
environmental and legal factors in order to catch up with fast changing world.

Political analysis for Coca-Cola:

Non-alcoholic beverages fall within the food category under the FDA.The government plays a role within the
operation of manufacturing these products in terms of regulations. There are potential fines setby the
government on companies if they do not meet a standard of laws.

The following are some of the factors that could cause Coca-Cola company’s actual results to differ materially
from the expected results described in the underlying company’s forward statement:-

 Changes in laws and regulations, including changes in accounting standards, taxationrequirements

and environmental laws indomestic or foreign jurisdictions.
 Changes in the non-alcoholic business environment. Theseincludes, withoutlimitations, competitive
product and pricing pressures and their ability to gain or maintain share of sales in global market as a
result of action of competitors.
 Political conditions, especially in international markets, including civil unrest, government changes
and restrictions on the ability to transfer capital across borders.
 Their ability to penetrate developing and emerging markets, which also depends on economic and
political conditions, and how well they are able to acquire or form strategic business alliances with
local bottlers and make necessary infrastructure enhancements to production facilities, distribution
networks, sales equipment and technology.

A threat that the Coca-Cola Company had to face recently due to changes in the political factors was War
against Iraq made USA and UK very unpopular in Middle East as well as in the other Muslim countries.
Because Coca-Cola is known as the very American company, this had a huge effect on the sale of its
products.

Economic Analysis for Coca-Cola:

Last year the U.S. economy was strong and nearly every part of it was growing and doing well.
However,things changed.Most economists loosely define a recession as two consecutive quarters
ofcontraction, or negative GDP growth. In 2008 we witnessed a global economic crisis which was suggested
by several important indicators of economic downturn worldwide. These includes high oil prices, which led to
both high food prices and global inflation; a substantial credit crisis leading to the bankruptcy of large and
well established investment banks as well as commercial banks in various nations around the world;
increasedunemployment; and the possibility of global recession.

As the inflation rate grows higher and higher consumer buying powers also represents a key threat in the
industry. The rivalry between Pepsi and Coke has produce a slow moving industry in which management
must continuously respond to the changing altitudes and demands of their customers or face losing market
share to the competition. Furthermore,consumers can switch to other beverages with little cost or
consequences.
The non-alcoholic beverage industry has high sales in countries outside the U.S.According to Standard and
Poor’s Industry surveys, “For major soft drink companies, there has been economic improvement in many
major international markets, such as Japan,Brazil and Germany. “These markets will continue to play a major
role in the success and stable growth for a majority of the non-alcoholic beverages industry.

Social Analysis for Coca-Cola:

Many U.S. citizens are practicing healthier lifestyles. This has affected the non-alcoholic beverage industry in
that many are switching too bottled water and diet colas instead of beer and other alcoholic beverages. The
need for bottled water and other more convenient and healthier products are in importance in the average day
to day life. Possible substitutes that put pressure on Coke include tea,coffee, juices, milk and hot chocolate.

Increasing awareness among consumers, public health professionals and government agencies of the potential
health problems associated with obesity and inactive lifestyles represents a significant challenge to the coca
cola company. The company has recognised that obesity is a complex public health problem. Their
commitment to consumers begins with the company’s broad product line, which includes a wide selection of
diet and light beverages, juice and juice drinks, sport drinks and water products.

A common criticism of Coke based on its allegedly toxic acidity levels has been found baseless by
researchers. The drink has also aroused criticism for its use of caffeine, due to the possibility of physical
dependence. There is also some concern regarding the usage of high fructose corn syrup in the production of
Coca-Cola. InIndia, there exists a major controversy concerning pesticides and other harmful chemicals in
bottled products including Coca-Cola.

Technological analysis For Coca-Cola:

Some factors that cause company’s actual results to differ materially from the expected results are as follows:

 The effectiveness of company’s advertising, marketing and promotional programs. The new
technology of the internet and television which use special effects for advertising through media.
The advertising makes the product attractive. This technology is being used in media to sell their
products.
 Introduction of cans and plastic bottles have increased sales for Coca-Cola as these are easier to
carry and you can bin them once they are used.
 As the technology is getting advanced there has been introduction of new machineries all the time.
Due to introduction of this machineries the production of the Coca-Cola company has increased
tremendously.

A Latest technical achievements made by the Coca-Cola company and Ardagh Glass was the new
environmentally friendly version of the iconic ‘Coca-Cola’ Contour bottle which has won number of awards
for its light weight.

Environmental Analysis for Coca-Cola:

The Coca-Cola system’s environmental commitments are focused on the areas in which they have the most
significant opportunities to make a difference-water stewardship, sustainablepackaging, and energy
management and climate protection. The company has made progress in each of these areas, but Coca-Cola
has recognized that there is much more to do.

However, with a system of Coca Colas size and reach, we must also step back and look at how cokes’ local
operations add up to global impact. For example:

 In 2007, the system used approximately 300 billion litres of water.

 Coca Cola is one of the world’s largest purchasers of sugar and high fructose corn syrup.
 Coke Company is among the world’s largest purchasers of citrus and coffee.
  Coca Cola is the largest consumer of aluminium cans, PET bottles and refillable glass bottles in the
non-alcoholic beverage industry.
 The company has more than 10 million vending machines, coolers and fountain dispensers in use
around the world.

Objectives for water stewardship:

 Reduce the amount of water used to produce their beverages.

 Recycle water used in the manufacturing processes so it can be returned safely to the environment.
 Replenish water in communities and nature through a global network of local partnerships and
projects.

Objectives for packaging methods:

 Reduce-To design consumer-preferred packages that use the least amount of resources, while
maintaining product quality.
 Recover-To build packaging management systems to collect post-consumer packaging.
 Reuse- To use most post-consumer packaging and packaging materials again to deliver sustainable
value.

While the company has worked hard to advance community recycling programs, they know that public
education is a key to prevent litter. Coca Cola system supports numerous litter prevention and community
beautification organizations around the world, including “Keep Australia Beautiful” in Australia, the “Tidy
Britain Group” in the Great Britain and “Keep America Beautiful” in the United States.

Legal Analysis for Coca Cola:

Here are some legal affairs that the Coca Cola Company had to face recently.

 In the 1970’s, India required Coca Cola to share its secret formula with the local subsidiary so as to
continue doing business here.Coca Cola refused and halted operations in India for almost 16 years.
 The European Commission has altered EU member countries to ban Coca Cola drinks because of
recent poisoning of 100 children in Belgium and cause seems to be the wrong carbon dioxide which
was used in Coca Cola soft drinks.
 Recently there was a demonstrations all around the India, protestors demanded Coca Cola to stop
production. Demonstrators believe that Coca Cola is depleting groundwater.

In India, there exists a major controversy concerning pesticides and other harmful chemicals in bottled
products including Coca Cola.