Assessing sustainability of competitive advantage of Coca Cola Inc: Threat and VIRO analysis
Operations of Coca cola are affected through the changes in laws and regulations. This is due to the changes in accounting standards and taxation requirements. Due to Government restrictions in USA, the company relocates capital across borders. The consumers despite of little high prices prefer to purchase coca cola product at once. This gives customers satisfaction especially when prices are high then the company will promote as beneficial alternate. The customers show more concern related to nutrition. They focus on their life expectancy. Through increase demand of healthier risks, non-alcoholic beverage sector is affected. The company focuses on efficient packaging and design of bottles due to the customers’ demands and technological improvement preferences.
Various Strengths of Coca Cola Inc provide the basis for its competitive advantage. Brand equity, company valuation, largest market share, global presence, affective marketing strategies as well as customer loyalty and distribution network across the world are major strength areas. These areas of strengths enable the company to attain and sustain its competitive advantage in terms of largest market share and brand in beverages.
Currently Coca Cola’s market share is 79.2 billion dollars (Bhasin, 2015). However, threats and weaknesses could cripple sustainable competitive advantage of the company. Major threats include sourcing of raw material. Water sourcing is becoming difficult due to scarcity and environmental challenges. Moreover, indirect competitors are also posing major threats. These competitors are Pepsi, Starbucks and other regional and local brands.
However, these threats to sustainable competitive advantage can be mitigated or eliminated by focusing on opportunities and strengths. Major Opportunities include diversification in food and health sector, development of Nations, supply chain improvements; packaged drinking water for people and marketing of selling products that sells least. These are important steps for the company that needed to be considered.
VIRO analysis is also an important technique for evaluating threat analysis for Coca Cola Inc to assess its sustainability of competitive advantage. VIRO analysis provides information about value of the products, its rarity, limitability and organization. These are important aspects of sustainable competitive advantage for Coca Cola to dominate its position in beverage market across the globe. Currently the value of the Coca Cola is high and the firm is in position to exploit its opportunities to neutralize threat from external environment in the form of resource or capability. Currently the company has high value. Similarly, rarity is low.
Resources for beverage products are not centered in the hands of few. Competitors are in position to utilize water, sugar, carbonated water and other materials in the industry. Imitation position of the company is strong and copy righted formulas for beverages provide protection to the company. Moreover, organization of Coca Cola is strong enough to organize, be ready, and being able to utilize its resources and capabilities to generate competitive advantages and sustain it over a longer period. Therefore, after conducting PEST and VIRO analysis, it can be concluded that competitive advantage of the firm is strong and currently in sustainable position. However, care full consideration is required in future to retain this condition.