The Coca-Cola Company deals with mass distribution of its products to vast environments that pose marketing challenges that it has to deal with. We have two types of environments that is, the internal and external environments. To begin with, the internal environment factors are those factors that deal with the strengths and weaknesses of the products of Coca-Cola. This comes down to the marketing elements and employees or labor motivation factors. Coca-Cola has to make good decisions in the areas of marketing in the internal environmental factors and manipulate them to achieve marketing objectives they high or low variable for each factor. Coca-Cola produce good quality products and set it at a price that is a bit lower than the competitor brands and to make sure that it uses a marketing leader strategy, The Coca-Cola company employs the method of intensive distribution of its products. Once the company identifies a potential market, it ensures that all products of the company reach to all potential customers of the market. Though, with the expansion globally, there are certain factors that affect the company, by exerting pressure in the company.
The main ones to be discussed are;- i. Political factors ii. Economic factors i. Political factors that affect globalization of Coca-Cola in Kenya The political arena has a huge influence upon the regulation of business, the investment made in the manufacturing plant, the spending power of consumers and other businesses i. e. competitor. It’s usually said if a country i. e. the global political power and stability are strong the economy itself is also strong. Coca-cola is a company that has spread its tentacles everywhere i. e. over 100 branches countrywide and hence it hugely depends on the political will and stability for it to grow and maintain to be the main producer of soft drinks, and aspect that its competitors like Pepsi, Schweppes can’t compete with(Armstrong G. & Kotler P. 2007). Coca-cola largely depends on the tax policy of the country in its profit-making. Each country that the company has a branch has different tax rate for foreign investors, hence profit-margins do vary. Some countries e. g. United Kingdom; its tax policy is moderately high compared to country like Kenya.
This has resulted in increase in cost production. Each financial year, the tax policy increases affecting the cost of production and slowing down the expansion and maintenance of its outlets i. e. the Coca-cola outlets. This has affected the purchasing power of the consumer; because the higher the retail or wholesale price goes the more the product i. e. soft drink becomes a luxury that is unaffordable. Therefore, with every entry of the soft drink company to a foreign country means adjusting the company’s objective to the foreign country’s policy of tax.
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Some countries have a high tax policy which has resulted to the company's to close down its manufacturing plants and another factor the high tax policy discourages the company to venture in some countries because it will ultimately affects the cost of production(Armstrong G. ; Kotler P. 2007). The second factor that exerts pressure on the Coca-cola company is the employment laws, which have increasingly become tight especially with the ever intrusion of the trade-unions and the education of employees to know their rights.
This is especially emphasized in company’s are in food technology e. g. Coca-cola, the safety and health measures and constantly advocated on. There is international pressure from the trade unions for the company to train and develop skills by the employees to safeguard their health and safety. This together ensuring the company offers a suitable working environment for all workers and sex, regardless of their race, age and gender. This particular pressure on the Coca-cola company is that the company is been urged to recognize and hire local trained managers from that country i.e. instead of hiring an expatriate to run the Coca-cola branch in Kenya, they are urged to hire a Kenyan manager. Ensuring the employees welfare is well catered for guarantees no strike and unnecessary discipline. The company also gets pressure to ensure that all the employees are fully insured, especially with the increase of terrorist attacks, machine malfunctions. With all these to consider, the cost of production has significantly increased and the consumer is left to feel the pinch of the high prices.
The political stability of the country exerts pressure on the company, i. e. when the political stability of the country shakes, it affects the production of the products, through less of manpower, delayment in transportation, insecurity. Unfortunately, this is one aspect that the company can’t do anything about it. e. g. , the recent political mayhem after the disputed 2007 General Election results in Kenya, which is the company, has a major branch i. e. Kenya controls the branches in East Africa of Coca-Cola Company.
The company lost a lot of revenue because its products were not moving from the manufactures to the retailers, and the ones that were been delivered there was constant looting and insecurity for the employees. During this period, the product i. e. soft drink was unreachable to its consumers and where it was available some suppliers i. e. the shops decided to hike the prices illegally, reducing the purchasing power. The political instability in turn affects the country inflation rate, increasing the living standards and cost of production due to the increasing of raw materials.
Political instability results the company to be at a risky-environment where all the company investment i. e. in the building and construction plants can get destroyed in the mayhem e. g. in the Rwanda genocide, Zimbabwe’s political situation. Environment regulation also results in pressure for the company. This is especially with all developed and developing countries urged to sign and adhere to the Kyoto Deal, which Kenya signed the deal.
All member countries are urged to ensure that all industries play a role in reducing its pollution i. e. air and water, through treating its wastage disposal before releasing it to the environment. The company is receiving pressure, through the use of its packaging material of the soft-drink which is mainly plastic and aluminum foil metal. The environmentalists are concerned with the impact the plastic has on the environment, considering it manufacture results in high air pollution.
All manufacturing industry that deals with food technology have been urged to invest and research in ways, which they can reduce pollution, through having a water treatment centre within the manufacturing plant (water is a major raw material for the manufacturing of the soft drink). The company has been pressured to play its role in decreasing global warming, by coming up with ways for its consumer to safely disposing the plastic bottles after the consumption of the drink. The company normally has to participate in educating the consumers on how to safely dispose the plastic bottles instead of littering i. e. their corporate social responsibility (Armstrong G. ; Kotler P. 2007).. The trade laws, restriction and tariffs also exert pressure on the the Coca-Cola Company in Kenya. There are a number of laws and regulations that are not desired by the company's Kenyan operations. There is an increase of competition by this industry, and he Kenya government has taken advantage and increase the tariff so as to they increase the tax turnover of the country. Also, a high tariff is usually set, to discourage incoming competitors e. g.country that has Pepsi can negotiate with the government to increase its tariff so as to discourage the entry of other competitors e. g. Coca-cola, together with this, the country’s governments gets to regulate the competition environment, so as to ensure the supply and demand ratio is not tilted, resulting to increase in supply and the demand is low affecting the profit-margin. The trade regulation of each country that Coca-cola has a branch renewed after its expiration, together with the lease of the land where the plant (manufacturing) will be constructed and established.
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