Tobacco Industry Corporate Social Responsibility - Free Samples

Question: Discuss about the Tobacco Industry Corporate Social Responsibility. Answer: Introduction: Strategic management is the process of evaluation and formation of effective strategies performed by the management team on behalf of owners of organization along with the stimulation of attainment of desired goals and objectives considering the internal and external environment. This procedure develops certain plans in order to attain the desires of the organization and these plans are developed on the basis of organizational requirements, rules, regulations and policies. While developing the strategies for the organization, it is necessary to consider some important points such as external and internal marketing environment, current position in the global market. Coca-Cola and PepsiCo are two big brands of soft drink industry and both of them plays effective role for being each others competitor. Strategic planning is a combination of objectives, plans and policies which is done to develop effective organizational strategies with regards to attain competitive advantage in the marketplace. An organizations efficiency could be determined with its strategies, thus, it is necessary for every organization to consider every crucial aspects such as external and internal business environmental conditions before developing strategies in order gain competitive advantage. in terms of international market, Coca-Cola is considered as strong because it holds almost 50% share of the overall non-alcoholic market share in the global market whereas, PepsiCo holds approximately 25% market share. This means, PepsiCo nowhere stands close to Coca-Cola in the international beverage industry. But due to few companies engagement in this industry, PepsiCo is considered as the direct competitor for Coca-Cola in the global market (Cassidy, 2016). Rivalry amongst both the companies is bit old now but still competition between PepsiCo and Coca Cola is considered to be the top rivalry between the two recognized international brands in the world. Thus, PepsiCo tries to attain competitive advantage by adopting unique and innovative measures in their strategies while Coca-Cola is doing the same as defensive strategies in order to maintain their acquired image in the global market (Ling, 2017). External Analysis (PESTLE analysis) Political factors such as governments policies, interest of political parties, etc. influence the performance of beverage industry. In relation with the smooth functioning, both companies i.e. PepsiCo and Coca-Cola have fulfilled all the political factors. Coca-Cola and PepsiCo both have developed its presence in most of the parts of the globe but due to different political conditions and political stability, both the companies are still struggling to enter into several parts (Shtal, et. al., 2018). Same goes with economic conditions, these are also varies country to country. It has been observed that some Asian countries have instable economic conditions due to which adopting license for execution of operations related to beverage industry. GDP, inflation rate, interest rate, exchange rates, etc. factors are some of the crucial factors which affect the performance of PepsiCo and Coca-Cola (Salmons, 2012). Social factors such as target customers tastes, preferences, recent trends, affect the demand of products. In terms of Coca-Cola, they have targeted the countries with high populations which are mainly Asian countries. Apart from this, hot climates are other major factors which are considered by Coca-Cola and PepsiCo in terms of increasing demand of their products (Stone Stone, 2013). Technological advancement is necessary for every company in every industry as it helps them to meet its customers demand in time. With the help of technological improvements, production capacity could easily be enhanced. PepsiCo and Coca-Cola have adopted recent technological advancements with regards to fulfil its target demographics demand along with minimising the wastage of water and other natural resources (Salar Salar, 2014). Legal factors Soft drinks are part of FMCG (fast moving consumer goods) market. Thus, regulations imposed by every country with regards to the production and distribution of FMCG products needs to be considered while developing strategies. Major environmental issues which Coca-Cola, PepsiCo and other soft drink manufacturer face are over-utilisation of ground water and other water resources. Along with this, disposition of waste, imposing control over excess utilisation of natural resources, etc. are some other issues which affects the whole beverage industrys performance. With this regard, both the companies have developed sustainable development policies under which various projects have been executed to save environment as well as other natural resources. Internal Analysis (SWOT) Strengths Weaknesses Coca-Cola PepsiCo Coca-Cola PepsiCo Strong brand reputation Creative and solid brand marketing Growing product portfolio Global experience Brand Equity Customer Loyalty Less diversified portfolio Value addition Competition Product dependency Failed products Opportunities Threats Coca-Cola PepsiCo Coca-Cola PepsiCo Various successful brands to pursue High brand recognition Healthy drinks Improve brand image Improve customer relations Research and development Intense competition from PepsiCo Imposition of taxes Health factor Competition from Coca-Cola Economic slowdowns Government norms and regulations Health factor Competitive analysis Competitive analysis is the method under which primary competitors positon is being evaluated by effective measures. This could be done in various forms such as by evaluating the revenues, strategies, brand reputation, value, etc. Coca-Cola and PepsiCo are one of the biggest rivals in the global market and their rivalry is continued since a very long time. They both have been compared lot of times on various aspects. The major factors on which success of soft drink is based on are availability, cooling, visibility, and range. Under this, availability determines the availability of products at any store. Visibility means that if Coca-Cola is present at any store but it is not visualised then availability will be of no use at that particular store. Cooling plays crucial role in the success of soft drinks because until and unless, soft drinks are not chilled, they are of no use. The last factor is range and it impact over the revenues of the companies. Availability of all flavours in al l sizes is known as range availability (Muzumdar, 2014). With the help of competitive analysis, current position could be determined along with the determination of strengths and weaknesses of direct competitors. Competitive analysis plays vital role in corporate strategy. In terms of Coca-Cola and PepsiCo, they both are primary competitors for each other. In terms of gaining competitive advantage over each other as well as to maintain the acquired position in the market, following strategies have been adopted by them: PepsiCo: Being a global leader in soft drink, organization focuses over meeting customers needs and enhancing brand value by synchronizing with local and traditional events. In order to enhance demand of their product, PepsiCo launches discount and attractive offers time to time along with attractive slogans and mission statements (Nganga, 2012). One of the solid weapons Pepsi have in their armoury is internal flexibility provided to its employees. In this manner, PepsiCo has given freedom to every manager, salesperson, etc. to promote PepsiCo at their own in order to enhance the demand as well as consumption in the market to gain competitive advantage over Coca-Cola (Bonnet Requillart, 2011). Pricing strategy also plays crucial role in terms of enhancing the demand of the products, thus, PepsiCo has adopted several promotional and discount offers in terms of attracting audience. Due to fewer margins in this industry, both the companies compete with each other at very less rate of profit margin. For example: if Coca-Cola is selling a 500 ml bottle at $0.10 then PepsiCo will reduce its prices to $0.09 in terms of raising demand of their products. Current revenue of PepsiCo is US $ 63,525 million. Coca-Cola: They set up brand image and reliability amongst the target audience by synchronising with mega and popular events such as Cricket World Cup, FIFA World Cup, etc. Apart from this, Coca-Cola has also entered into local markets and with the motive of making customer relations, various local events have also been promoted and sponsored by them (Cuganesan, Guthrie Ward, 2010). In terms of flexibility, Coca-Cola requires approval from its headquarters before starting any promotional or marketing campaign. The same pricing strategy has also been adopted by Coca-Cola but due to huge market share in the global soft drink industry, Coca-Cola focuses over product diversification, maintaining its brand image and on improving quality of its products rather reducing the prices of soft drinks to increase sales. Current revenue of Coca-Cola is US $ 35.410 billion. Industry analysis It is a tool which facilitates a companys understanding regarding its position in the market in comparison to the other companies of the same industry. It helps the companies to develop their strategies in an effective manner considering all factors. It also helps the companies to identify the threats and opportunities as well as to analyse their strengths and opportunities to gain competitive advantage. Industrial analysis could also be evaluated with the help of Porters five forces (Adeoye Elegunde, 2012). This force has low impact over both companies performance and this is because large numbers of suppliers are available in the market and switching costs is also low. In the same manner, it is bit easy for both the companies to switch suppliers at one call while, it will be bit difficult process for suppliers to switch from such companies in one move. Main factors which plays crucial role in bargaining power of suppliers are availability of large number of suppliers, and switching costs for suppliers are also high. Induvial bargaining power of customers is also low because sale of one bottle will not impact organizational overall sales. But there is slight difference between PepsiCos soft drinks and Coca-Colas soft drinks. Thus, this factor could affect both companies performance in negative manner. Coca-Colas customers do not focus over price. Due to several factors such as huge investment required, existence of big brands, etc., newcomers fears to enter into beverage industry. This is because large investment is required in every part i.e. from operations to marketing. Apart from this, customer loyalty of customers for existing brands is also high (Dorfman, et. al., 2012). Threat of substitutes Major substitute product for Coca-Cola and PepsiCo is each others products. Due to large products product offerings, availability of substitute is high for Coca-Cola in relevance with PepsiCo. Quality factor also plays crucial role in terms of making threat of substitute bit strong. Switching costs for customers is also low. Thus, this factor has bit huge impact as compared to other factors. Rivalry amongst Coca-Cola and PepsiCo is intense and both are considered as vital players for the beverage industry. There are some small companies also exists in the beverage industry but they does not have much potential to impact Coca-Colas or PepsiCos business. So, it could be said that rivalry between the existing firms has strong impact. References Adeoye, A.O. and Elegunde, A.F., 2012. Impacts of external business environment on organisational performance in the food and beverage industry in Nigeria.British Journal of Arts and Social Sciences,6(2), pp.194-201. Bonnet, C. and Requillart, V., 2011. Does the EU sugar policy reform increase added sugar consumption? 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