Entrepreneurship and innovation in The Coca Cola Company

Institution

Student’s Name

Executive Summary

The Coca Cola Company needs to operate in a better way in the Middle East and specifically in the UAE. The UAE is one of the best places where business ventures can thrive well. The company can do this by observing customer needs and work as per its ability and the kind on management it employs.

Company Description

The company has been contributing to economic development of many countries in the world, which host the company’s franchises. The Al Ahlia Gulf Line General Trading (PVT) LTD is the United Arab Emirate plant, which started as a joint venture between the Oman’s Line Gulf and the UAE’s Al Ahlia General Trading Co (PVT) LTD. The trading of this joint venture started back in 1988 with the site preparation starting by the start of 1989. The commissioning of can lines was done in January 1990 and the shipment of its finished goods to Oman and the UAE as well as to other countries. The company is locally situated in three locations in the UAE, which include Abu Dhabi, Al Ain, and Dubai. The company deals in Coca Cola products and it can be termed as a Coca Cola Company in the UAE but it is locally situated. It has strong relationships with the UAE local communities and with other local companies (Al Ahlia Group, 2006).

Market Analysis (Pinson, 2004)

The market for soft drinks in the UAE is wanting since the competition is stiff between the Coca Cola brands and the PepsiCo brands. The joint venture of Coca Cola Company in the UAE has broadened its market since its establishment in 1988. People are increasingly demanding soft drinks in the UAE given that the country is within one of the hottest climatic regions of the world. Consumers are of different behaviors. Some soft drink consumers want to maintain the consumption of a single brand while at the same time there are those consumers driven by the taste of new products. The joint venture has been innovative in this by balancing production of more than hundred products. Coke is the top brand in consumption and is therefore produced in the largest percentage. Occasionally, the company would release new products to meet the demands of this group of consumers.

Company’s Management System

The Coca Cola Company has uniqueness in it Management and products. It the management ensures a unique formula is employed in the production of its brand products. This aspect makes it compete effectively with its competitors irrespective of their age in the soft drink industry and market. UAE is a developed country and consumers who go for quality and band establishment characterize market (Pinson, 2004). The company is unique in its operation right from its production, marketing and distribution as well as the sale of its products.

The Main Products

Coca Cola Company is the global leader in soft drinks and takes the same top position in the UAE. The company produces many brands that range from soft drinks, milk products, water, to sweets. The tops brands include Coke, Fanta brands, Sprite, Crest, Mineral water, and Carbonic Water. The company deals in more products than its competitors like PepsiCo can produce.

Marketing and Sale

Al Ahlia Gulf Line General Trading (PVT) LTD is mainly a joint venture between two Coca Cola plants. The main branches are established in the major cities of the UAE that include Abu Dhabi, Dubai, and Al Ahlia. All these branches are established to broaden the company’s market. All branches are operated to form joint marketing strategies that help in fighting against close competitors.

Cost Information

The venture was started at a significant cost. There was the cost of capital, labor costs, cost of raw materials, and cost of establishment. After its establishment, the company was running at high operating costs due to low productivity and smaller market. The cost has increased greatly with expansion of production but the unit cost of producing one unit of Coca Cola product has been decreasing due to economies of scale in production. Other costs that increasing includes labor costs, advertising costs, upgrading costs, and innovation and research costs.

Financial Projection

The company aspires to broaden its sales to benefit from a broader market.

The Al Ahlia Gulf Line General Trading (PVT) LTD is a joint venture between former two Coca Cola Companies, which include the Oman’s Line Gulf and the UAE’s Al Ahlia General Trading Co (PVT) LTD. The venture was create to broaden its financial position. With the current strategies and market trends, the company projects its sale to double.

Legal / Environmental Analysis

SWOT Analysis (Pinson, 2004)

Strengths

The joint venture has its strength from the global perception of the company’s products. This makes it more competitive than rivals. The major rivals include PepsiCo and other local companies.

Weaknesses

The company only relies on the strategies from the brand’s headquarters in the US. This means that innovations are limited to the United States decisions. This makes it difficult to plan according to the structure of its environmental and social characteristics of the local industry and market.

Opportunities

UAE is a rich country with high per capita income. This creates a market opportunity where consumption is not limited by buying power but completion. There are many areas to venture and considering the hot climate, the company can grow as much as possible.

Threats

PepsiCo has been a fast growing company, which is the main competitor of the Coca Cola Joint Venture in the UAE. The company is a major source of threat to success of the Coca Cola venture in the UAE. The increasing demand for substitutes like ice creams also creates a significant threat to its growth.

PESTEL Analysis

Political Environment

The political characteristics of the UAE is that promoting business establishments. There are no major effects on the company from the government. The country has a long history of stable politics that creates good environment for businesses.

Economic Aspects

The UAE is rich country with high level of per capita income. This makes the company’s products affordable by all people. The country has high level of development. The local communities provide cheap labor to the company.

Social-cultural Aspect

The company is not affected by issues like culture since all its products are not sensitive to culture or religion. Social aspect influencing its growth includes family relationships, unemployment issues, and few cases of crime.

Technological Aspects

The company is ever updated to maintain pace with technological change. It incorporates new production methods whenever available. Technology includes use of computers in production and use of robots, which is common with many companies today.

Environmental Factors

The company is careful with environmental pollution. It has strategies to avoid greenhouse gas contribution. It minimizes it chances of causing water and soil pollution.

Legal Factor

All the company’s operation is monitored by the UAE government. Legal aspect limits it performance. Taxes on its products lower its demand due to increased price thereby lowering its potential in growth.

Growth Strategies/ Risk of Exit

To ensure growth the company is committed to produce quality products that meet international standards while ensuring environmental conservations. It also observes the cultural and social requirement of the local people. Its operations are based on the business laws and regulations of the UAE (Al Ahlia Group, 2006). Many conditions that govern the company’s production include environmental requirements, social requirements, financial requirements, and government regulations that could create its risk of exist. These requirements, conditions, and regulations affect its business operations in many ways. Still on the challenges, the issue of competition comes out when comparing its competitive position in the UAE and other regions coverings its market area. The company is however too strong to exist the market.

References

Al Ahlia Group. (2006). Al Ahlia Gulf Line General Trading Co. Retrieved April 26, 2013, from alahliagroup.com: http://www.alahliagroup.com/gulf-line/index.htm

Pinson, L. (2004). Anatomy of a Business Plan: A Step-by-Step Guide to Building a Business and Securing Your Company’s Future (6th Edition). Chicago: Dearborn Trade.