Strategic Thinking and Strategic Leadership

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Introduction

All organisations in the world exist with the purpose of fulfilling certain objectives. These objectives, however, are challenging to attain because of many environmental factors that cannot be predicted accurately on time. Thus, the organisations determine their direction, as well as the scope for purposes of achieving advantage within the changing environment well in advance.

This is done by configuring the resources and the competencies such that the stakeholders’ expectations can be fulfilled. In essence, it is this kind of arrangement and planning that comprises the aspect of strategy and strategic thinking (Johnson, Whittington & Scholes 2011, p. 9). It is an important concept because without strategy, there will be no chances of achieving the objectives.

Strategic leadership, on the other hand, must have the ability to translate the strategy to operational requisites. It should involve achieving a perfect alignment of the organisation and strategy (Boak, 2010, p. 34). In particular, this paper seeks to extensively cover the topical issue of strategic thinking and leadership, mainly expounding on the main theories concerning strategy formulation.

It also covers strategy development, implementation, and analyzes the relationship that exists between strategy and innovation. The paper also highlights the strategy process adopted at Coca-Cola Company.

Strategy Development and Implementation: Theories

Strategy can be defined in five different ways that are based on plan, ploy, pattern, position, and perspective (Mintzberg, Ahlstrand & Lampel, 2003, p. 13). As a plan, Mintzberg and his colleagues describe strategy as an intended course of action that is conscious. In other words, it as a set of guidelines that are used for purposes of dealing with a given situation. In terms of a ploy, strategy is looked at as a section of a plan.

Mintzberg, Ahlstrand and Lampel (2003) describe it as a specific manoeuvre, such as the establishing of a brand that is competitive, or building of barriers to deny rivals the opportunity and chance of entering the market. Strategy is, thus, a perfect means that can be employed to block or outwit others, mainly the competitors in the market.

In terms of a pattern, strategy is described as a pattern of action that is consistent towards achieving a goal. Such a plan may not have been organised in advance or done in an intended manner. However, it can still be observed in retrospect.

This definition of strategy is unique in the sense that other scholars have not considered it in their definition of strategy (Mintzberg, Ahlstrand and Lampel 2003, p. 13). In terms of looking at strategy as a position, the focus by Mintzberg, Ahlstrand and Lampel (2003) is on the organisation and the position that it occupies in the respective market that it serves.

Finally, strategy as a perspective considers the fact that a strategy can be seen as a way that is ingrained, and through which the world can be perceived (Mintzberg, Ahlstrand and Lampel, 2003, p. 15). It links strategy with an organisation’s culture closely.

For instance, some organisations may base their operations on technological innovation, while others may base it on marketing perspective. Others may still base their operations around the provision of services that are standardised.

In general, strategic decisions are varied and take up different forms and directions, depending on the objective of the organisation. These directions may focus on revising the organisations’ purpose, making a decision to exit or enter into certain markets, or changing a company’s offer of products or services.

Other strategic decisions may involve altering the structures and systems of an organisation, changing the manner in which the use of resources is done, and changing the relationships between an organisation and its partners, such as suppliers or distributors (Mintzberg, Ahlstrand and Lampel, 1998, p. 218).

Strategies occur in different levels, thus highlighting their main focus in as far as the organisation is concerned (Pearce & Robinson, 2011, p. 19). Corporate strategies are the highest level of strategies, whose main focus is on the entire organisation. The second level of strategy is the business-level strategy whose main focus is determining how the organisation will manage to compete in specific markets that it is interested in.

The third level of strategy is referred to as the functional or operational strategy. This kind of strategy only focuses on certain parts of the business, such as marketing, the human resource, communications, or quality among others. Other strategy levels may include private sector strategy, with an aim of achieving competitive advantage, and public sector strategy which mainly focuses on offering more complex services.

There is a close interrelation between strategy and innovation. Decisions on strategy mainly target the making of changes across the entire organisation. These changes, however, occur in two main ways; either incrementally or radically. An organisation comprises of two environments; the internal and the external environment, both of which the strategy being developed must consider.

The external environment is the one that the organisation lacks control over, and includes such factors as politics, the environmental elements, the society, the legal requirements, as well as the technological and economic aspects.

On the other hand, the internal environment often involves the surrounding that the organisation has control over. This environment comprises of such factors as the customers, competitors, and the suppliers’ actions and reactions. A diagrammatical representation of the organisation and the external and internal environments below explains the different forces that strategy aims to address (Grant, 2008, p. 78).

diagrammatical representation of the organisation and the external and internal environments

Source: Boak (2010)

The political forces mainly comprise of the policies formulated by the government, which will directly affect the operations of the organisation. They also involve the government as a customer that purchases the goods or services of the organisation.

The economic forces, on the other hand, comprise of such aspects as inflation, the interest rates adopted by the financial institutions, the exchange rates applied, as well as the general economic activity level within the country.

The social forces mainly comprise of two profiles that include the demographics and the attitudes, as well as values of the society. The technological forces refer to the enablers of the organisation’s operations and general performance, including the means of production and the information and communication technology.

The external environment also includes the environmental aspects, such as climatic conditions, energy supplies, and climate change. Finally, the legal forces within the external environment involve the laws and regulations that are set up in trying to ensure the organisation’s operations are in tandem with the stipulated order.

Different models have been set up by scholars for use by managers in organisations while trying to evaluate the environmental forces.

SWOT Analysis

This model mainly measures four areas of the organisation that are represented by the four letters- SWOT.

The strength of the organisation, represented by S, concentrates on the advantages that the organisation enjoys, which give it an edge over the other organisations that are competing with it. Such aspects include the resources, people, assets, reserves, innovations, IT systems, quality, philosophy, value, financial reserves, and knowledge, among many other positive attributes.

The weakness of the organisation, represented by W, analyzes the existing gaps in the organisations capabilities. Such gaps are potential drawbacks of the organisation because they can be exploited particularly by the competitors for their own advantage.

They include such aspects as poor reputation, poor IT system and infrastructure, weak financial position, poor leadership, and low commitment from the staff, among many other aspects.

The organisations opportunities are represented by the letter O, and mainly analyse the available chances that the organisation can exploit and make positive advancements out of them. Examples of such aspects include competitors’ vulnerabilities, market developments, new markets, innovation, and research, among many others.

The threats faced by the organisation are represented by the letter T, and consist of negative aspects with the potential of slowing down the organisation’s performance and operations. Examples include such aspects as political and legislative effects, new technologies, falling market demands, as well as loss of staff members to rivals, among other similar aspects.

The SWOT analysis also looks at the two environments within which the organisation operates; that is, the external and internal environments. The strength and opportunities analyses concentrate on the internal environment, while the weaknesses and the threats analyses concentrate on the external environment.

Porter’s Five Force Analysis

This tool proposed by Michael Porter is mainly used for assessing the existing balance of power within a competitive situation. It comprises of five dimensions that include threat of new entry, buyer power, threat of substitution, as well as supplier power, and competitive rivalry.

The threat of new entry focuses on the ease with which competitors can enter the market, and whether there exists barriers to entry. The buyer power focuses on the ease with which buyers find it possible to effect low prices and the ease with which they can change their respective suppliers.

The threat of substitution, on the other hand, evaluates whether substitute products and services exist in the market and whether the product or service is considered as a luxury or necessity.

Supplier power focuses on the ease with which the suppliers can influence price increases, and how easy it is for the companies to change suppliers. Finally, the competitive rivalry assess whether a market comprises of few or many competitors. It also analyzes the kind of products or services competitors offer in terms of attractiveness, as well as whether the customers in the market are bound by supplier loyalty.

The Boston Matrix

This model mainly provides an indicator on high growth demands or the need to have heavy investment for purposes of expanding capacity or developing brands. It comprises of four main dimensions named as stars, Cash Cows, question marks, and dogs.

The stars are projects that indicate high market share, as well as high growth potential. They may require significant cash amounts for their running, but also consume significant cash amounts. These projects have the potential of turning out as future Cash Cows.

The Cash Cows have a high market share and with low costs. Such projects sustain the running of the Stars projects, which require higher costs. They also sustain organisational research.

The Question Marks, on the other hand, are projects whose market share is low, but boast of high growth potential. Their costs of development may appear high, but the payback potential is unknown. The high costs result from such activities as research, investigation, and evaluation.

The Dogs, finally, are characteristic of low market share, as well as low growth potential. In essence, this could be draining the organisation, while consuming a lot of the management time. Dogs could include projects that were previously considered as Cash Cows, but which have ended their life cycle. They could also include a Question mark or a Star that failed to achieve its target.

The Boston Matrix model is also used to evaluate public sector organisations. Its main dimensions change to include Golden Fleece, Public sector Star, Political Hot Box, and Back Drawer Issue. The Golden Fleece concerns a service that is resourced well, but which has failed to meet an important public need. Such a service could either be looked at as overstaffed or a drain of the organisational resources.

The Public Sector Star refers to a service that is given high priority by the public, as well as the other stakeholders, and which is also likely to be funded well. The Political Hot Box, on the other hand, refers to a service that is in high demand, although it remains too new or receives inadequate resources for its effective delivery (Boak, 2010, p. 10).

Strategy Implementation

For any organisation, the implementation of its strategy often poses the most challenges (Kaplan & Norton, 2001, p. 41). There are five processes through which strategy implementation can be undertaken. These include translating strategy to terms that are operational.

This process mainly involves the balanced scorecard or strategy maps. Another process of implementation is referred to as the alignment of the organisation to its strategy. This process seeks to coordinate the varied organisational parts by using strategy themes.

A third process of implementation focuses on the making of a strategy as everyone’s everyday job. The process adopts the use of communication to educate all members within the education on the need to harmonise their own individual objectives to the organisation’s strategy. The fourth process involves the making of strategy as a continual process.

Here, regular discussions are held, while a review of the existing strategy is also done with the intention of learning from the past. A new strategy is achieved and adopted after the regular reviews and discussions iron out issues that the organisation ought to do away with.

A fifth and final process of implementation involves mobilising change by way of ownership, as well as the executive team’s active involvement. This also forms the most important factor in as far as success is concerned.

Challenges of Strategy Implementation

There are several factors that pose as a challenge to strategy implementation within an organisation. Beer and Eisenstat (2000, p. 29) list six factors that include the format of communication that is adopted in an organisation; it may involve the top down communication system or the laissez-faire style of management.

Equally, pursuit of organisational priorities that are conflicting in nature could serve as a hindrance to the achievement of a strategy’s objectives.

Where the senior management is ineffective in their operations, strategy implementation is likely bound to fail. The management of an organisation should be the organ that offers direction to the rest of the organisation, particularly where it involves strategy implementation. If this important direction lacks, the organisation would definitely lose direction (Mumford, 2003, p. 39).

Vertical communication is also of essence during the implementation procedure. Peer managers in different departments and areas must harmoniously work together as a team in order to advance the common goal of the organisation.

In some instances, peer managers consider each other as competitors, thus withholding information that would otherwise be vital in helping the organisation achieve the targets of its strategy. Such a scenario would definitely result in failure of the strategy.

The different organisational functions also need to be coordinated well to enable the achievement of organisational strategies. Where the organisation also comprises of other different businesses, there has to be high level of coordination as a way of linking the entire organisation as a unit.

It is also prudent that the organisation develops its own internal capacity of building up leadership skills. This is important because it helps in sustaining its strategic thinking and leadership culture. Strategy should be long term and attached to the leadership of an organisation to enhance its efficiency.

The above named factors hinder the achievement of strategy by way of formulating a vicious cycle that entangles the organisation, thus making it difficult to make an escape. They particularly result in poor quality of three important ingredients of strategy, which include direction, learning, and implementation. The diagram below depicts how the vicious cycle is formed and how it hinders the strategy.

Depicts how the vicious cycle is formed and how it hinders the strategy

Source: Boak (2010)

Important Capabilities in Strategy Implementation

A senior leadership style that achieves partnership and which focuses on direction and enablement should be adopted. This will ensure, in turn, that the organisation heads to the intended direction, while the strategy is also fulfilled or observed as planned. Secondly, there is need for the organisation to have its strategy and priorities in a clear manner.

This can only be achieved by way of holding thorough discussions amongst all the stakeholders concerned. Thirdly, the top team at the organisation ought to be effective in its operations and performance. The team must get involved in all the stages that are involved in as far as strategic change is involved.

The fourth critical capability in implementation involves the organisation adopting a vertical communication framework that is open. In other words, communication between managers and their subordinates should be done in an honest and factual manner in order to cultivate confidence within the stakeholders.

Effective coordination must also be achieved in the organisation by way of promoting teamwork in the organization. Business-wide initiatives must be started and new roles also initiated to achieve the desired coordination. Lastly, it is important that leadership is developed, while appropriate delegation is also achieved to sustain the strategic thinking and leadership at the organisation.

Strategic Leadership

According to Boal and Hooijjberg (2000, p. 551), strategic leadership focuses on the leadership of the organisations, instead of leadership in the organisation. It concentrates on those who have been bestowed with the organisation’s overall responsibility. Strategic leaders have specific roles that they need to undertake.

These include making strategic decisions, creating and informing the future vision, developing critical competencies and capabilities, developing structures and processes of the organisation, and managing multiple constituencies.

Other activities include choosing and developing leaders of an organisation particularly for the future generation, sustaining an organisational culture that is effective, and infusing ethical value into the culture of an organisation.

On their part, Hitt and Ireland (2002, p. 3) argue that strategic leadership is an important aspect of the organisation as it helps in the building of a company’s resources, as well as its capabilities. It places an emphasis on both the human, as well as the social capital, all of which are intangible. Another description of strategic leadership comes from Collins and Porras (2002, p. 18).

They describe it as an activity whose focus is on building the clock rather than telling the time. In other words, it is an activity that looks at the future and determines ways of making the future to be improved than the current or present time.

Both Senge (1990, p. 12) and Collins (2001, p. 64) are unanimous in their definition of strategic leadership. The two scholars term it as an important function of guiding an organisation for purposes of building its organisational capabilities.

From the above definitions, it can be deduced that leadership changes in its nature with advancement of seniority. This is because the organisation interacts more with the environment, while rising levels of complexity also add more pressure in terms of complexity. For the leader of a small organisation, the focus needs to be that of making predictions concerning future challenges that face the organisation.

On the other hand, strategic leaders of large corporations ought to deal with significant ambiguities, as well as complexities that exist in the environment. This is done by way of establishing priorities through the management of external relationships (Capon, 2008, p. 123).

The main role of a strategic leader in an organisation is to build a team that is more effective. It does not concern the magic powers that an individual CEO holds in as far as his decision making and control is concerned (Pfeffer & Sutton, 2006, p. 113).

As Pfeffer and Sutton further point out, strategic leadership involves the building of reliable systems, which can be able to work in the same way over and over again for a considerable period. It is not really about individuals and their personal capabilities.

Rather, it is focused on the ability of envisioning the company’s future and determining what will be needed in advance. Strategic leadership is about planning for a future that is not yet seen, but that which can be anticipated (Davila, et al. 2006, p. 63).

Constraints affecting a Strategic Leaders’ Performance

Strategic leaders’ performances are hindered by several constraints, which can be categorised as internal and external. The internal constraints consist of limited resources, a company culture that is strong and conservative, and a bureaucratic approach that is very strong.

On the other hand, external constraints comprises of such aspects as product and market factors, general economic conditions, and policies of the government, as well as technological changes, among other factors (Yukl, 2002, p. 181).

Executive Teams

This also forms part of strategic leadership in an organisation. Executive teams can particularly be of significant value to large organisations and require the company CEO to formulate the team (Collins, 2001, p. 64). The teams have the potential benefit of sharing the leadership burden, while contributing the individual knowledge and skills that are held by each of the team’s members.

The wide-range nature of a decision made by the team is more likely to offer a true representation of an organisation’s diverse staff. Teams also improve the communication quality amongst the individual executives, while they also promote better understanding and dedication of the executives.

However, as Yukl (2002, p. 182) points out, there is a challenge in relying on an organisation’s executive team as the strategic leadership. This is because teams often differ greatly and that can have great consequences on their operations. Equally, while some teams will tend to be dominated by the CEO, some may operate in a way that is more participative.

Executive teams are most important particularly during certain situations or circumstances. This includes when there is a rapid change within the organisation’s environment, and when the business units of an organisation require being coordinated owing to their diverse but interdependent nature (Yukl, 2002, p. 196).

Boards of Directors

Company boards of directors often comprise of senior executives, as well as the non-executive directors. Their role entails overseeing the CEO’s work, as well as that of the management team while ensuring that probity is achieved (The Higgs Report, 2003).

For the executive board to achieve excellent results in terms of offering strategic thinking and leadership, its chair needs to have strong relationship that is complimentary with that of the CEO and other board members. There also needs to be cultivated a culture that reflects openness and one that supports constructive dialogue. It is important that members trust each other and maintain mutual respect (Higgs Report, 2003, p. 23).

However, board of directors often face four common directorial dilemmas that must be achieved if the board’s role as strategic leaders is to be realized. The directional dilemmas include the board being entrepreneurial and having the ability to drive the organisation’s business forward (The Higgs Report, 2003).

This must occur while maintaining control of the business as well. It must have enough knowledge about the organisation’s working to be accountable, but avoid the daily management work or role.

Other directional dilemma involves being sensitive to pressures of short-term issues, as well as remaining resolute on the commercial requirements of the business. This should be done while at the same time acting responsibly towards the employees, the business partners, and the entire society (Garratt, 2003, p. 6).

Innovation and Change

An organisation’s company strategy needs to comprise of innovation in order to make it efficient. Organisational problems and challenges in both the external and internal environment often keep changing with time.

Thus, a strategy may perform well in enabling an organisation achieve its objective in a given year, but the same strategy may not be effective in the subsequent period because the problem or challenge might have transformed in a way. This underlines the importance of innovation in designing a company strategy (de Witt & Meyer 2005, p. 30).

As Hamel (1998, p. 8) rightly points out, innovation is achieved through involving new voices through bringing together knowledge in varied ways, getting people to involve themselves in inventing the organisation’s future, as well as introducing new ‘lenses’ and conducting extensive research.

Flexibility is important for organisations to help them achieve and manage change that is inherent in the organisational environment (Boak, 2010, p. 19). In particular, there are two different configurations, mechanistic and organic, which play a significant role in enabling an organisation to achieve change.

Mechanistic Configuration

This system breaks down operations in an organisation into separate tasks that are unique and specialised. Because of the separation of tasks, this kind of configuration also requires that the jobs be highly specialised, as well as being defined well. The system is characterised by an understandable hierarchy that depicts how orders and communication within the organisation should flow.

At the top end of the hierarchy, there is the knowledge, expertise, as well as the authority of the organisation. Instructing and issuing of commands is mainly done by the more senior members of the organisation, while the main communication pattern adopted is the vertical format that connects the bottom and the top of the organisation (Boak, 2010, p. 23).

Organic Configuration

This system mainly entails a broad definition of jobs with regular adjustments and re-defining being done. The description of the methods is done in a less precisely manner, while more autonomy is left for the individuals. This mainly is done to avoid putting too much limitation on the individuals.

Other characteristics of the system include a uniform spread of knowledge and expertise throughout the organisation, and lateral discussions involving colleagues in order to achieve coordination. Another significant practice is an elaborate informing and advising with minimal instructing and commanding (Boak, 2010, p. 26).

Selected Strategic Process: Coca Cola Global Marketing Strategy

The Coca-Cola Company strategy focuses on achieving cost leadership throughout the world (Vrontis & Sharp, 2003, p. 289). The company has mainly adopted differentiation as its central strategy. The company has achieved this through perceptions of superiority in product quality that surpasses rival companies in the market. The differentiation is also achieved through high brand image, as well as recognition.

To further enhance the differentiation, Coca-Cola uses extensive promotion and unique packaging of its products. The Coca-Cola bottle, for instance, is a recognised symbol internationally. The contoured bottle design was revitalised in 1999 by the company in a move that capitalised on a resource other competitors of the firm lack as an asset (Vrontis & Sharp, 2003, p. 290).

Coca-Cola also takes advantage of its geographic global presence to achieve its strategic goal of being a global leader in terms of cost. The Ansoff’s matrix can clearly illustrate the strategic evolution of the Coca-Cola Company.

The market penetration strategies for its current products include increasing market share, increasing product usage, increasing product use frequency, as well as increasing the quantity used, and introducing new application (Vrontis & Sharp, 2003, p. 291).

For the new products, Coca-Cola’s product development strategies involve undertaking product improvement, extending the product line, and introducing new products within the same markets. The market development strategies for new markets involve expanding the markets to cater for the existing products, expanding the geographic scope of the company, as well as targeting new segments.

The diversification strategies focusing on the new markets include vertical integration in which case the firm will achieve both forward and backward integration (Vrontis & Sharp, 2003, p. 294). It also involves diversifying into related businesses, also referred to as concentric diversification, and diversifying into unrelated businesses. This is also referred to as conglomerate diversification.

In the onset of Coca-Cola, the company only had one core product with its geographical location being in the United States. Coca-Cola pursued a market penetration strategy over time, which mainly focused on increasing the core product’s usage, as well as expanding the market share.

With the primary objective having been observed, there was need for the company to change its strategy in order to reflect on its changing future targets and goal (Vrontis & Sharp, 2003, p. 294).

The change in organisational objective involved launching the company’s products into the foreign market. A shift in strategy towards market development strategy was the main focus with the company aiming mainly at geographical areas, as well as target segments. The company has been successful in its operations within the foreign markets over the years.

However, a further development of the foreign markets has seen Coca-Cola faced with the need to achieve even further penetration of the foreign market.

At this juncture, the company’s strategy was changed once again, to product development strategy, with the main focus being on development of new products in addition to the core product. Thus, Coca-Cola introduced Fanta, Diet Coke, and Sprite (Vrontis & Sharp, 2003, p. 302). These products have equally succeeded to transform into Coca-Cola’s core products.

Market penetration continues to remain an objective of the company as Coca-Cola seeks to further establish itself in the market. This need has seen the company diversify from its original business, which dealt with operating strictly within the carbonated soft drinks sector (Vrontis & Sharp, 2003, p. 303). The diversification strategy is mainly focusing on broadening the business operation of Coca-Cola.

Thus, Coca-Cola today does not only focus on carbonated drinks, but rather has redefined its business into ‘ready packaged liquid refreshments’. The newly introduced products include fruit juices, bottled water, as well as new ‘ready to drink’ tea markets (Vrontis & Sharp, 2003, p. 306).

The strategic leadership at Coca-Cola can easily be depicted by the manner in which the company has successfully pursued its strategies. It is through strategic leadership that the Coca-Cola Company has managed to grow to the position that it occupies today. Future challenges still abound, even though the company remains to be the most successful soft drinks manufacturer in the world.

Competition from rival firms, such as PepsiCo, must be outwitted by the company’s leadership if Coca-Cola has to maintain its leadership position. Because of the geographical presence of the company, strategic thinking mainly involves all the country directors.

Different markets face varying businesses challenges and therefore the strategic leadership, although covers the entire world, also narrows down to individual national markets. The respective country directors, thus, involve their subordinates in the strategic thinking process, with the resultant contributions being reflected at the corporate level globally (Vrontis & Sharp, 2003, p. 306).

Recommendation

In seeking to sustain its low cost leadership focus, Coca-Cola should attempt to remove all the extras from its products and offer a no frills products. The contents of its products can create additional advantage to the company through this strategy.

For instance, the company can consider using alternative materials that are less costly, but still maintain the same tastes of its brands. However, this is a very dangerous strategy and should be approached with utmost caution, particularly given that any slight change in the product taste can potentially dissuade the market.

The Coca-Cola Company needs to enhance its communication system to enhance the achievement of its strategic planning. With operations spreading almost throughout the entire world, achieving a single strategy for the entire company may be challenging, particularly if the communication structures are less effective.

Thus, the company should focus on building a highly elaborate communication system that will ensure fast and accurate capture and relay of information.

The executive team should be used as the company’s strategic thinking and leadership. The executive team should involve all the country directors as a means of achieving an elaborate and efficient strategy for the company.

The global presence of the company also implies that it faces varying situations in its overall operations. Thus an executive team drawn from all the various national markets will enable the company to address all such issues in its strategic planning. Using such a team would also enhance interaction between the mangers drawn from the various countries.

Conclusion

Strategy is an elaborate plan that ensures an organisation is able to face the future with the hope of achieving its objectives. Organisations face numerous challenges in both their internal and external environments, which have the potential of limiting the achievement of objective. These challenges are catered for by the strategy adopted.

The formulation of strategy depends on the leadership of an organisation and its ability to think strategically. The chief executive at the company must be able to visualise the company’s future and come up with plans that seek to enhance the company’s position and performance even further. Several models can be used by managers to evaluate their internal and external environments before deciding on their strategy.

These models include SWOT analysis, Porter’s five force analysis, and the Boston Matrix. The SWOT analysis evaluates on the strength, weakness, opportunities, and threats with respect to a given organisation. Porter’s five-force model evaluates the entry barriers to a market, competition, existence of substitute products, as well as the bargaining powers of the buyers and the suppliers.

The Coca-Cola Company has succeeded as a leading global manufacturer of soft drinks by adopting a timely mechanism of changing and renewing its strategy. Over its existence, Coca-Cola has pursed market penetration, market development, and diversification strategies.

The market penetration strategy enabled the company to introduce its core product to the market, while the market development strategy enabled it to expand into the foreign market. The diversification strategy enables Coca-Cola to redefine its business from soft drink manufacturing to include other business products like bottled water and juice products.

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