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By the year 2000, another method was introduced which was named STEEPLE. This method have a new factor i.e. ethics. This factor was added due to the growing awareness about corporate social responsibility and business ethics.
John Kew, John Stredwick, (2005), Business environment: managing in a strategic context, CIPD Publishing
Analysis of the environment of Coca-Cola
Social Factors:
Over the past 5 years the numbers of people who are conscious about their health have increased exponentially. This is especially true in USA where more and more people are practicing healthier lifestyles. Researches indicate that soda and other sweetened drinks are the chief calorie sources in the diet of an American. Due to this fact, doctors and nutritionists advice people to reduce the daily consumption of drinks like Coca-Cola since they can be harmful to their health. In USA, drinks like Coca-Cola and Pepsi were found to be the main reason for obesity among young children and women. Studies have also revealed that regular intake of Coke and the like products reduce the absorption of minerals like Calcium, Magnesium, Ascorbic acid, Riboflavin and Vitamin A. Thus the company is facing a setback from the home country itself. In 2005, many lawyers and environmentalists charged a lawsuit against Coca-Cola and other soft drinks industry for excessive selling of their brands in schools.
Coca-Cola also faced much resistance from the Eastern countries where there was a high consumption of tea and other milk fermented drinks. So the company in 2010 introduced a new drink named Sprite Tea which was a mix of sprite and tea. Before that in 2008, it launched a tea brand named Yuang Ye and Jackie Chan was the brand ambassador of the product. This was launched in China and other eastern countries. In 2004, the company also launched a wellness drink in Japan for women.
Apart from that there are number of social ventures into which the company is into. It is providing resources like books and scholarships to needy children. Apart from that it has introduced a program in Pakistan that is into providing basic education to children. In 2004, the company donated €50,000 to SOS Kinderdorf, a children's charity organization in Austria. A sum of 1 million USD was also donated for awareness against HIV/AIDS in 2007.
Technological Factors
Coca-Cola is always a pioneer institution in bringing out innovative technologies.
In 2007, it came up with a new technology that would help customers to have ice-chilled coke wherever they want. This technology will work in such a way that when the cap of the bottle is opened, the mechanism inside will make ice out of the drink inside. The company also introduced this technology in 2008 with a new product called Sprite Super Chilled.
In the same year, the company announced to use coolers and vending machines free of HFC in the venues of 2008 Olympic Games to show its commitment towards environment protection. The company developed this technology together with Green Peace.
In the year 2009, the company introduced another technology into their vending machines. These Freestyle machines will be having touch screens and the customer can mix up to a variety of 100 drinks at a single time. Popsci.com has named this as the "Most Advanced Soda Fountain Ever".
In 2009 itself the company introduced bottles which are partially made from plants and hence can be recycled completely. This bottle also has a reduced carbon emission when compared with ordinary plastic bottles.
The company has also introduced innovative technologies in the entertainment field. In 2006, the company installed Dhoom 2-Juke boxes in and around Delhi (India). A limited series of Coke bottles were then brought into the market whose labels contained specific codes. When these labels are swiped into the Juke boxes, the customers could see the exclusive visuals of Dhoom 2 movie.
Economic Factors:
The company went through a major economic phase in the past five years.
The income tax payment has increased from 1.5 billion USD in 2006 to 1.9 billion USD in 2007. But the capital expenditures have also increased from 1.4 billion USD in 2006 to 2 billion USD in 2008. Still the company managed to have revenue of 31.9 billion USD in 2008.
The above graph shows the fluctuations in the stock prices of Coke from September 2009 to February 2010.
In 2008, the world faced the global economic crunch and this naturally had an impact on the company. The main reason for this was that 75% of company's sales is derived outside of North America.
But, reports revealed that the company was not much affected by the economic downturn. The first quarterly results of 2009 showed that the sales have increased by 2 percent in USA and by 3 percent around the world. This was because the company positioned it well in the international markets.
The company also had a remarkable increase in business in India. In 2009, the company's business increased by 31 percent in this country despite the various environmental protests against it. But the final quarter results of 2009 showed a decrease of 18 percent in the company's profit worldwide.
In 2010, the company registered revenue of 7.53 billion US dollars in the first quarter. This shows that the company expects to have a bright year ahead.
Environmental Factors:
The company has been accused of a number of environmental issues around the world.
In India, Coca-Cola has been nicknamed even as 'Killer Coke' in certain areas. It was feared that Coke contains hazardous levels of pesticides that could cause numerous health issues. A study conducted by Centre for Science and Environment (CSE), New Delhi, revealed that Coke and Pepsi contains toxins like lindane, DDT, malathion etc. These pesticides if consumed could even result in Cancer or irreparable damage to immune system. CSE also found that the Coke that is sold in India contained 30 times the permitted level of pesticide residues as per European Union regulations.
1n 2005, the Kerala State government banned the production and selling of Coke but it was overturned by the state high court in the same year itself.
The company was also blamed for over use of water resources and thus depleting the ground water table. The 16$ bottling plant in Kerala was shut down in 2004 due to severe decay in both quantity and quality of water in the surrounding areas. The plant there uses almost 900,000 litres of water every year for its purposes. According to the renowned environmentalist Vandana Shiva, it takes almost 9 litres of water to produce one litre of Coca-Cola. In the holy city of Varanasi, India, the Coca-Cola plant near the Ganges has been accused for emitting waste water which contained toxins into the river. The packaging of the bottles has also been a cause of concern to the public and alleges to have serious environment impact. The company still claims to be environmental friendly in all its ventures. The Coca-Cola environmental foundation is said to be actively participating in environment issues like waste management, recycling etc.
Political Factors:
As far as the political factors are concerned, they affect the company in meager way. It is because the governmental activity which is the major part of political environment has a little impact over the company.
Over the recent years the company met with a lot of protests in India and Middle East. Still it was able to outrival PepsiCo by a small percent. In the last century there have been issues in Israel regarding the construction of a plant over there. The company was accused of boycotting Israel in order to appease the Arab League. These still had an impact over the market of Middle East.
The environmental laws have some impact over Coke and other companies operating in the same industry. Over the past two years, the government of India has introduced some modifications to the existing laws that are likely to affect Coke. But the company is introducing changes in the plants as well as implementing proper wastage handling system and this would reduce the impact of these laws.
Tax system in India is a little complicated because it involves a variety of regulations. The license needs to be updated every time the production capacity is increased. This can pose certain problems to the company.
Ethical factors:
The Coca-Cola Company has been involved into a number of ethical issues over the past. The major controversies include those like violation of human rights and following unethical business practices. The company has been charged of monopolistic and other discriminatory practices which affected its goodwill.
In 2005, the European Union found that the company's business methods suppressed competition and hence the company had to end its dealings with bars and shops for stocking its drinks. In the same year itself, Coca-Cola Export Corporation was charged a fine of 68 million dollars for unfair commercial practices.
In the early 2000s the company was also criticized for racial discrimination in its US offices and had to pay a hefty fine of 192.5 million dollars. |
