In analyzing the internal and external environment of the two companies, Walmart and Coca Cola, we shall need to use an environmental scan.
Environmental Scanning: This involves “careful monitoring of an organization’s internal and external environments for detecting early signs of opportunities and threats that may influence its current and future plans. In comparison, surveillance is confined to a specific objective or a narrow sector” (Carpenter & Sanders, 2009).
Internal Environmental and External Environment
Coca Cola’s internal environment is basically comprised of its business controls which comprise of fundamental attributes including: proficiency in production technique, by utilization of its workforce’s management expertise and suitable communication networks. Continuous monitoring of the internal environment has gone a long way in avoiding ineffectiveness in any stage of the production line.
Concerning the external environment of Coke, it has been observed that it consists of dominant forces which can bring transformations that produce opportunities and threats in the beverage market. The PEST analysis is an instrumental tool for evaluating the marketing environment as it looks into Political, economic, social and technological aspects of the prevailing environment.
Coca Cola PEST analysis
Political: Negative political circumstances in international markets can upset Coke’s businesses given that 71% of its net operating revenues come from sales in worldwide markets.
Economic: Alterations in foreign currencies and instability in interest rates distress financial results due to the fact that majority of Coke’s revenues and expenses are in foreign currencies.
Social: As people pursue healthier lifestyle trends, the non-alcoholic beverage industry is affected because of the aspect of diet sodas and bottled water and the demand connected to them.
Technological change: Technological advancements like internet can be used for efficient advertising. Cans and plastic bottles (borne of new technology) that come to substitute the previous glass bottles make the product more appealing. All in all, new technology amplifies the quality of the product (Cheesman, 2004).
Walmart PEST analysis
Political: Walmart ascertained that they were vigilant of the political situation of all countries they have conducted their business in and have also made sure that they have a rational stand regarding political issues. Wal-Mart is constantly prepared for any difficulties pertaining to the political sector.
Economic: Walmart’s economic standing is doing well and they strive to advance their products to deliver the best to their customers. Hand in hand with the internal economic condition of the firm, the economy of the country should also be taken into account. Walmart first and foremost vets the economic position of the country they would like to operate in before concluding whether or not they will have a branch there.
Social: Walmart strives to ascertain that the products they offer in the market will be acceptable to the public. They do not approve the delivery of products they know will cause anxiety or protests among various groups in the society. Walmart ensures that they have a good association with diverse segments in the society although some are discontent with them. Walmart also participates in social activities that incline towards developing a better affiliation between them, the customers and the society they are operating in at large.
Technological: Walmart offered fresh innovations in its technological facet. They use high cutting-edge cash registers and superior performing slot machines. Their security systems are also advanced. Due to the fact that technology is a rapidly changing phenomenon, Walmart strives to ensure that they are up-to date with what is happening so as to adapt to these changes in a timely fashion. This is in effect aimed at giving them a competitive edge with any other company that may be using advanced technology too.
Competitive advantage and strategies used
Competitive advantage is the outcome of matching core competencies with the opportunities available. Some of the main competitive strengths of Coke are: its wide acceptance by the customers, dedicated associates, rising marketing abilities and outstanding network of bottlers and distributors. Coke has a prominent marketing sense and a brand name that is well renowned (Wheelen & Hunger, 2010).
Walmart, on the other hand, has been able to retain a competitive advantage allowing it as a company to use many strategies. However their most outstanding (and effective strategy) is low prices. Moreover, their employees are treated well, and their isles are clean and well organized. Due to its big size, Walmart is able to get big discounts from suppliers and they in turn pass that saving down to their customers.
Opportunities: Companies often use the swot analysis to analyze various aspects of the environment for example both WalMart are aware that demand of fast moving consumer goods within various regions are expanding and thus the organizations are expanding their product portfolio and services to earn more revenues.
Threats: The coca-cola company/Walmart through research have understood that newer upcoming companies and older rivals are rapidly changing and bringing about stiffer competition and thus the companies have dedicated a lot of funds to ensure that they stay ahead of the game within their environment.
Strengths: One of the key strengths of Coca-Cola Company/Walmart is that it has a wide range of brands. The Coca-Cola Company/Walmart are located in strategic locations which as quite advantageous and convenient for consumers. Furthermore, the Coca-Cola Company/Walmart has experienced top and well experienced employees who assist in making the companies quite unique. The presence of strengths enable these companies capitalize on environmental opportunities as they reveal themselves.
Weaknesses: Walmart, for example, heavily reles on the United States and the Americas market instead of global markets which may offer more but on the other hand understanding your weaknesses can be used to the advantage of the organization and this is how the company has avoided unnecessary risks.
By carrying out routine checks on the business environment and being alert on the on-goings in the business, the firm can gain great advantage in achieving its short term and long term goals and objectives. Another key element to a successful business is doing an environmental scan, identifying and understanding the risks (and other issues) underlying and attempting to manage them in the most appropriate way.
Thus, by doing this, the company will ensure that it remains efficient and more so, profitable. Therefore, the management should ensure that environment scans are constantly done in order to check on any threats that may result in losses or inefficiency in both the in external or external environment and at the same take advantage of new opportunities.
Carpenter, M. A. & Sanders, W. G. (2009). Strategic management: A dynamic perspective concepts and cases. Upper Saddle River, NJ: Pearson Education.
Cheesman, H. R. (2004). Business Law: Legal, E-Commerce, Ethical and International Environments. Upper Saddle River, NJ: Prentice Hall.
Wheelen, T. L. & Hunger, J. D. (2010). Concepts in strategic management and business policy. Upper Saddle River, NJ: Pearson Education.
Analysis of Walmart and Coca Cola