PEST CASE STUDY: COCA COLA
PEST analysis examines changes in a marketplace caused by Political, Economical, Social and Technological factors.
Look at the following statements abstracted from various sources, and group them under the following headings: Political; Economic; Social; Technological
After the shock of the attacks on September 11, 2001, and despite the debilitating effect of the Iraq War, the USA’s economy had returned to sustained growth by 2006. However, things have changed quite dramatically recently; following the sub-prime loan catastrophe in the housing market, the economy is again in trouble. Most economists are now predicting a severe recession (negative growth for ...view middle of the document...
Many people face bankruptcy, and mortgage foreclosures affect 1 in every 500 households in the USA. The poor and disadvantaged are being particularly affected by this crisis.
The Federal Reserve (the USA’s central bank) is doing all that it can help the economy recover. Lower interest rates should ultimately strengthen consumer demand by encouraging greater use of credit again. Companies (such as Coca-Cola) should be more ready to expand and increase the use of debt as a result of cheaper borrowing; borrowed funds can be used for research for new products or new technology. Lower borrowing costs allow companies to sell their products for less and thus spending, and ultimately the economy, are stimulated.
At home, many citizens in the USA are practising healthier lifestyles. This has affected the non-alcoholic beverage industry in that many are switching to bottled water and diet colas instead of beer and other alcoholic beverages. The need for bottled water and other more convenient and healthy products are important in average day-to-day life as speedy thirst quenchers..
In particular, older consumers – the “baby boomer” generation – are increasingly concerned with nutrition. Their average life expectancy is forecast to be well into their 90’s. Demand from this group will continue to affect the non-alcoholic beverage industry by increasing demand overall, and, specifically, for healthier beverages – less sugar, less harmful chemicals, more beneficial ingredients. There are leaks that there is a Viagra Coke under development.
Non-alcoholic beverages fall within the “food” category under the USA’s Food and Drug Administration. The Government plays a role in controlling the manufacture of these products by mandatory regulation. There are similar EEC laws. Failure to meet these standards results in severe penalties: fines and potential closure.
Other recent changes, including those in consumer laws, accounting standards, food standards, taxation requirements, (including tax rate changes, new tax laws and revised tax law interpretations) and environmental laws in domestic or foreign jurisdictions may also affect Coca Cola’s business.
Manufacturing technology for sort drinks continues to advance, and Coca Cola has taken advantage of developments to increase productivity considerably. For example, the introduction of cans and plastic bottles has increased sales markedly, as these are easier to carry, lighter and more environmentally friendly than traditional glass bottles. The materials used in the new forms of packaging are specially chosen for their ease in recycling.
New technology has also been used to improve quality and the product range. This has not always met with complete success, however. The introduction of Dassani, a bottled water produced by reverse osmosis of tap water was a marketing and financial disaster for Coca Cola which resulted in a loss of £100 million. The problem was not the ultra-pure water but the additives...