In late 2008, executives at Coca-Cola had to decide what to do with a fan-created page on Facebook that had amassed over one million followers in three months. From a legal point of view the fan-created page was in violation of Facebook's terms of service, because a non-copyright holder was using the imagery and logo associated with a known brand. Facebook contacted Michael Donnelly, Group Director, Worldwide Interactive Marketing for The Coca-Cola Company, to let him know that he was in the position to take down the hugely popular fan-created site or, conversely, he could take it over and make it an official marketing channel for the company. Coke was already revisiting its social media policies, with the Diet Coke and Mentos user-generated video incident fresh in its memory. Those videos, which featured elaborate geysers with Diet Coke as their main ingredient, were among the most viewed online videos at the time but were not initially sanctioned by the company. Donnelly knew that opening up the brand to creative consumers was necessary, but he and his team had to figure out how and to what extent they should do so while still protecting one of the world's most valuable brands.
Swot Analysis of "Coca-Cola on Facebook" written by John Deighton, Leora Kornfeld includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Coke Donnelly facing as an external strategic factors. Some of the topics covered in Coca-Cola on Facebook case study are - Strategic Management Strategies, Change management, Corporate governance and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Coca-Cola on Facebook casestudy better are - – there is increasing trade war between United States & China, digital marketing is dominated by two big players Facebook and Google, central banks are concerned over increasing inflation, technology disruption, supply chains are disrupted by pandemic , increasing transportation and logistics costs, geopolitical disruptions,
increasing government debt because of Covid-19 spendings, increasing commodity prices, etc
Introduction to SWOT Analysis of Coca-Cola on Facebook
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Coca-Cola on Facebook case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Coke Donnelly, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Coke Donnelly operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Coca-Cola on Facebook can be done for the following purposes –
1. Strategic planning using facts provided in Coca-Cola on Facebook case study
2. Improving business portfolio management of Coke Donnelly
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Coke Donnelly
Strengths Coca-Cola on Facebook | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Coke Donnelly in Coca-Cola on Facebook Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Coca-Cola on Facebook Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Coke Donnelly digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Coke Donnelly has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Effective Research and Development (R&D)
– Coke Donnelly has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Coca-Cola on Facebook - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Coke Donnelly is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Coke Donnelly is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Coca-Cola on Facebook Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Coke Donnelly is one of the most innovative firm in sector. Manager in Coca-Cola on Facebook Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Sustainable margins compare to other players in Sales & Marketing industry
– Coca-Cola on Facebook firm has clearly differentiated products in the market place. This has enabled Coke Donnelly to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Coke Donnelly to invest into research and development (R&D) and innovation.
Training and development
– Coke Donnelly has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Coca-Cola on Facebook Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Ability to recruit top talent
– Coke Donnelly is one of the leading recruiters in the industry. Managers in the Coca-Cola on Facebook are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Organizational Resilience of Coke Donnelly
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Coke Donnelly does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High brand equity
– Coke Donnelly has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Coke Donnelly to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Analytics focus
– Coke Donnelly is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by John Deighton, Leora Kornfeld can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Low bargaining power of suppliers
– Suppliers of Coke Donnelly in the sector have low bargaining power. Coca-Cola on Facebook has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Coke Donnelly to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses Coca-Cola on Facebook | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Coca-Cola on Facebook are -
Slow to strategic competitive environment developments
– As Coca-Cola on Facebook HBR case study mentions - Coke Donnelly takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Slow decision making process
– As mentioned earlier in the report, Coke Donnelly has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Coke Donnelly even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Capital Spending Reduction
– Even during the low interest decade, Coke Donnelly has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
High operating costs
– Compare to the competitors, firm in the HBR case study Coca-Cola on Facebook has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Coke Donnelly 's lucrative customers.
Interest costs
– Compare to the competition, Coke Donnelly has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Coca-Cola on Facebook HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Coke Donnelly has relatively successful track record of launching new products.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Coca-Cola on Facebook, is just above the industry average. Coke Donnelly needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Lack of clear differentiation of Coke Donnelly products
– To increase the profitability and margins on the products, Coke Donnelly needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
Coke Donnelly has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Need for greater diversity
– Coke Donnelly has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Low market penetration in new markets
– Outside its home market of Coke Donnelly, firm in the HBR case study Coca-Cola on Facebook needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Coca-Cola on Facebook | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Coca-Cola on Facebook are -
Creating value in data economy
– The success of analytics program of Coke Donnelly has opened avenues for new revenue streams for the organization in the industry. This can help Coke Donnelly to build a more holistic ecosystem as suggested in the Coca-Cola on Facebook case study. Coke Donnelly can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Coke Donnelly in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
Leveraging digital technologies
– Coke Donnelly can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Coke Donnelly to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Coke Donnelly can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Coke Donnelly to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Coke Donnelly to hire the very best people irrespective of their geographical location.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Coke Donnelly can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Building a culture of innovation
– managers at Coke Donnelly can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.
Better consumer reach
– The expansion of the 5G network will help Coke Donnelly to increase its market reach. Coke Donnelly will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Coke Donnelly in the consumer business. Now Coke Donnelly can target international markets with far fewer capital restrictions requirements than the existing system.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Coke Donnelly can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Coke Donnelly can use these opportunities to build new business models that can help the communities that Coke Donnelly operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Using analytics as competitive advantage
– Coke Donnelly has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Coca-Cola on Facebook - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Coke Donnelly to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Coca-Cola on Facebook External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Coca-Cola on Facebook are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Coke Donnelly can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Coca-Cola on Facebook .
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Coke Donnelly can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– Coke Donnelly can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Coke Donnelly in the Sales & Marketing sector and impact the bottomline of the organization.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Coke Donnelly will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Consumer confidence and its impact on Coke Donnelly demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Coke Donnelly.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Coca-Cola on Facebook, Coke Donnelly may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
Regulatory challenges
– Coke Donnelly needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Coke Donnelly with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High dependence on third party suppliers
– Coke Donnelly high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Coke Donnelly in the Sales & Marketing industry. The Sales & Marketing industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Weighted SWOT Analysis of Coca-Cola on Facebook Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Coca-Cola on Facebook needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Coca-Cola on Facebook is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Coca-Cola on Facebook is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Coca-Cola on Facebook is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Coke Donnelly needs to make to build a sustainable competitive advantage.