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The report explains the P.E.S.T.L.E Analysis is a framework which enables firm to scan environment &analyse any decision

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P.E.S.T.L.E Analysis

Introduction

The market is changing frequently with arrival of new edge of competition. Some changes are in control of the organization and some changes are not in control. Those which are beyond of control are called systematic factors happen in environment. Pestle analysis is a framework which enables firm to scan the environment and analyse and take any decision such as expansion much easier. Coco-Cola is a leading and largest beverage Company incorporated in the year 1992 situated in America. This report aims to screen the external environment of Coco Cola.

Pestle Analysis

Political environment- Coco Cola is subject to many rules and regulations such as food and drug administration with regard to non-alcoholic beverages under the food category. Company is also subject to occupational safety and Health Act to not only state, local, federal and other regulations of foreign (Rothaermel, 2015). Change in these laws and regulations impact the operations of Company positively and negatively. Furthermore, civil conflict, risk of terrorist impact Company business in terms of forming strategic alliance with local producers and enhance distribution network.

Economic environment- Economic factors are related to change in interest rates, inflation, deflation, unemployment rate and tax rates etc. Any change in these rates impact the organization in many ways. Products of Coco Cola are distributed all over the world. Different countries possess different customs, tastes, desires and cultures which has to be adapted and adjusted by Company. Coco Cola updated and changed in process and production techniques as per the need and desires of different customer of different countries. New flavours have been created to accommodate customers (Salmons, 2012). In the year 2001, government of US took antagonistic action for turning economy up. One of the decisions was to provide low cost loans and use such loan in research and development of new products has benefitted Coco Cola in great sense (Kraig, 2013). Financial crisis in the year 2007-08 also led to negative impact on sales of Company as there was less money flow in the market on the part of banks and customers.

Social factors- Social factors are related to preferences, demand, choices and lifestyle of customers. The sales of any Company are largely dependent on these factors. If the people will prefer non-alcoholic drink in any culture then Coco Cola will have to sale non-alcoholic drinks. For instance in US people are healthy and demonstrating interest in healthy lifestyles. They are increasing sales of non-alcoholic beverages. Customers are switching to bottle water such as Coco Cola light or Zero (Self, et. al., 2012). Customers who are around the age of 35-55 are more conscious for their nutrition and large population in US are baby boomers. More concerns are made to life choices as this will impact their life expectancy and demanding healthier drinks.

Technological factors- Actual results variants from expected results due to frequent change in technology. The way of advertisement is changed with the advent of social media platform for marketing. Advertisement is regularly evolving and thus if any Company is not able to utilise such channels facing drop in sales (Arendt and Zannini, 2013). Plastic bottles and can enhanced the sales of Coco Cola due to ease in carry and use. Coco Cola enterprises is also using modern technology in the assurance of quality and speedy delivery of Coco Cola products and opened largest factories of soft drinks which produces Coco Cola cans at fast rate which is more than a machine gun fire a bullet.

Legal factors- With the advancement in technology, production and running of operations have increased the importance of legal compliances. Now, non-compliances of laws and regulations can result in billions of fines for Company. Any carelessness in complying of laws also interrupts the general course of business. From the labour to quality of products number of areas are there where compliance is required. It is always advisable to have separate legal department of compliances which can timely reports to required authorities (Warner, 2010). Coco Cola faced tussle in terms of quality and products composition and also on labour practices. Thus, focus is shift to the ethics, corporate governance and compliances by Company. Company is also running compliance and ethics program in order to ensure that associates comply with law from any part of the world.

Environmental factors-  Society is becoming more conscious towards environment day by day and also expect from organization to make efforts in the improvement of environment condition and prevent releasing of any harmful toxin or gas. There are many rules and regulations come up for the safety and security of environment which requires organization to be in limit else pay hefty fines (Hassan, et. al., 2014). There is for environmental reporting by organization to stakeholders providing the activities and efforts made with respect to environment safety. In UK Coco Cola is known for smart productivity scheme in boosting of recycle of materials packaging and make others agreed on priorities towards the sustainable development and production. Coca Cola is also successful in selling of 100 billion of single use plastic bottles per year. But Company is just covering 50% of the bottles for recycling which implies a lack of ambition of Company to deal with largest challenge of plastic polluted ocean.

Conclusion

Thus, pestle analysis has been found to be effective in evaluation and assessment of external environment which is not in control of Coco Cola. The analysis provided a warning signal in terms of making any change such as entering in strategic alliance, entering in new areas for selling etc.

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