Ways to gain a competitive advantage

One: Competition is one of the most inevitable forces in today’s business world. Companies are seeking ways to gain a competitive advantage over competitors. Competitive advantage enables companies to differentiate themselves and their products, to create superior value for its customers and to serve them better than its competitors (Al Badi, 2018). While formulating a strategy, companies will evaluate the strategies of its competitors. Analyzing competitors helps to discover its weaknesses as well as identify opportunities and threats in the industry (Abraham, 2006). Three are many strategies used to evaluate competition in the market. One strategy is the formulation of a Competitive Profile Matrix (CPM).

Coca-Cola is amongst one of the leading soda beverage brands in the industry with a portfolio of over 500 beverage brands. Like most companies, Coca-Cola is faced with implementing strategic plans and evaluating its competitors. Pepsi Co. has been one of Coca-Cola’s primary competitors since the late 19^thcentury. Their products are very similar in ingredients and taste. Dr. Pepper is a major competitor of Coca-Cola also. Dr. Pepper has a portfolio of more than 50 brands. In recent years, Dr. Pepper has made a series of strategic acquisitions to grow its business and customer base. Although Coca-Cola has several competitors, the company still has brand recognition and a loyal customer base.

Competitive Profile Matrix (CPM)

As explained in our text, the Competitive Profile Matrix (CPM) reveals how a company compares to its major competitors across a range of key factors (David et. al., 2019, p. 83). Managers often use CPM as a valuable tool to differentiate the competition within an industry. The CPM provides the necessary information of competitive advantage based on key success factors and serves as the foundation for a company’s strategy (Zimmerer, Scarborough, & Wilson, 2008). CPM’s can assist managers in making strategic decisions.

The following table shows a summary of Coca-Cola’s CMP in comparison to its major competitors, Pepsi and Dr. Pepper. The CPM highlights the critical success factors which are key areas which must be performed at the highest possible level of excellence if company’s want to succeed in a particular industry (Zimmerer et. al., 2008). The critical success factors are factors that are either viewed by the customer as valuable or which provide the firms a significant advantage in the market. The critical success factors are weighted based upon relative importance.

The CPM analysis reveals that Coca-Cola is the stronger competitor in the industry. The relevant strengths for Coca-Cola include: advertising, global expansion, financial position, and market share. It is also important to note that Pepsi has a greater strength in customer loyalty. Dr. Pepper is ranked third overall. However, the company has a competitive advantage in their product prices.

References

Abraham, S. C. (2006). Strategic planning: a practical guide for competitive success. Mason Ohio: Thompson.

Al Badi, K. S. (2018). The Impact of Marketing Mix on the Competitive Advantage of the SME Sector in the Al Buraimi Governorate in Oman. SAGE Open. https://doi.org/10.1177/2158244018800838

David, F. R., & David, F. R. (2019). Strategic management: a competitive advantage approach, concepts and cases (17^th ed.). Upper Saddle River: Pearson.

Zimmerer T.W., Scarborough, N.M., & Wilson, D. (2008). Essentials of entrepreneurship and small business management (5th ed). NJ: Prentice Hall

Two:Within a free open market, competition is everywhere. Globalization has grown due to declining trade barriers and changes in communication, information, and transportation technology (Hill & Hult, 2019, p.15). An external assessment allows an organization to successfully monitor and manage changes and shifts in demands within the market. Economic, political, and social issues are critical to business success. A strategic analysis consists of internal and external components that identify strengths, weaknesses, opportunities, and threats (Saint Leo University, n.d.). Strategic planning allows a business to expand, identify opportunities and threats, and analyze its position to competitors to improve market shares. The ten external forces can be divided among five broad categories: economic, SCDE, political, governmental, and legal, technological, and competitive forces (Saint Leo University, n.d.). Identifying and prioritizing external opportunities and threats is critical to business survival.

Coca-Cola is the largest producer of beverages with more than 500 brands. With 19 beverages being offered in low and no-sugar options (David, 2018). The four best-selling Coca-Cola Company products are Coca-Cola, Diet Coke, Fanta, and Sprite. For the past decade, the company has faced declining revenues. In 2017, the brand peaked at a 15% loss. As a result, net income is negatively affected as well. In 2005, the company’s sales in diet beverages had dropped at a combined rate of 34%. Annually Coke produces 110 million bottles, consumers were not satisfied with the brand’s environmental footprint, so in 2017 the company launched the ‘World Without Waste” initiative (David, 2018). Updated strategic management is needed to satisfy the 5% growth demanded by shareholders.

A Competitive profile Matrix (CPM) is a management tool that compares a company with its top competitors (Saint Leo University, n.d.). The benefit of a CPM is the ability to compare and analyze competitors side by side quickly. A CPM consists of critical success factors, weight, rating, weighted score, and total weighted score on a score between 1.0-4.0. By creating a CPM, a brand understands its current position.

The following table provides an analysis between Coca-Cola and its top competitors, Pepsi and Dr. Pepper.

Based on the CPM summary with good intuitive judgment, Coca-Cola is still ahead of its top competitors. However, Pepsi is becoming more competitive with its advertising strategies, global expansions, and product quality. Coca-Cola should strive to improve customer loyalty initiatives and brand reputation ASAP. Multinational firms need a systematic external-audit system because external forces among foreign countries greatly vary (David, et al., 2019, p.86). Additional useful tools are the EFE Matrix and Porter’s Five Forces Model.

References

David, F. (2018). Coca-Cola Company, 2018. Retrieved March 18, 2021, from https://saintleo.brightspace.com/d2l/le/content/11…

David, F. R., & David, F. R. (2019). Strategic management: a competitive advantage approach, concepts and cases (17th ed.). Upper Saddle River: Pearson.

Hill, M. W., & Hult, G. M. (2019). International Business: Competing in the Global Marketplace (12th ed.). New York, NY: McGraw Hill Education.

Saint Leo University. (n.d.). Competitive Profile Matrix. Retrieved March 18, 2021, from https://saintleo.brightspace.com/d2l/le/content/11…

Saint Leo University. (n.d.). Ten External Forces. Retrieved March 18, 2021, from https://saintleo.brightspace.com/d2l/le/content/11…