Despite all the positive growth Coke has recorded and its prospects, the company faces the following fundamental market risks. Financial crisis that is looming in the world has hit very had in its parent U. S market. According to the 2007 Annual Report, Coca-Cola gallon sales to U. S were 37%, 43% in Mexico, Brazil, Japan and China and 20% to the rest of its world market (Business wire, 2007). With the financial crisis hardly affecting U. S, the sales revenue may be affected as the consumers’ disposable income shrink.
This may affects its earnings given it has high long term debt. Also its value of securities that are listed in stock markets may be eroded as many investors sell their shares or become apprehensive and not make buy move. This will result to capital loss which is already being experienced in NYSE. Increased competition mainly from growing companies who are offering beverages at lower prices also may affect the Coke’s sales especially in emerging economies in Africa and Asia.
Poor management in the bottlers company also increases operation risks. Bottlers’ operation are managed their owners, though there is management guideline form Coca-cola in some bottlers there may be lack of management efficiency, this results in loss of revenue as Coca-cola brands lose market to other competing brands. However, Coca-cola has the following strengths which can make it overcome all the above challenges. As we have seen, the company is well capitalized and thus it can easily finance its operations and support expansions.
The company’s greatest asset is employees.
Its large pool of competent employees will give it strong position. Coca-coal has a strong which makes effort to keep the company ahead in the arena (). Coca-cola has four of the strongest brands in the world. The strength of Coca-cola, Fanta, Sprite and others brands has given the company a huge competitive edge. Despite the price wars, the company’s brand enjoys high customer royalty that guarantees future company earning and growth.
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