Globalization refers to the worldwide fact of technological, economic, political and cultural exchanges, brought about by modern communication, transportation and legal infrastructure as well as the political choice of countries to open cross-border links in international trade and finance. Globalization has produced tremendous effects on the statistics of international businesses whether it is food industry or it is clothing industry, car industry or financial institutions, global integration between businesses, government and societies is deepening.
The business environment has undergone quick change during the past two decades the graphical effects of technological advancement and innovations have changed the style of businesses across the globe. The changes are been observed not only in the technological sector but also in the environmental field, most particularly in financial environment. (URL1). As there is a wide differences in the political environment and economies in different region therefore multinational companies are affective while integrating internationally.
In the same manner while competing internationally each companies will be affected by various environmental factor due to change in environment. Thus entering into international market a company has to do planning to deal effectively with political and economical environment factors. Now before we go head with what a multinational corporation have to do to solve these issues. It will be valuable to define multinational corporation. "A multinational or transnational enterprise is an enterprise that engages in foreign direct investments and owns and controls value adding activities in more than one country".
(Dunning,1993 P. 3) The model of multinational organization was developed during the 1930s. A grouping of economic, political and social factors forced firms to distribution their operations in response to national market differences. The highly significant element in global economy is the companies growth in terms of size, organization difficulty and the regional differences. To handle these issues multinational organization has to plan there strategies well. The production network is developed through highly influenced interrelated issues. (Dicken,2007)
The addition of globalization means globalism, complex connectivity, cultural and economic globalization , marketing or strategy term, corporate globalization, spread of capitalism and market oriented economic system. The managers has to be aware of the wider picture of these problems before emerging into the new market as there is a vast difference in the global environment and local environment . These multinational corporation has to deal with these factors involves in globalization. (URL1). An organization has to design their route inorder to achieve their business goal.
In an organization managers has to consider many factors such as internal factors which includes resources, office technology, previous model, wages and finance, respectively the external factors such as competitors background their technological factors, range of social, economical and government regulations. While designing the international expansion model an organization has to consider all these factors. The topic for these essay is Coco Cola carbonated brands to examine the political and economical factors in which it carries out its operations and strategies in United kingdom.
We will also be carrying out its pest and porters five forces analysis through the essay. Coco Cola was invented by doctor John Pemberton pharmacist from Atlanta, Georgia In May 1886. John Pemberton mix the coco cola formula in three brass kettle in his backyard. The suggestion of the name was given John Pemberton's book keeper Frank Robinson. (Url2) (the selling van used during the initial period of its production) Asa Candler owned the company in the year 1891 after the death of John, his father's first mission was to change the old Pemberton's old formula inorder to change the taste of the product, to ensure its consistency and firmness.
It was Candler's hardwork that he was able to promote coco cola beverage into every state and territory in the United States by 1895. It was under woodruff's tenure from the year 1923 until 1981, Coco Cola rose from national to international supremacy(Url2). Coco cola first arrived in Great Britain in 1900 when Charles Chandler, son of Asa Candler. The first Coke was sold in Great Britain on 31st August 1900 and after that went on regular sale through soda fountain outlets, which included Selfridges and the London Coliseum.
In 2004 The Coca-Cola Company's share of the carbonated soft drinks category in Great Britain was 45. 3%, and market share of the non-alcoholic beverages was 9. 9% (Url3). As in the neo- classical environment in united kingdom it has been facing different humiliation in facing art rival Pepsi. Before we look into the external and internal factors impact on the company lets discuss opportunities and treats. One of the advantage because of which company creates more value is its ability to produce drinks in cheap ingredients such as sugar, citric acid and caramel coloring.
Thus the inputs which is required to produce these products is very less, thus it really doesn't depend on economic level of a country. That's the reason Coco Cola and Pepsi start their business in any part of the world and relatively do good business. The past few years have been booming for the drinks industry, but growth prospects are stagnant for the next few years. A recession is a possibility after so many years of economic stability, but basic saturation is more of a problem. Due to competition in the market Innovations are becoming fewer and consumers could bring growth for healthy drinks, preferably with a move to premium products.
Social Coke and Pepsi belong to secondary demand products and thus have low output prices allowing people to buy Coke and Pepsi without appreciable pocket damage. This benefits both Coke and Pepsi as the economic recession in the UK decreased Average Household Disposable Income, their low output prices means people can afford to buy their products. Tuning into the image conscious youth, Coca Cola has branded themselves towards this market. Cola has a good understanding that todays youth have more disposable income than before and are more brand and image conscious.
Because it is highly popular among young people, Coca Cola has good opportunities for profitable sales. Children also enjoy and prefer sweet and sparkling tastes of Coke and Pepsi, and taking into account that students and children belong to low income social status population level, those drinks have good basis to be famous and chosen. Coke it is fit for long storage, as it doesn't contain any perishable ingredients thus it is convenient for taking too long journeys, for busy people, who can't frequently buy fresh food.