Economic Factors That Affects the Globalizations of Coca-Cola in Kenya
There are factors that exert pressure in the company resulting to reducing the purchasing power of potential customers and the firm‘s cost of capital argues ICMR Case Studies and Management Resources. (2007). The soaring high prices of oil i. e. crude oil have really exerted pressure on the cost of production from the manufacturing to the transport and delivery system of the products. The transport of raw materials have also been affected by this oil rising prices, resulting to sometimes slow or even unavailability of raw materials affecting the manufacturing of the soft drinks.
Unfortunately this has resulted to reducing the purchasing power of the consumer, viewing the soft drink as a luxury that they can’t afford. The company has been forced to find other ways to generate power, that less expensive, but this is unlikely, because even the electricity cost in the country is rising significantly i. e. electricity tariffs. High electricity costs, results to high cost of production.
Over the year, there has been an increasing trend where the country are experiencing a decrease in the GDP per capita, due to the ever increasing cost of living standards, high levels of unemployment due to company’s downsizing to cut down costs. The more this trend continues, the more the soft drink becomes a luxury which the local consumer can’t afford. In addition to this the New World order, has another issue on its table, that eventually will result in reducing the sales revenue of the soft-drink i. e. the increase prices of food prices which the country is also experiencing, resulting in the consumer having a lean and limited budget to purchase soft-drink since it becomes a luxury (Armstrong G. & Kotler P. 2007). The interest rates in the local banks are increasingly tremendously, due to the slow growth of economy, rising oil and food prices, hence in turn putting pressure in the cost of production of the soft-drinks.
The offering of credit facilities and overdrafts have become so expensive for the company, hence slowing down the company expansion programme together with acquiring the state-of-the art technology in the manufacturing plants, plus employing more employees that the company needs. This has coupled with the high exchange rates the country is experiencing world major currency i. e. the dollar, hence the basic raw materials for manufacturing the soft drinks has become expensive and puts a financial toll on the company. This eventually results in slowing down the sales because the customer is unable to consume the product as before.
Unfortunately again, the company can do nothing about this but adjust its prices of the soft drinks. Together with this, the high exchange rate, discourage the company from venturing another branch i. e. Coca-cola to a country which especially has moderately high exchange rates (ICMR Case Studies and Management Resources. , 2007). The environment factors have put pressure on the company so as to reduce the pollution the company emits to the environment. Hence the company is usually taxed moderately high because of its amount of pollution that its releases e. g. to the sewage system etc (Armstrong G. & Kotler P. 2007). The exchange of behaviors by the consumers has resulted to pressure the company. There is more awareness where people are encouraged to eat and live healthy and to avoid eating carbonated drinks which the Coca-Cola Company offers.
The company is loosing its consumer to fresh fruits juices. This has reduced the sales revenue and lowered down the growth and expansion of the company (ICMR Case Studies and Management Resources. 2007). There has been an increase in competition in the soft drink industries, with more companies that especially deal with food technology venturing in the soft drink business e. g. the merging of Redbull, Ribenna, and Lucozade etc. This puts the pressure in the company, because now they have to compete for the same consumers they attract. This has resulted to an increase the production i. e. the awareness campaign to be used by the company. The company receives a lot of pressure from shady business men who in turn want to take advantage of the Coca-cola brand and make counterfeit products whose standards are low compared to the real Coca-Cola Company. The ‘fake’ products are sold cheaply compared to the Coca-cola products.
This has generated to loss of revenue, together with the tarnished name for the Coca-cola brand (ICMR Case Studies and Management Resources. (2007). The changing infrastructure and technology also exerts pressure in the company. For the company to maintain its well known standards, the company has to heavily invest in the latest technology that ensures the rate of production per day is high, this together with ensuring the health and safety measures are observed in the drinks. As the technology, keeps changing and getting better and better, the company has no choice to invest in the machines (Armstrong G. & Kotler P. 2007). Kenya have good infrastructure, this helps the company in the delivery of its products, hence a country that has poor infrastructure e. g. the road network slows down the delivery of the soft drinks plus increases the consumption of fuel. This has resulted to the unavailability of the product to certain parts of the country.
Conclusion
Coca-Cola has managed to become a success because of designing a marketing mix that enables them to create a product that the customer wants at that very moment in Kenya. The quality of the product and the design are the same all round the world.
The packaging and brand name is also similar so that everyone gets the same Coca-Cola experience all over. Coca-Cola products are refreshing because of the ice cold concept. During summer or in hot weather Coca-Cola products will always be served ice cold with every Coca-Cola stand having a Coca-Cola refrigerator. The distribution of Coca-Cola product is fast and efficient due to a good relationship with retailers, wholesalers and distributors that have a large number of trucks to ferry the products from the factories to the consumers.
References
- Armstrong G. & Kotler P. (2007). Consumer Markets: Influences on consumer behavior, Principles of Marketing. Coca cola website ICMR Case Studies and Management Resources. (2007). Consumer Behavior. Retrieved January 20, 2008 from http://www. icmrindia. org/courseware/Consumer%20Behavior/CBC03. htlm
- Kotler, P. (2005) Principles of Marketing. New York. Melbourne Press Schaik J. L. , (2002); The Task of Marketing Management; J. L. van Schaik (Pity) ltd
