The Economic Factors Affecting The Coca-Cola Company
Introduction:
Conglomerate Coca-Cola is a company that prides itself on being the world’s largest beverage company, and one who embodies the cross borders concept of international business by being recognised by no less than 94% of the world’s population is an undoubted success story. However, the company is not immune to the various political, economic, social and technological factors (PEST) that can affect their international operations and, in turn, the future development of the firm.
Subject 1 - Economic Factors:
Arguably, financial issues are the most important external factor affecting the global multi-national enterprise, as Coca-Cola acquires a notable percentage of net operating revenue from international product sales. For example, …show more content…
The Cola-Cola Company are subject to numerous duties and taxes urged by governmental officals, for example, the sugar tax which is due to take effect in April 2018 (HM Revenue & Customs, 2016). It is the company’s belief that 'as... governments in the United States and throughout the world experience significant budget deficits, some lawmakers have singled out beverages... and have imposed or increased...sales or similar taxes on beverages, particularly sugar-sweetened beverages' (The Coca-Cola Company, 2017). Following the introduction or increases of new indirect taxes could mean that the costs of products would increase making beverages less affordable to consumers and therefore, negatively impacting revenues as basic economic theory predicts that higher prices will generally lead to less demand. However, most people are reluctant to change their consumption habits unless prices change dramatically. Economic evidence from the iea.org.uk shows that the demand for soft drinks is inelastic, a one per cent increase in price leads to a less than one per cent decline in …show more content…
For example, the conglomerate has been the target of many lawsuits, alongside large-scale citizen and non-governmental protests in India for its wasteful consumption of water. In support of Elkington’s triple bottom line theory: profit, people and planet (Elkington, 1999), this public pressure resulted in a three-step initiative from CCE to recycle water, reduce consumption levels and refill water back into the communities. In 2016, they announced that not only had they met their goal of replenishing all 100% of the water used but stated, 'In 2004, we were using 2.7 liters of water to make 1 liter of product. And we’re working to potentially reduce it to 1.7 liters of water by 2020' (The Coca-Cola Company, 2017). The company made much progress in energy management, water stewardship, and climate protection in an attempt to construct a full triple bottom line and preserve the billion-dollar
Conglomerate Coca-Cola is a company that prides itself on being the world’s largest beverage company, and one who embodies the cross borders concept of international business by being recognised by no less than 94% of the world’s population is an undoubted success story. However, the company is not immune to the various political, economic, social and technological factors (PEST) that can affect their international operations and, in turn, the future development of the firm.
Subject 1 - Economic Factors:
Arguably, financial issues are the most important external factor affecting the global multi-national enterprise, as Coca-Cola acquires a notable percentage of net operating revenue from international product sales. For example, …show more content…
The Cola-Cola Company are subject to numerous duties and taxes urged by governmental officals, for example, the sugar tax which is due to take effect in April 2018 (HM Revenue & Customs, 2016). It is the company’s belief that 'as... governments in the United States and throughout the world experience significant budget deficits, some lawmakers have singled out beverages... and have imposed or increased...sales or similar taxes on beverages, particularly sugar-sweetened beverages' (The Coca-Cola Company, 2017). Following the introduction or increases of new indirect taxes could mean that the costs of products would increase making beverages less affordable to consumers and therefore, negatively impacting revenues as basic economic theory predicts that higher prices will generally lead to less demand. However, most people are reluctant to change their consumption habits unless prices change dramatically. Economic evidence from the iea.org.uk shows that the demand for soft drinks is inelastic, a one per cent increase in price leads to a less than one per cent decline in …show more content…
For example, the conglomerate has been the target of many lawsuits, alongside large-scale citizen and non-governmental protests in India for its wasteful consumption of water. In support of Elkington’s triple bottom line theory: profit, people and planet (Elkington, 1999), this public pressure resulted in a three-step initiative from CCE to recycle water, reduce consumption levels and refill water back into the communities. In 2016, they announced that not only had they met their goal of replenishing all 100% of the water used but stated, 'In 2004, we were using 2.7 liters of water to make 1 liter of product. And we’re working to potentially reduce it to 1.7 liters of water by 2020' (The Coca-Cola Company, 2017). The company made much progress in energy management, water stewardship, and climate protection in an attempt to construct a full triple bottom line and preserve the billion-dollar