Coca Cola Environmental Audit Analysis

2 Environmental Audit - Macro External force using PESTEL Analysis

2.1 We will explore the various Macro and Micro External force using PESTEL Analysis. This include appraisal of the internal force and assessment of the financial performance of the company. With the SWOT analysis, we review the strength, weakness, opportunity band threat for Coca-Cola.. Macro External forces are classify by several author into specific factors. In this report, we will refer to PESTEL Analysis (Lynch, 2009). PESTEL are defined as Political, Economic, Social, Technological, Environmental, Legal factors. These factor will affect the decision of the manager in the company. External force is dynamic and complex. There are changes every day and you could find a significant change the next day. When using PESTEL Analysis, we must be ready to look at them and question their assumption and presence. Their presence may have an impact to the company.

2.2 Political factor - Coca-Cola Company is a global business but operate on a local scale. Majority of the Coca-Cola's bottler in many countries are not owned by Coca-Cola's Company. Coca-Cola Company can be affected by Political factor around the world where the bottling partner are. Coca-Cola Company may be affected in an indirect way such as loss of sale from the drinks concentrate, base and other ingredient. However given any political unrest, the possible impact will be the importation of raw material, concentrate to make the beverage for that local market etc. Other factor which influence or affect Coca-Cola company is the regulatory compliance such as FDA. Non-compliance of regulation may result in product recall and heavy fines, which in evidently decrease public's trust to the product. In 2008, FDA had issued a warning letter to The Coca-Cola Company for a violation of the Federal Food, Drug, and Cosmetic Act which the Diet Coke Plus product us misbranded within the mean of section 403(r)(1)(A) of the Act [21USC343(r)(1)(A)] because the product make a nutrient content claim but does not meet the criteria to make the claim (FDA GOV, 2008) . On June 1999, Coca-Cola in cooperation wit the Belgian Health Ministry withdrew its product from Belgian stores as a result of two "Unrelated"matters (Johnson & Peppas, 2003).

2.3 Economic factor - In countries where economic growth rate are slower may affect Coca-Cola's company as demand may be lower. Issues such as the currency exchange rate, inflation rate, growth rate are key factor which may affect the cost of sale. If the country's economic is on a downturn, consumer may reduce the need of buying their product. On the contrast, emerging countries where there are sign of growing economy (e.g. China, India), the demand will be stronger. Direct development of bottling plant in strategic location in these area are beneficial as the business strategy of Coca-Cola is a global business but base