Coca cola cost structure analysis. Analysis Essay Sample: Capital Structure Analysis 2022-10-28
Coca cola cost structure analysis Rating:
9,3/10
1315
reviews
Coca-Cola is a globally recognized brand and one of the largest producers of beverage products in the world. The company's cost structure plays a significant role in its overall business strategy and financial performance. In this essay, we will analyze Coca-Cola's cost structure and discuss some of the key factors that contribute to the company's expenses.
One of the primary components of Coca-Cola's cost structure is the cost of goods sold (COGS). This includes the cost of raw materials, such as concentrate, sweeteners, and packaging materials, as well as the cost of labor and manufacturing processes. The company sources a significant portion of its raw materials from external suppliers, which exposes it to fluctuations in commodity prices. In addition, the company has a large global supply chain, which adds to its COGS due to transportation and logistics costs.
Another significant component of Coca-Cola's cost structure is marketing and advertising expenses. As a well-known global brand, the company must continuously invest in marketing and advertising efforts to maintain its brand recognition and customer loyalty. These expenses include traditional forms of advertising, such as television and print advertisements, as well as digital marketing efforts, such as social media campaigns and website development.
In addition to COGS and marketing expenses, Coca-Cola also incurs general and administrative expenses, which include salaries, rent, and other overhead costs. The company also has research and development costs associated with the development of new products and the improvement of existing ones.
One factor that has impacted Coca-Cola's cost structure in recent years is the increasing focus on sustainability and environmental responsibility. The company has made significant investments in initiatives to reduce its environmental footprint, such as the development of more sustainable packaging materials and the implementation of renewable energy sources in its manufacturing processes. These efforts come with additional costs, but they also help to position the company as a leader in sustainability and may lead to cost savings in the long term.
Overall, Coca-Cola's cost structure is complex and multi-faceted, with a range of factors contributing to the company's expenses. The company must carefully manage these costs in order to maintain its financial performance and stay competitive in a rapidly changing market.
Coca Cola Cost Structure Analysis
From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs. Capital leases are recorded as liabilities for the lessee and receivables for the lessor where as accounting for operating leases records expenses for the lessee and revenues for the lessor. Two common costing systems used in business are traditional costing and activity-based costing. Social Sciences, 14 5 , pp. To the extent that these ratios are concerned with asset cover for borrowing, their value depends on the realistic valuation of assets. The non alcoholic beverages business environment is rapidly evolving as a result of, among other things, changes in consumer preferences, including changes based on health and nutrition considerations and obesity concerns, shifting consumer tastes and needs, changes in consumer lifestyles and competitive product and pricing pressures. Also there should be periodic assessment programs like the company jam in which opinions of employees from both sides should be taken into consideration.
Coca Cola Organizational And Management Structure Case Study Example
Coca Cola, over the years has faced and overcome several challenges and crisis. The rights for bottling and selling Coca Cola in the United States were secured by Joseph B. These problems include sales with discounts, sales with right of return, sales with buybacks, bill and hold sales, etc. Then, I outlined the different areas of each topic. The company continues to use debt wisely, has a large amount of cash and equivalents available, and continues to perform during troubling times. This determines the capability of the product to supply the demand of the consumers.
Reuters The key to success for all beverage companies is differentiation. In 1886, when Atlanta and Fulton County passed Prohibition legislation, Pemberton responded by developing Coca-Cola, essentially a carbonated, non-alcoholic version of French Wine Cola. ·        The scarcity of sufficient water could also hinder the production of beverages by the company. The best technique to accomplish this is the analysis of financial ratios. Therefore, it can be said that Coca Cola is dependent on App Annie for delighting and amazing its customers and maintaining best standards of marketing.
Coca Cola has competitive advantage so it is making it get bigger and bigger in terms of sales and market share. Additionally, the company experienced culturally imposed operating restrictions when marketing its product in some countries, due to risks related to the socio-cultural factors such as obesity, that have potential adverse effects on the beverage industry. Both companies have to train their employees in the field where the employees are expert in and also empowering employees will also reduce the production cost. Coca Cola maintains a solid position. The threat of substitutes, however, is a very real threat. Technological factors: The changes in technology across the world, the innovation of new techniques and machinery and influence of international know-hows are some of the technological factors influencing the business of Coca Cola. The debt-equity ratio is calculated by dividing the long-term debt with ordinary shareholder funds.
While chapter 20 initially emphasizes actual return on plan assets as a component of pension expense, here we can see Coca-Cola instead reports their expected returns on plan assets. Further opportunities may include, much well known products, more cash cows, and change area of expertise to a variety, other than Beverages. Investment analysis of Coca Cola Hellenic Bottling Company. Not all countries were equally accepting towards a carbonated soft drink. Internal Analysis There are internal influences as well as outside influences on the firm. The right product along with an effective marketing and branding campaign could create a formula for success.
Introduction Coca-Cola was created in 1886 by John Pemberton, a pharmacist from Atlanta Georgia. Market structures describe the competitive environment in which a firm operates. Coca Cola applies the demographic factor to achieve its target market for example it advertise for youths to like the Coca Cola in new generation terms. Through constant innovation, the company is trying to enhance the taste and quality of its products. Fixed costs: Fixed costs are such costs that do not change with the change in activity level within the relevant range.
Role culture is normally split up into a number of functions that are organized in a hierarchical way. In developing a strategy for a Company brand, Coca Cola conduct product and packaging research, establish brand positioning, develop precise consumer communications and solicit consumer feedback. Coca Cola is continuing its diversification efforts, however and now owns 50% of Nestle, which currently dominates bottled water sales in some regions. The calculation for dilutive earnings per share adds in the 15 exercised shares giving us an average shares outstanding of 2,329. However, with changing times they have diversified into a vast range of beverages. Coca Cola Company, being a world leader in beverage production enjoys a large market share as there is not any other company in the world that has gone to the point of eliminating the company or posing a threat in the market. Tax shield in this company equals to debt multiplied corporation tax, in coca cola Company, I find from annual report that corporation tax for 2008 is about 31% and 22% in 2006, 21% in 2007 respectively.
The most popular and selling drink of the company around the world is coke. To reach the consolidated net income seen on its income statement, Coca-Cola simply reduces its income before income taxes by the above specified income tax expense amounts for each year. Again a note is to be reported in the financial statements for a change in estimate. The graphical representation of the ratios given below: Debt — Equity Ratios of Coca Cola and its competitor PepsiCo 2. Administration of these operations over the business esteem tie tends to be more difficult at outside of the center operations.
