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Unit 1 -D2- explain how future changes may impact strategy of your business
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D2- explain how future changes may impact strategy of your business
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In this assignment, I will be evaluating how future changes in economic,legal, political and social factors may impact on the strategy of the Coca
Cola PLC.
Political:
The political party in charge may someday decide to increase corporation
tax. When this eventually happens, this will have a great effect on both
small and large business. While small companies may be forced to close
down or cancel expansion plans, large companies like the Coca Cola PLC
will also be at a disadvantage. This is because a rise in corporation tax
will mean that they have to hand in more of their profits amounts to the
government. Therefore, they will not have as much profit left for
themselves and stakeholders will receive less money. As a result, the
Coca Cola PLC will have to increase the price of its beverages to prevent
profit levels from tumbling down.
According to me, a rise in price can have a 50/50 chance of profitability.
The reason being is when the price of Coca Cola products increases; it is
obvious that the company will obtain more return from its sales. However,
it can also have a negative consequence as if the products get more
expensive, consumers may be reluctant to purchase them and sales
figures may also go down!
Governmental regulations concerning the marketing, labelling or even the
availability of Coca Cola beverages can also impact the company. As it
has been proved that the Coca Cola beverages give rise to several
alarming health problems, the government can pass on restrictions
concerning the marketing and advertising techniques used by the
company. For instance, the government can ban the company from
advertising its products on TV, at a certain period of time and on specific
channels, especially when children are likely to be watching as they are
more vulnerable and prone to being influenced.
If this occurs, this issue is certainly going to make headlines across the
globe, since the Coca Cola PLC is a global company. All the gossips and
reports might present a negative perception about the business in the
mind of potential customers, who may then prefer to avoid the product
completely. This will result in a fall in demand and consequently in profit
levels as well.
Moreover, the truth is gradually becoming obvious. Everyone seems to
finally realise that the Coca Cola beverages simply have no benefits
whatsoever. Therefore, the government may restrict the places where
, such products can be sold. It can prohibit the sales of these soft drinks in
certain places. For instance, such drinks may no longer be sold in vending
machines in schools, colleges or on other premises where they are at the
availability of children. This can affect the profitability of the Coca Cola
PLC, given that a high percentage of their customers are the youths.
Economical:
The monetary value of all the finished goods and services produced within
country in a specific time period during a year can also greatly affect a
business. Research by the British Chambers of Commerce suggests that
gross domestic product for 2014 will probably rise from 1.7% to 1.9%.
This predicted rise in GDP demonstrates that the economy is good and the
nation is moving forward. A rise in GDP will have a positive impact on the
Coca Cola PLC as people will have more disposable income and will
therefore have more money to spend on less vital products like the Coca
Cola beverages! As a result, consumers will buy more ‘luxury’ products
and the demand and profit levels of the Coca Cola PLC will increase, which
is in their favour. When there is a rise in GDP, the Coca Cola PLC can
decide whether it wants to slightly increase the price of its product as well
in order to maximise profits.
Unemployment is a vital factor which can negatively affect businesses.
When there is consistent levels of unemployment, people will not be
obtaining a constant salary and as a result, they will spend their savings
on basic necessities, like food, shelter and clothing. As Coca Cola
beverages are not essential for survival in such circumstances, consumers
will opt to spend their money on other, more important items instead.
Thus, the Coca Cola PLC will experience a fall in demand and profit levels
will decline considerably. To adjust to such conditions, the business might
have to decrease the price of the products being offered to regulate sales,
even though in extreme conditions, this strategy may not be efficient.
Interest rate is another vital factor which can significantly disturb the
activities and transactions of a business. The current interest rate is
0.5%, however, if the Bank of England decides to increase this figure, I
personally believe that it will have a huge impact on most businesses,
including the Coca Cola PLC. The reason being is, when the business
decides to go ahead with a change, improvement or creation of a product,
it will borrow money from the bank to finance this process. With a rise in
interest rates, the Coca Cola PLC will have to pay considerably more in
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