In order to have a strong business model it is imperative to supplement it with an equally strong understanding and knowledge of the factors that may affect a business from the outside world. A business must be fully aware of its external environment and must anticipate and be ready for any future problems they may encounter.

A vital and beneficial tool for a company to know its outside environment is through a PEST analysis, an analytical tool that provides companies with ability to audit factors such political, economic, socio cultural and technology to gain insights about a company’s environment.

Coca Cola is a multinational cooperation that has actively used the PEST analysis to place them in the dominant financial position they are currently in.

The political analysis of Coca Cola are mostly taxation requirements; the political stability of countries they operate and the environmental laws they have to abide in foreign and domestic markets. In addition, the company must also anticipate for civil conflict and this allows them to initiate strategic business planning.

Sales in the company are largely impacted by economic factors in which they have no control over such as the differentiating labor costs, interest rates, exchange rates and economic growth of the countries they operate in. The Social Aspect is also an essential factor that needs consideration, with more people opting for a healthier lifestyle, coca cola zero sales have increased. The demand for healthier drink alternatives has also been increasing as more and more people are concerned with their nutrition. Media perception and demographic changes also play a role in the social aspect Coca Cola is concerned with.  Lastly technological factors need to be assessed, such as advancing equipment for product manufacturing and design. The company has switched from glass bottles to concentrating production on plastic and cans due to how easy it is to dispose. Also, the promotional side of the company, advertising through social media as a more effective way.

Coca Cola has implemented the PEST analysis in a very effectual manner and is central to their business which has enabled them to gain knowledge to the outside world. This goes to show how the PEST analysis is useful to evaluate the variables outside of the business in which a company has no control. It allows a business to avoid actions that are likely to fail and also seek out potential opportunities.

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References 

https://toughnickel.com/industries/PEST-Analysis-Coca-Cola