Coca-Cola's Concentric Diversification Strategy: Benefits and Challenges - Essay Sample

Introduction

Coca-Cola is a multinational corporation that uses different strategies to expand its operations into new markets. Forbes publications analyzed concentric diversification of Coca-Cola Company with Chi limited of Nigeria by presenting the benefits and the challenges of the strategy to both business enterprises. Through Forbes publication on Coca-Cola growth strategy, various organizational business lessons to other multinational and domestic organizations emerge.

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Multinational organizations partnership with domestic organizations from other countries provides them with a chance to enter new markets with established customers. For instance, Coca-Cola would benefit from the market share Chi limited had established in Nigeria. Multinational organizations learn that they can use their finances to enter into markets that they have limited growth opportunities due to domestic companies (Kim et al., 2017). Multinational corporations will befit by using the existing infrastructure, and raw materials create a new product and service. Apart from the latest products, multinational organizations can utilize concentric diversification to boost the presence of their existing products in new markets.

Domestic and small companies also learn from the Coca-Cola diversification strategy. Local companies can use the approach to achieve larger goals using fewer finances and working parts. Partnering with organizations with corresponding marketing, operating, financing, and management efforts can help the firms achieve larger goals, which would not be possible as a separate entity (Arroyo-Blanco et al., 2018). For an instant, Chi limited through the partnership would be able to increase its operations and productions. Though it would not enter global markets, it would increase its dominance in Nigeria. Domestic companies learn that concentric diversification may not last due to the different domination power of the partners. The companies can, however, use multinational management experience and expertise to improve their actions in a different situation.

In conclusion, the Forbes publication on the growth strategy of Coca-Cola has business lessons to both multinational organizations and domestic organization. The lessons include the use of smaller local companies by organizations to enter new markets and dominate. Through related products and markets, organizations can use concentric diversification to achieve strategic fitness in new markets. The lesson also includes the benefit of the centric diversification favouring multinational organizations in the long-run.

References

Arroyo-Blanco, E. A., Boza-Monge, A. E., & Cortes-Morales, R. Concentric diversification: growth without losing competitiveness for a small it firm. e-Society, 2018, 265. https://www.researchgate.net/profile/Piet_Kommers/publication/331174981_Edited_by_Piet_Kommers_and_Pedro_Isaias_Associate_Editor_Luis_Rodrigues_ISBN_978-989-8533-75-3/links/5c6ab38492851c1c9de7734d/Edited-by-Piet-Kommers-and-Pedro-Isaias-Associate-Editor-Luis-Rodrigues-ISBN-978-989-8533-75-3.pdf#page=280

Kim, H., Hong, S., Kwon, O., & Lee, C. (2017). Concentric diversification based ontechnological capabilities: Link analysis of products and technologies. Technological Forecasting and Social Change, 118, 246-257. https://www.sciencedirect.com/science/article/pii/S0040162516306254