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Strategic Management Issues of Coca-

Cola Company

INTRODUCTION
A global perspective is a matter of survival for businesses. Strategic
management is the process of specifying an organization's objectives,
developing policies and plans to achieve these objectives, and
allocating resources so as to implement the plans. The Coca-Cola
Company (Coca-Cola) is a leading manufacturer, distributor and
marketer of Non-alcoholic beverage concentrates and syrups, in the
world. The company owns or licenses more than 400 brands, including
diet and light beverages, waters, juice and juice drinks, teas, coffees,
and energy and sports drinks. The company operates in more than 200
countries. Coca-Cola Enterprises is the world's largest marketer,
producer and distributor of Coca-Cola products. It operates in 46 U.S.
states and Canada, and is the exclusive Coca-Cola bottler for all of
Belgium, continental France, Great Britain, Luxembourg, Monaco and
the Netherlands. Coca-Cola is the non alcoholic bottled beverages.

ORIGIN OF THE REPORT


We are lucky to say that our honorable course teacher Md. Muzahidul
Islam Lecturer, Department of Management Studies, Faculty of
Business Administration and Management, assigned us a report on
“Strategic Management Issues of Multinational Companies
(MNCs): A Case Study on Coca-Cola Company”. This report is
prepared on the basis of secondary data.

OBJECTIVES OF THE STUDY


Every successful study should have specified and well-defined
objectives. A careful statement of the objective helps in preparing a
well-decorated report facilitating others to take decision on it. The
specific objectives of the study are to have knowledge about-

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 To know about the strategic management issues of multinational
companies
 To know about the strategies of the multinational companies
 To characterize the challenges of international strategic
management
 To know about the international strategic management process
 To identify and characterize the levels the international
management strategies
 To know about the Coca-Cola Company’s strategies management
process.

SCOPE OF THE STUDY


This study has focused upon the Management Issues those are
followed by the Coca-Cola Company for capturing the global market.
Through our report we try to find out the global challenges of
International Strategic Management to assess the basic strategies,
describe the international strategic management process of Coca-Cola
Company. We hope this study will help to whom, who want to know
more clearly about strategic management, its issues as well as the key
factors which affect the process of Internationalization for a company.

Data and Methodology


We examine secondary data of which related to the Strategic
Management Issues at the global based Market. Data are collected on
various issues from annual report of Coca-Cola Company (2005-2009).
In our report we analysis the monthly, quarterly, half-yearly news
Review of this company. Based upon this data we like to analysis the
Economic Review, Statistical Strategic condition of the Coca-Cola
Company. Both the official and regional website helps us to find out
more related to the issues with the global market. Form those huge
data we take the necessary and used them for the analysis. Our
analysis data are clearly represented in our main part of the report
through relevant chart, graph with proper description.

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LIMITATIONS OF THE REPORT


As a student of faculty of Business Administration and Management,
7th semester, this is our first initiative for making a report on “Strategic
Management Issues of Multinational Companies (MNCs): A Case Study
on Coca-Cola”. We were really unable to collect enough information
from due to their official restrictions. Many things were so confidential
that we were not entitled to access there. Beside this we have faced
the following hindrances in preparing this report:

• Lack of knowledge and experience


• Short of time
• Lack of computer facilities
• Lack of sufficient privileges
• Lack of communication facilities

Definition of Strategic Management

Strategic management is the process of specifying an organization's


objectives, developing policies and plans to achieve these objectives,
and allocating resources so as to implement the plans. It is the highest
level of managerial activity, usually performed by the company's Chief
Executive Officer (CEO) and executive team. It provides overall
direction to the whole enterprise.

International strategic management is a comprehensive and ongoing


management planning process aimed at formulating and
implementing strategies that enable a firm to complete effectively
internationally. The process of developing a particular international

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strategy is often referred to as strategic planning. Strategic
Management is the study of function and responsibilities of senior
management.

Five Essential Parts of Strategic Management

Goal-setting

Goal-setting enables a firm to articulate its vision: identify what needs


to be accomplished, define short-and long-term objectives, and relate
them to what the organization needs to do.

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Analysis

Analysis guides to collect and consider information so that a firm


understands the situation. Assess external environments and internal
situations to identify the strengths and weakness of the organization
and the opportunities and threats face to reach the goals.

Strategy Formulation

To determine a strategy, the firm reflects prioritize, develop options,


and make decisions. Review the results of the analysis, identify the
issues that a firm implementing partners need to address, and
prioritize them in terms of their urgency and magnitude. Use these
results to design alternative strategies and plans that address the key
strategic issues.

Strategy Implementation

To implement the strategy, assemble the necessary resources and


apply them. Put the chosen plans into practice, marshal the resources
and commitments necessary for moving ahead, tap existing capacity
and/or build new capacity, and seek to achieve results.

Strategy Monitoring

Monitoring allows checking the progress toward achieving the firm’s


goals and assessing whether any changes in the environment
necessitate alternatives to the firm’s strategy. Modify plans and
actions to adjust to the impact of changing in the operating
environment.

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SIGNIFICANCE OF STRATEGIC MANAGEMENT

Strategic management integrates the knowledge and experience


gained in various functional areas.

It helps to understand and make sense of complex interaction in


various areas of management.

It helps in understanding how policies are formulated and in creating


appreciation of complexities of environment that the senior
management faces in policy formulation.

Managers need to begin by gaining an understanding of the business


environment and to in control.

They should know to manage and understand information technology,


which is changing the face of business.
Significance of Strategic
Management

As public and common investors own and more companies managers


need to acquire skills to maximize shareholder value.

To have/take a strategic perspective, managers should foresee the


future and track changes in customer expectation. Intuitive, logic
To the shape the Future Its helps to increase the
reasoning is required for proper decision-making.
of business productivity
As corporate are becoming more integrated with the public life,
corporate governance is becoming important which manager may
Effective
have strategic idea
to practice. To Makes discipline

Mangers and employer


are innovative and
To make control
creative

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Issues in Strategic Management Decision Making

• While making a decision the company might have different


people at different periods of time.

• Decision requires judgments; personal related factors are


important in decision-making. Hence decision ma y differs as
person change.

• Decisions are not taken individually, but often there is a task in


decisions which could be Individual Vs Group decision making.
There will be a difference between the individual and group
decision-making.

• On what Criteria a company should make its decision, for


evaluation of the efficiency & effectiveness of the decision
making process, a company has to set its objectives which serves
as main bench mark.

• 3 Major Criteria in decision Making are---

a. The concept of Maximization.

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b. The concept of satisfying.
c. The concept of instrumentalism.

Based on the concept chosen the strategic decisions will differ.

• Generally decision-making process is logical and there will be


rationality in decision-making.

• When it comes to Strategic decision making point of view there


would be proper evaluation & then exercising a choice from
various available alternative resources, which leads to attain the
objectives in a best possible way.

• Creativity in decision-making is required when there is a


complete situation & the Decision taken must be original &
different.

• There could be variability in decision-making based on the


situation & Circumstances.

International strategic management results in the development of


various international strategies, which are comprehensive frameworks
for achieving a firm’s fundamentals goals. Conceptually, there are
many similarities between developing a strategy for competing in a
single country and developing one for competing in multiple counties.
In both cases, the firm’s strategic planners must answer the same
fundamental questions—

• What products and/or services does the firm intend to sell?


• Where and how will to make those products or services?
• Where and how will it sell them?
• Where and how will it acquire the necessary resources?
• How does it expect to outperform its competitors?

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But developing an international strategy is far more complex than


developing a domestic one. Because managers developing a strategy
for a domestic firm must deal with one national government, one
currency, one accounting system, one political and legal system and
usually a single language and a comparatively homogeneous culture.
But managers responsible for developing a strategy for an
international firm must understand and deal with multiple
governments, multiple currencies, multiple political and legal system,
and variety of language and cultures.

Various Roles of Strategic Management

Senior management plays n important role in Strategic Management.

Role of Board of Directors: Board of Directors is the supreme


Authority in a company. They are the owners/ shareholders/ lenders.
They are the ones who direct and responsible for the governance of
the company. The Company act and other laws blind them and their
actions & they sometimes do get involved in operational issues.
Professionals on the B.O.D help to get new ideas, perspectives and

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provide guidance. They are the link between the company and the
environment.

Role of C.E.O: Chief Executive Officer is the most important


Strategist and responsible for all aspects from
formulations/Implementation to review of Strategic Management. He is
the leader, motivator & Builder who forms a link between company
and the board of directors and responsible for managing the external
environment and its relationship.

Role of Entrepreneur: They are independent in thought and action


and they set / start up a new business. A Company can promote the
entrepreneurial spirit and this can be internal attitude of an
organization. They provide a sense of direction and are active in
implementation.

Role of Senior Management: They are answerable to B.O. Directors


and The C.E.O as they would look after Strategic Management a
responsible of certain areas / parts of terms.

Role of SBU – Level Executives: They Co-ordinate with other SBU’s


& with Senior Management. They are more focused on their product /
burners line.

They are more on the implementation role.

Role of Corporate Planning Staff: It provides administrative


support tools and techniques and is a Co-ordinate function.

Role of Consultant: Often Consultants may be hired for a specified


new business or Expertise even to get an unbiased opinion on the
business & the Strategy.

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Role of Middle Level Managers: They form an important link in
strategizing & Implementation. They are not actively involved in
formulation of Strategies and they are developed to be the future
management.

COMPANY OVERVIEW

The Coca-Cola Company (Coca-Cola) is a leading manufacturer,


distributor and marketer of Non-alcoholic beverage concentrates and
syrups, in the world. The company owns or licenses more than 400
brands, including diet and light beverages, waters, juice and juice
drinks, teas, coffees, and energy and sports drinks. The company
operates in more than 200 countries. Approximately 74% of its
products are sold outside of the US. The company is headquartered in
Atlanta, Georgia and employs 71,000 people as of September
2006.The company recorded revenues of $24,088 million during the
fiscal year ended December 2006, an increase of 4.3% over 2005. The
increase in revenue was primarily due to increase in sales of Unit
cases of company’s products from approximately 20.6 billion unit
cases of the company’s Products in 2005 to approximately 21.4 billion
unit cases in 2006, the increase in the Price and Product/geographic
mix also boosted the revenue growth. The company-wide gallon sales
and unit case volume both grew 4% in 2006 when compared to 2005.
The operating profit of the company was $6,308 million during fiscal
year 2006, an increase of 3.7% over 2005. The net profit was $5,080
million in fiscal year 2006, an increase of 4.3% over 2005.

HISTORY OF COCA-COLA

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Coca-Cola was first introduced by John Smyth Pemberton, a
pharmacist, in the year 1886 in Atlanta, Georgia when he invented
caramel-colored syrup in a three-legged brass kettle in his backyard.
He first “distributed” the product by carrying it in a jug down the street
to Jacob’s Pharmacy and customers bought the drink for five cents at
the soda fountain. Carbonated water was teamed with the new syrup,
whether by accident or otherwise, producing a drink that was
proclaimed “delicious and refreshing”, a theme that continues to echo
today wherever Coca-Cola is enjoyed.

Dr. Pemberton’s partner and book-keeper, Frank M. Robinson,


suggested the name and penned “Coca-Cola” in the unique flowing
script that is famous worldwide even today. He suggested that “the
two Cs would look well in advertising.” The first newspaper ad for
Coca-Cola soon appeared in The Atlanta Journal, inviting thirsty
citizens to try “the new and popular soda fountain drink.” Hand-
painted oil cloth signs reading “Coca-Cola” appeared on store awnings,
with the suggestions “Drink” added to inform passersby that the new
beverage was for soda fountain refreshment.

By the year 1886, sales of Coca-Cola averaged nine drinks per day.
The first year, Dr. Pemberton sold 25 gallons of syrup, shipped in
bright red wooden kegs. Red has been a distinctive color associated
with the soft drink ever since. For his efforts, Dr. Pemberton grossed
$50 and spent $73.96 on advertising.

Dr. Pemberton never realized the potential of the beverage he created.


He gradually sold portions of his business to various partners and, just
prior to his death in 1888, sold his remaining interest in Coca-Cola to
Asa G. Candler, an entrepreneur from Atlanta.

By the year 1891, Mr. Candler proceeded to buy additional rights and
acquire complete ownership and control of the Coca-Cola business.
Within four years, his merchandising flair had helped expand
consumption of Coca-Cola to every state and territory after which he
liquidated his pharmaceutical business and focused his full attention

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on the soft drink. With his brother, John S. Candler, John Pemberton’s
former partner Frank Robinson and two other associates, Mr. Candler
formed a Georgia corporation named the Coca-Cola Company. The
trademark “Coca-Cola,” used in the marketplace since 1886, was
registered in the United States Patent Office on January 31, 1893.

The business continued to grow, and in 1894, the first syrup


manufacturing plant outside Atlanta was opened in Dallas, Texas.
Others were opened in Chicago, Illinois, and Los Angeles, California,
the following year. In 1895, three years after The Coca-Cola
Company’s incorporation, Mr. Candler announced in his annual report
to share owners that “Coca-Cola is now drunk in every state and
territory in the United States.”

As demand for Coca-Cola increased, the Company quickly outgrew its


facilities. A new building erected in 1898 was the first headquarters
building devoted exclusively to the production of syrup and the
management of the business. In the year 1919, the Coca-Cola
Company was sold to a group of investors for $25 million. Robert W.
Woodruff became the President of the Company in the year 1923 and
his more than sixty years of leadership took the business to
unsurpassed heights of commercial success, making Coca-Cola one of
the most recognized and valued brands around the world.

HISTORY OF BOTTLING

Coca-Cola originated as a soda fountain beverage in 1886 selling for


five cents a glass. Early growth was impressive, but it was only when a
strong bottling system developed that Coca-Cola became the world-
famous brand it is today.

Year 1894: A modest start for a bold idea

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In 1894 the Coca-Cola Company is in a candy store in Vicksburg,
Mississippi, brisk sales of the new fountain beverage called Coca-Cola
impressed the store's owner, Joseph A. Biedenharn. He began bottling
Coca-Cola to sell, using a common glass bottle called a Hutchinson.
Biedenharn sent a case to Asa Griggs Candler, who owned the
Company. Candler thanked him but took no action. One of his nephews
already had urged that Coca-Cola be bottled, but Candler focused on
fountain sales.

In 21st century the Coca-Cola bottling system grew up with roots


deeply planted in local communities. This heritage serves the
Company well today as consumers seek brands that honor local
identity and the distinctiveness of local markets. As was true a century
ago, strong locally based relationships between Coca-Cola bottlers,
customers and communities are the foundation on which the entire
business grows.

1920s and 30s … 1950s … Packaging


1916 … International innovations
expansion
Birth of the
contour bottle

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VISION OF COCA-COLA COMPANY

Our mission declares our purpose as a company. It serves as the


standard against which we weigh our actions and decisions. It is the
foundation of our Manifesto.

• To refresh the world in body, mind and spirit


• To inspire moments of optimism through our brands and our
actions
• To create value and make a difference everywhere we engage.

MISSION OF COCA-COLA COMPANY

To create consumer products, services and communications, customer


service and bottling system strategies, processes and tools in order to
create competitive advantage and deliver superior value to;

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• Consumers as a superior beverage experience
• Consumers as an opportunity to grow profits through the use of
finished drinks
• Bottlers as an opportunity to grow profits in volumes
• Bottlers as a trademark enhancement and positive economic value
added
• Suppliers as an opportunity to make reasonable profits when
creating real value-added in an environment of system-wide team
work, flexible business system and continuous improvement
• Indian society in the form of a contribution to economic and social
development.
• Refresh the World... In body, mind, and spirit
• Inspire Moments of Optimism... Through our brands and our actions
• Create Value and Make a Difference... Everywhere we engage.

VISION FOR SUSTAINABLE GROWTH

Our vision guides every aspect of our business by describing what we


need to accomplish in order to continue achieving sustainable growth.

People: Being a great place to work where people are inspired to be


the best they can be.

Portfolio: Bringing to the world a portfolio of quality beverage brands


that anticipate and satisfy people's desires and needs.

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Partners: Nurturing a winning network of customers and suppliers,
together we create mutual, enduring value.

Planet: Being a responsible citizen that makes a difference by helping


build and support sustainable communities.

Profit: Maximizing long-term return to shareowners while being


mindful of our overall responsibilities.

QUALITY POLICY

Coca-Cola Company follows different quality standard for different


countries across the globe. Coca-Cola Company has a long-standing
commitment to protecting the consumers whose trust and confidence
in its products is the bedrock of its success. In order to ensure that
consumers stay informed about the global quality of all Coca-Cola
products sold in World, Coca-Cola products carry a quality assurance
seal on them. The ‘One Quality Worldwide’ assurance seal appears on
the entire range of Coca-Cola Company’s beverages.

CURRENT ORGANIZATIONAL ORGANOGRAM

CEO

EVP/ SVP & SVP &


President EVP/ Director
SVP & Director
Bottling CFO and Presiden Public Affairs/
Presiden General Human
Invest/ EVP t MKT Communicati
t Counsel Resource
Supply Strategy on
s
Chain

President of President President


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President
European 17 Latin President of
Eurasia of African
Union America Pacific Group
Group Group
Strategic Management Issues of Coca-
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BRANDS OF COCA-COLA

Coca-Cola Zero® has been one of the most successful


product launch hes in Coca-Cola’s history. In 2007, Coca
Cola’s sold nearly 450 million cases globally. Put into
perspective, that's roughly the same size as Coca Cola’s
total business in the Philippines, one of our top 15 markets.
As of September 2008, Coca-Cola Zero is available in more than 100
countries.

Energy Drinks

For those with a high-intensity


approach to life, Coca Cola’s brands
of Energy Drinks contain ingredients
such as ginseng extract, guarana
extract, and caffeine and B vitamins.

Juices/Juice Drinks

We bring innovation to the goodness


of juice in Coca Cola’s more than 20
juice and juice drink brands, offering
both adults and children nutritious,
refreshing and flavorful beverages

Soft Drinks

Coca Cola’s dozens of soft drink


brands provide flavor and
refreshment in a variety of choices.
From the original Coca-Cola to most

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recent introductions, soft drinks from The Coca-Cola Company are both
icons and innovators in the beverage industry.

Sports Drinks

Carbohydrates, fluids, and electrolytes


team together in Coca Cola’s Sports
Drinks, providing rapid hydration and
terrific taste for fitness-seekers at any
level

Tea and Coffee

Bottled and canned teas and coffees


provide consumers' favorite drinks in
convenient take-anywhere packaging,
satisfying both traditional tea drinkers
and today's growing coffee culture.

Water

Smooth and essential, our Waters and


Water Beverages offer hydration in its
purest form.

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Other Drinks

So much more than soft drinks, Coca


Cola’s brands also include milk
products, soup, and more so you can
choose a Coca Cola Company product
anytime, anywhere for nutrition,
refreshment or other needs.

CONSUMER CHOICE AT A GLANCE

Limca Common Fanta Basically Preferred by Maaza also Ladies and


drink. Ladies and Kids. Kids

Sprite not clearly Kinley Soda Mostly those who


defines. consume liquor

Factors affecting the strategic management issues

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Factors affecting the strategic management issues of domestic and
international operations of Coca-Cola Company.

Table 1: Factors affecting the strategic management issues

Language English used as a Use the local language required in


second language many situations

Culture Relatively Quite diverse, both between


homogenous countries and within countries

Politics Unstable Often volatile and of decisive


importance
Economy Underdeveloped Wide variations among countries and
among regions within countries

Governmental Reasonably Often extensive and subject to rapid


interference predictable change

Labor Skilled labors are Skilled labors often scarce, requiring


not available training or redesign of production
methods
Financing Moderately Often poorly developed financial
developed financial markets; capital flows subject to
markets government control
Market Data collect is not Sometimes data difficult and
research very easy expensive to collect

Advertising Media are available Media limited; many restrictions; low


with some literacy rates rule out print media in
restrictions some countries

Money Must change from one currency to


another
Transportation It is not developed Often adequate
s
Control Always a problem A worse problem
Labor Collective Layoff of workers often not possible;
relations bargaining, layoff of may have mandatory worker
workers participation in management; workers
may seek change through political
process rather than collective
bargaining

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Factors Affecting International
Strategic Management

Langua Culture Politics Econom Governme Labor


ge y nt

Financin Market Money Control Advertising Contrac


g ts

Transportation and Labor Relations


Communication
Figure: Factors affecting the strategic management issues

There are some factors which affect strategic of Coca-Cola Company in


case of international operation. Language is one of the main
considerations when it does business domestically, they generally
domestic language. But when it does business outside the country it
follows Polycentric policy that is it used different language in different
countries. Side by side culture is relatively homogeneous in domestic
operation and quite diverse, both between countries and within
countries. Political stability and policy also be considered by the Coca-
Cola Company. Control function is done by centrally in case of
domestically but when it goes beyond outside, it must work a tightrope
between over centralizing and losing control to much decentralizing.
Labor is another consideration because their skills and collective
bargaining that is labor relation differ from country to country.
Advertising in domestic country is very easy because domestic
cultures are known to them. But in case of international operation it
faces many problems for advertising such as shortage of media, huge
advertising cost and so forth. However economy is relatively uniform
in domestic’s country but outsides, it faces wide variation among
countries and among region within country. In case of Coco-Cola
Company the market research data is easy to collect but when it goes
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to foreign sometimes face difficult and expensive to collect data. At
last we see that government interference in case of domestically, it is
minimal and reasonably predictable but in international operation it is
often expensive and subject to rapid change.

Strategic Alternatives of Multinational Companies

Multinationals corporations typically adopt one of four strategic


alternatives in their attempt to balance the three goals of global
efficiencies, multinational flexibility, and worldwide learning. There
four strategies are as follows—

Home Replication Strategy

In this strategy, a firm utilizes the core competency or firm-specific


advantage it developed at home as its main competitive weapon in the
foreign markets that it enters. That is, it takes what it does
exceptionally well in its home market and attempts to duplicate it in
foreign markets.

Multi-domestic Strategy

It is the second alternative available to international firm. A multi-


domestic corporation views itself as a collection of relatively
independent operating subsidiaries, each of which focuses on a
specific domestic market.

Global Strategy

It is the third alternative available for international firms. A global


corporations views the world as a single marketplace and has as its
primary goal the creation of standardized goods and services that will
address the needs of customers worldwide.

Transnational Strategy

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The transnational corporation attempts to combine the benefits of
global scale efficiencies with the benefits of local responsiveness.

Strategies for Coca Cola Company

These four strategy are shown in the following figure—

Home Multi-domestic
Replication Strategy
Strategy


Transnational
Global Strategy Strategy

From these four strategies Coca-Cola Company follow the Multi-


domestic strategies. They produce their products independently in
different countries. All countries product are not same. They produce
their products by following different strategy for different countries,
based on the internal and external environment of the country. Coca-
Cola Company developed their strategy by considering the nature of
the people of different county’s people, culture, status and so many
other related factors. Behind the reasons of following of this strategy
may be that, different countries economies of scale for production,
distribution, and marketing are low, side by side cost of coordination
between the parent corporation and its various foreign subsidiaries is
high. Because each subsidiary in a multi-domestic corporation must be
responsive to the local market, the parent company usually delegates
considerable power and authority to managers of its subsidiaries in
various host countries.

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Levels of Strategies followed by Coca-Cola Company

There are three levels of strategies followed by Coca-Cola Company.


This may be stated as the following—

Figure: Levels of Strategies

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Corporate Level Strategy

Corporate level strategy attempts to define the domain of business the


firm intends to operate. Corporate level strategy fundamentally is
concerned with the selection of businesses in which the company
should compete and with the development and coordination of that
portfolio of businesses. A firm might adopt any of three forms of
corporate strategy:

• A single business strategy

• Related diversification strategy and


• Unrelated diversification strategy.

Coca-Cola Company follows related diversification strategy that is calls


for the firm to operate in several different but fundamentally related
businesses. Each of its operations linked to the others Coca-Cola
characters, the Coca-Cola logo, and a theme of wholesomeness and a
reputation for providing high quality family products. Coca-Cola
Company follows this strategy because it has several advantages. At
first, the firm depends less on a single products so it is less vulnerable
to competitive or economic threats. Secondly, related diversification
may produce economies of scale for a firm. Thirdly, related
diversification may allow a firm to use technology or expertise
developed in one market to enter a second market more cheaply and
easily. Corporate level strategies of Coca-Cola Company is following—

Corporate Level Strategy


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Marketin System Reward


Financial
g Strategie System R&D Strategies
Strategies
Strategies s Strategies

Figure: Corporate Strategy of Coca-Cola Company

Business Unit Level Strategy

A strategic business unit may be a division, product line, or other profit


center that can be planned independently from the other business
units of the firm. Corporate strategy deals with the overall where as
business strategy focuses on specific business, subsidiaries or
operating units within the firm. Business seeks to answer the question
“how should we compete in each market we have chosen to enter?”
The firms develop unique business strategy for each of its strategic
business units, or it may pursue the same business strategy for all of
them. The three basic business strategy are differentiation, overall
cost leadership and focus. Coca-Cola Company uses the differentiation
strategy effectively.

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Functional Level Strategy

The functional strategies attempts to answer to question “How we


manage the function?” The functional level of the organization is the
level of the operating divisions and departments. The strategic issues
at the functional level are related to business processes and the value
chain. Functional level strategies in marketing, finance, operations,
human resources, and R&D involve the development and coordination
of resources through which business unit level strategies can be
executed efficiently and effectively.

Functional units of an organization are involved in higher level


strategies by providing input into the business unit level and corporate
level strategy, such as providing information on resources and
capabilities on which the higher level strategies can be based. Once
the higher-level strategy is developed, the functional units translate it
into discrete action-plans that each department or division must
accomplish for the strategy to succeed.

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E-COMMERCE OF COCA-COLA COMPANY

Good points of Coca-Cola Company

• Brand Promotion
• Attractive products selection
• Look and feel 8
• Provision of multimedia product, catalogue pages
• Personal attention
• Community relationships

Weak points of Coca-Cola Company

• Performance and service: that is not easy navigation, shopping


and purchasing, and prompt shipping and delivery.
• Discount pricing is not being offered.

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Developing International Strategies

Developing international strategies is not a one-dimensional process..


Simply put, put strategy formulations deciding what to do and strategy
implementation is actually doing it. Firms generally carry out
international strategic management in two broad strategies-

Strategy Formulation

In strategies formulation, a firm establishes its goals and strategic plan


that will lead to the achievement of their mission goals. In
international strategy formulation, managers develop, refine, and
agree on which markets of enter (or exit) and how best to compete in
each.

Strategy Implementation

A firm develops the tactics for achieving the formulated international


strategies is known as strategy implementation. Strategy
implementation is usually achieved via the organization’s design, the
work of its employees, and its control systems and processes.

Every Multinational Companies are developing their international


strategies so that they can survive in the complex business situation.
Now the modern market is fully globalized and as a result it’s really
difficult for every multinational organization in the right track. In such
aspect the importance of strategy formulation and strategy
implementation played an important role. Side by side there is some
important process which helps in international strategy formulation.

Developing International Strategies in Aspects of Coca-Cola


Company

TCCQS is the Coca-Cola system’s branded quality management


system. It helps coordinate and guide our activities to ensure quality in
everything they do. For entering in to a new market and be survive in

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the market it always ready to cope with change. Different government
policy, economic condition, political situation, barrier and ban are
associated with different market.

Coca-Cola Company’s basic strategies are to develop a mission


statement for entering a new market depending on a fully fledged
market survey. Identifying external and internal environment strength,
weakness, opportunity, and threats is the next management
strategies. Depending on the scope and opportunity the company will
go forward as well as try to resolve the weakness and threats. After
entering into a new market Coca-Cola Company try to achieve
strategic goals and guide its daily activities with proper observation.

Lastly this company establishes a control framework for controlling the


managerial and organizational systems and process as well. This
company believes that, for taking a position in a new country is fully
depends on the good formulation strategies and keeping it. To do
business outside the local market is depending on the quality control
of the product and quality ensures the customer perception and the
choice for consuming this products.

Figure: Quality Management System of Coca-Cola Company

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Through this model, we see that the company is first take the response
of customers and consumers through market survey. Then the
management accumulates the best quality resources for making their
products. This process includes-

• Skilled employee involvement for production and quality control

• High quality materials for production

• Up to date technology for quality control

• Effective methods and newly developed strategies

They will follow some sequential steps in developing the international


strategy formulation. Those steps help the Coca-Cola Company to
enter and establish their business in multinational base. They are
following multi-domestic strategies for their produced product as well
as their marketing system. The analysis of different levels of strategic
formulating of Coca-Cola Company is given below.

Developing the Mission Statement

Coca-Cola Company begins the international strategic planning


process by creating a mission statement, which clarifies the
organization’s purpose, value, and directions. The mission statement is
often used as a way of communicating with internal and external
constituents and stakeholders about the firm’s strategic direction.

Mission statement of Coca-Cola Company

This company focused on driving growth in of their business in


selected profitable and emerging categories. To develop, implement
and continuously improve the integrated management systems in a
culture of continuous improvement which:

• Directs the continual up-gradation for efficient and environment


friendly manufacturing technology.

• Monitor and improve the efficiency and effectiveness of all


business processes.

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• Promotes professional and flexible work environment, teamwork
and innovation through employee participation and process
ownership.

• Drives customer orientation at all levels within the organization.

• Monitor and economize the Cost of Quality.

Comments on mission Statements

(In terms of how they support the strategies)

The vision statement of this company supports the existing strategies


that are (generic strategy) that Coca Cola needs to pursue is that of
differentiation. In their current vision and mission statements, the
company says it aims to be a low cost leader, yet through their
analysis of the strategic direction, the company needs to adopt a
generic strategy of differentiation. This will allow Coca cola to do two
things;

1. Increase unit sales

2. Gain buyer loyalty

However, at the expense of sounding simplistic, it is necessary that


the company communicate its differentiation to its customers,
otherwise these two advantages will not avail themselves. Initially
Coca cola will need to adopt a focused differentiation approach, which
means that they should selectively choose which markets will profit
them the most and then target only those markets until such
provisions are in place from where the company is able to expand its
target base. After which they should opt for a broad differentiation
generic strategy.

COCA-COLA COMPANY, THE SWOT ANALYSIS

SWOT ANALYSIS

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The Coca-Cola Company (Coca-Cola) is a leading manufacturer,
distributor and marketer of Non-alcoholic beverage concentrates and
syrups, in the world. Coca-Cola has a strong brand name and brand
portfolio. Business-Week and Inter brand, a branding consultancy,
recognize Coca-Cola as one of the leading brands in their top 100
global brands ranking in 2008. The Business Week-Interbred valued
Coca-Cola at $67,000 million in 2008. Coca-Cola ranks well ahead of
its close competitor Pepsi which has a ranking of 22 having a brand
value of $12,690 million The Company’s strong brand value facilitates
customer recall and allows Coca-Cola to penetrate markets. However,
the company is threatened by intense competition which could have
an adverse impact on the company’s market share.

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Analyzing the primary competitor and identifying their Strengths,


Weaknesses, Opportunities, and Threats (SWOT Analysis) help
determine target markets, marketing plan, and customer service, sales
forecasting and sales planning. Examining the following will assist in
the competitive analysis:

 Identify the level of rivalry among competing sellers in the


industry
 Review strategies of companies to encourage customers to
switch from a competitor
 Analyze ease of entry for new competitors
 Determine bargaining power for suppliers of key materials and
components
 Determine bargaining power for buyers of the product

SWOT Analysis represents the analysis of the following four things—

STRENGTHS

Distribution network: The Company has a strong and reliable


distribution network. The network is formed on the basis of the time of
consumption and the amount of sales yielded by a particular customer
in one transaction. It has a distribution network consisting of a number
of efficient salesmen, 700,000 retail outlets and 8000 distributors. The
distribution fleet includes different modes of distribution, from 10-
tonne trucks to open-bay three wheelers that can navigate through
narrow alleyways of Indian cities and trademarked tricycles and
pushcarts.

Strong Brands: The products produced and marketed by the


Company have a strong brand image. People all around the world
recognize the brands marketed by the Company. Strong brand names
like Coca-Cola, Fanta, Limca, and Maaza add up to the brand name of
the Coca-Cola Company as a whole. The red and white Coca-Cola is
one of the very few things that are recognized by people all over the
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world. Coca-Cola has been named the world's top brand for a fourth
consecutive year in a survey by consultancy Inter brand. It was
estimated that the Coca-Cola brand was worth $70.45billion.

Low Cost of Operations: The production, marketing and distribution


systems are very efficient due to forward planning and maintenance of
consistency of operations which minimizes wastage of both time and
resources leads to lowering of costs.

WEAKNESSES

Low Export Levels: The brands produced by the company are brands
produced worldwide thereby making the export levels very low. In
India, there exists a major controversy concerning pesticides and other
harmful chemicals in bottled products including Coca-Cola.

Small Scale Sector Reservations Limit Ability To Invest And


Achieve Economies Of Scale: The Company’s operations are carried
out on a small scale and due to Government restrictions and ‘red-
tapism’, the Company finds it very difficult to invest in technological
advancements and achieve economies of scale.

OPPORTUNITIES

Large Domestic Markets: The domestic market for the products of


the Company is very high as compared to any other soft drink
manufacturer. Coca-Cola India claims a 58 per cent share of the soft
drinks market; this includes a 42 per cent share of the cola market.
Other products account for 16 per cent market share, chiefly led by

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Limca. The company appointed 50,000 new outlets in the first two
months of this year, as part of its plans to cover one lakh outlets for
the coming summer season and this also covered 3,500 new villages.
In Bangalore, Coca-Cola amounts for 74% of the beverage market.

Export Potential: The Company can come up with new products


which are not manufactured abroad, like Maaza etc and export them to
foreign nations. It can come up with strategies to eliminate
apprehension from the minds of the people towards the Coke products
produced in India so that there will be a considerable amount of
exports and it is yet another opportunity to broaden future prospects
and cater to the global markets rather than just domestic market.

Higher Income among People: Development of India as a whole


has lead to an increase in the per capita income thereby causing an
increase in disposable income. Unlike olden times, people now have
the power of buying goods of their choice without having to worry
much about the flow of their income. The beverage industry can take
advantage of such a situation and enhance their sales.

THREATS

Imports: For example: As India is developing at a fast pace, the per


capita income has increased over the years and a majority of the
people is educated, the export levels have gone high. People
understand trade to a large extent and the demand for foreign goods
has increased over the years. If consumers shift onto imported
beverages rather than have beverages manufactured within the
country, it could pose a threat to the Indian beverage industry as a
whole in turn affecting the sales of the Company.

Tax and Regulatory Sector: The tax system in India is accompanied


by a variety of regulations at each stage on the consequence from
production to consumption. When a license is issued, the production
capacity is mentioned on the license and every time the production

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capacity needs to be increased, the license poses a problem.
Renewing or updating a license every now and then is difficult.
Therefore, this can limit the growth of the Company and pose
problems.

Slowdown In Rural Demand: The rural market may be alluring but it


is not without its problems: Low per capita disposable incomes that is
half the urban disposable income; large number of daily wage earners,
acute dependence on the vagaries of the monsoon; seasonal
consumption linked to harvests and festivals and special occasions;
poor roads; power problems; and inaccessibility to conventional
advertising media. All these problems might lead to a slowdown in the
demand for the company’s products.

COCA-COLA COMPANY, THE PEST ANALYSIS

A scan of the external macro-environment in which the firm operates can be


expressed in terms of the following factors:

• Political
• Economic
• Social
• Technological

The acronym PEST (or sometimes rearranged as "STEP") is used to describe a


framework for the analysis of these macro environmental factors. A PEST analysis
fits into an overall environmental scan, which consists of significant political,
economic, social and technological analysis for a firm to reach their desirable
position or to attain the goals and objectives. For operating a business worldwide it
is too much important, because its analysis represent the overall environmental
scanning as shown in the following diagram:

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Environmental Scan

/
\

External Analysis

Internal Analysis

/ \

Macro environment

Microenvironment

P.E.S.T.

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Coca-Cola Company’s perform/ operate their business unit in different country
based on the developing of the PEST analysis. The PEST analysis of Coca-Cola
Company is as following—

Political Factors

It is one of the significant parts of a company where, in which country they


operate their business unit. Political factors include government regulations and
legal issues and define both formal and informal rules under which the firm must
operate. Some examples include:

• tax policy
• employment laws
• environmental regulations
• trade restrictions and tariffs
• political stability

Economic Factors

Another most imperative element for PEST analysis is economic factors.


Economic factor affects the purchasing power of potential customers and the firm's
cost of capital. The following are examples of factors in the macro-economy:

• economic growth
• interest rates
• exchange rates
• inflation rate

Social Factors

Social factors include the demographic and cultural aspects of the external macro
environment. These factors affect customer needs and the size of potential
markets. Some social factors include:

• health consciousness
• population growth rate
• age distribution
• career attitudes
• emphasis on safety

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Technological Factors

Technological factors can lower barriers to entry, reduce minimum efficient


production levels, and influence outsourcing decisions. Some technological factors
include:

• R&D activity
• automation
• technology incentives
• rate of technological change

Develop Strategic and tactical goals and plans of Coca-


Cola Company

After completion of SWOT and PEST analysis as context, international


strategic planning is largely framed by the setting of strategic goals.
Based on different market situation as well as customers response this
company will set up their tactical goals for being a strong position in
the global market place. Strategic goals are the major objectives that
the Company wants to accomplish through pursuing a particular
course of action.

The basic objective of set up this strategic and tactical plan and goals
is to exploit the firm’s strengths and environmental opportunities,
neutralize external threats and overcome the firm’s weakness.
Depending on those vital factors this Coca-Cola Company is develop a
Control Framework for their overall controlling of management.
Through this framework managerial and organizational systems are
observed, monitor, and processed.

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Findings
By preparing this report about the strategic management issues of
multinational companies (MNCS), the case study on the Coca-Cola
Company, we get some important things. These findings are as follows

• Coca-Cola Enterprises is the world's largest marketer, producer


and distributor of Coca-Cola products.

• Coca-Cola was first introduced by John Smyth Pemberton, a


pharmacist, in the year 1886 in Atlanta, Georgia when he
invented caramel-colored syrup in a three-legged brass kettle in
his backyard.

• It operates in 46 U.S. states and Canada, and is the exclusive


Coca-Cola bottler for all of Belgium, continental France, Great
Britain, Luxembourg, Monaco and the Netherlands. Coca-Cola is
the non alcoholic bottled beverages.

• The company owns or licenses more than 400 brands, including


diet and light beverages, waters, juice and juice drinks, teas,
coffees, and energy and sports drinks.

• The company operates in more than 200 countries

• Strategic management integrates the knowledge and experience


gained in various functional areas.

• 3 Major Criteria in decision Making are---the concept of


Maximization, the concept of satisfying, the concept of
instrumentalism.
• The vision of Coca-Cola Company is to refresh the world in body,
mind and spirit
• Bringing to the world a portfolio of quality beverage brands that
anticipate and satisfy people's desires and needs.
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• Coca-Cola Zero® has been one of the most successful product
launch hes in Coca-Cola’s history
• It has soft drinks, energy drinks, juice drinks, sports drinks, tea
and coffee, water and other drinks.
• Coca-Cola Company follows the multi-domestic strategy for
operating their business.
• After entering into a new market Coca-Cola Company try to
achieve strategic goals and guide its daily activities with proper
observation.
• Good points of Coca-Cola Company are brand promotion,
alternative products selections, Provision of multimedia product,
catalogue pages and so on.

CONCLUSION

Being in such a tense competition (just like the brand Coca-Cola),


Coca-Cola should not take the direct and tough attack upon it. There is
no good to either side. The best way is to keep a peaceful relationship
with it and always compare with others; we should find their
disadvantages and show our advantages on this aspect. Then by and
by, the people would think ours is betted Of course the most important
rule is to improve ourselves to meet the consumers. An organization’s
strategic thinking is governed by the situation prevalent in its external
environment. The external environment comprises of the strategic
moves adopted by the organization’s competitors. The organization
has to carefully study these moves and accordingly devise strategies
to gain competitive advantage. For the same, the organization needs
to conduct an industry and competitive analysis. The paper discusses
the steps and processes involved in the same. In formulating business
strategy, managers must consider the strategies of the firm's
competitors. While in highly fragmented commodity industries the
moves of any single competitor may be less important, in
concentrated industries competitor analysis becomes a vital part of
strategic planning.

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REFERENCES

Cooper, R. D., Schindler, S. P. (2001), “International Business Research


Method” Seventh Edition, New York: McGraw-Hill Irwin

Gerard Prendergast and Leyland Pitt (2007) “International Journal of


Strategic Management: a World Issue”, Vol. 26 No.6, 1996, pp. 60-72.
© MCB University Press.

James Prendergast and Eammon Murphy and Malcom Stephenson


(1996) “International Journal of Quality & Reliability Management”, Vol.
13 No. 5, 1996, pp. 77-90, © MCB University Press.

Rose Sebastianelli and Nabil Tamimi “How Management Strategies


Defining Quality”, Vol. 19 No. 4, 2002, pp. 442-453. MCB UP Limited.

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Annual Report of Coca-Cola Company (2005-2009)

www.coke/homeContent.asp.htm

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