strategic management report on cocal cola by noor
TRANSCRIPT
A STRATEGIC MANAGEMENT REPORT ON COCA-COLA
June 12
2010
SUBMITTED BY : NOOR MOHAMMAD
SUBMITTED TO: SIR. Dr. SHAHEER ALAM
MBA. 3rd SEMESTER .GROUP (B)
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ACKNOWLEDGEMENT
I have the only pearl of eyes to admire the blessing of the Compassionate and
Omnipotent because the words are bound, knowledge is limited and time is short to
express His dignity. All thanks are due only toAlmighty Allah, most gracious, the most
merciful, who gave me the strength to do this job. My special praise for Holy Prophet
Muhammad (Peace Be Upon Him) who is, for even humanity as a whole.
It is a matter of great honor and pleasure for me to express my ineffable gratitude
and profound indebtedness to my venerable supervisor Sir SHAHEER ALAM, for his
kind supervision, valuable suggestion and
sympathetic attitude through my research. I am much impressed of his intellectual
activities, inexhaustible energy to steer forth the student. His sympathetic and sincerest
attitude is highly qualified experience.
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Executive Summary
The purpose of this report is to construct strategies by analyzing the general beverage
industry– in particular, carbonated drinks – and the competitive environment. Coca- Cola
is one of the most popular and recognizable brands in the world of business (Heller et al
2006,). Thus, from this analysis, COCA COLA’s potential growth and strategic
management to maximize profitability will be examined. Eventually, these crucial factors
in business management are affecting COCA COLA’s performance in the market,
including expanding into larger market and launch takeovers of other companies that
COCA COLA believe will create value for the company.
This report will also discuss and outline each aspect in the general environment of COCA
COLA and also the strength of each aspect in regards to Porter’s five forces. Along with
the analysis, the effect that each aspect brings to strategic management will also be
discussed, focusing mainly towards several aspects to COCA COLA’s strategic
management.
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Table OF Contents Page No.
CHAPTER #1
Introduction
1.1 Company Overview
1.2 History Of Coca-Cola Company
1.3 The Slogan
1.4 History Of Bottling
1.5 ( The Secret Formula Of Coca Cola)
CHAPTER #2
Internal Analysis
2.1 Mission, Vision & Values Of Coca Cola Company
2.1.1 Our Mission
2.1.2 Our Vision
2.1.3 Our Wining Culture
2.2 Objectives Of Coca-Cola Company
2.2.1 The Corporate Objectives
2.3 Management Philosophy And Attitudes, Culture And Leadership
2.3.1 Decision-Making:
2.3.2 Organizing
2.3.4 Leading
2.3.5 Controlling
2.4 Market Share Of Coca Cola
2.5 Strategies
2.5.1 Positioning Strategy
2.5.2 Promotion Strategies
2.5.3 Utc Scheme
2.5.4 Getting Shelves
2.5.5 Eye Catching Position
2.5.6 Sale Promotion
2.5.7 Distribution Channels
2.5.8 Advertisement Strategies
2.5.9 Our Competitive Strategies
2.5.9.1 Marketing:
2.5.9.2 Innovation:
2.5.9.3 Globalization:
2.6 Value Chain Of Coca Cola
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2.6.1 Our Suppliers
2.6.2 Our Customers:
2.6.3 Coca Cola Retailing Research Council
2.6.4 Collaboration Customer Relationship Process
2.6.5 Customer Development And Training
2.7 Financial Analysis Of Coca Cola Company
CHAPTER #3
(External Analysis)
3.1 Coca-Cola Company, The Pestle Analysis
3.1.1 Political Analysis For Coca-Cola
3.1.2 Economic Analysis For Coca-Cola
3.1.3 Social Analysis For Coca-Cola
3.1.4 Technological Analysis For Coca-Cola
3.2 Industrial Environment And 5 Forces Model For Coca Cola
3.2.1 Bargaining Power Of Supplier
3.2.2 Bargaining Power Of Buyers
3.2.3 Threats Of Substitute
3.2.4 Rivalry Among Competing Firms
3.2.5 Threats Of New Entrants
3.3 Coca-Cola Company, The SWOT Analysis
3.3.1 Strengths
3.3.2 Weaknesses
3.3.3 Opportunities
3.3.4.Threats
3.4 General Analysis Of Coca Cola
5 Recommendation
6 Conclusion
7 REFRENCES
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CHAPTER #1
(INTRODUCTION)
1.1 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 2008.The company recorded revenues of $24,088 million during the fiscal
year ended December 2008, an increase of 4.3% over 2007. 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 2007 to
approximately 21.4 billion unit cases in 2008, 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 2008 when compared to 2007. The operating
profit of the company was $6,308 million during fiscal year 2008, an increase of 3.7%
over 2007. The net profit was $5,080 million in fiscal year 2008, an increase of 4.3%
over 2007.
1.2 HISTORY OF COCA-COLA COMPANY
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
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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.
1.3 THE SLOGAN:
“ALWAYS COCA COLA”
1.4 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
In 1894 the Coca-Cola Company is in a candy store in Vicksburg,
Mississippi, brisk sales of the new fountain beverage called Coca- Cola
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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.
1950s … Packaging
Innovations
1920
s and 30s …
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Inte
rnational
exp
ansion
1.5 ( The secret formula of Coca Cola)
The mystique of Coca-Cola was also enhanced of course, by its secret
formula, whose blend of flowers was code-named 7x. Soon after frank
Robinson brought him the formula, as a Candler changed it. His son
said that he did so because the Palmerton product did not have an
altogether agreeable taste. It was unstable; it contained too many
things, too much some ingredients and too little of other the bouquet
of several of the volatile essential oils previously used was adversely
affected by some ingredients. The main reason that Candler modified
the formula was to distinguish it from all the other recipes floating
around. At least ten people had access to the origin Palmerton.
Robinson had a particularly keen nose and pallet and could detect
even a trace of an off flavor, although there are rumors of the secret
formula is no longer a secret, the magical formula of Coca-Cola called
7x still remain distinctive in flavor till date.
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CHAPTER #2
(INTERNAL ANALYSIS)
2.1 Mission, Vision & Values of Coca Cola Company
The world is changing all around us. To continue to thrive as a business
over the next ten years and beyond, we must look ahead, understand
the trends and forces that will shape our business in the future and
move swiftly to prepare for what's to come. We must get ready for
tomorrow today. That's what our 2020 Vision is all about. It creates a
long-term destination for our business and provides us with a
"Roadmap" for winning together with our bottling partners.
2.1.1 OUR MISSION
Our Roadmap starts with our mission, which is enduring. It
declares our purpose as a company and serves as the standard
against which we weigh our actions and decisions.
To refresh the world...
To inspire moments of optimism and happiness...
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To create value and make a difference.
2.1.2 OUR VISION
Our vision serves as the framework for our Roadmap and guides
every aspect of our business by describing what we need to
accomplish in order to continue achieving sustainable, quality
growth.
People: Be a great place to work where people are inspired
to be the best they can be.
Portfolio: Bring to the world a portfolio of quality beverage
brands that anticipate and satisfy people's desires and
needs.
Partners: Nurture a winning network of customers and
suppliers, together we create mutual, enduring value.
Planet: Be a responsible citizen that makes a difference by
helping build and support sustainable communities.
Profit: Maximize long-term return to shareowners while
being mindful of our overall responsibilities.
Productivity: Be a highly effective, lean and fast-moving
organization.
2.1.3 Our Wining Culture
Our Winning Culture defines the attitudes and behaviors that will be
required of us to make our 2020 Vision a reality.
2.1.4 Live Our Values
Our values serve as a compass for our actions and describe how we
behave in the world.
Leadership: The courage to shape a better future
Collaboration: Leverage collective genius
Integrity: Be real
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Accountability: If it is to be, it's up to me
Passion: Committed in heart and mind
Diversity: As inclusive as our brands
Quality: What we do, we do well
Focus on the Market
Focus on needs of our consumers, customers and franchise
partners
Get out into the market and listen, observe and learn
Possess a world view
Focus on execution in the marketplace every day
Be insatiably curious
Act Like Owners
Be accountable for our actions and inactions
Steward system assets and focus on building value
Reward our people for taking risks and finding better ways to
solve problems
Learn from our outcomes -- what worked and what didn’t
2.2 OBJECTIVES OF COCA-COLA COMPANY
•To engage Coca-Cola in exploring the viability and options for using their distribution
networks in developing countries to distribute ‘social products’ such as oral rehydration
salts (ORS) and related educational materials on health, hygiene and sanitation.
•To help engage an appropriate international NGO, or NGOs, to partner with Coca-Cola
at a global level and local levels on this initiative.
•To support Coca-Cola and its partners in modeling different scenarios which combine
Coca-Cola’s distribution network with local health initiatives in order to achieve our
aims.
•To support Coca-Cola and its partners in selecting the most promising scenarios as the
basis for field trials.
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•To support the international NGO, or NGOs, to engage local NGOs and local Health
Institutions in order to undertake trials linking this idea with local support infrastructure.
•To engage and inform as many people as possible, encouraging them to support this
campaign, managing expectations and offers of help and promoting constructive debate.
•To establish a core group of enablers and activists to lead on the different aspects of this
campaign.
• To monitor the progress of the campaign and ensure that any trials and roll-outs are
effectively monitored and evaluated.
2.2.1 THE CORPORATE OBJECTIVES:
STRATEGIC GOALS
The strategic goals are considered when company is thinking of the long-term objectives
but at coca cola strategic objectives and goals are set up for three years. These strategic
goals are decide by the top management with consultation by the parent company head
quartered at Singapore. However, they are reviewed every year in the annual meeting to
make sure that they are in line with the changing environment. They are:
• To continue to be an organization providing the quality products to the valuable
customers.
• To select and retain the professional people for the organization.
• To project an outstanding corporate image.
• To satisfy the customer through extra ordinary service and an excellent service along
with the complete tactical and operational support.
TACTICAL GOALS:
The top management of the company on an annual basis devises these goals together with
the consultation of the lower level employees. Then each departmental director is given
these annual tasks that then subdivide it on the quarterly or monthly basis to have a
proper check to ensure that these objectives are achieved, mainly through marketing, is
the job of the director of each division. For this year, these goals are:
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• To increase the revenues by 20% as compared to last year.
• To increase the total retail customers by around 10%.
• To increase the market share by 5%.
• To reactivate the discontinued customers by 30%.
OPERATIONAL GOALS:
Operational goals are decided by the top management in consultation with the lower level
employees. They are following the concept of management by objectives
(MBO). Each employee is assigned its goals and is told what is expected of him and then
he is evaluated on the basis of certain rules and regulations followed evenly by the
company.
For example: a sales man is given following tasks, duties and certain targets: Each
salesman has to oversee around 100-125 outlets. The frequency of visits to each outlet
depends upon the sales of that particular outlet. Normally, a salesman has to visit a single
outlet thrice a week i.e. every alternate day. This means that a salesman visits at least 20-
30 outlets per day.
The salesman has three basic functions to perform.
• To find new customers,
• To retain existing ones,
• To bring back the discontinued account
Each salesman has to bring in at least three new accounts every month. These may either
be new customers or the reactivation of the discontinued accounts. Sales manager is made
responsible for the performance and achievement of operational goals and is assigned to
set certain milestones for the salesman so as to give him proper feedback, which
definitely helps the salesman achievement of the above-mentioned goals.
.
2.3 Management philosophy and attitudes, culture and leadership
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2.3.1 DECISION-MAKING:
Competing in the market place is like a war. You have Injuries and casualties, and the best
strategy win” (John Collins)
The decision-making process in CCBPL is centralized. The model used is classical, whereby the
top management takes their time while making decisions and explore and evaluate all the possible
alternatives before choosing the rationally economic and feasible situation.
Programmed decisions are made only by the top management with no consultation what so ever
with the line managers while the daily and routine decisions are made by the line managers at the
middle level with the prior permission or approval from the general manager.
Decisions, which are normally taken at the top management, are related to
• The package positioning
• Trade discounts
• Advertisement
• Price reductions
• Distribution
While recruiting new employees, the top management approves the vacancies and asks the
Human Capital Department to conduct the written test and this test normally is conducted for the
employees at the lower level. Then prospective applicants are short listed through the interview
process. Then the Business and operations manager or general manager personally interviews the
employees and then makes the final decision about the selection himself.
Hence, the style of decision-making followed by the CCBPL model is AII. That is, the decisions
are made on the basis of the inputs provided by the lower level employees and the managers at
the middle management level. Top management asks for the suggestions and ideas of his
subordinates and then takes the final decision himself.
However, the remaining decisions, which are mainly related to the daily operations, are made by
the respective managers who are eventually made responsible for the results. The management is
very much cooperative and encourage its employees to come up with new ideas related to their
duties and the work they do so as to increase the overall efficiency of the organization and
eventually increasing the profits..
2.3.2 ORGANIZING
1: DEPARTMENTALIZATION:
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CCBPL is divided into different departments on the basis of functional approach. People are
grouped together on the basis of common skills and work activities. This approach helps
company in achieving the economies of scale through high quality of problem solving and lesser
needs of the training of the employees.
CCBPL is headed by the General Manager. There are five departments at CCBPL namely,
Production, Industrial Relations, Sales and Marketing, Human Capital, and Finance and
Accounting.
•Production Department is responsible for the overall production of the
CCBPL. There are 8 plants of CCBPL operating throughout the country. Different areas are
distributed the products on the basis of nearness so as to reduce the transportation cost.
• Industrial Relations Department is responsible for dealing with the
Problems related to the working environment of the employees and the
Issues related to the labor unions.
• Sales and Marketing Department is responsible for the making the
Product available in the market and to deal with the issues related to the
advertisements of the products.
• Human Capital Department is responsible for looking for the efficient
pool of workers, selecting the professionals and makes them happy so that they should stick to the
company. The Human Capital department deals with management level employees’ grievances.
• Finance Department deals with the overall costing and pricing of the
products. This also handles the import related issues of the company. Accounting department
assists the sales department in making invoices and payroll entries.
WORK SPECIALIZATION
The work specialization is high, as each Manager is made responsible for only a particular
function, which is his expertise. There is no boredom or monotony as each salesman is meeting
the different sort of person and the work is challenging and promotions are based on performance
there is no monotony and boredom.
AUTHORITY AND RESPONSIBILITY:
The salesman has to report to the sales manager. These sales managers are responsible for the
performance of the sales man and they are required to provide them timely feedback. They are
also required to provide the guidance at any time and related to the issues related to the
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performance of the employees. These salesmen are monitored on an on-going basis by their
manager, which serves as an effective control mechanism.
The employees have a lot of authority, responsibility and information relative to the work that
they are doing. However, all the information and authority relative to the work is provided by
their respective managers.
The procedure is same in the other departments as well.
DELEGATION AND ACCOUNTABILITY:
There is a high degree of delegation and delegation is done with proper authority and
responsibility. Each manager is also made accountable for the actions of his subordinates. Proper
instructions and guidance is given at time to time to achieve the objectives by the respective
managers.
Apart from the delegating every manager is responsible for motivating his juniors so as to
increase the effectiveness and efficiency of the employees. Human Capital department also helps
employees realize their potential and motivate them through different methods. They make sure
that they give the best in return to their managers. This increases their performance, the quality of
their work, and customer satisfaction.
SPAN OF CONTROL:
The span of control is low as there are 3-5 employees reporting to their managers. This low
structure is due to the fact that organization is a vertical and different people have different works
to do so. It is also difficult to control more than five people and still manage the resources and
people in an effective manner.
RESOURCE ALLOCATION:
As far as resource allocation is concerned, the managers of each department have the authority to
utilize the organizational resources whenever needed for the functions of his department. They
have to get the approval from the other managers if these assets belong to other managers. These
resources may be capital, human or any other available.
ORGANIZING THE HUMAN RESOURCES:
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Recruitment is normally done on the required positions and not on the standby basis.
Recruitment starts whenever a supervisor or sales manager needs a salesperson and it is first
approved by the general manager before sending it to the human resources department.
All the vacancies are first internally advertised so that all the employees who fulfill the
requirements can avail this opportunity. If there aren’t any suitable persons for a particular job
then human resource department search its data bank and if there is no suitable person then at last
it is advertised in the newspaper but it is rarely the case at coca Cola for the sales man.
Selection is based on different criterion for different positions. Education requirements are the
first and the most important and are the first part of the screening of the personnel.
After the screening stage, applicant is called for the aptitude test. For a salesman job simple
arithmetic and general knowledge is tested. Know how of English is also necessary in some
cases.
After passing the aptitude test applicant is asked to appear for an interview. This interview is
normally carried out by the sales and human resource department. Purpose of this interview is to
confirm the data and claims, which the applicant has produced and made.
If the applicant is selected, he is asked for four sureties or any other references, which he can
make and sometimes, human resource department also like to confirm from their Ex-Employers
about the conduct and the reason for leaving of the applicant.
2.3.3 TRAINING:
At Coca cola on the job training is given the utmost importance. At first a sales man is given
information about the product, sales environment and company policies and procedures. Ethical
behavior is emphasized most so as not to create any sort of bad habits which can cause great
problems for the company. Normally a new sales man is supposed to work under another
salesman to learn the basics of selling techniques and the overall environment in which he will be
working.
A salesman is then allowed to work under the salesman but he is asked to perform all the
operations by his own. These include filling out the route card, dealing with the customers,
communicating with to loader, cash management, setting the visi cooler and the next days order
to be loaded. After doing this entire if has any problems in learning then he is guided by
salesman, market developer, and sales manager if required.
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Apart from this on the job training, the company also has some in-house training facilities. The
company has a sales hall in which all the sales personnel are given some tips regarding the
changes in the selling environment and how to improve efficiency and efficacy. These tips are
normally given by the general manager.
Coca Cola also arranges some type of seminars, work shops and modules related to the sales
management, Forecasting of the daily sales, merchandising, selling skills, supervisory techniques
and other areas related to the sales.
Coca Cola does not have any library and special trainers but they do have the separate space for
the training and they also use some sort of videos to elaborate and show the examples of effective
selling skills and techniques.
To maintain the professional employees company has a policy of promotion from within.
Promotions are based on the performance, which is measured very objectively. Apart from this
the company pays its employees more than the industry wages. Not only the wages and salary but
different other benefits are also given to employees to motivate and retain them in the
organization. The company also has an effective incentive plan.
2.3.4 LEADING
LEADERSHIP STYLE:
The general manager of the company is at the topmost position in the organizational hierarchy;
Even though he is not directly involved in its operations he is responsible for taking major
administrative decisions regarding the company policy and Operations. Departmental managers
are responsible for leading and directing their subordinates. These leaders focus on these areas:
• Increasing business with a coordinated approach by helping each other in its
operations.
• Encouraging the employees to give new ideas so as to increase the customer
satisfaction.
As there is a very high degree of delegation and participation so they believe that the leadership
style used in all the departments of CCBPL is democratic. The concept of team management is
only practiced in the sales and marketing department as they have to work in dependence of one
another. Subordinates are given a fair treatment and are dealt in a very good manner so as to give
them a feeling that you are not only an employee but also a member of the family.
The managers at CCBPL are very supportive as they use teams and treat subordinates as equals,
and have a highly open communication system. They are participative since they encourage the
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involvement of the employees in decision-making and make use of group discussions. However,
some monetary and non-monetary rewards are used to create a high involvement from the
employees especially at the lower level.
MOTIVATION:
Employee motivation is given a very high consideration at CCBPL. At CCBPL they have the
policy of promotion from within policy. Promotions are bestowed on the performance basis. This
performance base motivates employees to work hard and achieve the goals, which are very
objective and are perceived achievable by most of the employees.
Apart from this compensation plan is also a motivating factor as CCBPL is paying more than the
industry averages. Not only this different campaigns and competitions between the employees
itself are also used to motivate the employees.
Managers play a vital role in motivating employees as they give them the timely feedback about
their activities. They also help them solve different problems, which can be job related or
personal problems. Working environment and a challenging milestone are a major factor in
employee motivation at CCBPL.
COMMUNICATION:
There is open environment in CCBPL, which discourages barriers among the members sharing
information. The top management consults lower ranks before deciding on the policy matters and
then these things are communicated downwards. Every employee is allowed to see the general
manager at any time if he has any problem. Inter departmental communication is done through
formal and informal manners. Grapevine is also used to get the feedback about the employees’
views about the management.
CORPORATE CULTURE:
The Top management at coca cola also tries to emphasize to follow the prescribed culture of the
organization. CCBPL has formal and documented values that are communicated to all the
employees. To ensure proper application of the rules and behaviors of the values, the top
management act as role models, and closely administer and review their employee’s behaviors.
Our Winning Culture
Our Winning Culture defines the attitudes and behaviors that will be required
of us to make our 2020 Vision a reality.
Our values serve as a compass for our actions and describe how we behave
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in the world.
• Leadership: The courage to shape a better future
• Collaboration: Leverage collective genius
• Integrity: Be real
• Accountability: If it is to be, it's up to me
• Passion: Committed in heart and mind
• Diversity: As inclusive as our brands
• Quality: What we do, we do well
Focus on the Market
• Focus on needs of our consumers, customers and franchise partners
• Get out into the market and listen, observe and learn
• Possess a world view
• Focus on execution in the marketplace every day
• Be insatiably curious
Work Smart
• Act with urgency
• Remain responsive to change
• Have the courage to change course when needed
• Remain constructively discontent
• Work efficiently
Act like Owners
• Be accountable for our actions and inactions
• Steward system assets and focus on building value
• Reward our people for taking risks and finding better ways to solve
problems.
• Learn from our outcomes -- what worked and what didn’t
Be the Brand
• Inspire creativity, passion, optimism and fun
2.3.5 CONTROLLING
Control is done through the evaluation, which is based on the very objective basis. Certain criteria
are fixed in advance and if these criteria are not met then the employees are asked and evaluated
for the reasons and corrective actions are taken by the respective managers. Different departments
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have different criteria and different reporting and controlling systems. The reporting, evaluation
and control system of sales departments is follows:
Sales Person’s reporting system:
Every sales person directly reports to market developer of his area. A sales person is supposed to
give him a daily report of his activities and he is free to ask for any kind of assistance from the
market developer.
Every salesperson is given an attendance punch card, which records his arrival and departure
time. He is also given a route call card, which he is supposed to fill out. This card includes all the
details about the visits of the outlets, time spent on these outlets, sales made on these outlets, time
spent on these outlets, sales made on these outlets, time during traveling, names of the loaders
and salesperson’s time in and time out of the vehicle.
Apart from this a sales person is also given a form to fill up for the next days order to be loaded
in the truck. This basically tells about the total sales of the salesman according to the brand and
the size of the product. This basically is used by the human resources department to evaluate the
performance and calculating the total salary of the salesman.
Sales Person’s Evaluation System:
Every salesperson’s evaluation is done on quarterly basis. Evaluation helps the company to
promote the people to the higher levels of the organization. This evaluation also motivates
salespeople to work hard and get the promotion or at least the monetary rewards, which are given
not only to the best salesman but the best market developer and the best sales manager of the
year.
Performance is evaluated on the basis of performance development plan. Performance is
measured on the basis of achievement of the targets, which are set and communicated at the very
beginning of the year to each sales manager, each quarter to every market developer and every
month to each salesperson. This performance development plan evaluates the sales people on the
basis of call slips, Route call, Call
2.4 Market Share of Coca cola:
Being the biggest company in the soft drink industry, Coca Cola enjoys the largest market share.
This company controls about 59% of the world market.
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2.5 Strategies
2.5.1 POSITIONING STRATEGY
It means that you try to give image to your product in the mind of the customers. To give a true
and positive picture of the product is the best positioning. The company should promote its good
points or comparative advantage which it has over its competitor.
DIFFERENTIATION STRATEGY
In order to serve your target market you introduce different things to your product so that your
product can be differentiated from other products.
• Basis of Differentiation There are many bases on which a product can be differentiated but
Coke has differentiated its product on the following base: • Product Differentiation Coke
differentiate its product from its competitors on the basis of brand, quality and taste. • Image
Differentiation Logo is used for image differentiation. Logo is what establishes a brand name in
the consumer mind. It is the brands identification, signature and image. Coca cola has kept on
changing its logo from time to time.
2.5.2 PROMOTION STRATEGIES
Price Strategy Trade Promotion:
Coca Cola Company gives incentives to middle men or retailers in way a that they offer
them free samples and free empty bottles, by this these retailers and middle man push
their product in the market. And that's why coca cola seen more in the market. And they
have a good sale in the market because according to the expert which product seen more
in the market that sells more."Seen as sold"
They do agreements with a shop keepers and stores to exclusive sale in those stores. These stores
are called as KEY accounts in their local language.
And coke also invest heavy budget on these stores and offers them free samples and free bottles
and some time cash incentives.
2.5.3 UTC Scheme
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UTC mean under the crown scheme, coca cola often do this type of scheme and they offer very
handy prizes in it. Like once they offer bicycles, caps, TV sets, cash prizes etc. This scheme is
very much popular among children.
2.5.4 Getting shelves
Coca Cola gets or purchase shelves in big departmental stores and display their products in those
shelves in that style which show their product clearer and more attractive for the consumer.
2.5.5 Eye Catching Position
Salesman of the coca cola company positions their freezers and their products in eye-catching
positions. Normally they keep their freezers near the entrance of the stores.
2.5.6 Sale Promotion
Coca Cola Company also does sponsorships with different college and school's cafes and
sponsors their sports events and other extra curriculum activities for getting market share.
Normally they keep their freezers near the entrance of the stores. Sale Promotion Company also
does sponsorships with different college and school's cafes and sponsors their sports events and
other extra curriculum activities for getting market share.
2.5.7 Distribution Channels
Coca Cola Company makes two types of selling
o Direct selling
o Indirect selling
1. Direct Selling:
In direct selling they supply their products in shops by using their own
transports. They have almost 450 vehicles to supply their bottles. In this type of selling company
have more profit margin.
2. Indirect Selling :
They have their whole sellers and agencies to cover all area. Because it is
very difficult for them to cover all area of Pakistan by their own so they have so many whole
sellers and agencies to assure their customers for availability of coca cola products.
Facilitating the Product by Infrastructure
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For providing their product in good manner company has provided infrastructure these includes.
• Vizi cooler
• Freezers
• Display racks
• Free empty bottles and shells for bottle
2.5.8 Advertisement Strategies
Coca Cola Company use different mediums for advertisement.
• Print media
• Pas material
• TV commercial
• Billboards and holding
(1)Print Media:
They often use print media for advertisement. They have a separate department
for print media.
(2)TV Commercials:
As everybody know that TV is a most common entertaining medium so TV
commercials is one of the most attractive way of doing advertisement. So Coca Cola Company
does regular TV commercials on different channels.
2.5.9 Our Competitive strategies
The Coca-Cola Company is one of the largest, most successful and most widely recognized
corporations in existence. Coca-Cola is a dominating force in the beverage industry and sets a
very high standard of competition. Research shows that its trademark is recognized by over 94%
of the world’s population. There are many factors contributing to Coca-Cola’s success, however,
we believe that their key success factors are Marketing, Innovation, and Globalization.
2.5.9.1 Marketing:
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Coca-Cola is seen as one of the founding fathers of the modern day marketing model. They were
among the pioneers of advertising techniques and styles used to capture an audience. They were
also one of the first companies to offer a gimmick with their product, this being a mini yo-yo. It
was around 1900 when Coca-Cola began presenting their signature drink as a delicious and
refreshing formula. This slogan has been repeated for over the last 100 years selling Coke all over
the world. Through its intense marketing campaigns, Coke has developed an image that is
reflected in what we think of when we buy Coke and what we associate with drinking Coke. This
image has been subconsciously installed in our brain by the advertising campaigns that show
Coca-Cola associated with “good times.”
2.5.9.2 Innovation:
Coca-Cola has been able to survive and grow in an ever-changing market because of its ability to
systematically innovate and deliver new products. In the late 90s the company, typically showing
earnings growth of 15-20% per year, turned in three straight years of falling profits. It was
apparent that the market was changing and in order to keep up with these changes, Coca-Cola had
to move from a single core product to a total beverage company. This was a major change
because their past success was base on having one successful core product. Coca-Cola began to
employ a strategy referred to as “play to win innovation.” The company began operating in a
decentralized environment that was unfeasible in previous years. Now Coca- Cola offers nearly
400 different products in and is still dominating the beverage industry. This is made possible by
the company’s ability to innovate and adapt to changing markets.
2.5.9.3 Globalization:
Today’s big business takes place on a global scale, and Coca-Cola is no exception. Technology is
continually changing business, and these constant changes have been making it more feasible and
profitable for businesses to expand their operations globally in order to serve all different types of
diverse markets around the world. This global view is reflected in Coke’s recent “I’d like to teach
the world to sing” commercial. Coca-Cola is taking advantage of the large revenue opportunities
made possible by participating in a global market and now offers products in 200 countries
around the world.
2.6 Value Chain Of Coca Cola
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2.6.1 Our Suppliers
Our suppliers are business partners who provide our system with materials, including ingredients,
packaging and machinery, as well as goods and services. Our Company's Supplier Guiding
Principles (SGP) communicates our values and expectations, emphasizing the importance of
responsible environmental and workplace policies and practices.
Suppliers' policies and practices must comply, at a minimum, with all applicable laws and
regulations, including those concerning child labor; forced labor; abuse of labor; freedom of
association and collective bargaining; discrimination; wages and benefits; working hours and
overtime; health and safety and environmental practices. New agreements with suppliers require
compliance with our SGP. We have communicated these expectations, trained suppliers and
started a comprehensive auditing process. In 2007, we conducted 1,313 supplier audits, a 28
percent increase since 2006. We have also worked with our bottling partners so that they have
similar principles to target suppliers not covered by our program.
2.6.2 Our Customers:
We seek to better understand the impact of the Coca-Cola business along our entire value cycle
and partner with our customers to address areas of concern and add value beyond our beverage
products. Our customers include large international chains of retailers and restaurants and small
independent businesses. We work with them equally to create mutual benefit. Together with our
bottling partners, we serve our customers through account management teams, providing services
and support tailored to their needs.
Our customers are continually looking for ways to reduce costs, improve sales and profits, and
deliver better-quality, more diverse products to consumers. We work to create additional value
for our customers by anticipating their demands and interests and to proactively deliver viable
solutions for their businesses.
2.6.3 Coca Cola Retailing Research Council
In Africa, Asia, Europe, Latin America and North America, Coca-Cola Retailing Research
Councils conduct research on issues affecting the retail food industry. The results are
communicated through a collaborative website that allows retailers to gain information necessary
to strategically respond to the changing marketplace.
2.6.4 Collaboration Customer Relationship Process
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Our Collaborative Customer Relationship process has been refined in three lead markets -- Japan,
Mexico and Switzerland -- and is now being implemented with key customers in other markets
around the world. We work with our customers to improve shopper marketing and supply chain
collaboration and to accelerate innovation in order to provide superior beverage selections to
every consumer on every shopping trip.
Coca-Cola Mexico's Collaborative Customer Relationship program was recently recognized by
Oxxo, a convenience store chain that has 5,700 stores in 30 states in Mexico. The program has
proven successful in understanding shopper needs, drives and preferences, and migrating from a
transactional and commercial link to a collaborative and multifunctional business relationship.
2.6.5 Customer Development and Training
We provide support to smaller customers to help make their businesses more efficient and
profitable. In Latin America, for example, we have established customer development training
centers, the largest ones in Argentina, Brazil, Chile, Mexico and Peru.
We also work with customers to broaden the range of beverages they offer, provide nutritional
information and ensure our beverages are marketed responsibly.
2.7 Financial analysis of Coca Cola Company
Latest 12 Months Data Items
Latest Full Context Quarter Ending Date (2010/03)
Gross Profit
Margin
68.8%
Pre-Tax Profit Margin
29.7%
Interest Coverage
27.0
Current Ratio
1.3
Quick Ratio Receivables Turnover Asset Turnover Return on Invested
28
0.9 9.2
Most Recent Data
0.7
Capital
24.2%
Total Debt/
Equity
0.47
Return on Assets
14.9%
5-Year Averages
Return on Equity
28.5%
Return on Invested
Capital
25.1%
Gross Profit
Margin
68.5%
Net Profit Margin
(Total Operations)
20.6%
Current P/E Ratio
16.9
5-Year High P/E
Ratio
26.3
5-Year Avg.
P/E Ratio
20.7
12 Month Normalized
P/E Ratio
16.6
CHAPTER #3
(EXTERNAL ANALYSIS)
3.1 COCA-COLA COMPANY, THE PESTLE ANALYSIS
A scan of the external macro-environment in which the firm operates can be
expressed in terms of the following factors:
Political
Economic
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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.
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.
3.1.1 Political Analysis for Coca-Cola
Non-alcoholic beverages fall within the food category under the FDA. The government
plays a role within the operation of manufacturing these products in terms of regulations.
There are potential fines set by the government on companies if they do not meet a
standard of laws.
The following are some of the factors that could cause Coca-Cola company's actual
results to differ materially from the expected results described in their underlying
company's forward statement:-
Changes in laws and regulations, including changes in accounting standards,
taxation requirements, (including tax rate changes, new tax laws and revised tax
law interpretations) and environmental laws in domestic or foreign jurisdictions.
Changes in the non-alcoholic business environment. These include, without
limitation, competitive product and pricing pressures and their ability to gain or
maintain share of sales in the global market as a result of action by competitors.
Political conditions, especially in international markets, including civil unrest,
government changes and restrictions on the ability to transfer capital across
borders.
Their ability to penetrate developing and emerging markets, which also depends
on economic and political conditions, and how well they are able to acquire or
form strategic business alliances with local bottlers and make necessary
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infrastructure enhancements to production facilities, distribution networks, sales
equipment and technology.
E: Economic change, for example a recession creating increased activity at the lower
ends of product price ranges. Rate of interest raises depressing business and causing
redundancies and lower spending levels.
3.1.2 Economic Analysis for Coca-Cola
Last year the U.S. economy was strong and nearly every part of it was growing and doing
well. However, things changed. Most economists loosely define a recession as two
consecutive quarters of contraction, or negative GDP growth. On Monday 26, the
government officially declared that the U.S. has been in recession since March. (CBS
Market Watch. "U.S. Officially in a recession." Rex Nutting. [Nov 26, 2001].
www.cbsmarketwatch.com)
However, because of aggressive action by the Federal Reserve and Congress it will be
short and mild. The economy will return to sustained, positive growth in the first half of
2002.
Future Outlooks
The Federal Reserve is doing all that it can help the economy recover. They have cut the
interest rate ten times this year. The rate now lies at a 40-year low of 2%. Lowering the
interest rates will ultimately excite consumer demand in the economy. Companies will
expand and increase use of debt as a result of the low borrowing rates. Coca-Cola can
borrow money for investing in other products as the interest rates are low. It can use the
borrowing on research of new products or technology. As researching for new products
would cost less the Coca-Cola Company will sell its products for less and the people will
spend as they would get cheap products from Coca-cola.
Before the attacks on September 11, 2001, the United States was starting tot see the
economy recover slightly and it is only just recently that they achieved the economic
levels. Consumers are now resuming their normal habits, going to the malls, car
shopping, and eating out at restaurants. However, many are still handling their money
cautiously. They believe that with lower inflation still to come, consumers will recover
their confidence over the next year.
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The non-alcoholic beverage industry has high sales in countries outside the U.S.
According to the Standard and Poor's Industry surveys, "For major soft drink companies,
there has been economic improvement in many major international markets, such as
Japan, Brazil, and Germany." These markets will continue to play a major role in the
success and stable growth for a majority of the non-alcoholic beverage industry.
S: Social change involves changing attitudes and lifestyles. The increasing number of
women going out to work, for example, led to the need for time-saving products for the
home.
3.1.3 Social Analysis for Coca-Cola
Many U.S. citizens are practicing healthier lifestyles. This has affected the non-alcoholic
beverage industry in that many are switching to bottled water and diet colas instead of
beer and other alcoholic beverages. Also, time management has increased and is at
approximately 43% of all households. (http://www.cdf-mn.org). The need for bottled
water and other more convenient and healthy products are in important in the average
day-to-day life.
Consumers from the ages of 37 to 55 are also increasingly concerned with nutrition.
There is a large population of the age range known as the baby boomers. Since many are
reaching an older age in life they are becoming more concerned with increasing their
longevity. This will continue to affect the non-alcoholic beverage industry by increasing
the demand overall and in the healthier beverages.
T: Technological change - creates opportunities for new products and product
improvements and of course new marketing techniques- the Internet, e-commerce.
3.1.4 Technological Analysis for Coca-Cola
Some factors that cause company's actual results to differ materially from the expected
results are as follows:
The effectiveness of company's advertising, marketing and promotional programs.
The new technology of internet and television which use special effects for
advertising through media. They make some products look attractive. This helps
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in selling of the products. This advertising makes the product attractive. This
technology is being used in media to sell their products.
Introduction of cans and plastic bottles have increased sales for Coca-Cola as
these are easier to carry and you can bin them once they are used.
As the technology is getting advanced there has been introduction of new
machineries all the time. Due to introduction of this machineries the production of
the Coca-Cola company has increased tremendously then it was few years ago.
CCE has six factories in Britain which use the most stat-of the-art drinks
technology to ensure top product quality and speedy delivery. Europe's largest
soft drinks factory was opened by CCE in Wakefield, Yorkshire in 1990. The
Wakefield factory has the technology to produce cans of Coca-Cola faster than
bullets from a machine gun.
3.2 Industrial Environment and 5 Forces Model for Coca Cola
Applying Porter’s 5 forces allows the garnering a retrospective view of the potential
attractiveness in terms of profitability of the company. Analyzing the beverage industry
will also allow a more accurate outlook on its potential. The analysis below
will concentrate on the industry from COCA COLA perspective and also its effect on
strategies discussed before.
3.2.1 Bargaining Power of Supplier
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Inputs, such as materials, labor, supplies, etc. are standard rather than unique or
differentiated. This allows variable substitutes of inputs readily and resulted in numerous
potential suppliers. Suppliers themselves will find it hard to enter business like COCA
COLA and perform function in-house. Since COCA COLA is producing at large scale, to
suppliers, this business is very important; however the cost of purchase has significant
influence on overall costs. This requires COCA COLA to carefully choose its suppliers to
suppress cost problem.
3.2.2 Bargaining Power of Buyers
There are a large number of buyers and customer relative to the number of firms in the
industry, each with relatively small purchases. However, there is no cost incurred in
switching suppliers. COCA COLA’s product is very unique to some degree and has
accepted branding. However, customers are very highly sensitive to price, therefore
choosing the most cost efficient suppliers are very crucial to minimize cost, thus
maximizing profit.
3.2.3 Threats of Substitute
Generally, substitutes have performance limitations that do not completely offset their
lowest price or their performance is not justified by their high price. Obviously, it cost the
customers nothing to switch to COCA COLA’s substitutes, such as coffee, tea and juice.
Besides, there has been a high potential of customers to substitute COCA COLA products
COCA COLA can further develop its competitive advantage against substitutes through
takeovers to minimize the potential of decrease in sales.
3.2.4 Rivalry among Competing Firms
COCA COLA’s main rival is Pepsi and the biggest threat that they pose is price. When
prices change, the effect on beverage industry towards the consumption of soft drink is
drastic. Although the product is not complex, which makes it easier for other companies
to compete against COCA COLA; they do not own a share in the market as large as
either COCA COLA or Pepsi are. This is because it is hard to commit into this industry,
34
as it will be hard to get out of this business, involving specialized skills, facilities and
long-term contract commitments. Capital needed to enter the business line is very large.
this will result in less competition, thus enabling COCA COLA’s chance to gain more
market share.
3.2.5 Threats of New Entrants
Large companies like COCA COLA, have a cost or performance advantage in the
beverage industry, because of established brand identities. Beside Pepsi, there are
proprietary product differences in the industry. The capital needed to enter the industry
and to be frontline in the industry like COCA COLA today is very expensive, for the
reason to build production plant, managing the company, commercialization, etc. and
also a long time frame to build the confidence and loyalty in the target market.
Newcomers also face difficulty in accessing the distribution channels and it may be more
costly compared to what COCA COLA has to pay, given their level of experience in the
industry. Licenses, insurance and qualifications are difficult to obtain. However, upon
entering the industry, newcomer can expect a strong retaliation in the market. When this
happens, their position may pose a threat to COCA COLA and COCA COLA may find
more challenges in implementing strategies to obtain more market share and maintain
customer’s loyalty.
Overall, COCA COLA are not competing mainly against Pepsi. The fight is against its
substitutes. Their main goal is so that public should reach to Coke whenever one feels
like drinking something. As a result, a strategic management to win the fight is to put up
a large number of vending machines at every street corner, restaurants and cafes.
Consequently, sales will take a quantum jump and COCA COLA have less to worry
about competitor and substitutes.
3.3 COCA-COLA COMPANY, THE SWOT ANALYSIS
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
35
brand name and brand portfolio. Business-Week and Inter brand, a branding Limca
Common drink. Fanta Basically Preferred by Ladies and Kids. Maaza also Ladies and
Kids Sprite not clearly defines. Kinley Soda Mostly those who consume liquor
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.
SWOT Analysis
Strengths Weaknesses
Internal -Popularity
-well known
-branding obvious and easily
recognized
-A lot of finance
-customer loyalty
-Word of mouth
-lack of popularity of many Coca Cola’s
brands
-Most unknown and rarely seen
-result of low profile or non-existent
advertising
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-International Trade -health issues
Threats Opportunities
External -changing health-consciousness
attitude
-legal issues
-Health ministers
-competition (Pepsi)
-many successful brands to pursue
-advertise its less popular products
-buy out competition.
-More Brand recognition
3.3.1 STRENGTHS
World’s leading brand
Coca-Cola has strong brand recognition across the globe. The company has a leading
brand value and a strong brand portfolio. Business-Week and Interbrand, a branding
consultancy, recognize. Coca-Cola as one of the leading brands in their top 100 global
brands ranking in 2006 The Business Week-Interbrand valued Coca-Cola at $67,000
million in 2006. Coca-Cola ranks well ahead of its close competitor Pepsi which has a
ranking of 22 having a brand value of $12,690 million Furthermore; Coca-Cola owns a
large portfolio of product brands. The company owns four of the top five soft drink
brands in the world: Coca-Cola, Diet Coke, Sprite and Fanta. Strong brands allow the
company to introduce brand extensions such as Vanilla Coke, Cherry Coke and Coke
with Lemon. Over the years, the company has made large investments in brand
promotions. Consequently, Coca-Cola is one of the best recognized global brands. The
company’s strong brand value facilitates customer recall and allows Coca-Cola to
penetrate new markets and consolidate existing ones.
Large scale of operations:
With revenues in excess of $24 billion Coca-Cola has a large scale of operation. Coca-
Cola is the largest manufacturer, distributor and marketer of nonalcoholic beverage
concentrates and syrups in the world. Coco-Cola is selling trademarked beverage
37
products since the year 1886 in the US. The company currently sells its products in more
than 200 countries. Of the approximately 52 billion beverage servings of all types
consumed worldwide every day, beverages bearing trademarks owned by or licensed to
Coca-Cola account for more than 1.4 billion.
The company’s operations are supported by a strong infrastructure across the world.
Coca-Cola owns and operates 32 principal beverage concentrates and/or syrup
manufacturing plants located
throughout the world. In addition, it owns or has interest in 37 operations with 95
principal beverage bottling and canning plants located outside the US. The company also
owns bottled water production and still beverage facilities as well as a facility that
manufactures juice concentrates. The company’s large scale of operation allows it to feed
upcoming markets with relative ease and enhances its revenue generation capacity.
Robust revenue growth in three segments:
Coca-Cola’s revenues recorded a double digit growth, in three operating segments. These
three segments are Latin America, ‘East, South Asia, and Pacific Rim’ and Bottling
investments. Revenues from Latin America grew by 20.4% during fiscal 2006, over
2005. During the same period, revenues from ‘East, South Asia, and Pacific Rim’ grew
by 10.6% while revenues from the bottling investments segment by 19.9%. Together, the
three segments of Latin America, ‘East, South Asia, and Pacific Rim’ and bottling
investments, accounted for 34.8% of total revenues during fiscal 2006. Robust revenues
growth rates in these segments contributed to top-line growth for Coca-Cola during 2006
3.3.2 WEAKNESSES
Negative publicity:
The company received negative publicity in India during September 2006 The Company
was accused by the Center for Science and Environment (CSE) of selling products
containing pesticide residues. Coca-Cola products sold in and around the Indian national
capital region contained a hazardous pesticide residue. These pesticides included
chemicals which could cause cancers, damage the nervous and reproductive systems and
38
reduce bone mineral density. Such negative publicity could adversely impact the
company’s brand image and the demand for Coca-Cola products. This could also have an
adverse impact on the company’s growth prospects in the international markets.
Sluggish performance in North America
Performance in North America:
Coca-Cola’s performance in North America was far from robust. North America is Coca-
Cola’s core market generating about 30% of total revenues during fiscal 2006. Therefore,
a strong performance in North America is important for the company.
In North America the sale of unit cases did not record any growth. Unit case retail
volume in North America decreased 1% primarily due to weak sparkling beverage trends
in the second half of 2006 and decline in the warehouse-delivered water and juice
businesses. Moreover, the company also expects performance in North America to be
weak during 2007.
Sluggish performance in North America could impact the company’s future growth
prospects and prevent Coca-Cola from recording a more robust top-line growth.
Decline in cash from operating activities:
The company’s cash flow from operating activities declined during fiscal 2006. Cash
flows from operating activities decreased 7% in 2006 compared to 2005. Net cash
provided by operating activities reached $5,957 million in 2006, from $6,423 million in
2005. Coca-Cola’s cash flows from operating activities in 2006 also decreased compared
with 2005 as a result of a contribution of approximately $216 million to a tax-qualified
trust to fund retiree medical benefits. The decrease was also the result of certain
marketing accruals recorded in 2005.
Decline in cash from operating activities reduces availability of funds for the company’s
investing and financing activities, which, in turn, increases the company’s exposure to
debt markets and fluctuating interest rates.
3.3.3 OPPORTUNITIES
39
Acquisitions
For the last one year, Coca-Cola has been aggressively adopting the inorganic growth
path. During 2006, its acquisitions included Kerry Beverages, (KBL), which was
subsequently, reappointed Coca-Cola China Industries (CCCIL). Coca-Cola acquired a
controlling shareholding in KBL, its bottling joint venture with the Kerry Group, in Hong
Kong. The acquisition extended Coca-Cola’s control over manufacturing and distribution
joint ventures in nine Chinese provinces. In Germany the company acquired Apollinaris
which sells sparkling and still mineral water in Germany. Coca-Cola has also acquired a
100% interest in TJC Holdings, a bottling company in South Africa. Coca-Cola also
made acquisitions in Australia and New Zealand during 2006. These acquisitions
strengthened Coca-Cola’s international operations. These also give Coca- Cola an
opportunity for growth, through new product launch or greater penetration of existing
markets.
Stronger international operations increase the company’s capacity to penetrate
international markets and also gives it an opportunity to diversity its revenue stream.
Growing bottled water market:
Bottled water is one of the fastest-growing segments in the world’s food and beverage
market owing to increasing health concerns. The market for bottled water in the US
generated revenues of about $15.6 billion in 2006. Market consumption volumes were
estimated to be 30 billion liters in 2006. The market's consumption volume is expected to
rise to 38.6 billion units by the end of 2010. This represents a CAGR of 6.9% during
2005-2010. In terms of value, the bottled water market is forecast to reach $19.3 billion
by the end of 2010. In the bottled water market, the revenue of flavored water (water-
based, slightly sweetened refreshment drink) segment is growing by about $10 billion
annually. The company’s Dasani brand water is the third best-selling bottled water in the
US.
Coca-Cola could leverage its strong position in the bottled water segment to take
advantage of growing demand for flavored water.
Growing Hispanic population in US:
40
Hispanics are growing rapidly both in number and economic power. As a result, they
have become more important to marketers than ever before. In 2006, about 11.6 million
US households were estimated to be Hispanic. This translates into a Hispanic population
of about 42 million. The US Census estimates that by 2020, the Hispanic population will
reach 60 million or almost 18% of the total US population. The economic influence of
Hispanics is growing even faster than their population. Nielsen Media Research estimates
that the buying power of Hispanics will exceed $1 trillion by 2008- a 55% increase over
2003 levels. Coca-Cola has extensive operations and an extensive product portfolio in the
US.
The company can benefit from an expanding Hispanic population in the US, which would
translate into higher consumption of Coca-Cola products and higher revenues for the
company.
3.3.4. THREATS
Intense competition Coca-Cola competes in the nonalcoholic beverages segment of the
commercial beverages industry. The company faces intense competition in various
markets from regional as well as global players. Also, the company faces competition
from various nonalcoholic sparkling beverages including juices and nectars and fruit
drinks. In many of the countries in which Coca-Cola operates, including the US, PepsiCo
is one of the company’s primary competitors. Other significant competitors include
Nestle, Cadbury Schweppes, Groupe DANONE and Kraft Foods. Competitive factors
impacting the company’s business include pricing, advertising, sales promotion
programs, product innovation, and brand and trademark development and protection.
Intense competition could impact Coca-Cola’s market share and revenue growth rates.
Dependence on bottling partners:
Coca-Cola generates most of its revenues by selling concentrates and syrups to bottlers in
whom it doesn’t have any ownership interest or in which it has no controlling ownership
interest. In 2006, approximately 83% of its worldwide unit case volumes were produced
and distributed by bottling partners in which the company did not have any controlling
41
interests. As independent companies, its bottling partners, some of whom are publicly
traded companies, make their own business decisions that may not always be in line with
the company’s interests. In addition, many of its bottling partners have the right to
manufacture or distribute their own products or certain products of other beverage
companies.
If Coca-Cola is unable to provide an appropriate mix of incentives to its bottling partners,
then the partners may take actions that, while maximizing their own short-term profits,
may be detrimental to Coca-Cola. These bottlers may devote more resources to business
opportunities or products other than those beneficial for Coca-Cola. Such actions could,
in the long run, have an adverse effect on Coca-Cola’s profitability. In addition, loss of
one or more of its major customers by any one of its major bottling partners could
indirectly affect Coca-Cola’s business results. Such dependence on third parties is a weak
link in Coca-Cola’s operations and increases the company’s business risks.
Sluggish growth of carbonated beverages:
US consumers have started to look for greater variety in their drinks and are becoming
increasingly health conscious. This has led to a decrease in the consumption of
carbonated and other sweetened beverages in the US. The US carbonated soft drinks
market generated total revenues of $63.9 billion in 2005, this representing a compound
annual growth rate (CAGR) of only 0.2% for the five-year period spanning 2001-2005.
The performance of the market is forecast to decelerate, with an anticipated compound
annual rate of change (CAGR) of -0.3% for the five-year period 2005-2010 expected to
drive the market to a value of $62.9 billion by the end of 2010.
Moreover in the recent years, beverage companies such as Coca-Cola have been
criticized for
Selling carbonated beverages with high amounts of sugar and unacceptable levels of
dangerous chemical content, and have been implicated for facilitating poor diet and
increasing childhood obesity. Moreover, the US is the company’s core market. Coca-Cola
already expects its performance in the region to be sluggish during 2007. Coca-Cola’s
revenues could be adversely affected by a slowdown in the US carbonated beverage
market
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3.4 General ANALYSIS of Coca Cola
Coca Cola being the multinational and reputed organization apply all the good traits of
planning, organizing, leading and controlling from top to bottom. When we look at the
planning procedure of the Coca Cola it runs very smoothly in every department. There is
very well integrated effort of all the department of the organization to organize and
control an individual for a particular task. its forecasting planning system is according to
the company requirements in which each department has to justify the employees it
required in the Annual Business Plan of the year.
Taking about organizing and controlling all the work done by their respective
departments as the company is divided in different departments planning starts (strategic
planning) from top authority and afterwards organizing and leading and controlling is
done as per the requirements of each and every department
5 Recommendation
Coca cola is a multinational company and running their business successfully. Americans
took over the organization in 2000. They introduced many advantageous programs to the
employees which were very lucrative such as life insurance, health and safety insurance
and many other reward-giving policies. But there are some draw backs in there
organization, these are:
Coca cola does not use advertisement media extensively as most of the jobs are
filled by
referrals and unsolicited applications files. Unsolicited applications files are good
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approach but most of the people do not know about such methods.
Coca cola does not hire fresh graduates at middle level management, this creates
bad Image of the organization. They should hire fresh graduates as it may give
them new and fresh ideas.
To some extend they include the lower management staff in decision mailing so
their
should be De-centralized structures of planning to some extend.
Their should be proper communication cycle from top to bottom employees so
their should be no chance of miscommunication.
And at the end their should be proper motivational practices should be implement
to increase the moral of employees so they work more efficiently.
The Coca-Cola Company has a high level of uncertainty when it comes to
the raw materials it uses. For a few of the ingredients, the company only has
one or two viable suppliers. This could be extremely problematic for a variety of
reasons. Another problem could arise if a supplier experiences an event that
economically devastates them. If a supplier goes bankrupt, or is in some type of
natural disaster, the Coca- Cola Company would suffer greatly as well.
The Coca-Cola Company can improve and secure relationships with suppliers.
The most optimal method would be to use backward vertical integration and
purchase a supply.
6 Conclusions
This report gives complete briefing about all the planning
process carried out in an Organization.
When planning is completed how to carried out all the phase of
organizing different tasks in different departments according
to the requirements. This report gives complete information
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about the working of coca cola in market, a complete overview
of strengths,
Weakness, opportunities and threat.
REFERENCES:
o www.Companies.Online.com
o Thomas register of American Manufacturers
o www.Wikipedia.com
o Www. Question. com
o www.cocacola.com
o www.world.book.com
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