Strategic Management-Coca Cola

LETTER OF TRANSMITTAL

Date:

To:

From:

Subject:

We are given pleasure to transmit this report, “Strategic Analysis” under

the unprejudiced conclusions of International Marketing Course, during

summer semester (4th) 2004 of MBIT program, IBIT department, University

of the Punjab.

We have arranged our superlative efforts in originating this undertaking.

We enormously enjoyed it. Working on this task was exceptionally erudite

for us.

Group Members Signature

Institute of Information & Technology,University Of The Punjab, Lahore.

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ACKNOWLEDGMENT

We are thankful to the ALLAH ALMIGHTY, by the assistance of HIM, we

have accomplished our Task. We would like to thank all of the people who

directly or indirectly helped us to achieve this Target.

Special Thanks to:

Mr. Amjad Rasool Alvi

Mr. Fasial Hashmi

Mr. Matloob

Mr. Rana Imran

Mr. Sahil

This Report fabricates its foundation on numerous discussions among the

panel (Group Members). Our conspirator’s encouraging ideas and

strengthening of our thoughts are reflected in this comprehensive Report.

All the stuff regarding this report has been explained marvelously and

carefully. This write up is being demonstrated in easy mode which is

understandable by the reader. It will provide the intramural and threshold

aura to read and it will cover all the requisites and proviso about the topic

under discussion. One of the aesthetic and charming characteristics of this

speculation is this, that it is easygoing and genial.


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ABSTRACT

The vibrant capability of Marketing Department in Coca-Cola career

planning has been highly accentuate. This department has been

acknowledged as the means through which the swift industrialization and

other progressing goals of the association can be conquered. This report

delves into the role of International Marketing for the promotion of

organization, role of other departments in this process, internal & external

support of different institution department in this process. The verdict

about Coca-Cola’s marketing department process may facilitate policy

makers, employment agencies, organization to ascertain and over and

above existing cooperation’s the genteel maneuver to improve the overall

performance of the company, not only in Pakistan but also in all parts of

the world.


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METHODOLOGYMETHODOLOGY

Aspect about international marketing has been pile up by means of

primary sources by interviewing marketing executive, in the production

unit & Head Office, Visiting to office of Human Resource managers in

Lahore. Human Resource administrator in Head Office was the part of that

information collecting activity.

Secondary information has been congregated through different marketing

books, internet sites of Coca-Cola Company, articles and generals related

to advertisement and promotion.

Our foremost endeavor was to compile and evaluate all relevant

information with reference to marketing strategies in the host country

(Pakistan) and to judge against this information with standard set by

international marketers.


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TABLE OF CONTENTS

Executive Summary 06

Introduction 07

Brands 08

The Coca-Cola Story 09

New Coke to Present 10

Coca-Cola IN Pakistan 12

Community Involvement 14

Marketing Involvement 14

Uncontrollable Elements 15

Methods of Doing Business 17

Customer Market 18

SWOT Analysis 19

Post 9/11 Effects 22

IPR 22

PEST Analysis 24

BCG Matrix 27

EPRG Model 28

Product Life Cycle 29

Duties & Taxes Applied 30

Strategies to Reduce Political Vulnerability 31

Cultural Borrowing 32

Problems 34

Recommendation 36

Bibliography 40

Appendix 41


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EXECUTIVE SUMMARY

Role of Marketing Department in the improvement process continues to be

at the vanguard of strategy contest not only in this part of the world

(Pakistan) but also in other countries. Most of the specifics about

promoting brands have been renowned in the entire world. The

competitive allege for marketing department are infinite, containing

promotions and strategies that make possible for them to survive in

persistently varying environment (Such as technology) of world. By

applying international marketing concepts the company can acquire

multinational status with a reputed brands and the company is globally

recognized for the quality and standard.

Coca-cola’s headquarter is in USA and there are more than 200 countries

in which it is acting as a host company. In Pakistan there are 9 plants and

over 1800 employees, 8 plants are functional and three plants in Lahore,

Gujranwala and Rahimyar Khan have achieved the Quality system award.

Coca-cola with its 450 brands is claiming to be the world’s best non-

alcoholic beverage maker and is yet proving his claim by having 63%

share in the world market and they are fulfilling their promise to maintain

a standard and proving to become a quality symbol. And their aim is to

serve the nation by making only non-alcoholic drinks and to give the world

a cool and fresh treat.


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INTRODUCTION

Coca-Cola (also known as Coke) is a popular carbonated soft drink sold in

stores, restaurants and vending machines in over two hundred countries.

It is produced by The Coca-Cola Company, which is also occasionally

referred to as Coca-Cola or Coke. It is one of the world’s most

recognizable and widely sold commercial brands. Coke's major rival is

Pepsi. Although Coke has been the target of urban legends decrying the

drink for its supposedly copious amounts of “acid”, or the "life-

threatening" effects of its carbonated water but still it is the most in-style

soft drink. About its safety and the ethics of the company that produces it,

it is widely accepted as the most dominant soft drink in the world today.

Originally intended as a patent medicine when it was invented in the late

19th century, Coca-Cola was bought out by shrewd businessman Asa

Griggs Candler, whose aggressive marketing tactics led Coke to its

dominance of the world soft drink market throughout the 20th century.

Although faced with accusations of perverse side-effects on the health of

consumers and monopolistic practices by its producing company, Coca-

Cola has remained a popular soft drink well into the first decade of the

21st century.


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BRANDS

Globally, the Coca-Cola Company owns or licenses nearly 450 brands in

the nonalcoholic beverage business. Many of those brands are considered

among the worlds most valuable. Some of these include:

- Carbonated soft drinks

Such as Coca-Cola, Diet Coke, Fanta, Sprite and Fresca

- Juices and juice drinks

Such as Minute Maid, Qoo, Fruitopia, Maaza and Bibo

- Sports drinks

Such as POWERade and Aquarius

- Water products

Such as Ciel, Dasani and Bonaqua

- Teas

Such as Sokenbicha and Marocha

- Coffee

Such as Georgia coffee, the best-selling noncarbonated beverage in

Japan.


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THE COCA-COLA STORY

Coca-Cola was invented by John S. Pemberton in 1886 in Columbus,

Georgia, originally as a coca-wine called Pemberton's French Wine Coca. It

was initially sold as a patent medicine for five cents a glass at soda

fountains, which were popular in America at the time thanks to a belief

that carbonated water was good for the health. It was re-launched as a

soft drink to counter Prohibition.

The first sales were made at Jacob's Pharmacy in Atlanta, Georgia on May

8, 1886, and for the first eight months only thirteen drinks were sold each

day. Pemberton then ran the first advertisement for the beverage on May

29 of the same year in the Atlanta Journal. Asa Griggs Candler bought out

Pemberton and his partners in 1887 and began aggressively marketing

the product — the efficacy of this concerted advertising campaign would

not be realized until much later. By the time of its 50th anniversary, the

drink had reached the status of a national symbol. Coca-Cola was sold in

bottles for the first time on March 12, 1894 and cans of Coke first

appeared in 1955.

The first bottling of Coca-Cola occurred in Vicksburg, Mississippi at the

Biedenharn Candy Company in 1891. Its proprietor was Joseph A.

Biedenharn. The original bottles were Biedenharn bottles, very different

from the much later hobble-skirt design that is now so familiar. Asa

Candler was tentative about bottling the drink, but the two entrepreneurs

who proposed the idea were so persuasive that Candler signed a contract

giving them control of the procedure. However, the loosely-termed

contract proved to be problematic for the company for decades to come.

Legal matters were not helped by the decision of the bottlers to

subcontract to other companies — in effect, becoming parent bottlers.

When the United States entered World War II, Coke was provided free to

American soldiers, as a patriotic drink. The popularity of the drink

exploded in the wake of World War II as American soldiers returned home,

more grateful than ever to partake of a beverage that had become

synonymous with the American way of life.


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NEW COKE TO THE PRESENT

In 1985, Coca-Cola, amid much publicity, attempted to change the formula

of the drink. Some authorities believe that New Coke, as the reformulated

drink was called, was invented specifically to respond to its commercial

competitor, Pepsi. Double-blind taste tests indicated that most consumers

preferred the taste of Pepsi (which has more lemon oil, less orange oil, and

uses vanillin rather than vanilla) to Coke. New Coke was reformulated in a

way that emulated Pepsi. Follow-up taste tests revealed that most

consumers preferred the taste of New Coke to both Coke and Pepsi. The

reformulation was led by the then-CEO of the company, Roberto Goizueta,

and the President Don Keough.

It is unclear what part long-time company president Robert W. Woodruff

played in the reformulation. Goizueta claims that Woodruff endorsed it a

few months before his death in 1985; others have pointed out that, as the

two men were alone when the matter was discussed, Goizueta might have

misinterpreted the wishes of the dying Woodruff, who could speak only in

monosyllables. It has also been alleged that Woodruff might not have been

able to understand what Goizueta was telling him.

The commercial failure of New Coke therefore came as a grievous blow to

the management of the Coca-Cola Corporation. Coca-Cola management

was unprepared, however, for the nostalgic sentiments the drink aroused

in the American public; some compared changing the Coke formula to

rewriting the American Constitution.

The new Coca-Cola formula subsequently caused a public backlash. Gay

Mullins, from Seattle, Washington, USA, founded the Old Coke Drinkers of

America organization, which attempted to sue the company, and lobbied

for the formula of Old Coke to be released into the public domain. This and

other protests caused the company to return to the old formula under the

name Coca-Cola Classic on July 10, 1985. The company was later accused

of performing this volte-face as an elaborate reuse to introduce a new

product while reviving interest in the original. The company president

responded to the accusation by declaring: "We are not that stupid, or that

smart."

The Coca-Cola Company is the world's largest consumer of natural vanilla

extract. When New Coke was introduced in 1985, the economy of


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Madagascar crashed — vanilla being a prime export — and recovered only

after New Coke flopped, since New Coke used vanillin, a less-expensive

synthetic substitute. Purchases of vanilla more than halved during this

period.

Meanwhile, the market share for New Coke had dwindled to only 3% by

1986. The company renamed the product "Coke II" in 1992 (not to be

confused with "Coke C2", a reduced-sugar cola launched by Coca-Cola in

2004). However, sales falloff caused a severe cutback in distribution. By

1998, it was sold in only a few places in the Midwestern U.S.


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COCA-COLA

IN

PAKISTAN


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Introduction

The Coca-Cola Company is a global company with some of the world's

most widely recognized brands, the Coca-Cola business in Pakistan has

completed its 50 years of operation. The beverages are produced locally,

employing Pakistani citizens. And their product range and marketing

reflects Pakistani tastes and lifestyles, and they are deeply involved in the

life of the local communities in which they operate

History

The Coca-Cola Company began operating in Pakistan in 1953. Benjamin H.

Oehlert Junior, former senior vice president of The Coca-Cola Company,

served as United States Ambassador to Pakistan from 1967 to 1969.

Brands

Coca-Cola®, Fanta®, Sprite®

Bottling Information

The Coca-Cola System in Pakistan operates through twelve bottlers, 10 of

which are owned by Coca-Cola Beverages Pakistan Limited, out of these

twelve plants now eight are operating. The CCBPL plants are in Karachi,

Hyderabad, Lahore, Gujrawala, Faisalabad, Rahimyar Khan, Multan and

Sialkot. The remaining two plants, independently owned, are in Rawalpindi

and Peshawar. The Coca-Cola in Pakistan serves 70,000 customers retail

outlets.

Employment/Economic Impact

In Pakistan it employs 1,800 people. In Pakistan it has invested over $130

million (U.S.).


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Community Involvement

In 2000, when Eastern Pakistan suffered its worst droughts, The Coca-Cola

System initiated a famine-relief program to help victims and was the first

private-sector company to assist.

It initiated a voluntary Haj program that allows one employee from each

plant, selected through a draw, to be sent on the Holy Pilgrimage to Mecca

at the Company's expense.

Sponsorships

The Coca-Cola Company sponsors the Basant Festival in Lahore, a festival

that marks the beginning of spring and attracts visitors from all over the

world. Part of the festival is the Coca-Cola Kite Flying Championship.

The Company sponsors Pakistan's leading pop group and organizes

concerts throughout the country for teenagers and underprivileged

children.

It sponsors Pakistan's No. 1 solo artist, who will participate in concerts and

charity events organized by The Coca-Cola Company in Pakistan. The

Company has signed a sponsorship agreement with eight of Pakistan's

national cricket players for promotional and advertising use.

The Coca-Cola System in Pakistan is the exclusive supplier for Pakistan

Railways, serving soft drinks in stations, platforms and on trains. The

Company will be undertaking a beautification program of stations and

platforms.

Marketing Involvement

Coca-Cola Corporation is a multinational organization. And it is indulged in

the international marketing .The brands and basic strategies are made in

the home country but the local strategies are defined in the host

countries. Also the 4P’s are made according to the demographics and

taste of the people of the host country.

In Pakistan the Coca-Cola Company maps the strategies and the brands by

looking into the environment in which it is working. The brands are

produced locally. And the product, price promotion and placement are

planned with respect to the controllable variables and uncontrollable

variables.

Uncontrollable Elements


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Whenever any business start operating in two or more than two countries,

it come across some of the problems which are beyond the control of

business , like legal restraints, government controls, weather, consumer

behavior, economic conditions of the host country, social and cultural

factors, geography & infrastructure, channel of distribution available, level

of technology and competitive forces. These problems are different in all

the countries in which business starts its operations. So business has to

design a separate framework for each country to overcome these

problems.

Coke is one of the oldest companies which are in international business;

they have a vast experience of controlling these elements. They heavily

rely on research to overcome these problems.

Legal And Political Problems

They perform thorough study of legal and political problems to decide to

enter into any country. They track the previous record of the ruling party

and policies. They also keep in mind the attitude of other opposition

parties about foreign companies. If any problem arises regarding political

or legal issues, they don’t sacrifice their policies and secrecies, as we have

a case of COKE AND INDIAN GOVERNMENT. When Indian Government

asked to have formula for the concentrate and they deny and left the huge

Indian market.

Social And Cultural Factors

Social and Cultural factors have a very vital impact on the business in the

host country. Although this is the most difficult task to understand the

culture of the host country but business has to do reasonable care to

understand this problem.

Coke performs research to understand these issues and design their

strategies accordingly. They design their products, prices, place,

promotion and customer service according to the culture of the country.

As we see that coke has 400 brands allover the world but in Pakistan we

have only 4 brands and in India which is a market of 1.1 billion people

coke has 15 brands. This is because of cultural differences that they

cannot introduce all the brands in all the countries.


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Geography & Infrastructure

If any business wants to start its business in any other country, it also

studies the geography and infrastructure of the host country. That is if

feasible for doing business or not. They decide the channel of distribution,

modes of transportation and there cost to make decisions regarding prices

and designing strategies.

In Pakistan Coke found a reasonable infrastructure to do business, which is

continuously improving to facilitate distribution system.

Economic factors

Different counties have different economic conditions at a time so Coke

designs different strategies to handle these conditions. As Coke is one of

the largest businesses in the world, they have a strong financial

background to overcome these economic problems. In host countries they

change their prices, investment and penetration strategies to overcome

economic factors.

Competitive Forces

Whenever any business enters into any other country they face

competition with some local and international brands. Coke Combat this

problem with their quality commitment and continuously providing its

customers with quality product, services and entertainment.


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Methods of Doing Business

Diverse structure, management attitude, and behavior encounter in

international business, they are behaviors encountered in international

business, and there is considerable latitude in the ways business is

conducted. Coca-Cola Company had taken into the consideration these

facts that a certain amount of cultural shock occurs when differences in

contract level, communications emphasis, tempo, and formality of foreign

business are encountered. Ethical standards are likely to be different as

well as negotiation emphasis.

Coca Cola Company determines the prominence of status and position

(PDI) combine to influence the authority structure of business. It adopts

low (PDI) value that they could take the suggestion of his employees to

make a right decision at a right time, which could deal with of the

customer; also they could take the suggestion of his customers about its

taste, branding and other related features which could enhance its

efficiency of sales and promotion.

As its business grows and professional management develops, their is shift

towards decentralized management decision management. They are

making their decisions either in committees or meeting. Committee may

operate on a centralized or decentralized basis, but the concept of

committee management implies some thing quite different from

individualized functioning.

Coca Cola Company is doing its business allover the world they hire locals

wherever they do business and take their suggestions in designing their

strategies. Because company is very much well aware of the fact that local

know their social culture very well and help company to design effective

and efficient strategies.

Target Market:

o Upper upper class

o Upper middle class

o Upper lower class

o Middle upper class

o Middle middle class


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o Middle lower class

They mainly emphasize on students and teenagers, they gain their

attraction by indulging into the activities like:

Becoming a partner at the Basant

Promoting new age music and hiring pop stars into their promotion

Compaign.

CUSTOMER MARKET

Demographic Factors

People of all ages and gender use Coca-Cola. Educated people belonging

to upper and middle-income groups also commonly use Coca-Cola. Major

emphasis of Coca-Cola is to attract teenagers.

Life Style Pattern

The Taste and quality conscious people Drink Coca-Cola brands especially

Coca-Cola. Diet Coca-Cola offered by Company is Very popular among

diabetic patients.

Preference for Specific Benefits

For over 51 years Coca-Cola Corporation has maintained a tradition of

producing only the Quality drinking beverages. That is why it continues to

be a familiar and trusted household name in Pakistan. Today, Coca-Cola’s

lives up to its well earned reputation as market leader by insuring that

consumers get the best carbonating drink. The best of nature, technology

and human resource have together contributed to Coca-Cola’s reputation

for unparalleled quality- a standard now recognized internationally. Above

all, the entire process is overseen by a professional management and

trained workforce.


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SWOT

ANALYSIS


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STRENGTHS

Coca-Cola has been a complex part of Pakistani culture for over a half

century. Being a strongly recognized brand the product's image is loaded

with coolness and refreshment, and this is an image many people have

taken deeply to heart. The Coca-Cola image is displayed on T-shirts, hats,

and collectible memorabilia. This extremely recognizable branding is one

of Coca-Cola's greatest strengths. "Enjoyed more than 685 million times a

day around the world Coca-Cola stands as a simple, yet powerful symbol

of quality and enjoyment".

Additionally, Coca-Cola's bottling system is one of their greatest strengths.

It allows them to conduct business on a global scale while at the same

time maintain a local approach. The bottling companies are locally owned

and operated by independent business people who are authorized to sell

products of the Coca-Cola Company. Because Coke does not have outright

ownership of its bottling network, its main source of revenue is the sale of

concentrate to its bottlers.

The Coca-Cola Company in Pakistan has the mover advantage, as it was

the first to introduced soft drink. There are 8 plants working in Peshawar,

Karachi, Lahore, Gujrawala, Rawalpindi, Faisalabad, Raheem Yar khan, and

Multan. These big plants have employed more than 1800 employees.

Duopoly of two main beverage companies in Pakistan including Coca-Cola

has been diffused into the local markets.

WEAKNESSES

Although domestic businesses as well as many international markets are

thriving, Coca-Cola has recently reported some "declines in unit case

volumes due to reduced consumer purchasing power”

Coca-Cola on the other side has effects on the teeth's which is an issue for

health care. It also has got sugar by which continuous drinking of Coca-

Cola may cause health problems. Being addicted to Coca-Cola also is a

health problem, because drinking of Coca-Cola daily has an effect on your

body after few years (International report of Coca-cola).

Out of twelve plants, eight are the operational plants while two are

franchised with other group of companies, which is a drawback for coca-

cola in Pakistan as in these two plants the involvement of Coca-Cola


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International is not present which effects the overall image of these plants

in the local market about the quality and international standards.

OPPORTUNITIES

Brand recognition is the significant factor affecting Coke's competitive

position. Coca-Cola's brand name is known well throughout 94% of the

world today. In Pakistan it is the well-known brand among the people of all

ages specially the children are more attracted towards the coke.

As Coca-Cola is in business of soft drinks and has more than 450 brands

allover the world, but in Pakistan they have only four brands, so there is a

potential in Pakistani market for other brands too. Pakistani weather is hot

and humid. This causes a tremendous growth in the sales during the

summer season.

Packaging changes have also affected sales and industry positioning, but

in general, the public has tended not to be affected by new products.

Coca-Cola's bottling system also allows the company to take advantage of

infinite growth opportunities around the world. This strategy gives Coke

the opportunity to service a large geographic, diverse, area.

The unique formula (concentrate) is being imported from U.S.A and it is

then processed in the local plants, this resists the copying of formula and

formation of fake formula thus keeping the taste of pure and real Coca-

Cola revitalizing and tempting.

THREATS

Currently, the threat of new viable competitors in the carbonated soft

drink industry is not very substantial. The threat of substitutes, however,

is a very real threat. The soft drink industry is very strong, but consumers

are not necessarily married to it. Possible substitutes that continuously put

pressure on both Pepsi and Coke include tea, coffee, juices, milk, and hot

chocolate ("Cola Wars", 1991).

Even though Coca-Cola and Pepsi control nearly 5% of the entire beverage

market, the changing health-consciousness of the market could have a

serious affect. Of course, both Coke and Pepsi have already diversified into

these markets, allowing them to have further significant market shares

and offset any losses incurred due to fluctuations in the market ("Cola


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Wars", 1991). In Pakistan the consumption of cold beverages is 5% which

have to be stabilized.

Consumer buying power also represents a key threat in the industry. The

rivalry between Pepsi and Coke has produce a very slow moving industry

in which management must continuously respond to the changing

attitudes and demands of their consumers or face losing market share to

the competition. Furthermore, consumers can easily switch to other

beverages with little cost or consequence.

Post 9/11 Effects

After 9/11 incident Coca-cola suffered a loss due to boycott of religious

activists at a larger scale. The market share and market value was

dropped down to several points .Price competition was started after this

incident. Due to sanctions imposed on Pakistan after May5, 1995 taxes

were to be paid in high amount thus increasing the cost of production and

price offered to consumers and decreasing the buying powers of

customers. So any of the activists behavior can cause decline in the

production and sale of coke and other cold beverage company.

Intellectual Property Rights

Coke is one of the biggest brands in the world, and its brand value is

approximately 4 billion $. It is said that the most common word to speak in

this world is “OK” and after this the second most common in this whole

world is “COKE”. Sometimes different people and organizations used their

names to make money, in the form of fake bottling.

The main threat to the company is the production of fake bottles. Fake

bottling is growing day by day Fake bottles problem for a company comes

under the “act of unfair practices”. In a black marketing aspect whole

sellers and retailer could take the fake bottles at a low price for selling at

the price of original bottles which could be harm full for the health of

consumers. Coca Cola Company could create a check and balance to meet

the need of time, which in turn could help to increase its market share. It

already had made several steps to prevent fake bottling and production of

fake coke but due to mushrooming industry the laws and management of

the corporation is failed to stop this industry from flourishing. The


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government is also not of great help to the company in solving this main

issue.


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PEST

ANALYSIS


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POLITICAL FACTORS

The political environment of Pakistan affects the coca-cola beverages and

Coca-Cola Export Corporation, to some extent. For instance, the political

instability in Pakistan causes trade and import policies to change rapidly

as the government changes which causes many problems in the import of

raw materials. Trade barriers such as tariffs and duties on the import of

syrup (concentrate) from USA increases the operational cost. A relaxation

has been given by the current government. So the situation for the

beverage industry is getting better day by day for the last couple of years.

Also the policies have been more or less constant and also the emaciation

of free trade zones by the government will help the Coca-cola to flourish

more effectively in Pakistan.

ECONOMIC FACTORS

The economic condition of Pakistan has not been stable for a long time but

The recent economic indicators suggest that the economy is growing and

macroeconomic issues are getting sold but at the same time there has not

any marked increase in the consumer buying power (inflation). When the

recession occurs the price of bottles are dropped down to increase the

sales and to achieve the targets of the company. So overall economy of

Pakistan directly affects the cost and price of the Coca-Cola Company.

SOCIAL FACTORS

Being a foreign based company Coca-cola faces opposition by Muslim

activists. The main social issues are:

It faced scandal of humiliating Muslim’s religion that when the inverted

image of Coca-Cola brand name is being viewed on the mirror it disgraces

the name of Holy city Makkah and Hazrat Muhammad (P.B.U.H). This was a

wrong conception as there was no reality in it and this scandal was

flopped after a short span.

One of the greatest social barriers to coca-cola Lahore is the restriction of

coke in the campus premises. Jamiat’s strike to coke affects the sales and

overall image of coke as a larger number of students from all over the

Pakistan are studying in the University of The Punjab. But on the contrary

in the all parts of the country coke is viewed as the partner in the major Institute of Information & Technology,

University Of The Punjab, Lahore.25

events like Basant and promoter of music thereby making a place in the

hearts of young generation of the society.

TECHNOLOGICAL FACTORS

The making of Coke, Fanta, Diet coke and sprite involves "mixing and

blending, filling and capping ". For this process, concentrate or syrup is

imported from USA and is then mixed in the local plants .Machinery for the

local plants was also imported but now the coca-cola company follows

Local content law as most of the spare parts are locally made. The system

is automated and equipment is fully operational and up-to-dated. In

technology Coca-cola company is far ahead than the several other local

beverage brands of Pakistan. It is a Highly Technical 10 Steps Process.

Which are all done in the local plants using local content law.


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BCG MATRIXBCG MATRIX

A Coca-cola beverage limited is now at a stage of question mark if we

place it in a BCG Matrix. Because overall market is growing and it has

relatively less market shares then its real competitor PEPSI. Only about 5%

of the cold beverages are being utilized and this number is increasing.

Coke is sold in the 1:2 approximately ratio with respect to Pepsi as market

share or Coca-Cola Company is 27% and that of Pepsi is 68%.


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Growth Of

Market

Relative share

High ?

Low Cash Cow

Dog

High Low

EPRG MODEL

Coca –cola has a geocentric policy regarding their human resource and

policy making for host countries. They design their 4 P’s and management

policies according to the environment and atmosphere of the host country.

And they hire employees on merit regarding their qualifications and

knowledge without any discrimination between the countries and races.

As for as Pakistan is concerned here Coca –cola is being lead by a

Pakistani head, Mr. Asadullah Sherazi (GM CCBPL). 4 P’s are designed by

management of the host country, as BASANT is being celebrated by Coca

–cola in Pakistan, which is a very important event celebrated by the main

target market of the company.

PRODUCT LIFE CYCLE


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Coca-cola is in a stage of growth according to a product life cycle analysis.

It is recovering its market share very quickly which it had lost in previous

years although there is good competition in market but it is still recovering

and enjoying healthy profits. There are no barriers for new entrants, and

many companies are entering in this industry because of healthy growth.


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DUTIES AND TAXES APPLIED

Duties and Taxes are the tariff barriers for any company to import or

export something to other country. The most important component of

coke is their concentrate which is provided allover the world from USA.

Pakistani Government treats their concentrate under the head of luxuries

and applied second highest duty after tobacco. According to their

spokesman if this duty is removed, then price of coke’s 250ml bottle can

be lessened up to Rs.5.

Laws Abided By & Methods of Conflict Resolution

Coca-cola is one of the oldest multinational corporation, they have a vast

experience of dealing with different governments and different

organizations allover the world. When ever they enter into some country

they made a thorough research work. They analyze the political

restrictions, rules and regulations of doing business, political parties which

can affect policies and policy making authorities. They respect the laws of

host country and design their framework according to the rules and

regulations of the host country.

Methods of Conflict Resolution

World wide Coca-cola tries to solve any disputes which may arise through

arbitration and they mention this clause in contract that if any dispute

arises, they will go for arbitration but if arbitration does not solve the

problem then they refer their dispute to litigation. They prefer arbitration

because litigation is very expensive and lengthy process; there is fear of

poor image and damaging public relations, fear of unfair treatment in host

country and fear of loss of confidentiality.

As far as Pakistan is concerned up till now no such dispute has arisen in

which they need to go for arbitration. But they go for litigation against

those firms which are involved in using their brand name for fake bottling.


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STRATEGIES TO REDUCE POLITICAL VULNERABILITY

Nowadays political governments are very conscious about foreign

businesses and foreign investments, so they usually have standardized

policies for all the competing businesses; there is no biasness in dealing

with different competing business. But sometimes a situation may arise

due to some political reasons that may create some problems, so coke

deals with such problems strategically.

As we have a example, when Pepsi launch their tin can at Rs.10/-they got

special permission to manufacture tin cans and that was the only plant

which got permission to manufacture cans, as we know that time Pepsi

and Coke are bitter competitors so Coke must go with guns and guns with

Pepsi, they tried to get permission but they failed. So they imported Coke

cans from Dubai at Rs.13/- and sell it for Rs.10/- to compete in the market.

So if some problem arises which can affect their image and that cannot be

solved due to some political and legal problems they solve this

strategically.

As we know that nowadays Pepsi in Pakistan is under the administration

and control of Mr. Hamayun Akhtar who is a Federal Trade Minister of

Pakistan, but nowadays policies are standardized so it doesn’t create any

problems.

Current Strategies Regarding International Operations

One of the reasons of losing their market share in Pakistan in last few

years was their quality. In Pakistan they were operating as franchisee but

now Company has acquired most of the plants except from Peshawar and

Rawalpindi plant now they are very much conscious about their quality

standards and the quality of other two is being controlled by Coca Cola

Exports Corporation.

Another reason was that their backup was not as strong as Pepsi. They

were not getting any kind of help regarding financial problems,

management problems from Coca Cola International. But now most of the

plants are under the control of Company itself and Coke International is

also very keen to raise its market share in Pakistan so they are fully

supporting Coca Cola Beverages Pakistan and Coca Cola Exports

Corporation Pakistan.


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In Pakistan there main focus is on standardized products as Coca Cola,

Sprite, Fanta, and they are going to launch some of new products in next 2

or 3 years.

Adaption and cultural borrowing

Adaption is a key concept in international marketing, and willing to adapt

is a crucial attitude .Adaptation, or at least accommodation, is required on

small matters as well as large ones. Coca-Cola Company recognizes the

need of affirmative action, that is, open tolerance of concept “different

and equal”. Coca-Cola company feels that essential to effective to

Adaption is awareness of its own culture and recognize that differences in

others can cause anxiety, frustration and misunderstanding of the host

intention .The self reference criterion (SRC) is specially operative in

business custom but Coca-Cola company could not indulge its own (SRC)

in others culture it try to adopt the strategies of the host countries where

they are doing business around the world ,it reduce the (SRC) to lower the

barriers of cultural differences . Coca-Cola Company develops an

understanding and willingness to accommodate the differences that

exists. Company is doing a successful business internationally since 1953.

And operating in a home country for more than 50 years it have set up its

strategies to meet the needs of required customer in every way possible

where it is doing business it aware of the possibility of cultural differences

and the probable differences, consequences of failure to adapt, or

accommodate, the seemingly and less variety of customs must be

assessed.

Coca-Cola Company business customs includes imperatives and

adiaphora. Cultural imperatives are the business customs and exceptions

that must be met and conformed to or avoided if relationship is to be

successful. Company knows the best how to do the business at their best.

Human relation, friend ships and or attaining the level of trust are right

tricks to do a business in a home country as well as in a host country.

They that there is no substitute for establishing friend ship in some

cultures before effective business negotiation can begin.


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Company motivate their local agents to make more sales and the

friendship helps establish the right relationship with end users that to

more sales over a longer period of time.

Culture adiaphora relates to the area of behavior or to customs that

cultural aliens may wish to conform or to participate in but that are not

required.

Company feels that such Culture adiaphora has a minute effect on its sale

but it has no longer effects. When an issue arises in a home country about

its penny per bottle is given to the Israel to war against Muslims and mean

while many brands came into existence such as Mecca Cola, Shandy Cola

etc.

They have adapted their company culture according to the external

environment as they are indulge in many community programs such as

scholarship and school funding programs and they have borrow the

culture of Pakistanis. They hire local employees and plan according to the

local environment

PROBLEMS BEING FACED BY COCA-COLA COMPANY


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There are some problems being faced by a company which affects its

business strategies. It is difficult to know where to begin and isolate the

events which shape the business environment.

Distribution

Coca-Cola Company is facing a problem of distribution, as distributors are

expecting more from coco cola to provide an extra distribution channels

which could help them to spread their products at large .Coca-cola

products are some where not available in rural area due to inefficient

distribution system.

Investment

Coca-Cola Company is now facing a problem regarding investment, like

investment in distribution system, to make it efficient. They need

investment to encourage retailers to provide space to their products, in

the form of providing coolers. Company is not in a situation to provide it to

all its retailing stores while its competitor PEPSI COLA provides it to its

distributors to promote his products in the market which is their

competitive edge to increase it s share in the market. It creates an

attraction to its distributors to take its products more to take incentives of

special discounts provided by the company to its distributors, wholesaler,

and retailers. This is a relatively a long term process to penetrate in the

market and gain market share.

Brand Awareness

Having low promotional strategies that most of their customers are

unaware of their brands mostly they mix their brands with Pepsi, they feel

that Sprit and Fanta are the brands of Pepsi but in actual these are the

brands of Coca-Cola Company they are facing these problems due to

having low promotional strategy so that the unaware of its brands.

Single Advertising Platform


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They have only one Advertising platform regarding promotion which is

music; on the other hand Pepsi has another very important Advertising

platform which is Cricket. Most of our youngsters are attracted towards it.

Low value of share

Coca-Cola company having a share of about 27% which is lower than its

competitors i.e. Pepsi having market share of 68% involve in more

promotional strategies as compared to Coca-Cola.

Fake Bottling

Fake bottling in Pakistan is one of the major problems being faced by the

company. This problem not only affects the sale volume and profit

margins but also brand value and loyalty of the customers. The

profitability which company gain, ultimately that part of gain goes to fake

bottle producers, who running their business in the name of company

RECOMMENDATIONS

Distribution


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Products of the company must be physically transported from its

warehouse where the products are needed. Company must add value to

its products that eventually bought by individuals in order to create a

viable “value chain” model to create a relationship of distribution

management and select other facilitating organizations as a member of

value chain .so the distributors within a marketing mix is getting the

product to its target Market .the most important activity in getting the

coco cola company products to the target market is arranging for its sales

and transfer of a product to its final customer by assuming its financial

risks. for ultimate selling company try to carry out the functions in

exchange for the order and payment from the customer by providing more

easily available products at a required place. Company try to carry out the

functions in exchange for the order and payment form the customer by

providing more easily available products at required places.

Companies try to hire Agent middle man who works as their own to

distribute its products at various locations.

As the middle man could not be disinter mediate from the process

although some of unnecessary or redundant functions which cause the

lost of financial resources. Company create assortment and storing

products can be shifted from one party to another in order to increase

efficiency.

Designing Distribution Channel

Specify role of distribution.

Select the distribution channel

Determine the intensity of distribution

Choose specific channel members

Market Segmentation

With different wants, buying preferences or product use behavior

relatively minor and benefits sought by the customer can be satisfied with

single marketing mix .as a result segments must be targeted individually

and alternative marketing mix is required.

The process of market segmentation

Identify the current and potential wants that exist within a market


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Identify characteristics that distinguish among the segments

Determine the size of segment and how well they are being satisfied

New Product Development

To achieve strong sale and healthy profits company should have an

explicit strategy with respect to developing and evaluating new products.

This could also help it to defend its market share. Stages in product

development which could enhance business activities,

Gathering new product ideas

Screening of ideas

Business analysis

Prototype development

Market test.

Commercialization.

Dispose of Used Products

Consumers desire for convenience in the form of throw away containers

conflict with their stated desire for clean environment. Some discard

packages wind up little, others add to solid waste in landfills. So the coco

cola company recycles its disposable bottles and cans to recycle so the

cost of production could be minimized to deal with other financial

resources.

Promotional Programs

Promotion, in some where it takes, is an attempt to influence so the

company could hold a defined marketing promotional mix so that the

consumer could be aware of its brand at large. They adopt the strategy by

the following methods:

Personal selling.

Advertising.

Sale promotion.

Public relations.

Company sells its products by creating an attraction for the customers by

adopting these strategies.

Formation of a Pakistani Website


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Web ushered in another level of networking of marketers. E-information

form of networking involves creating a corporate website and posting

information on it .Firms are able to make vast amount of information

available on their website .The information ranges from product

description and invitations to suppliers to submit bits on planned

purchases to product operation instruction and information about

contracting sale personnel. So the coco Cola Company must be create its

website that the ultimate customer could know about the product

available in the market .They must create a web sit which could fall in the

categories of

Background and general information

Current business operations

Links

Attraction and entertainment features

Contact point

The impacts of internet marketing create an opportunity to increase its

wellbeing in the market place so opportunity of dealing in a host country

as well as in the international marketing could increase.

Establishing the Budget

Once the promotional budget has been established, it must be allocate

among the various activities comprising the overall promotional

program .One method that the coco cola company use to extend their

budget “cooperative corporative ads which is a joint effort two or more

firms intended to benefit each of the participant. So the company could

use any of the two strategies of corporative ads i.e. vertical and

horizontal. In vertical corporative ads, Coco cola Company could share the

cost of ads with the retailers or by giving a special discount to the retailers

in order to encourage the retailer advertise.


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BIBLIOGRAPHY

Reference Books

John Bratt, Jeffzay Gold, 2003, Human Resource Management

(Theory & Practice), 3rd, Plagrave Mecmiilan.

Will Rowan, 2002, Digital Marketing (Using New Technologies to Get Closer to Your Customers), 1st, Kogan Page Limited.

Miller & Layton, 2001, Fundamental of Marketing, 4th, McGraw-Hill Book Company Australia Pty Limited.

David Jobber & Geoff Lancaster, 2004, Selling and Sales Management, 6th, Pearson Education Singapore Pte. Ltd.

Peter Rix, 2001, Marketing (A Practical Approach), 4th, McGraw-Hill Book Company Australia Pty Limited.

Dillon, Madden, Firtle, 1994, Marketing Research in a Marketing Environment, 3rd, McGraw-Hill Book Company Australia Pty Limited.

Hawkins, Best, Coney, 2004, Consumer Behavior (Building Marketing Strategy), 9th, McGraw-Hill Book Company Australia Pty Limited.

Reference Sites

www.coca-cola.com

www.cocacola.co.in

www.coca-cola.co.uk

www.cokebuddy.co.au

www.cocacola.co.jp

www.cokecce.com

www.woccatlanta.com


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APPENDIX


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QUESTIONIARE

1. Information about: Company’s History Line of business Number of Employees Information about Host Country Analysis

2. How do you adjust the controllable variables with the uncontrollable variables? Like:

Economic climate Structure of Distribution Competitive Forces Political and legal Forces Cultural Forces Geography and Infrastructure Domestic Environment

3. What are Barriers faced by the company to operate (Tariff and non Tariff)?

4. What are Duties and Taxes applied?

5. Culture and its impact, any resistance if any like boycott of foreign brands nowadays

6. Cultural borrowing, if any like in promotion strategies?

7. What are Imperatives, Adiaphorous and Exclusives followed by the company?

8. What are Strategies adopted to reduce political, operational and administrative vulnerabilities? 9. What are Laws abided by and methods of conflict resolution? (Both internal and external) Like:

Conciliation Arbitration Litigation

10. Any issues related to Intellectual propriety rights, Fake Coke, How you deal with this problem.

11. What are the current strategies regarding International Operations in Pakistan?

Like Standardization vs. Adoption.

12. Localization Issues:

Localization of Business in Pakistan (any raw material import, extend of local vendors)


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Localization of Products Localization of Profits Localization of Production Localization of Management

13. How to deal with competitors strategies

14. What are the current problems and opportunities in this business that you are facing?

15. Describe mode of international import/export, joint venture, and subsidiary?

16. Information About: Ratio of International profits vs. domestic profits Sales figure Production Cost

17. Any Future Problem: W.T.O. tread New Business Entrance


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Strategic Management-Coca Cola

Documents

local content

consumer buying

coco cola

human resource

coca cola

cultural factors

bottling system

fake bottling