Strategic Management of of Coca-cola

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.

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

Dr. Pemberton’s partner and book-keeper, Frank M. Robinson, suggested the name and penned “Coca-Cola” in the unique flowing script that is famous worldwide even today. He suggested that “the two Cs would look well in

HISTORY OF COCA-COLA COMPANYHISTORY OF COCA-COLA COMPANY

advertising.” The first newspaper ad for Coca-Cola soon appeared in The Atlanta Journal, inviting thirsty citizens to try “the new and popular soda fountain drink.” Hand-painted oil cloth signs reading “Coca-Cola” appeared on store awnings, with the suggestions “Drink” added to inform passersby that the new beverage was for soda fountain refreshment.

By the year 1886, sales of Coca-Cola averaged nine drinks per day. The first year, Dr. Pemberton sold 25 gallons of syrup, shipped in bright red wooden kegs. Red has been a distinctive color associated with the soft drink ever since. For his efforts, Dr. Pemberton grossed $50 and spent $73.96 on advertising. Dr. Pemberton never realized the potential of the beverage he created. He gradually sold portions of his business to various partners and, just prior to his death in 1888, sold his remaining interest in Coca-Cola to Asa G. Candler, an entrepreneur from Atlanta.

By the year 1891, Mr. Candler proceeded to buy additional rights and acquire complete ownership and control of the Coca-Cola business. Within four years, his merchandising flair had helped expand consumption of Coca-Cola to every state and territory after which he liquidated his pharmaceutical business and focused his full attention on the soft drink. With his brother, John S. Candler, John Pemberton’s former partner Frank Robinson and two other associates, Mr. Candler formed a Georgia corporation named the Coca-Cola Company. The trademark “Coca-Cola,” used in the marketplace since 1886, was registered in the United States Patent Office on January 31, 1893.

The business continued to grow, and in 1894, the first syrup manufacturing plant outside Atlanta was opened in Dallas, Texas. Others were opened in Chicago, Illinois, and Los Angeles, California, the following year. In 1895, three years after The Coca-Cola Company’s incorporation, Mr. Candler announced in his annual report to share owners that “Coca-Cola is now drunk in every state and territory in the United States.”

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

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

In 21st century the Coca-Cola bottling system grew up with roots deeply planted in local communities. This heritage serves the Company well today as consumers seek brands that honor local identity and the distinctiveness of local markets. As was true a century ago, strong locally based relationships between Coca-Cola bottlers, customers and communities are the foundation on which the entire business grows.

1916 …

Birth of the contour bottle

1920s and 30s … International expansion

1950s … Packaging innovations

HISTORY OF BOTTLINGHISTORY OF BOTTLING

Our mission declares our purpose as a company. It serves as the standard against which we weigh our actions and decisions. It is the foundation of our Manifesto.

To refresh the world in body, mind and spirit

To inspire moments of optimism through our brands and our actions

To create value and make a difference everywhere we engage.

To create consumer products, services and communications, customer service and bottling system strategies, processes and tools in order to create competitive advantage and deliver superior value to;

Consumers as a superior beverage experience

Consumers as an opportunity to grow profits through the use of finished

drinks

Bottlers as an opportunity to grow profits in volumes

Bottlers as a trademark enhancement and positive economic value added

Suppliers as an opportunity to make reasonable profits when creating real

value-added in an environment of system-wide team work, flexible business

system and continuous improvement

Indian society in the form of a contribution to economic and social

development.

Refresh the World... In body, mind, and spirit

Inspire Moments of Optimism... Through our brands and our actions

Create Value and Make a Difference... Everywhere we engage.

MISSION OF COCA-COLA COMPANYMISSION OF COCA-COLA COMPANY

VISION OF COCA-COLA COMPANYVISION 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 modelling 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.

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 help gather and make available appropriate research reports and opinion in this area, and ensure that the group and its supporters are well-informed.

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

OBJECTIVES OF COCA-COLA COMPANYOBJECTIVES OF COCA-COLA COMPANY

BRANDS OF COCA-COLA

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

Energy Drinks

For those with a high-intensity approach to life, Coca Cola’s brands of Energy Drinks contain ingredients such as ginseng extract, guarana extract, and caffeine and B vitamins.

Juices/Juice Drinks

We bring innovation to the goodness of juice in Coca Cola’s more than 20 juice and juice drink brands, offering both adults and children nutritious, refreshing and flavorful beverages

Soft Drinks

Coca Cola’s dozens of soft drink brands provide flavor and refreshment in a variety of choices. From the original Coca-Cola to most recent introductions, soft drinks from The Coca-Cola Company are both icons and innovators in the beverage industry.

Sports Drinks

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

Tea and Coffee

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

WaterSmooth and essential, our Waters and Water Beverages offer hydration in its purest form.

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

CONSUMER CHOICE AT A GLANCE

Limca Common drink.

Fanta Basically Preferred by Ladies and Kids.

Maaza also Ladies and Kids

COCA-COLA COMPANY, THE SWOT ANALYSIS

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

Sprite not clearly defines.

Kinley Soda Mostly those who consume liquor

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

Identify the level of rivalry among competing sellers in the industry Review strategies of companies to encourage customers to switch from a

competitor

Analyze ease of entry for new competitors

Determine bargaining power for suppliers of key materials and components

Determine bargaining power for buyers of the product

SWOT Analysis represents the analysis of the following four things—

STRENGTHS

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

Strong Brands: The products produced and marketed by the Company have a strong brand image. People all around the world recognize the brands marketed by the Company. Strong brand names like Coca-Cola, Fanta, Limca, and Maaza add up to the brand name of the Coca-Cola Company as a whole. The red and white Coca-Cola is one of the very few things that are recognized by people all over the world. Coca-Cola has been named the world's top brand for a fourth

consecutive year in a survey by consultancy Inter brand. It was estimated that the Coca-Cola brand was worth $70.45billion.

Low Cost of Operations: The production, marketing and distribution systems are very efficient due to forward planning and maintenance of consistency of operations which minimizes wastage of both time and resources leads to lowering of costs.

WEAKNESSES

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

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

OPPORTUNITIES

Large Domestic Markets: The domestic market for the products of the Company is very high as compared to any other soft drink manufacturer. Coca-Cola India claims a 58 per cent share of the soft drinks market; this includes a 42 per cent share of the cola market. Other products account for 16 per cent market share, chiefly led by Limca. The company appointed 50,000 new outlets in the first two months of this year, as part of its plans to cover one lakh outlets for the coming summer season and this also covered 3,500 new villages. In Bangalore, Coca-Cola amounts for 74% of the beverage market.

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

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

THREATS

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

Tax and Regulatory Sector: The tax system in India is accompanied by a variety of regulations at each stage on the consequence from production to consumption. When a license is issued, the production capacity is mentioned on the license and every time the production capacity needs to be increased, the license poses a problem. Renewing or updating a license every now and then is difficult. Therefore, this can limit the growth of the Company and pose problems.

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

COCA-COLA COMPANY, THE PEST ANALYSIS

A scan of the external macro-environment in which the firm operates can be expressed in terms of the following factors:

Political Economic

Social

Technological

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

    Environmental Scan

          /   \

External Analysis     Internal Analysis    

/                       \  

Macro environment  Microenvironment     

|

  P.E.S.T.      

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

Political Factors

It is one of the significant parts of a company where, in which country they operate their business unit. Political factors include government regulations and legal issues and define both formal and informal rules under which the firm must operate. Some examples include:

tax policy

employment laws

environmental regulations

trade restrictions and tariffs

political stability

Economic Factors

Another most imperative element for PEST analysis is economic factors. Economic factor affects the purchasing power of potential customers and the firm's cost of capital. The following are examples of factors in the macro-economy:

economic growth interest rates

exchange rates

inflation rate

Social Factors

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

health consciousness population growth rate

age distribution

career attitudes

emphasis on safety

Technological Factors

Technological factors can lower barriers to entry, reduce minimum efficient production levels, and influence outsourcing decisions. Some technological factors include:

R&D activity automation

technology incentives

rate of technological change