Professional Documents
Culture Documents
Company Background
Financial Performance:
Coca- Coca-Cola grew turnover by approximately 4 percent in 2006. In the same year it
reached nearly US$24 billion. The company generated 73 percent of the revenue from
locations outside the company's domestic US market. The shift towards foreign markets as a
financial concern is likely to continue. Recent growth has been chiefly in the form of brand
extensions and an ever-expanding distribution network. However, at a global level, stagnation
in carbonates has affected volume growth for Coca-Cola. Volume growth in terms of cases
grew by only 2 percent in 2006, and remained stagnant in the key North American and
Europe, Eurasia and Middle East markets. This slow down in carbonates has impacted some
investors' perception of the future financial growth potential of the firm.
Geographic Coverage
The geographic coverage of Coca-Cola is the best in the world - it is hard to think of a brand
that has achieved such massive levels of penetration and recognition in North America,
European Union, Africa, Latin America, North Asia, Eurasia and Middle East. International
operations contributed 73 percent of 2006's sales and74 percent of operating income in 2006.
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.
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.
While we talk about Vision statement Coca-cola it simply tells us that this company wants to
achieve something new in future which will consist sustainability, Quality and growth which
is neither an easy task to achieve but apart from this statement we can see that statement is
clear and having brief meanings which explains a lot about what coca-cola wants accordingly.
Moreover this statement tells us that, they are going to achieve these three things which are
sustainability, Quality and growth by the help of six variables which are people, Portfolio
partners, planet, profit and productivity. There people, partners, productivity and portfolio
will give them to achieve better quality and growth in future where as there responsibility
towards planet and partners will help them to achieve sustainability. So Vision of Coca-Cola
is clear and good for future.
But when we talk about Mission statement of Coca-Cola Company which contains least
components for the good mission statements which are Philosophy, Concern for public
image, concern for employees, Self concept is there while customers, Products and services,
technology and concern for survival, growth and profitability is not mentioned in mission
statement which can conflicts with vision statement moreover Coca-Cola is facing the issues
regarding to health concerns which is a big clash with mission statement which is concern for
public image so as well as Vision is concern it is clear and good but mission statement of
Coca-cola is not supporting its vision which can create problems for the company for its
achievements.
PEST ANALYSIS
The PEST analysis examines changes in a marketplace caused by Political, Economical, Social
and Technological factors.
P: Political change, from one party to another in control- for example the rise in private
healthcare and privatizations under Conservative governments.
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:-
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 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.
Economic Analysis for Coca-Cola
There will not be any exaggerations in it if we say that overall situations for the COCA-COLA
are quite acceptable in global market as well as local markets. 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.
"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.
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. The need for bottled water and other more convenient and healthy
products are in important in the average day-to-day life.
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.
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 in selling of the products. This advertising
makes the product attractive. Similarly digital marketing concept has been introduced and has
been utilized by the industry efficiently which is good for company as well.
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. Last but not east coca-cola is now trying to
lead in new markets with the help of advanced technology which is actually helping the company
in new manner.
Strategic Issues
Coca-Cola faces several significant strategic issues. Three primary strategic issues are of
importance.
The first is the declining sales in the carbonated soft drink sector.
The second is the current health and wellness trend sweeping across the beverage industry.
The third issue is the threat of increased competition from PepsiCo.
The other strategic issues the company faces include increasing conflict with the bottlers, lack
of innovation and food safety and statutory regulatory compliance.
PEPSI
Caleb Brandhum, a North Caroline Pharmacist, structure Pepsi Cola in the 1890’s as cure of
Dyspepsia (indigestion). In 1902, Bradhum applied for a trade mark, issued ninety seven
share of stock and began selling Pepsi syrup in earnest. In his first year of business he spend
$1900 on advertising a huge sum that he sold only 8000 gallons of syrup. In 1905 Bradhum
built Pepsi’s bottling plant. By 1907 he was selling 10,000 gallons a year, two years later; he
hired a New York advertising agency. After passing through many troubles for some period
now Pepsi is a market leader in internationally and is available in 187 Nations throughout the
world.
Cadbury Schweppes PLC
Cadbury Schweppes are joined force of Cadbury found in 1824 of U.K. and Schweppes of
Ireland founded in 1783. Cadbury Schweppes is unified bussing which manages the relations
his with over 240 franchised bottling operation on Zambia and Zimbabwe. Cadbury
Schweppes has fottlery and partnership operations in 14 countries around the world.
Wt.
Factors Weight Rate Score
Strengths
Brand equity/recognition 0.12 4 0.48
Variety of products 0.1 3 0.3
High market share 0.1 3 0.3
Financial strength
for acquisitions 0.1 4 0.4
Strong global presence 0.1 3 0.3
Product quality 0.05 3 0.15
Geographic spread 0.05 4 0.2
New products 0.05 4 0.2
Innovative packing 0.05 3 0.15
Weaknesses
Strong & tough
competition 0.1 1 0.1
Substitute products 0.05 1 0.05
Advertising & promotion 0.08 2 0.16
Non availability of all
flavors/
products in every
operating group 0.05 1 0.05
Affordability of coke
products in east and south
Asia 0.075 2 0.15
Total 1.0 2.99
According to the analysis of IFE, the score of Coke is 2.99, which is above average. This shows
that Coca-Cola is internally strong and good enough. So by using their strengths, the can
overcome their weaknesses.
Wt.
Factors Weight Rate Score
Opportunities
Threats
Changing trend of healthy
According to the analysis of EFE, the rating is 2.32, which is slightly below average. This shows
that the threats being faced by Coca Cola are fierce, and it should take some actions to prevent
the threats and utilize the upcoming opportunities.
Space matrix:
Competitive pressure -1
AVERAGE 5 AVERAGE -3
Space matrix:
Competitive pressure -1
AVERAGE 5 AVERAGE -3
SPACE MATRIX:
RATIO ANALYSIS:
Rivalry:
The rivalry faced by Coke is very much of a threat. Pepsi has a number one brand in
bottled water “Aquafina” and “Gatorade” a sports drink which has doubled the sale in the last
five years. Pepsi has market of bottled tea and runs a coffee product by the joint-venture of
Starbucks a famous brand all over the world. Pepsi is very strong in Snack division. It earns
about 60% of the revenue from the world. It ranked 19th in U.S. and 10th around the world. Its
brands are available in 200 markets. It’s running its business in North America, Latin America,
Europe, Middle East, Africa and Asia pacific. Mexico and Russia were the two strongest
contributing markets for Pepsi in 2006.
Cadbury Schweppes PLC, a 200 year old company, has a strong regional Beverage presence in
Americas and Australia. Brand icons include Mott’s, Canada Dry, Halls, Trident, Dentyne,
Bubblicious, Trebor Basset, Dr. Pepper, 7up and Snapple. The company won Britain’s most
admired award in 2004.
Groupe Danone has recognition worldwide as a number one brand in bottled water creating a
volume nearly $ 20B liters. It earned 70% of its sales from the emerging markets. Company’s
primary brand in bottled water is Evian. The company sells flavored water and focuses on health
conscious segment. Levite was a big success in Mexico. The company continues to add new
drinks in different markets, such as Tailefine Fiz in France, which is a zero-calorie soda. The
product ranked number 2nd in French Low-calorie segment.
Subsidiary:
The threat of substitutes is high as the rising market trend is now more towards
noncarbonated and less calories products. People are more health conscious now and there is a
major shift in the market. The probability of buying the noncarbonated and less calories products
is now increasing. So the substitute product market is now having a chance to capture the market.
Coke has jumped into this segment for its survival. Substitutes like water, beer, coffee, juices etc
are available to the end consumers but this countered by concentrate providers by huge
advertising, brand equity, and making their product easily available for consumers, which most
substitutes cannot match. Soft drink companies diversify business by offering substitutes is to
shield themselves from competition.
New Entrants:
The threat of new entrant is low as there is huge level of investment required in
competing these giants. The big companies are now acquiring the small firms which are running
in the substitute product area to become the leader in the worldwide market.
The several factors that make it very difficult for the competition to enter the soft drink market
Include;
• Concerning the bottlers
Both Coke and PepsiCo have franchisee agreements with their existing bottler’s who have
rights in a certain geographic area. These agreements prohibit bottler’s from taking on new
competing brands for similar products.
• Brand Image
Coke and Pepsi have a long history of heavy advertising and this has earned them huge
amount of brand equity and loyal customer’s all over the world. This makes it hard for a new
entrant to match this scale in this market place.
• Fear of Retaliation
To enter into a market with entrenched rival behemoths like Pepsi and Coke is not easy as
it could lead to price wars which affect the new comer.
Value Chain Analysis
Coke is majorly focusing in three main area of Value chain, i.e. Out Bound Logistics, Innovation
and Customer interaction.
In Out Bound logistics, the company is distributing its products through restaurants, grocery
market, street vendors and other channels all of which sell to end customers. The company is
acquiring many organizations that are related to the non-carbonated beverages business. This will
strengthen Coke in maintaining its name in the world market while enhancing its noncarbonated
product line. This increases the infrastructure of the company. The purpose of acquiring these
organizations is make the final product available to the end user.
Coke acquired many firms I different regions. It acquired;
• Apollinaire’s, a mineral water company in Germany
• Trajicante, in Italy. After acquiring this company, Coke added to its existing Water-
Brands to five.
• Tugos del Valle, S.A.B. de C.V. in Latin America
• Acquired Multon juice operation, to expand its Russian beverages portfolio.
• Purchased Kerry Beverages Ltd. One of the largest bottlers in China
• Purchased Odwalla and Fuz
In the long run, the compay is willing to reduce its ownership in bottlers as to reduce the costs
which it is currently facing.
.
Another part which Coke was putting its focus was the Innovation part. Coke introduced
coffee-tea dispensing technology via Far Coast Brand, a concept store opened in Toronto, Canada
in 2006. It also launched calorie-burring beverage called Enviga. Coke launched Vault an energy
soda nationally in 2006.
Coke was concerning the process improvement area of. For which it invested in front-end
capability, equipment and people/training. Coke implemented route-to-market design and
optimization of the infrastructure in its bottling operations in India.
Coke managed to collaborate with Apple iTunes. By this way, Coke is involved in a digital
program that focuses on youth. Sensitivity marketing is also done by Coke as well for the
purpose of estimating the customer’s demand. Coke has chosen a digital marketing platform in
Latin America to build and strengthen its relationship with customers which has registered
more than 5 million visitors in Mexico and Brazil. The company successfully implemented “My
Coke Reward” program, which involved about 3.5 million participating subjects and where
greater than 1.5 million rewards were claimed. The program was bilingual and internet based.
The company continued this program in 2007.
In order to discuss one by one factor, following is the information provided.
Procurement:
Human Resource:
Regarding with human resource management, Coke has a very loyal workforce, minimal
turnover, and a strong tendency to promote from within. Coke provides attractive compensation
and places a major emphasis on employee training so that employees worldwide share a similar
understanding. Coke places a lot of emphasis on having its people "think globally, but act locally;
respond daily to competitive situations; serve customers and consumers with a passion".
Coke has sustained an overall domestic market share lead versus Pepsi, with 41% versus
31% internationally. Brand loyalty is another major strength for Coke in the U.S. and around the
world.
Technology:
Today we can see the world through a single window called the “internet”. Teenagers
share similar tastes in music, clothing, and consumer brands. With its global scope and the power
of the world's most ubiquitous trademark, the Coca-Cola system is uniquely equipped to market
to this group. This is why Coke collaborated with Apple iTunes, so the company can come up
with such an add which will make an effect on the customer. The “My Coke Reward” program
has the same element of purpose.
Current Strategy
CONCLUSION:
The Coca Cola Company has a very rich history and spread over the world, the coca cola
should pursue an aggressive strategy. Coca Cola Company has a strong competitive position
in the market with rapid growth. It needs to use its internal strengths to develop a market
penetration and market development strategy. This includes focus on Water and Juices
products, and catering to health consciousness of people through introduction of different
coke flavor and maintaining basic coke flavor. Further company should integrate with other
companies, acquisition of potential competitor businesses, innovation in branding and
aggressive marketing strategy can bring long term profitability.
Reference:
www.fliiby.com/file/377296/8y8ad925ug.html
www.xtremeinsight.net/.../coca-cola_-_brand_review__extracts_.pdf
www.scribd.com