STRATEGIC MANAGEMENT

PROJECT:
THE COCA COLA
COMPANY

HISTORY AND EVOLUTION OF SOFT DRINK INDUSTRY:

The history of soft drinks throws light upon some of the important business
innovations, such as product development, mass marketing, franchising,
evolution of consumer tastes and cultural trends. Europeans believed that
natural mineral waters had medicinal qualities and it was favoured as an
alternative to polluted common drinking water. British chemist Joseph Priestley in
1772 invented means to synthetically carbonate the water and the
manufacturing of artificial mineral waters started in 1780s in Geneva and 1790s
in London with Jacob Schweppess business. The term soda water originated in
1798 and the first known manufacturer of soda water was Yale University
chemist Benjamin Silliman. Two years later Joseph Hawkins of Baltimore was the
first person to secure the patent in U.S. for the equipment to produce the drink.
Around 1820s the pharmacies provided beverage as a remedy for various
digestive ailments. Slowly the drink gained popularity and was increasingly
consumed for refreshment, after the addition of sugar and flavourings to the
beverage in 1830s.The first cola drink was introduced in the year 1881, followed
by several brands emerging in late 1800s. Pharmacists experimenting at local
soda fountains invented Dr. Pepper in Texas in 1185, Coca-Cola in Georgia in
1886 and Pepsi-Cola in the state of North Carolina in 1893, among several other
brands. Post World War II the soft drink industry pioneered television advertising,
catchy slogans, celebrity endorsements and various other forms of mass
marketing targeting the youth.
Throughout the years the most famous rivalry within the soft drinks industry has
been between the major giants, Coke and Pepsi, which waged the famous cola
wars in the 20th century. During 1930s and 1940s Pepsi challenged Coke by
introducing a twelve ounce bottle for the same price as Cokes five cent six
ounce bottle. In 1970s the Pepsi challenge in form of taste test results leaned
toward a consensus that Pepsi was preferred over Coke by more Americans.
In the year 2001, the soft-drink industry included approximately 500 U.S.
bottlers employing more than 180,000 people, and it achieved retail sales of
more than $60 billion. Americans that year had an average consumption of 55
gallons of soft drinks per person, which was up from 48 in 1990 and 34 in the
year 1980. Coca-Cola led with more than 43 percent of the soft drink market and
Pepsi with 31 percent and they were among the nine leading companies which
accounted for 96.5 percent of industry sales. Seven individual brands accounted
for almost two thirds of the sales: Coca-Cola Classic, Pepsi, Diet Coke, Mountain
Dew, Dr. Pepper, Sprite and Diet Pepsi. Domestic sales growth started falling in
the late 1990s due to increased competition from other beverage segments like
coffee drinks, iced teas, juices, sports drinks, and bottled waters. The industry
still continues to tap lucrative international markets.

BRIEF INSIGHT INTO THE SOFT DRINK INDUSTRY:

The non-alcoholic beverage industry can be broadly classified into soft drinks and
hot drinks. Soft drinks contain carbonated/non-carbonated water, a sweetener
and a flavour. The soft drink category leads the industry and includes bottled
waters, carbonates, juices, sports and energy drinks, etc. Soft drinks are also
referred to as liquid refreshment beverages. In the US, sales of liquid
refreshment beverage lead food and beverage retail sales. The global soft drink
industry is witnessing constant growth over the years and is expanding rapidly.
The two major drivers contributing to this trend are: Rapid expansion of markets

in developing countries and people are shifting towards more natural and healthy
low calorie drinks. This new-age trend is considerably simulating the
development in soft drink industry and is posing serious threat to the carbonated
beverage segment. To address this growing concern, big soft drink giants like
Pepsi and Coke are thriving to become a total beverage company, thereby
catering to the needs of the varied soft drink demands.
The 50 billion rupee soft drink industry is now growing at an annual rate of 67%. In India, Coke and Pepsi have a combined market share of around 95%
through both its direct operations or through franchisees. At present there are
about 110 soft drink producing units employing over 125,000 people. Soft drink
market can be divided into two segments, Cola and the Non-Cola drinks. Cola
segment has about 62% market share whereas the non-cola drink segment
covers the remaining market including soda, flavoured drinks, etc.
Gone are the days when soft and aerated drinks were considered as drinks for
the middle class and the affluent segment, that segmentation is no more valid in
the current scenario. According to an NCAER study 91% of the soft drink sales
are made to the lower, middle and the upper middle class segment of the
society. The industry estimates that the soft drinks market should grow at twice
the GDP growth rate. The Chinese and the Russian market grew by three and
four times as compared to the Indian market over the past year.

INDUSTRY ANALYSIS:
1. PESTLE Analysis:
With the help of PESTEL analysis framework following is the analysis of the
macro-environmental factors and their impact on the soft drink industry:

Political
P

Economic

SocioE Cultural

Food and
Drug
Administrati
on

Reccesssion

Consumer
Choice

Political
Scenario

Raw
Materials

Diet
Consciousn
ess

Interest
Rate

Social
Media

Technology

Automation

Marketing

Legal

Laws

Environment

Waste
Manageme
nt
Public
Concern

1. Political Factors:
Food and Drug Administration (FDA) Regulation:
o These regulations define what all ingredients can and cannot be used in
the product, how the product is being produced, where it is produced, as
well as other laws concerned with the production quality and health effects
of the product.
o The government has set potential fines if the companies do not comply
with the standard of laws of manufacturing, production, and distribution.
Political Scenario:
The political scenario also matters to a great extent as there can be some
civil unrest in certain markets or due to factors like inflation thereby
leading to decrease in sales. Most importantly, cross border situations are
starkly different in different countries, hence companys needed to stay in
line with all those policies and changes so that they can adapt to all those
changes as per the situation.
2. Economic Factors:
o
o
o
o

o
o

Recessions:
The soft drink industry may experience market shocks in the periods of
recession
Since 2008, the industry has been struggling to regain its previous market
strength
The industry is expected to make an significant changes with an expansion
of 27% by the year 2015 which is the highest increase since 2008
Consumers have continued to spend their money carefully over the past
few years after the 2010 recession.
Raw Materials:
Cost of raw materials can be a factor if the economy for certain materials
is weak or there is shortage of the raw materials
Sugar and carbonated water are the main ingredients, apart from it there
are a lot of preservatives and flavouring such as ascorbic acid, gums,
aspartame, etc.
Interest rate
To reduce the overall borrowing costs, the firms in beverage industry are
using currency swaps and interest rate to significantly adapt the rates in
order to minimize the borrowing cost.

3. Socio-Cultural Factors
o
o
o
o

Consumer Choice:
Age plays an important role when evaluating consumer choice
The older generation is more health conscious and tends to make
nutritional choices between products
The younger generation leans towards products that are fun, new, and
trendy
Celebrity endorsements, attractive commercials, and sweepstakes become
more important to the younger generation in their product decision.
Diet Consciousness:

o
o

o
o
o

According to a study about one-third of Americans are considered obese

and it is speculated that there is a link between soft drink consumption
and obesity
Dieting has become a very marketable, popular trend which forces the soft
drink industry to create new products that meet consumer preferences
Social Media:
Social media outlets keep consumers directly connected to the brand
Firms are able to obtain valuable information and feedback from
consumers about potential or current new products
Low advertising costs thereby providing a global outreach

4. Technological Factors:
o
o

o
o

Automation:
New technological advancement in manufacturing and quality control
concepts are improving bottling operations efficiency
High product volume requires high levels of automation. Technological
advances increase the utility of employees and capital, thereby increasing
the productivity.
Cost factor related with the new technology can be an entry barrier to new
competitors.
Marketing:
Technological advancement helps create new brands and product lines to
meet consumer preferences.
Improved logistics help products move through distribution channels more
effectively. This keeps distribution costs down while increasing sales
information to consumers.
Social media provides huge growth in consumer awareness, brand
value/identity, product promotions and direct communication to
consumers.

5. Legal Factors:
The legal factors include consumer laws, discrimination laws, employment
laws, health and safety laws, etc.
o As per abiding by the standards the firms must provide nutritional facts
information of their product to the customer
o Employees must be provided with at least the required minimum wage as
per the minimum wages act and any sort of discrimination shall not be
tolerated in the workplace
o All factories of the firms must abide by Occupational safety and health
administration standards and regulations.
o If any of these laws change, companies must change their operations and
procedures to abide by the new changes made in order to avoid being
fined or even shut down.
6. Environmental Factors:
Waste management and public concerns:

Increasing environmental consciousness is one of the most important

concerns nowadays. The firms operation is exaggerated by federal
legislative applications
that concentrate on the four objectives.
1. Bargaining
Power of Buyers:
o Decrease the quantity of packaging material which is affecting the nations
solid
system
o The
softwaste
drinkmanagement
market covers
the largest share in the beverage industry. Net
o worth
Diminishing
the
consumption
natural
scarce
of soft drinks industry is of
$60
billionand
dollars.
In resources
U.S. three firms control
o 89%
Increase
recycling
materials
of the the
softreuse
drink and
sales
thereby packaging
making it hard
to gain market share.
To shelter
the hard
natural
o Soft
drinks are
to environment
duplicate at and
oneshuman
house health
and it from
takesundesirable
a considerable
effectsofrelated
with the dumping
and
recyclability
the packaging
amount
time, manufacturing
your
own
soft drink of
especially
when you take
materials.
into consideration the low price of the product.
o Large numbers of customers in America consume over 56 gallons of soda in a
year. On an average cost of soft drink is under $2 which makes each
individual purchase relatively insignificant.
o There is a high sensitivity to the price of soft drinks and the consumers are
willing to change brands if one becomes much more expensive than the
other. Soft drinks are do not come under the need segment and people wont
pay any price for it.
o Due to competitiveness of the soft drink industry switching supplier cost is
relatively low and also the price difference is rather small. Difference can
2. Porters
FiveonForces
occur based
location Analysis:
and the proximity of the product to the market.
o There are no steps to use the product and all nutrition facts and ingredients
are listed on the label. Therefore no additional information is required to be
made available to the customers.
o The products offered are very unique in the soft drink industry and
consumers are very brand loyal to the drink of their choice. Though many
varieties of the sodas are similar in type yet have distinct tastes.
2. Bargaining Power of Suppliers:
o

The firms can quickly and easily switch between suppliers as they do not hold
much competitive pressure. Suppliers to the soft drinks industry are the
bottling equipment manufacturers and the packaging suppliers. The numbers
of equipment suppliers are easily available in the market and it is fairly easy
for a company to switch suppliers. This takes away much of the suppliers
power to bargain.

The inputs materials are extremely differentiated as every firm is trying to

create the best product competing with each other. Each firm has a different
formula, color, and taste for their beverage. No two products are typically
exactly alike and differentiate in some form or the other. Constant product
innovation is a key to fill in the buyers need for a variety of tastes.

The companies chooses a suppliers that does the the best job and offers the
best price. If another supplier does the same job at a cheaper price, the firm
can switch without any second thoughts.

The Business is extremely important to the suppliers as the soft drink

industry is one of the extremely profitable markets. The main revenue for the
supply companies comes from delivering the beverages and equipment to
the customers.

There is a wide variety of current and potential suppliers in this soft drink
industry. For current and potential suppliers it is easy to enter or succeed in
the industry as supplying the soft drinks is not a complex task.

3. Threat of New Entrants

o

Soft drinks are not proprietary products because it can be made by any one.
The proprietorship is restricted only to patented flavors and brands.

Supplier switching costs in soft drink industry are negligible. The soft drink
industry being very competitive the prices only fluctuate slightly depending
on geographical location or sale discounts.

The existing firms in this industry have a cost and performance advantage
over the new entrants. This is because existing firms have already covers
large capital expenditures and have economies of scale. They also have
direct supply and distribution channels setup which is build up over the
years.

The majority of soft drinks are well established brand identities, with the
exception of few generic brands. Brand identities define soft drink flavors, For
e.g. Sprite associates with lemon-lime, or Coke relates to cola

For the setup of a company there issues related to are licenses, insurances,
and other difficult qualifications which are not that easy to gain. Companies
must get approval from the FDA to sell their products, have respective
licenses to produce and distribute internationally and proper insurance to
cover potential lawsuits, accidents, or faulty product.

Entry into the soft drinks industry because requires large capital costs which
are needed for manufacturing. Bottling, storage and the distribution functions
can be contracted out, but it would likely increase costs in the long run
thereby weakening the supply chain.

New entrants into the industry would face difficulty in assessing the sales and
distribution channels. The major brands have already set up a strong foothold
over the main distribution channels be it supermarkets, gas stations or
restaurants. Over the years they have established low costs, competitive
pricing and strong business relationships.

A new entrant can expect a strong retaliation from current market players.
The soft drink industry can be construed as oligopoly with existing firms
having strong foothold over distribution channels, relationships with suppliers
and retailers thereby creating a brand value among the customers.

4. Threat of Substitutes
o

Available substitutes do not have performance limitations or high prices that

would justify their use over the products in the soft drink industry because
substitutes are not priced at a high enough cost where it would affect their
use as a mainland product.

Customers would not incur costs in switching to substitutes. The choice of

switching to a substitute for a customer would in most cases be the
difference of cents.

There are substitutes for carbonated beverages, like water, tea, sports drinks,
etc.

Customers are not likely to go for substitutes because brand name loyalty is
a very strong competitive pressure in this industry.

3.

Once entered it would be really difficult to get out of the business because of
the amount of cost involved in terms of fixed costs and advertisements, as well
as binding contracts with the distribution channels.

Customers would not be affected from switching from one player to another as
the cost involved is really low. The most they may incur would be a few cents
because of the low prices which do not fluctuate much among the firms.

Because of the products in this industry being simple carbonated beverages,

there is no need for significant customer-producer interaction because the
customers purchase decision is mainly based on taste.

Economic Features of the Industry

Market Size and

Growth Rate

Product
Differentiation

Product Innovation

Demand Supply
Conditions

Vertical Integration

Economies of Scale

60 billion dollar industry

Current growth rate is 7%
Maturation phase of the industry life cycle because the number of
competitors is stable, market growth is low, profits are high, market
size is the largest to date and investment in the industry is also stable
Products are becoming more and more differentiated as there are a
number of new soft drinks hitting the market each and every day
Differentiation is key for a firm to maximize their revenue due to
customer trends and tastes always changing and the firms need to
create new products and flavors
The industry is not entirely characterized by rapid product innovation and short
product life cycles but it is very common to see both occurring rather often
The most profitable soft drinks do not have short product life cycles as they
have been around for years
Some new beverages however do experience short product life cycles as they
can be introduced to the market and not be received well and need to be taken
off the shelf
The amount of companies in the industry creates competition amongst
members.
Companies have to stay similar on product price in order to keep market
share
The industry is not overcrowded because all the competitors are still able
to make profit
Competitors operate in multiple stages of the industry.
The majority of competitors all engage in manufacturing and
distribution.
The larger competitors also have bottling operations.
Competitors sell to retailers.
The entire industry is characterized by economies of scale in every
aspect.
Since soft drinks are sold in high volume, costs may only be kept
down by manufacturing, shipping, etc. at the highest cost-efficient
volume.
Advertising may be on economies of scale since the industry leaders
have maintained aggressive marketing campaigns since founded, and
might have capitalized on long-term relationships and high volume
incentive rates.
Large-scale operations pass on cost savings to the customer and are
able to retail their products at a significantly lower price.

Coca Cola: An Overview

Coca Cola is the world's leading manufacturer, marketer and distributor of nonalcoholic beverages. It operates in over 200 countries and has around 500
brands. It has a revenue of $45.72 billion ( June, 2015).
Vision, Mission and Values
VISION
The Vision of Coca Cola is as follows:
Coca Cola's vision serves as the framework for their future growth and guides
every aspect of our business plan by describing what we need to accomplish in
order to continue achieving sustainable, business growth and profitability.

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.

Productivity: Be a highly effective, lean and fast-moving organization.

People: Be a great place to work where people are inspired to be the best
they can be.

Profit: Maximize long-term return to shareowners while being mindful of

our overall responsibilities.

MISSION
The mission of the Coca Cola is as follows:
Their mission is enduring and they declare their purpose as a Coca Cola and
serves as the standard against which we weigh our actions and decisions.

To inspire moments of optimism and happiness.

To refresh the world.

VALUES
Coca Cola believes in fostering the following values:
Their values serve as a compass for our future work method and describe how
we behave in the world.

Collaboration: Leverage collective genius

Leadership: The courage to shape a better future
Passion: Committed in heart and mind
Diversity: As inclusive as our brands
Quality: What we do, we do well

Integrity: Be real

Accountability: If it is to be, it's up to me

FOCUS ON THE MARKET

Focus on consumers needs, customers needs and franchisees
Get into the market and listen, observe and learn the market conditions
Possess a worldwide view
Lay focus on execution in the marketplace every day
Be insatiably curious and different

WORK SMART
Remain responsive to change
Have the courage to change course when needed as per the
organizational position
Remain constructively discontent and wanting
Act urgently
Work efficiently and effectively
ACT LIKE OWNERS
Steward system assets and focus on building value for company
Rewards people for taking risks and finding better ways to solve company
problems
Learning from our outcomes -- what worked and what didnt in the past
We are accountable for our actions and inactions to our stakeholders
BE THE BRAND
Inspire optimism, creativity, passion and fun

Coca Cola History

It began when Atlanta pharmacist , Dr. John S. Pemberton, started a distinctive
tasting soft drink that could be sold at soda fountains in nearby areas. He mixed
flavoured syrup and carbonated water in the neighborhood pharmacy . Frank M.
Robinson, Dr. Pembertons partner and bookkeeper, named the beverage as Coca
Cola.
By 1888, three versions of Coca Cola were on the market. As Griggs Candler
acquired a part in Pemberton's Coca Cola in 1887 and refurbished it as the Coca
Cola Coca Cola in 1888. The same time Pemberton sold the rights a second time
to four more businessmen: C.O. Mullahy, E.H. Bloodworth, J.C. Mayfield, A.O.
Murphey. Pemberton's son Charley Pemberton began selling his own version of
the product.
John Pemberton declared that the name "Coca Cola" belonged to Charley, but the
other two manufacturers could continue to use the formula. So, in the summer of
1888, Candler sold his beverage under the names Yum Yum and Koke. After both
failed to catch on, Candler set out to establish a legal claim to Coca Cola in late
1888, in order to force his two competitors out of the business. Candler
purchased exclusive rights to the formula from John Pemberton, Margaret Dozier
and Woolfolk Walker. However, in 1914, Dozier came forward to claim her
signature on the bill of sale had been forged, and subsequent analysis has
indicated John Pemberton's signature was most likely a forgery as well.
In 1892 Candler incorporated a second Coca Cola, The Coca Cola Coca Cola (the
current corporation), and in 1910 Candler had the earliest records of the Coca
Cola burned, further obscuring its legal origins. By the time of its 50th
anniversary, the drink had reached the status of a national icon in the USA. In
1935, it was certified kosher by Rabbi Tobias Geffen, after the Coca Cola made
minor changes in the sourcing of some ingredients.
Coca Cola was sold in bottles for the first time on March 12, 1894. The first
outdoor wall advertisement was painted in the same year as well in Cartersville,
Georgia. Cans of Coke first appeared in 1955. The first bottling of Coca Cola

occurred in Vicksburg, Mississippi, at the Biedenharn Candy Coca Cola 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 two
entrepreneurs from Chattanooga, Tennessee, Benjamin F. Thomas and Joseph B.
Whitehead, proposed the idea and were so persuasive that Candler signed a
contract giving them control of the procedure for only one dollar. Candler never
collected his dollar, but in 1899 Chattanooga became the site of the first Coca
Cola bottling Coca Cola. The loosely termed contract proved to be problematic
for the Coca Cola for decades to come. Legal matters were not helped by the
decision of the bottlers to subcontract to other companies, effectively becoming
parent bottlers. Coke concentrate, or Coke syrup, was and is sold separately at
pharmacies in small quantities, as an over-the-counter remedy for nausea or
mildly upset stomach.

On April 23, 1985, Coca Cola, amid much publicity, attempted to change the
formula of the drink with "New Coke". Follow-up taste tests revealed that most
consumers preferred the taste of New Coke to both Coke and Pepsi, but Coca
Cola management was unprepared for the public's nostalgia for the old drink,
leading to a backlash. The Coca Cola gave in to protests and returned to a
variation of the old formula, under the name Coca Cola Classic on July 10, 1985.
On February 7, 2005, the Coca Cola Coca Cola announced that in the second
quarter of 2005 they planned to launch a Diet Coke product sweetened with the
artificial sweetener sucralose, the same sweetener currently used in Pepsi One.
On March 21, 2005, it announced another diet product, Coca Cola Zero,
sweetened partly with a blend of aspartame and acesulfame potassium. In 2007,
Coca Cola began to sell a new "healthy soda": Diet Coke with vitamins B6, B12,
magnesium, niacin, and zinc, marketed as "Diet Coke Plus. On July 5, 2005, it
was revealed that Coca Cola would resume operations in Iraq for the first time
since the Arab League boycotted the Coca Cola in 1968.
In April 2007, in Canada, the name "Coca Cola Classic" was changed back to
"Coca Cola." The word "Classic" was truncated because "New Coke" was no
longer in production, eliminating the need to differentiate between the two. The
formula remained unchanged.
In January 2009, Coca Cola stopped printing the word "Classic" on the labels of
16-ounce bottles sold in parts of the south-eastern United States. The change is
part of a larger strategy to rejuvenate the product's image. In November 2009,
due to a dispute over wholesale prices of Coca Cola products, Costco stopped
restocking its shelves with Coke and Diet Coke.

Products and Brands

Coca Cola has a wide range of products marketed under different brands. Some
of them are as follows:

Strategic Positioning of Coca Cola in the Global Market

We would be analyzing Coca Cola's positioning strategy through various standard
models and matrices.

Porters Five Forces Model

This model was propounded by Michael Porter and enumerates the external
factors that impact the competitive positioning of a firm.
Following are the Porter's Five Forces:

1. Rivalry among various competitors: Coca Cola, PepsiCo and Cadbury Schweppes
are the major players in this industry. PepsiCo is the largest competitor of Coca Cola.
Coca Cola has an advantage over PepsiCo as it made early entry into the market.
Pepsi is trying to compete with Coke by concentrating to spread their market share in
the emerging economies where the presence of Coke is weak. It is also diversifying
into food segment and has launched brands like Quaker Oats, Tropicana, etc. While
the Coke targets the matured generation, Pepsi is targeting the youngsters; it has
positioned itself as 'Choice of New Generation'.
Another competitive pressure is Brand Loyalty. Coca Cola has a large customer base
who are completely loyal to the brand. But according to the Brand Keys Customer
Loyalty leaders survey(2004), Diet Coke ranked 36th and Diet Pepsi was ranked 17th
as having the most loyal customers.
2. Threat of new entrants: The treat of potential entrants is low in the soft drinks
industry. This can be attributed to the fact that Coke and Pepsi have a strong Brand
image and great distribution channels that is very difficult for a new firm to build.

Another barrier to entry would be high fixed costs like warehouses and logistics.
Capital requirements for promoting and establishing a soft drink is also very high.
Morever, the soft drinks industry is saturated

3. Threat of Substitutes: Presence of wide product portfolio of Coca Cola mitigates the
threat of substitution to some extent. But local versions of the soft drinks pose threat
as they are cheaper. Substitutes also include the competitors who are not a part of the
soft drink industry. Health conscious customers are now preferring bottled water and
sports drinks. Drinks like Paperboat are becoming increasingly popular. Tea and
Coffee also act as substitutes as they contain caffeine. Blended Coffee is becoming
popular owing to the mushrooming of Starbucks, CCD and Barista, which offer a
wide variety of flavours appealing to a wide range of customers.
4. Bargaining power of Suppliers: The supplier bargaining power is low due to the
scale of Coca Cola. The principal raw material used by the soft drink industry is
fructose corn syrup while is available from many sources. Outside US, sucrose is
used, which is also available from many sources.
Aspartame, an artificial sweetener, is used for low calorie soft drinks. Until January
1993, it was available from only one source, viz., the NutraSweet Coca Cola due to its
patent. But, its patent expired at the end 0f 1992. This has further enhanced Coca
Cola's power over the suppliers.
5. Bargaining power of Buyers: Individual customers are the ultimate buyers of soft
drinks. They have a low bargaining power but Coca Cola should be careful not to
price themselves out of the market.

Strategy Tactics Grid

Strategy

Efficient

Ineffective

Effective

Die(Slowly)

Thrive

Die(Quickly)

Survive

Tactics

Inefficient

In order to be successful, a Coca Cola needs to get both its strategy and tactics
working in harmony to provide the optimum return bounded by
efficiency(McDonald and Leppard, 1993). Situational environment should be
carefully considered before designing strategy and tactics.
In the above matrix, the companies finding themselves on the left portion are
destined to perish, the pace of which is determined by the efficiency/ inefficiency
of tactics.
Coca Cola lies in the second quadrant as it is effective in doing things right
(getting the desired result) and efficiently doing things right. (working efficiently
with minimum wastage of resources).

Porters Generic Strategy Grid

Coca Cola follows Differentiation strategy(first quadrant) as well as Cost

Leadership strategy(second quadrant).

Coca Cola achieves differentiation by:

perceived superior quality product

high Brand image
promotion and packaging(Coca Cola bottle has become an internationally recognized
symbol; the contour bottle design was revitalized in 1999)

Coca Cola achieves cost leadership by:

economies of scale in R&D and promotion

knowledge and experience of production and operation processes
effective distribution networks
efficient manufacturing systems

Ansoff Matrix
Initially, Coca Cola had a single core product which had presence only in the US.
It followed Market Penetration Strategy to capture the US market.

When it was launched in the foreign markets, Coca Cola followed a Market
Development strategy for targeting new geographies and segments.
In order to further penetrate the markets, Coca Cola followed the Product
Development strategy by introducing new products like Fanta, Sprite, etc.
For further penetration, Coca Cola followed the diversification strategy by
introducing new product in new market. Some example could be bottled water
(Kinley), fruit juices(Minute Maid), etc

BCG Matrix

BCG matrix provides a strategic view of the business that helps the Coca Cola in
decision making.
Coca Cola's business is a problem child in some Nordic countries.
Divesting a business(Dogs) in poorly performing countries will affect Coca Cola's
presence, it is highly unlikely for it to do so. It is also possible that these
businesses i.e. Dogs might form the basis of growth and emerging markets in
future.

Coca Cola: Financial Ananlysis

Market Share:
It being the biggest corporation in the soft drink sector, Coca Cola has the largest
market share. This corporation manages about 59% of the world market share.

Financial Report:
This corporation is financially very good due to strong finances. Corporation is
still surviving the ups and down of the occupation world. In 2013, basic and
diluted net income per share has a component of non-cash gain of $.02 per share
after taxes, which was given recognition on the notion of stock being issued by
Coca Cola Inc., one of the valuation stockholders in this corporation.
Profitability analysis:
The second thing after past performance through which they determine budget is
profit. If they get profits with the high margin, then they mostly go for
increasing their profits in the subsequent years.
Liquidity Ratio

Working capital
It measures a corporation's efficiency and its financial health. It is a financial
metric which depicts liquidity available in occupation. Alongside fixed valuables
like equipment and plant, working capital is usually appraised as a part of (OC)
operating capital.
(WC) Working capital = current valuables current in outstanding debt
Though working capital is improving on a yearly basis, Coca Cola is still not able
to deliver performance compared to soft sector average and its other
counterparts.

Current ratio balance

It measures a corporation's ability to pay short-term in outstanding debt.
(CR) Current ratio balance=Current Valuables/Current In outstanding debt
From Coca Colas perspective, current ratio balance is increasing every year. The
corporation is hence performing above sector average.

Quick ratio balance

Its an indicator of a corporations short-term liquidity and measures a
corporations ability to meet its short-term covenants with the most liquid
valuables like cash etc. Hence, the ratio balance excludes inventories from
current valuables, and is calculated as: we measure the dollar amount of liquid
valuables (cash etc.) available for each dollar of current in outstanding debt
(short term). The figure 2.5 value of Quick ratio means that a corporation has
$2.50 of liquid valuables available to cover each $1 of current in outstanding
debt recorded. Higher the quick ratio balance better is the liquidity position of
the corporation.
Quick ratio balance = (CA inventory) / CL
Where CA = current assets, CL = current liabilities
Coca Colas quick ratio balance is on a rise every year, showing that it is able to
deliver results above expectations.

Accounts receivable throughput

It is the ratio balance of net sales of employers occupation on solvency terms to

its average sum of accounts receivable. It can be equated with activity ratio
balance which determines the number of times during that period an occupation
collects its average sum of accounts balance which is pending under receivable
terms.
Accounts receivable throughput = Net Sales as Credit/ Net Average Accounts
Receivable
This amount for Coca Cola has been slightly increasing, thereby signaling that
the corporation has been over performing in its sector.

Next ratio : Average collection period (number of days sales in

receivables)
The amount of time it takes for an occupation to receive money that is owed in
parameters of receivables from its clients. Calculated as:
Average Period of collecting time (Days) = (AR x Days) / Sales in Credit (nominal
value)
Where:
AR = Average amount of accounts receivables
Sales in credit= Total amount of net-credit sales during period
Days = Total amount of days in period
The average collection period has also been on rise during the last 3 years,
though slightly. The corporation is not delivering results in its sector because
Coca Colas operation balance runs much differently than sector competitors due
to its stress on distribution of syrup-liquids, thereby directly varying Average
Collection Period.

Inventory throughput
It shows how many times a corporation's inventory is sold off and replaced
during a given time. The period (days) is further divided by the available or
calculated value of inventory throughput formula to arrive at the required
number of days it takes to sell the inventory.
Inventory Throughput = COGS / Average Inventory OR
Inventory Throughput = Sales / Inventory
The above value for Coca Cola has been on decline year over year. The
corporation has been
underperforming in its sector.

Ratio balance of in outstanding debt to stockholders valuation

Its a measure of a corporation's financial leverage/ability derived by dividing its
total in outstanding debt by stockholders' valuation held currently. It depicts
what proportion of outstanding debt and valuation the corporation is using for
financing purposes.
Outstanding debt/Valuation Ratio balance = total in outstanding debt (TL) / all
of the value of stockholders valuation (E)
If the outstanding debt/valuation ratio balance for Coca Cola is 2.5, it means that
for every dollar that shareholders
own, Coca Cola owes $2.50 to creditors in
total. This ratio balance has gone spiraling towards the bottom year over year,
showing that the corporation is also underperforming in its sector.

Ratio balance of fixed valuables to outstanding debt

The fixed-valuables- to long-term-in outstanding debt ratio balance is a way of

measuring the solvency of a corporation. A corporation's long-term outstanding
debts are often secured with fixed valuables, which is why creditors are
interested in this ratio balance. This ratio balance is calculated by dividing the
value of fixed valuables by the amount of long-term outstanding debt.
Ratio balance = Fixed valuables / long-term in outstanding debt.
This ratio balance has been improving for Coca Cola. The corporation is also over
performing in its sector.

Net profit margin

Net profit margin is the percentage of earnings remaining after all interest,
operating expenses, taxes and preferred stock dividends have been subtracted
from a corporation's total earnings.
Net profit = (Total Earnings Total Expenses)/Total Earnings
Net profit margin = Net profit / Total earnings
By dividing net profit by total earnings, we can see what percentage of earnings
made it all the way to the bottom line, which is good for stockholders.
The net profit margin for Coca Cola had seen no significant alters in the last 3
years. The corporation is over performing in its sector.

Gross profit margin

A financial metric used to determine a firm's financial health by calculating the
proportion of sum of money left over from earnings after accounting for the
COGS. Thus, Gross profit margin serves as the source for paying additional
expenses and future savings.
Gross Profit Margin = (Earnings-COGS)/Earnings
COGS = cost of goods sold
The gross profit margin for Coca Cola had seen no significant alters in the last 3
years. The corporation is over performing in its sector.

Times interest earned

A metric used to measure a corporation's ability to meet its outstanding debt
liabilities. It is usually quoted as a ratio balance and indicates how many times a
corporation can cover its interest charges on a pretax basis. Failing to meet these
liabilities could force a corporation into bankruptcy.
Also referred to as "interest coverage ratio balance" and "fixed-charged
coverage."
(TIE) it is the value calculated for connotation of Times Interest Earned =
Earnings before interest and taxes (EBIT) / Total interest payable contractual
outstanding debt
Times interest earned has been improving for the corporation. Coca Cola is also
over performing in its sector.

Total asset throughput (ratio balance of nets sales to valuables)

The total asset throughput ratio balance measures the ability of a corporation to
use its valuables to efficiently generate sales. This ratio balance considers all
valuables, current and fixed. Those valuables include fixed valuables, like plant
and equipment, as well as inventory, accounts receivable, as well as any other
current valuables. The smaller the total asset throughput ratio balance, the
smaller the # when compared to historical data for the firm and sector data, the
more sluggish the firm's sales.

Total asset throughput is calculated as Net Sales in notional quantity of

sales/Total Valuables = $ Times
The smaller the total asset throughput ratio balance (the smaller the $ Times), as
compared to historical data for the firm and sector data, the more sluggish the
firm's sales. This may reflect a problem with one or more of the asset categories
composing total valuables - inventory, receivables, or fixed valuables.
Also, the above calculation of Total asset throughput has been on the decline for
Coca Cola for the last 3 years. The corporation is underperforming in its sector.

Pace/rate earned on total valuables (requite on valuables)

An indicator of how much revenue a corporation is making relative to its total
valuables. ROA gives an idea as to how efficient senior level management is at
using its valuables to accelerate earnings. Calculated by dividing a corporation's
annual earnings by its total valuables, ROA is displayed as a percentage.
Sometimes this is referred to as "requite on investment".
Requite on valuables = Net quantity of income value / Total Valuables
Also noted is the fact that Coca Colas ROA has been decreasing slightly over the
last 3 years. The corporation is underperforming in its sector.

Pace/rate earned on total stockholders valuation (requite on

valuation)
Its the quantity of net revenue requited as a percentage of shareholders
valuation. Requite on valuation measures a corporation balances profitability by
revealing how much profit a corporation generates with the money of the
stockholder investment. ROE is expressed as a percentage and calculated as:
Requite on Valuation = Net Income/Shareholder's Valuation
Coca Cola has been on a slight decline the past 3 years. The corporation has
been underperforming in its sector.

Pace/rate earned on common stockholders valuation

Ratio balance indicating the earnings on the common stockholders' investment.
Pace/rate earned on common stockholders valuation is calculated as a
percentage and calculated as:
Pace/rate earned on common stockholders valuation =
(Net income - preferred dividends) / average common stockholders' valuation.
There has been no alter with this metric the last 3 years, however the
corporation is underperforming in its sector.

Earnings per share on common stock

The portion of a corporation's profit allocated to each outstanding share of
common stock. Earnings per share serves as an indicator of a corporation's
profitability.
Calculated as:
(Net income Dividends on preferred stock) / Average outstanding shares
Earnings per share on common stock have been increasing for Coca Cola. The
corporation is
also over performing in it sector.

Coca Cola Financials 2013-2015

2013

2014

2015

Status

Sector
average

Working capital

25,49

30,32

31,30

Improvin

2.76

2.60

Improvin

Ratio balance of fixed valuables to 2.86

L.T. in outstanding debtedness

23,500

2.2

Ratio balance of in outstanding

1.36

1.45

1.51

debtedness to S.E.

Decreasi

1.22

ng

Total asset throughput

1.58

1.56

1.52

Decreasi

2.3

ng
Current ratio balance

1.05

1.09

1.13

Increasi

ng
Quick ratio balance

.92

.97

1.0

Increasi

.59

ng
Pace/rate

earned

on

total 11%

11%

10%

valuables

11.8%

ng

Earnings per share on common 1.90

2.01

1.95

stock
Accounts receivable throughput

Decreasi

Increasi

1.52

ng
9.46

10.09

9.62

Improvin

9.32

g
Average collection period

38.58

36.18

37.96

Improvin

31.2

g
Times interest earned

19

19.2

19.5

Improvin

15.4

g
Inventory throughput

15.05

14.71

14.30

Decreasi

15.5

ng
Net profit margin

Gross profit margin

25.3

26.9

28.4

61.2

60.9

61.2

n/a

18%

n/a

43%

Pace/rate earned on common S.E.

.42

.42

.42

n/a

.63

Pace/rate earned on total S.E.

.27

.27

.26

decreasi

.36

ng
Coca Cola Common Size Income Statement
2015

2014

2013

Net Operating Earnings

100.00

100.00

100.00

Cost of Goods Sold

-39.32

39.68

-39.14

Gross Profit

60.68

60.32

60.86

Selling, general and Admin. Expenses

%
-36.94

%
36.94

%
-37.47

Other operating charges

-1.91

-.93

-1.57

Operating Income

21.83

22.45

21.82

Interest income

%
1.14

%
.98

%
1.04

Interest expense

-.99

-.83

-.90

Valuation income, net

1.28

1.71

1.48

Other income (loss), net

1.23

.29

1.14

Income before income taxes

24.50

24.59

24.58

Income taxes

%
-6.08

%
-5.67

%
-6.03

Consolidated net income

18.41

18.92

18.55

Net income attributable to non-controlling interests

%
-.09

%
-.14

%
-.13

Net income attributable to shareowners

18.32

18.78

18.42%

FINANCIAL STATEMENTS ANALYSIS

The in-depth analysis of key financial ratio balances in this project helps in
measuring the financial strength, liquidity conditions and operating efficiency of
the corporation. It also provides valuable interpretation separate for each ratio
balance that helps organization implementing the findings that would help the
organization to increase its efficiency (Sharma, 1) Ratio balances are only post

mortem analysis of what has happened between two balance sheet dates. For
one thing, they gain no clue about the future. Ratio balance analysis in view of
its several limitations should be considered for analyzing purposes rather than
being considered as an end itself.
From the analysis it is quite clear that the gross profit ratio balance is providing a
steady growth number whereas operating ratio balance is around optimum level
to the sector standards. As a whole, the liquidity position of the corporation is
good. Thus finally the corporation must try to improve its profit margins as they
are small sector levels. This improvement may also bring up its requite on
investment and overall efficiency to the corporation. The occupation
environment of the corporation is reasonably good. The corporations track
record is always inclined to strong principles based profit growth.
Demand for carbonated soft drinks has been negatively affected from the
concerns of the obesity and nutrition concerns of todays population. Carbonated
soft drinks have dropped from 60% to 35% of the total US beverage volume.
Carbonated soft drink companies such as Coca Cola have also been under public
eye because of public policy challenges infuriated from the sales of soft drinks in
grade schools. The last market data information has led to alteration from
carbonated soft drinks to flavored water, diet beverages, and sports drinks.
Coca Cola faces a risk from increasing price movements for commodities that are
required in for its operation balances. Alters in the prices of these raw materials
will pass onto the customers if the corporation wishes to remain profitable. This
alters and potential increase in price of products could potentially result in loss of
target audience, as they may switchover to more inexpensive alternatives. Coca
Cola faces price risk on commodities such as resin and corn which affects the
cost of raw materials used in the manufacturing of finished goods. Also, Coca
Cola is exposed to commodity price fluctuations on crude oil. This is important
because this affects the corporation's cost of fuel used in the movement and
delivery of its products.
In the fiscal year 2013, Coca Cola reported very strong financial performance
with a reported net income of $36.1 million. Throughout the year, Coca Cola saw
an improvement across many channels of their occupation that helped drive an
increase in case volume of 4.4%. This was the highest volume growth the
corporation has seen in over five years. Coca Cola is also focusing its efforts to
improve the balance sheet in order to better position the corporation to react to
opportunities when they are available. This dedication is shown through the
decrease of long-term outstanding debt by over $450 million in past 10 years.
Coca Cola plans to continue to use its available annual cash falls to reduce longterm outstanding debt. Coca Cola is on the smaller end when compared in
market capitalization to its competitors and the sector. This is because the
corporation strictly focuses on distribution specifics, whereas its competitors are
focused on development, marketing, selling, and distribution of their products.
Based on its positive net, operating, and gross margins, we can clearly
visualize that Coca Cola operates under profitable conditions. Although the
corporation converts an above median percentage of its earnings to gross profits,
it fails to do the same for operating and net profits. The corporations 6.36%
operating margin and 2.61% net profit margin is far smaller than the competitors
listed and the overall sector average. In addition, Coca Cola saw its earnings
drop despite of positive earnings growth in last financial year. When compared to
the sector average, Coca Cola is heavily lagging behind in both these metrics.

In the last 7 years, the corporation has been averaging a compound

annual growth pace/rate of just fewer than 5%. In addition to the higher
earnings, profit margin is slightly improving year over year. The Corporations
outstanding debt to total capital ratio balance number75.44% is relatively high
when compared with the non-alcoholic beverages sector's norm. Coca Cola is
moving in the right direction as it is decreasing its outstanding debt-to-total
capital ratio balance year over year; on the other hand, the sector is actually
moving the opposite direction as its outstanding debt-to-total capital ratio
balance is increasing. When compared with competitors that are similar in
market capitalization, the corporations quick ratio balance is high. With a quick
ratio balance of 1.13 and an interest coverage ratio balance of 1.75, the
corporation should be able to comfortably repay its outstanding debt. Coca
Colas cash conversion cycle shows that it is almost twice as large as the sector
average. This is a bad sign as this shows that the corporation takes a longer time
than its competitors to convert resource inputs into cash pitfalls.

During last seven years, Coca Cola is showing steps in both reducing its
dependence on outstanding debt and also increasing its liquidity. Its LT
Outstanding debt/Valuation ratio balance has decreased substantially from
765.15 to 315.76. This is the same case for LT Outstanding debt/ Total Capital
ratio balance, which decreased from 87.34 to 75.44. The metrics based on
liquidity shows that all three ratio balances have increased during the timeline.
This is a positive sign as the corporation is better positioning itself to handle any
unanticipated conditions.

We can clearly see that ROA, ROC, and earnings per employee are on an
upward trend, ROE has been very vulnerable. ROA has almost doubled from
1.64% in 2004 to 3.05% in 2010. ROC has increased from 5.87% to 8.10% in
these same 7 years. Earnings per employee has been on a constant rise and
increased almost by $93,000 within this time range. But still this doesnt allow us
to really deduce anything from ROE since there doesnt seem to be a noticeable
trend. ROE hit its high in 2004 at 37.38% and had its small in 2008 at 9.24%.

Since then, ROE has recovered and continued to hover around its usual range of
30%.

Cash falls from operation balances, investments and other financial

activities:

Net Income

2015

2014

2013

8626.00

9086.00

8634.0
0

Depreciation/Amortization and depletion

1977.00

1982.00

1954.0
0

Net Alter from Valuables/In outstanding debtedness

-932.00

1080.00

1893.0
0

Net cash from Discontinued Operation balances

0.00

0.00

0.00

Other operation balance activities

871.00

657.00

779.00

Net case from operating activities

10542.0

10645.00

9474.0

0
Property and equipment

2439.00

0
2637.00

2819.0
0

Acquisition/disposition of subsidiaries

519.00

654.00

-415.00

Investments

-9234.00

803.00

1991.00
Other investing activities

-303.00

-187.00

-93.00

Net cash from investing activities

4214.00

11404.00

2524.0
0

Uses of funds:

Issuance (repurchase) of capital stock

2015

2014

2013

-2944.00

3054.0

3070.00

0
Issuance (repayment) of outstanding debt

4711.0

4218.00

4965.00

0
Increase (decrease) short-term outstanding debt

0.00

0.00

0.00

Payment of dividends and other distributions

-4300.00

4969.0

4595.00

0
Other financing activities

17.00

100.00

45.00

Net cash from financing activities

-2234.00

3745.0

3347.00

0
Effect of exalter pace/rate alters

-611.00

-255.00

-430.00

Net alter in cash and equivalents

1972.0

4286.00

4361.00

8442.0

12803.0

10414.

8442.00

Cash at beginning of period

Cash at end of period

00
Diluted net EPS

1.90

8517.00

12803.0
0

1.97

1.85

Coca Colas financing activities include share issuances, net borrowings,

dividend payments and share repurchases. The current yield on Coca Cola bonds
is 3.03%; Coca Colas current stock price is $40.88. Also, the company maintains
outstanding debt levels considered prudent based on the corporations cash falls,
interest coverage ratio balance and percentage of outstanding debt to capital.
Coca Cola uses outstanding debt financing to smaller their overall cost of capital,
which increases their requisite on shareowners' valuation. This exposes them to
adverse alters in interest pace/rates. Its capital structure consists of 54.2%
outstanding debt and 45.8% valuation. The corporation keeps a tab on their
interest coverage ratio balance and the rating agencies consider the ratio
balance in assessing provided ratings of credit. But, the rating agencies
aggregate financial data for certain bottlers along with the corporation when

assessing their outstanding debt rating. As such, the key measure to rating
agencies is the aggregate interest coverage ratio balance of the Coca Cola and
certain bottlers. Coca Colas global presence and strong capital structural
presence gives them access to key financial markets around the world, enabling
them to raise funds at a small effective cost. This position, coupled with active
top management of Coca Colas mix of short-term and long-term outstanding
debt and their mix of fixed-pace/rate and variable-pace/rate outstanding debt,
results in a smaller overall cost of borrowing. Coca Colas outstanding debt top
management policies, in conjunction with their share repurchase programs and
investment activity, can result in current in outstanding debt exceeding current
valuables.

STRATEGIC ALLIANCES
The Coca-Cola Company works globally with partners to address their collective
environmental and social challenges and responsibly manage the planet's resources.
Coca Cola Company is based on Business to Business marketing, which means that the
company provides goods that bought for a resell rather than personal use. It is focused
on sequential synergies. It utilizes a variety of alliance types. The company partners
with some of its largest customers to achieve heightened brand presence and sell more
product. The company's alliances are based on commitment and trust.
Coca-Cola prefers to acquire brands and ally with bottlers to package and distribute
those brands. The company makes its Coke syrup, for example, and after completing
its task, passes the product on for bottling by partners, or for consumption. This
approach fits with the companys strategy and enhances its operational effectiveness.
There are other benefits of various alliance types which Coke enjoys:

A. Partnerships with Bottlers and Distributors

Lowers the costs of entering markets.
Reduces the need for capital.
Streamlines the companys portfolio or operational activities.
B. Acquisition of Brands and Products
Fills gaps in Coca-Colas brand portfolio.
Reduces competition in the beverage industry.
Prevents competitors (i.e. Pepsi Co.) from gaining the same market space.
Grows total company revenue.
While Coca-Cola generally partners with bottlers, it sometimes takes a minority equity
interest in them. In some uncommon instances, Coke buys an entire bottlers
operations. The equity interest in its bottlers is a sign of encouragement, an indication
that Coca-Cola wants its partners to succeed. Some of the companys oldest bottling
partners are Coca-Cola Enterprises and Coca-Cola Hellenic Bottling. Coca-Cola focuses
on its core operation, making syrups, and lets other handle the intense logistical
challenge of bottling and distributing its products.
Coca-Cola Company works together with more than 300 bottling partners globally and
operates the most extensive beverage distribution system in the world.
Bottling Investments Group (BIG) It was created to ensure that the bottling
franchises receive appropriate investments and expertise to ensure their long-term
success. BIG strategically invests in select bottling operations and temporarily takes

McDonald partnered with Coca-Cola in 1955, when McDonalds opened its first
restaurants in Des Plaines and a beverage supplier was required.
McDonalds and Coca-Cola alliance is a big success, making the two companies what
Apartare
from
the bottling
partners,
Coca
Cola
Company
has global
strategic
alliances
they
today.
McDonalds
is now
the
worlds
leading
food
servicewith
retailer
a
vast
range
of
other
companies
to
leverage
their
brand
in
different
domains.
with more than 35000 local restaurants serving nearly 70 million people in more than
100
(McDonalds,
while Coca-Cola
is the calorie-free
worlds largest
1. Incountries
2006, Apple
and Coca2014),
Cola collaborated
to promote
Cokebeverage
Zero
company
owning
and
licensing
around
1.9
billion
beverage
servings
worldwide
every
along with iTunes.
day in more than 200 countries (Coca-Cola Annual Report, 2013). Customers are
2. Since 2001,
Proctera &
Gamble
joint all
venture
Coca-Cola
to soft
accustomed
to enjoying
meal
with a has
cokeainside
along,with
which
makes the
develop
and
market
their
juices
and
snacks.
drink a key revenue stream, covering about 5% of McDonalds revenue.
Why did McDonalds and Coca Cola partnership become successful?
It is the compelling partnership Value Propositions and offers they jointly designed
3. McDonalds
that made the partnering extraordinary. Some of the reasons are:
1. The joint expansion vision
McDonalds and Coca-Cola shared a common mission and vision to expand globally
2. Source of value (SoVs)
Coca-Cola has saved the cost of vertical integration from the partnership with
McDonalds (Douglas et al., 1996), compared to Pepsi who expanded distribution of
its products to end customers by acquiring Kentucky Fried Chicken, Pizza Hut and
Taco Bell at an expensive cost (PepsiCo, 2014). Meanwhile, targeting similar
demographic end customers, that partnership benefited each other in terms of
resources & expertise sharing, marketing synergies and risk reduction.
3. Areas of co-operation (AoCs)
A. Market expansion
Both of them are the leaders in their industries and possess numerous resources and
operation experiences, thus adding more symmetry to the vision of global expansion
(David, 2014). E.g- to help McDonalds expand worldwide, Coca-Cola often provides
existing offices in different regions as a base of operation for McDonalds to get up.

B. Product development
The know-how and expertise from Coca-Cola benefits the product development of
McDonalds. In 1993, Coca-Cola offered business advice on the product offering of
McDonalds, creating the Extra Value. In 2002, both of them executed collaborative
strategies for Latin America, designing and testing of new packaging for drinks.
Moreover, recently, Coca-Cola helped McDonalds create a new product line of
smoothies.
C. Unique strategic values created by the supply chain integration
The unique supply chain co-operated by both Coca-Cola and McDonalds creates
added values. Evidence shows that the best taste of Coca-Cola is only available in
McDonalds, as they established a unique system for the delivery and production of
coke. Coke syrup is normally delivered in plastic bags; however, since McDonalds
sells a larger amount of coke, syrup can be delivered in stainless steel tanker
truck. Additionally, McDonalds has a reverse osmosis filter offering the cleanest
water. All these make coke taste fresher and better; enabling McDonalds to
possess competitive advantage of better-taste coke.
D. Advertising and Corporate social responsibilities (CSR)
From opposing Bloomberg on super-size sodas (Watson, 2012) to being the biggest
sponsors of Brazils 2014 world cup, McDonalds and Coca-Cola have worked
countless campaigns globally over years. Most recently, in Philippines, both
partners started #BetterTogether, a social media campaign to promote the fast
food chains BFF Bundle, a set meal which includes Coca-Cola drinks.
Moreover, McDonalds and Coca-Cola constantly innovate together in a more
sustainable supply chain. In 2002, they pursued new sponsorship and charity
opportunities in Latin America, and helped more than 100 local schools to allow
students to see the collection from Art Museum. Furthermore, they also developed
a new cup with a locking lid to prevent children from spilling their drinks.
1. The Walt Disney Company has a 47 years alliance with Coca-Cola Company.
On September 2002, DASANI water bottles were featured at the Walt Disneys
parks and resorts. DASANI were also served on the Walt Disney cruise lines, and
became the sponsor of the Walt Disneys World Marathon.

4. Since 1991, Nestl Company - Switzerland, and Coca Cola

Company have a joint venture in which Nestl shares its coffee, tea and
chocolate beverages while Coke their distribution system.

5. In April, 2014 Coca-Cola entered into agreement with InterContinental Hotels Group
(IHG), one of the world's leading hotel companies, wherein the hotel chain would offer
Coca-Colas soft drink and juice brands to guests during their stays at IHG hotels in the
United States.
6. Sustainability Partners - Coca Cola has also partnered with many organizations around
the world so as to contribute to positive change and achieve their sustainability goals,.
These organizations are as follows:

A. The Company announced a partnership with WWF on June 5, 2007 to work

toward conserving and protecting freshwater resources around the world; to
improve their carbon emissions and energy use and to improve water efficiency
within their operations.
B. The company is engaged with PNB through participation in local chapters and
projects. Across the Middle East and North Africa region, for example, the
Company partnered with the U.S. State Department to sponsor a month-long
summer entrepreneurship program at Indiana Universitys Kelley School of
Business.
C. Through their partnership with the Inter-American Development Bank (IDB),
the company has undertaken multiple initiatives throughout Latin America in the
areas of agriculture, sports for development, recycling and water and sanitation.
D. The Company has undertaken several innovative projects in association with the
Gates Foundation. In October 2009, the company undertook a four-year, $11.5
million project in Kenya and Uganda to increase local mango and passion fruit
sourcing, benefitting more than 50,000 small farmers, many of them women.
E. The Coca-Cola Company has launched more than two dozen programs in
partnership with
USAID, the principal U.S. federal agency providing development and
humanitarian assistance, since 2002. In 2005, the company launched the Water
and Development Alliance (WADA)a unique partnership to address community
water needs in developing countries around the world.
F. On December 1, 2011, World AIDS Day, the Company announced a multi-year
partnership with RED to help raise awareness and money for The Global Fund to
Fight Aids, Tuberculosis and Malaria with the aim of virtually eliminating motherto-child HIV transmission by 2015.
G. The Coca-Cola Company has been in collaboration with IFRC, the
International Federation of Red Cross and Red Crescent Societies, since

I.

On August 2014, the Company purchased 16.7% Equity Stake in Monster

Beverage. The Coca-Cola Company would contribute its Energy Portfolio to
Monster, and Monster its Non-Energy Portfolio to the Company.

CORE COMPETENCIES
The company has developed following competencies over the years that has
enabled it to position itself strongly in the global market.
1. Comprehensive distribution network Its distribution system spans over
200 countries. This has made Coca-Cola accessible to billions of people
worldwide. Coca-Cola is often available in ample supply to people in areas
where other consumer goods companies would never consider delivering their
products. The African continent is an excellent example its fairly common
to see a small shop selling cold Coke in the middle of nowhere.
2. Secret Recipe - The secret recipe for Coca-Cola, which tastes better than other
cola drinks.
3. Innovation The companys ability to continue developing new products and
re-inventing old ones Coca-Cola currently offers over 400 brands in 200
markets worldwide. Coca-Colas production techniques are so well developed
4. Marketing Strategies The Coca-Cola Company has a strong marketing
strategy that focuses on growth in all types of markets namely; generating
more volume in the emerging markets, increasing their brand value in
developing markets and growing profit in their most developed markets.

Going
Global

Co's
Quality
Promis
es

Coke
Pumps

Coca
Hookh
a

Marketi
ng
Strategy

Taegti
ng
young
mind
Chang
e of
Bottle
Design
s

Coca
Cabs
Cocater
ia

Fun
Island

Coca-Colas Business Model Canvas

OUR RECOMMENDATIONS
In todays economic slowdown market, it is very important for Coca-Cola to
manage cost, foster product differentiation and promote marketing. The
company can take following steps:

Absolute, Repair and

Refranchise
Take over management of the
various facets of the Coca-Cola
supply chain, primarily the bottling
distilleries.
Revamp and update the current
model utilized by the lie of
production.
After fixing the problematic
stages of product creation,
refranchise the organization to
further cut future costs associated
with owning an entire supply chain

Absolute control over

Production
Vertically integrate the product
towards a streamlined model to
minimize the total cost of goods
sold
Acquire each part of the Coca-Cola
supply chain from raw material to
distribution
This would enable them to
achieve 2020 goal of doubled
revenue over a 10 year period

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