Professional Documents
Culture Documents
| 8/8/2010
Business Plan
Business plan
On
Prepared for:
ASHRAF U BHUYAN
Lecturer
Department of Business Administration
Prepared by:
Md. Ansarul Haque
2006-1-10-150
2010-2-10-105
2010-2-10-176
2010-2-10-012
DEDICATION
Business Plan on Coca-Cola Ltd. | 8/8/2010
Acknowledgements
First of all we would like to thank the almighty god that we are enabling enough to
do this term paper. We are very much thankful to our respective course instructor
Ashraf U Bhuyan for giving us such an interesting project and proving the
necessary suggestion and guidelines. This has provided us the chance of working
with real life data, which helped us to acquire clear insight about the course. It was
a thoroughly enjoyable experience. This Business Plan will definitely add to our
practical experience and will help us in professional life.
We are grateful to our administration as they provide us with the facility to use
computer lab. May be, it would have been impossible to finish the Business Plan in
time if we didnt get facility to use computer lab for our own purpose. We are
acknowledging to all of those web sites from which we have taken necessary helps.
Last but not least, we are proud and feeling lucky enough to have such nice
members in our group. We have a strong bonding of understanding which has
made our effort successful and memorable.
Executive Summary
The Coca-Cola Company is the world's largest beverage company, largest manufacturer,
distributor and marketer of non-alcoholic beverage concentrates and syrups in the world and is
one of the largest corporations in the United States. The company is best known for its flagship
product Coca-Cola, invented by pharmacist John Stith Pemberton in 1886. The Coca-Cola
formula and brand was bought in 1889 by Asa Candler who incorporated The Coca-Cola
Company in 1892. Besides its namesake Coca-Cola beverage, Coca-Cola currently offers nearly
400 brands in over 200 countries or territories and serves 1.5 billion servings each day.
The company operates a franchised distribution system dating from 1889 where The
Coca-Cola Company only produces syrup concentrate which is then sold to various bottlers
throughout the world who hold an exclusive territory.
The Coca-Cola Company is headquartered in Atlanta, Georgia. Its stock is listed on the
NYSE and is part of DJIA and S&P 500. Its current chairman and CEO is Muhtar Kent.
Table of Contents
Content:
1.
2.
Management
3.
Marketing
A. Market Analysis.
B. Competitive Analysis
C. SWOT Analysis
D. Strategy Planning
Operation
A. Key Professionals
B. Organizational Structure
C. Human Resource Management
D. Product & Service Delivery
E. Customer & Service Support
F.
5.
Facilities
Financial Data
A.
Company Statement
B.
C. Balance Sheet
D. Break Eve Analysis
6. Conclusion.
1.
A. SUMMARY:
Coca-Cola Enterprises, established in 1986, is a young company by the standards of the
Coca-Cola system. Yet each of its franchises has a strong heritage in the traditions of
Coca-Cola that is the foundation for this Company.
The Coca-Cola Company traces its beginning to 1886, when an Atlanta pharmacist, Dr.
John Pemberton , began to produce Coca-Cola syrup for sale in fountain drinks. However
the bottling business began in 1899 when two Chattanooga businessmen, Benjamin F.
Thomas and Joseph B. Whitehead , secured the exclusive rights to bottle and sell CocaCola for most of the United States from The Coca-Cola Company.
Coca-Cola bottling system continued to operate as independent, local businesses until
the early 1980s when bottling franchises began to consolidate. In 1986, The Coca-Cola
Company merged some of its company-owned operations with two large ownership groups
that were for sale, the John T. Lupton franchises and BCI Holding Corporation's bottling
holdings, to form Coca-Cola Enterprises Inc. The Company offered its stock to the public
on November 21, 1986, at a split-adjusted price of $5.50 a share. On an annual basis, total
unit case sales were 880,000 in 1986.
In December 1991, a merger between Coca-Cola Enterprises and the Johnston CocaCola Bottling Group, Inc. (Johnston) created a larger, stronger Company, again helping
accelerate bottler consolidation. As part of the merger, the senior management team of
Johnston assumed responsibility for managing the Company, and began a dramatic,
successful restructuring in 1992.Unit case sales had climbed to 1.4 billion, and total
revenues were $5 billion
4.
The ultimate objectives of our business strategy are to increase volume, expand our share of
worldwide nonalcoholic ready to drink beverages sales, maximize our long-term cash flows, and
create economic value added by improving economic profit.
The Coca Cola system has more than 16 million customers around the world that sells or serves our
products directly to consumers. We keenly focus on enhancing value for these customers and helping
them grow their beverage businesses. We strive to understand each customers business and needs,
whether that customer is a sophisticated retailer in a developed market a kiosk owner in an emerging
market.
There are nearly 6 million people in the world who are potential consumers of our companys
product. Ultimately, our success in achieving our vision depends on our ability to satisfy more of their
beverage consumption demands and our ability to add value for customers. We achieve this when we
place the right products in the right markets at the right time.
2.
MANAGEMENT:
3.
MARKETING
A.MARKET ANALYSIS:
THE OVERALL MARKET:
Being the biggest company in the soft drink industry, Coca Cola enjoys the largest market share.
This company controls about 59% of the world market.
Nonalcoholic
All commercial
Beverages
drink
10 year compound
annual growth
Company
Industry
5-year compound
annual growth
Company
Industry
Company
Industry
2002
Company
share
2002
Company
share
Company
per capita
Income
6%
5%
5%
5%
4%
4%
18%
9%
This shows that the market of the company is geographically vast and it is controlling it with great
success. In 2002, the company grew their carbonated soft-drink business by nearly 250 million unit cases
and generated record volumes. Because carbonated soft drinks are the largest growth segment within the
nonalcoholic ready-to-drink beverage category measured by volume, that is why they are focusing more
on this and they are continually increasing the pace because they know that accelerating this pace is
crucial to their future success. Thus they are increasing their market day by day. The operation income
earned by Coca Cola Company can be illustrated by the following pie chart.
(Figure)
70
This strategy has worked a lot and it has helped them to become the Worlds leading Soft Drink Company.
The global unit sale of the Coca Cola Company is increasing from the last ten years. The data of the
global unit sale of the Coca Cola Company can be represented by following chart.
(Figure)
So there is positive growth in the market of the Coca Cola Company. There is a
volume increase by 4% with strong international growth of 5%. This is only due to the
marketing programmers, which has deepened the relationship of the customers and Coca
financial health and success of their bottling partners is a critical component of The
Company's ability to build and deliver leading brands.
worldwide
innovative
Cola. The
Coca-Cola
In 2002, the company had worked with their bottlers to turn good intentions into reality by
improving the system economics. The results in 2002 reflect this steadily improving and mutually
constructive relationship between the Company and their bottling partners. The main reason behind this
relationship is to continue realizing shared opportunities for growth, with closer coordination of
operations including customer relationships, logistics and production.
NORTH AMERICA
30%
LATIN
EUROPE &
AMERICA
MIDDLE EAST
25%
22%
ASIA
AFRICA
17%
6%
So the volume is least in the Africa and most in the North America. The data about the market
share of this company area wise is given in the following table.
The above table shows the geographical earning of the Coca Cola Company and from this data;
we can find out that the customers of Coca Cola are increasing which is shown by the companys per
capita income. Unit case equals 24 eight-ounce servings. The column, which shows the non-alcoholic
beverages consist of commercially, sold beverages, as estimated by the Company based on available
industry sources. The country column is derived from
The Company's unit case volume while the industry column includes nonalcoholic ready-to-drink
beverages only, as estimated by the Company based on available industry sources.
Country
Nonalcoholic
All commercial
Beverages
Drinks
Company
Industry
Company
Industry
Company
Industry
2002
Company
share
2002
Company
share
Company per
capita
Income
North
America
22
15
398
United States
23
16
419
Latin America
24
15
205
Argentina
20
10
236
Brazil
23
13
144
Chile
(2)
56
23
336
Mexico
10
22
18
462
Europe
& Middle East
12
72
Eurasia
17
(14)
14
39
France
110
Germany
(1)
(6)
14
193
Great Britain
11
17
193
Italy
104
Middle East
12
12
17
Spain
17
12
264
Asia
10
14
23
Africa
10
34
11
34
(Table)
In Asian population, which is the satisfied customer of Coca Cola, is approximately 3.2 billion
and the average consumer enjoys close to two servings of our products each month. Through an intense
focus on Coca-Cola, innovation and new beverages, the company has achieved volume growth of 10
percent in 2002. With developing economies and populations, this region has strong long-term potential,
and the company is building an exciting family of beverage brands in addition to expanding the
popularity of our core brands, led by Coca-Cola. In China, for example, sales of Coca-Cola increased 6
percent. The total unit case sale of Coca Cola in Asia can be shown by the following pie chart.
(Figure)
So the company is emphasizing more in this area and is trying to develop a strategy, which can
increase the growth of the consumption of Coca Cola by the people of Asia. Among the countries of Asia,
Japan has the highest percentage, which is about 29%. Among others, Pakistan, India and Bangladesh are
those countries where the average consumption is increasing day by day.
MARKET SEGMENTS:
Market segments are basically those people who take this drink daily and those areas where the
demands is higher then the other areas. There are so many people who take this drink daily and those
people who take weekly and those who take less often are always there as well. So, their basic segments
are those people who take this drink regularly.
For this reason Coca-Cola have provided their coolers and freezers in the market. They have
maximum number of coolers and freezers in the market. They provide this infrastructure free of cost just
to provide child coke to their customer, which they want to be purchase.
Their salesman and mechanics regularly visit all the shops where coke has its infrastructure to check
that either it is in proper condition or not, if not then they immediately change or repair it.
B. COMPETITIVE ANALYSIS
COMPETITORS
Cokes major competitor is PEPSI and there is no hesitation to say this because every one
knows that and all the other cold drinks and water, coffee, tea is the competitors.
MAJOR COMPETITORS
Consumers firstly decide that they are going to have a soft drink. Then they compete brands
with each other. Like they compete Coke with Pepsi and Sprite with 7up and team. So the major
competitor of Coke is Pepsi.
When they motivate to any other brand or on Coke its in instinct basically that based on
messages derive certain feelings.
But Coca Cola thinks in a different way, they believe that RC Cola, new coming Beverages,
and all juices, even they take water and tea as their competitors.
MAJOR COMPETITOR
PEPSI INTERNATIONAL
HISTORY
PepsiCo is a world leader in convenient foods and beverages, with revenues of about $27 billion
and over 143,000 employees. The company consists of the snack businesses of Frito-Lay North America
and Frito-Lay International; the beverage businesses of Pepsi-Cola North America, Gatorade/Tropicana
North America and PepsiCo Beverages International; and Quaker Foods North America, manufacturer
and marketer of ready-to-eat cereals and other food products. PepsiCo brands are available in nearly 200
countries and territories.
Many of PepsiCo's brand names are over 100-years-old, but the corporation is relatively young.
PepsiCo was founded in 1965 through the merger of Pepsi-Cola and Frito-Lay. Tropicana was
acquired in 1998 and PepsiCo merged with The Quaker Oats Company, including Gatorade, in
2001.would entertain the listener with the latest musical selections rendered by violin or piano or
both. The new name, Pepsi Cola, is derived from the two of the principle ingredients, Pepsin
and Kola Nuts. It was first used on the August 28. At that time, Brahams advertising praises his
drink as Exhilarating, invigorating, aids digestion.
1990-2002
The advertisement of the Pepsi changes to, You got the right one baby, Uh-Huh! With the
extensive usage of the stars in the ads, the popularity of Pepsi increase. In 1992 Pepsi-Cola formed a
partnership with Thomas J. Lipton Co. Today Lipton is the biggest selling ready-to-drink tea brand in the
United States. Outside the United States, Pepsi-Cola Company's soft drink operations include the business
of Seven-Up International. Pepsi-Cola beverages are available in more than 190 countries and territories.
PEPSIS PRODUCTS
Pepsi
Teem
Miranda
Pepsi Max
Pepsi Lemon
Pepsi Blue
Mountain Dew
7up
SWOT Analysis:
STRENGTH
WEAKNESSES
NEGATIVE PUBLICITY
The company received negative publicity in India during September 2006.The Company
was accused by the Center for Science and Environment (CSE) of selling products containing
pesticide residues. Coca-Cola products sold in and around the Indian national capital region
contained a hazardous pesticide residue. These pesticides included chemicals which could cause
cancers, damage the nervous and reproductive systems and reduce bone mineral density. Such
negative publicity could adversely impact the companys brand image and the demand for CocaCola products. This could also have an adverse impact on the companys growth prospects in the
international markets.
OPPORTUNITIES
If Coke is considered a luxury product. Then there is the tax rate system
After paying all these taxes coke has to pay electricity charges. We have to spend on
distributions. After paying all these expenses Cokes margin squeezed and consumers have to
pay for increasing tariffs.
These are the opportunities through which we can increase the price and can get profits.
STRATEGIC PLANNING
In the year 2002, the company had a great success, as the strategy worked which resulted in making Coca
Cola Company the worlds leading company. In 2001, company accomplished the crust of its strategy as
Worldwide volume increased by 4 percent with strong international growth of 5 percent and clear
signs that our North American business is growing solidly and predictable.
Earnings per share grew by 82 percent, as we delivered on our commitment to create volume
growth while aggressively
Return on common equity grew from 23 percent in 2000 to 38 percent this year.
The company has generated free cash flow of $3.1 billion, up from $2.8 billion in 2000, a clear
indication of its underlying financial strength.
The strategy for the future of the company is very straightforward. The marketing strategy for the year
2002 is as follows,
Grow system profitability and capability together with our bottling partners.
Serve customers with creativity and consistency to generate growth across all channels.
C.PRODUCTS:
There are different brands of the Coca Cola Company, which are currently in use through out the
world. This company not only deals in the carbonated drinks but also other drinks. While launching its
product, the marketing team considers the culture of the country.
Coke
Sprite
Fanta
Diet coke
Coke classic
MARKET POSITIONING
PRODUCT RANGE
The total range of Coca Cola Company in Worldincludes:
Coke.
Sprite.
Fanta.
Diet Coke.
And company offers their products in different bottle sizes these include:
SSRB
LRB
NRB
PET 1.5
PET 2.0
CAN
PACKING
Coca cola products are available in different packing
Our local marketing strategy enables Coke to listen to all the voices around the world
asking for beverages that span the entire spectrum of tastes and occasions. What people want in a
beverage is a reflection of who they are, where they live, how they work and play, and how they
relax and recharge. Whether you're a student in the United States enjoying a refreshing CocaCola, a woman in Italy taking a tea break, a child in Peru asking for a juice drink, or a couple in
Korea buying bottled water after a run together, we're there for you. We are determined not only
to make great drinks, but also to contribute to communities around the world through our
commitments to education, health, wellness, and diversity. Coke strives to be a good neighbor,
consistently shaping our business decisions to improve the quality of life in the communities in
which we do business. It's a special thing to have billions of friends around the world, and we
never forget it.
COCA-COLA CONCERTS
The TVC campaign focused on the hectic lifestyle of a pop star who found respite & relief
through Coca-Cola in short moments that he had to himself during a concert. Coca-Colas brand
positioning of providing deep down refreshment for the body, soul & mind were captured accurately in
the TVC & depicted aptly how the drink completes the moment for Aurar.
COCA-COLA GO-RED
Quenching the thirst of motorist, pedestrians & passerbys during hottest summer season, CocaColas GO-RED teams went out into the cities main quadrants to serve & refresh on the spot with
ice-cold Coca-Colas at discounted prices backed by a heavy FM announcement campaign the GO-RED
stall, served well to promote the Coca-Cola industry.
.
The promotion saw avid consumer collecting Coca-Cola Crown caps & sparked a keen response from
the public , rendering an outstanding testimonial campaign in the second phase, highlighting the winners
over whelmed in the magical delight of their favorite beverage Coca-Cola.
DIET COKE
After the acquisition of the individual local franchise bottling facilities in 1996, the company has
successfully launched its first new product, diet coke, for the first time in almost 3 years. The was linked
with three fashion shows as Diet Coke is related to fashion & fitness, but the major hit was thematic
fashion shows in restaurants, which are the key accounts of the company as this has been never done
before in Pakistan.
ADVERTISEMENT
Coca cola company use different mediums
Print media
Pos material
Tv commercial
PRINT MEDIA
They often use print media for advertisement. They have a separate department for print
media.
POS MATERIAL
Pos material mean point of sale material this includes: posters and stickers display in the
stores and in different areas.
TV COMMERCIALS
As everybody know that TV is a most common entertaining medium so TV commercials
is one of the most attractive way of doing advertisement. So Coca Cola Company does regular
TV commercials on different channels.
DISTRIBUTION CHANNELS
Direct selling
Indirect selling
DIRECT SELLING
In direct selling they supply their products in shops by using their own transports. They
have almost 450 vehicles to supply their bottles. In this type of selling company have more profit
margin.
INDIRECT SELLING
They have their whole sellers and agencies to cover all area. Because it is very difficult
for them to cover all area of Worldby their own so they have so many whole sellers and agencies
to assure their customers for availability of coca cola products.
PROMOTION STRATEGIES
GETTING SHELVES
They gets or purchase shelves in big departmental stores and display their products in that
shelves in that style which show their product more clear and more attractive for the consumers.
SALE PROMOTION
Company also do sponsorships with different college and schools cafes and sponsors
their sports events and other extra curriculum activities for getting market share.
UTC SCHEME
UTC mean under the crown scheme, coca cola often do this type of scheme and they
offer very handy prizes in it. Like once they offer bicycles, caps, tv sets, cash prizes etc. This
scheme is very much popular among children
4. Operations:
A. KEY PERSONNEL :
The Coca-Cola Company is a truly global company, and we operate in over 200
countries around the world. From Atlanta to London to Bangkok to Santiago, our
people make a difference everywhere we work. Here we have the opportunity to
make a difference and create ways to connect our executives, guests and others
around the world in an expeditious, safe and comfortable manner. We never stop
looking for the best and the brightest.
BUSINESS/ADMINISTRATIVE SERVICES Its the business of running our
business.
It takes thousands of people working together to keep our multi-billion dollar
operation running smoothly. At The Coca-Cola Company, we know just how
valuable your efforts are to our continued success. Thats why we offer
opportunities that recognize your contributions and reward your efforts.
Opportunities are available in Administration, Facilities Management, Presentation
Graphics and Archives/Records Maintenance. If you want a career that can take
you places, youll like what you find at The Coca-Cola Company.
BUSINESS MANAGEMENT Its the strategy that drives our future.
Where is the next big opportunity for The Coca-Cola Company? What will our
competitors be doing next weeknext yearin the next decade? Your insights and
analysis will help find the answers. Here we take on big challenges and make bold
plans for the future. Are you ready to share your ideas with some of the best
thinkers in business? Opportunities are available in Strategic Planning and
Business Development.
FINANCE - Its a multi-billion dollar challenge.
C. HUMAN RESOURCES:
The key to our success is our people. Its been the same story from day one.
At The Coca-Cola Company, we understand the importance of Human Resources,
which is why we have one of the most robust departments youll find just about
anywhere. Opportunities include Generalist, Staffing, Training, Compensation and
Benefits, Organizational Development, Employee Relations and Compliance and
Occupational Health. If you can keep our people out in front, we can offer you a
career with endless potential.
For providing their product in good manner company has provided infrastructure these
includes:
Vizi cooler
Freezers
Display racks
opportunity.
INNOVATION Its about the next big idea.
What will be our next success story? A new product? A new packaging system?
Something so new the world has never seen anything like it? At The Coca-Cola Company, your
ideas will make the difference. Were always searching for whats next. Thats why were almost
always ready to talk to someone like you. We have opportunities available in New
Products/Services Development, Laboratory Analysis, Research & Development and
SRA/Environmental. If youre ready to make a breakthrough, this could be the break youve
been seeking.
MANUFACTURING Its helping to quench the thirst of the world.
Creating some of the best selling beverages in the world takes some of the best
technology around and some of the very best people in the business. At The Coca-Cola
Company, our Manufacturing and Maintenance teams are beyond compare. Thats why, year
after year, our beverages are enjoyed by billions of peoplebillions of times.
MARKETING Its driving the success of the one of the worlds best known
brands.
The strength of our brands is tied directly to the people behind them. Its your ideas and
innovative thinking that make The Coca-Cola Company a global powerhouse. Are you ready to
make your mark? We have opportunities available in Brand Management, Creative Services,
Marketing Research, Advertising, Media, Category Management, Channel and Customer
Marketing, Marketing Asset Management, Promotions and Merchandising/Licensing. If you
have the ability, this may be your opportunity to put your talent in a multi-billion dollar spotlight.
SALES AND ACCOUNT MANAGEMENT Its representing The Coca-Cola
E. Customer service :
The second key element of our business imperatives is to develop each of our markets by
providing superior customer service and quality products.
In Coca-Cola Hellenic we work hard to adapt our business to the changing needs of our
customers. We initiate a number of customer-specific programmed. This aims to facilitate a
cross-functional approach to planning for the purpose of better aligning our organization with the
way our customers do business.
The goal of this approach is to create value for our customers. Improved preparation of
joint annual plans encompassing promotional planning and revenue growth initiatives, inventory
management and customer-specific cooler placement strategies, are examples of what we believe
will bring additional value to our customer relationships.
In serving consumers our blueprint can be summarized in four words: availability,
affordability, acceptability and activation.
AVAILABILITY
We place our range of products within easy reach of consumers in the right package, in
the right location, at the right time.
We focus on developing strong relationships with our customers to ensure that the right
products are in stock, highly visible and readily accessible wherever and whenever consumers
may desire a non-alcoholic beverage.
AFFORDABILITY
We offer a wide variety of desirable, premium quality products, in packages appropriate
for the occasion, at the right price.
In doing so, we aim to reach as many consumers as possible while taking into account the
differing levels of purchasing power in the countries in which we operate.
ACCEPTABILITY
We supply an extensive and growing range of products that meet the highest quality
standards in each country, increasing their acceptability to consumers.
We have a detailed understanding of consumer needs and access to the most effective
communications channels. Combined with our experience in quality control, customer service
and efficient distribution, we are able to reach out to customers and consumers in each of our
markets and meet their demands.
ACTIVATION
We motivate consumers to choose our products by improving product availability and
attractiveness at the point of purchase and by building brand strength in our local markets.
We achieve this in close cooperation with our customers through:
* the placement of cold drink equipment, such as coolers and vending machines
* the provision of signage and other point-of-sale materials
* the implementation of local marketing and promotional initiatives
5. FINANCIAL DATA
COMPANY STATISTICS:
The statistics of this company is impressive. Since it is operating through out the world that is
why the number of employees and the bottling equipments is highest among the other bottling
companies. There is a constant increase in every aspect when we compare the statistics of 2001 and the
statistics of 2002. This is because; Coca Cola Company is increasing its volume day by day. The
expansion of this company, which shows the success of Coca Cola brands, results in the percentage
change in the statistics of the two years. The statistics is as follows.
(Table)
Equivalent cases
2002
2001
4.2 billion
3.8 billion
87%
87%
Fountain
13%
13%
Employees
72,000
67,000
Vehicles
54,000
52,000
2.4 million
2.3 million
Production only
25
25
Distribution
385
361
Combination
53
50
Total
463
436
80%
72%
46
46
Cans
44%
45%
Non-refillable bottles
52%
51%
Refillable bottles
4%
4%
63%
59%
Facilities
Capital structure
6.3%
6.8%
3%
Flat
2%
$1.95
$2.39
(18)%
9%
$0.97
$1.18
6%
8%
83%
74%
Key Statistics
EBITDA is the Earnings before interest, taxes, depreciation, and amortization, and other
non-operating items.
Net Debt is the Long-term debt plus current portion of long-term debt less cash and
marketable securities.
Equivalent Case or Unit Case is the physical case and fountain gallons converted
to a standard unit of measure defined as 24 eight-ounce servings or 192 ounces per
equivalent case sold by Coca-Cola Enterprises.
(In millions except per share data, ratios and growth rates)
2002
2001
Percentage
change
20,092
19,889
1%
Operating income
5,352
3,691
45%
Net income
3,969
2,177
82%
1.601
0.882
82%
1.601
0.882
82%
4,110
3,585
15%
Business reinvestment
(963)
(779)
24%
(1,791)
(1,685)
6%
(277)
(133)
108%
3,147
2,806
12%
Dividends paid
Return on capital
26.6%
16.2%
38.5%
23.1%
International operations
12.5
11.9
5%
5.3
5.2
2%
Worldwide
17.8
17.1
4%
2002 basic and diluted net income per share includes a non-cash gain of $.02 per share after
taxes, which was recognized on the issuance of stock by Coca-Cola Enterprises Inc., one of the equity
investors of this company.
2002 basic and diluted net income per share includes the following charges:
$.19 per share after income taxes related to the Company's portion of charges recorded by
the investors of the company.
$.16 per share after income taxes related to the impairment of certain bottling,
manufacturing and intangible assets.
$.05 per share after income taxes related to the settlement terms of a discrimination
lawsuit.
$.01 per share after income taxes related to incremental marketing expenses in Central
Europe.
These charges are partially offset by a gain of $.05 per share after income taxes related to the
merger of Coca-Cola Beverages plc. and Hellenic Bottling Company S.A. and $.04 per share
after income taxes related to benefits from a tax rate reduction in Germany and from favorable
tax planning strategies.
BALANCE SHEET
The Coca-Cola Company and Subsidiaries
Condensed Consolidated Balance Sheets 2009
April 3, 2009
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Marketable securities
6,816
263
3,139
Inventories
2,298
2,198
14,714
INVESTMENTS
Equity method investments:
Coca-Cola Hellenic Bottling Company S.A.
1,386
840
680
2,410
441
TOTAL INVESTMENTS
5,757
OTHER ASSETS
1,793
8,425
6,042
GOODWILL
3,988
2,384
TOTAL ASSETS
43,103
5,651
6,701
461
356
13,169
LONG-TERM DEBT
5,017
OTHER LIABILITIES
2,944
865
880
Capital surplus
8,021
Reinvested earnings
38,911
(2,893)
(24,207)
20,712
396
TOTAL EQUITY
21,108
Note:
The financial information included in this section should be read in conjunction with Management's Discussion
and Analysis of Financial Condition and Results of Operations and Notes to Consolidated Financial Statements
contained in our Company's 2009 Quarterly Report on Form 10-Q and 2008 Annual Report on Form 10-K.
43,103
The annual Financial information of the organization is available at its website, http://www.thecocacolacompany.com. It can be specifically found at the following url: http://www.thecocacolacompany.com/investors/pdfs/form_10K_2007.pdf)
1. Unit of measurement used for the partnership with Memo: This is the length of
time the partnership lasts and the extent of activities Memo has to do such services
for the Company such as autograph signing, promotions to customers and other
promotional procedures in favor of the Organization and its products:
4. Fixed cost for the period of partnership: the Contract of partnership for a year
amounting to $15 million.
Although these are estimations, once the company recovers the $15 million fixed cost, which is
the contract price with Memo and the variables costs that it would incur, Coca-Cola will be breaking even
with its expense already. That means after breaking even it has to pay only per activity that it must require
Memo to perform and the variable cost of the memorabilia and additional product sales. No activity, no
cost to incur. Still, at the end of the year, the contract of partnership between memo and Coca-Cola proves
profitable.
The above matrix indicates the kind of costs that Coca-Cola have. The relevant costs,
these will be the direct bases of decisions the Company may make and these costs will be the
determining factor if the organization would go on with the plan to outsource or maintain its
current activity of having the bottling department in-house.
On the other hand, the irrelevant costs are the ones that are committed by the entire
organization but these costs are not in any way directly related to the issue at hand: the plan to
outsource the bottling plants. However, in some cases, these irrelevant costs might be allocated
in some way or another in other earning departments. Irrelevant costs are not used in the costvolume-profit analysis or break-even analysis and eventually, not used in decision making as the
name suggests, it is irrelevant.
as well. Say, the finance and marketing departments are only supporting the production department. It is
the production that creates money for the organization. But as mentioned, without the help of finance to
properly manage the assets and without the marketing department making the products interesting and
salable, the production department cannot do anything to earn that money. Thus, it may as well be fair to
allocate the costs incurred by these support departments to the main department. In this case, allocating
the cost of non-revenue generating finance and marketing to the production department that mainly
generates the sales is viewed as a fair policy. However many propose the activity-based costing to be
more effective because every department has a cost driver that can be considered a fairer valuation of cost
for a certain cost center.
Talking back about the real situation presented in the firth part (I), the Organization partnering with
Memo has many costs and cost drivers. These are the two good examples:
1. Autograph signing: the very obvious cost driver for this would be the time spent by Memo in
signing the autographs of his fans while promoting the Coca-Cola products at the same time.
Estimated cost of autograph signing in a year can total to 60 hours paying Memo $5,000 per hour
and that would be $300,000 and this is only for autograph signing.
2. Another cost that Memo can cause the organization would be on memorabilia sales. Say, a T-shirt
with his various poses endorsing Coca-Cola branded products, memo can bill Coca-Cola for it
based on the volume of T-shirts printed and sold/given by the company. This means that the cost
driver for this T-Shirt with Memo's image activity would be the number of T-shirts printed.
Estimates number of T-shirts is 5 Million and Memo charges $1.50 per shirt in using his name
and image and thus he is entitled 7.5 million payments from Coca-Cola.
The above situations, activities and their costs simply indicate the use of ABC depicts a more accurate
result than simply spreading the costs arbitrarily on the products.
Costing a product requires a thorough examination, analysis and understanding of the company's
activities. As presented, one might use cost allocation technique or activity based costing.
CONCLUSION:
Coca-Cola no doubt come the heart beat of Pakistanis. Coca-Cola is one of the leaders in
sponsoring the most important, thrilling events. E.g. Cricket matches concerts and many other social
occasions. Event at the present they are organizing a Basant festival for which they busily organizing
stuff.
END