STRATEGIC MANAGEMENT MID PROJECT

THE COCA COLA CO.

Managerial Accounting - 2014

Dea Handayani 008201400025

STRATEGIC MANAGEMENT

Liswandi

President University
Bekasi
2016
 TABLE OF CONTENTS
EXECUTIVE SUMMARY .............................................................................................................. 3
INTRODUCTION ............................................................................................................................ 4
COMPANY FOCUS ........................................................................................................................ 4
Vision..........................................................................................................................................................................4
Mission, Values & Strategies ..............................................................................................................................5
Cost Leadership ................................................................................................................................................................... 5
Differentiation...................................................................................................................................................................... 6
ANALYSIS........................................................................................................................................ 6
External Environment (Macroeconomics) ...................................................................................................6
Political, &Economical, ..................................................................................................................................................... 6
Social, Technological, Legal & Environmental ........................................................................................................ 7
Industry Analysis ...................................................................................................................................................8
New Entrants, Substitute Product & Bargaining power of Buyers ................................................................ 8
Bargaining Power of Suppliers & Rival...................................................................................................................... 9
Industry Attractiveness .......................................................................................................................................9
Competitors Analysis ....................................................................................................................................... 10
Internal Environment (Microeconomics) .................................................................................................. 11
The Company, Customers, Suppliers, Competition & Public ..........................................................................11
Value Chain ........................................................................................................................................................... 12
Inbound Logistics .............................................................................................................................................................12
Operations & Outbound Logistics ..............................................................................................................................13
Marketing and sales, Service, Infrastructure & Human Resource Management ....................................14
Technology Development & Procurement .............................................................................................................15
Resources .............................................................................................................................................................. 15
Tangible Resources ..........................................................................................................................................................15
Intangible Resources .......................................................................................................................................................16
Capabilities ........................................................................................................................................................... 17
Core Competencies ............................................................................................................................................. 18
SWOT Analysis ..................................................................................................................................................... 19
Strengths ..............................................................................................................................................................................19
Weaknesses .........................................................................................................................................................................19
Opportunities .....................................................................................................................................................................21
Threats ..................................................................................................................................................................................22
TOWS Matrix......................................................................................................................................................... 24
RECOMMENDATIONS ............................................................................................................... 24
REFERENCES ............................................................................................................................... 25

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 EXECUTIVE SUMMARY
The Coca Cola Company is an American multinational beverage corporation and
manufacturer, retailer and marketer of nonalcoholic beverage concentrates and syrups. It own
more than 500 nonalcoholic beverage brands. The company has operated a franchise since 1889,
where The Coca Cola Company produces syrup concentrates and sold to various bottlers
throughout the world. The Coca-Cola Company uses 2 kinds of strategies, which is cost
leadership and differentiation, which results in a brand recognition for the company.

The company has both external environment and also internal environment factors that
might give bad and also good impact to the company and also the world. External includes the
political, social, environmental, legal, technological and economical factors, while internal
includes the suppliers, the company itself, buyers, competition, and public. Each factors will be
explained further later in the next chapter.

The content of this research will be the analysis of the industry as a whole, starting from
the internal until external analysis that might affect the decision making inside the company
itself. There will be some tables related to support the analysis and also comparison to the
competitors. The main competitors of Coca-Cola are Dr. Pepper Snapple Group, Campbell Soup,
PepsiCo and Procter & Gamble.
One of the strengths own by the company is brand recognition and reputation. The Coca
Cola Company has become the leading player in global beverages industry and the number one
beverages brand in terms of reach and sales. While the main problem is regarding the health
problem, which is obesity and diversification of industry, which will results in the decreasing
demand of the products.
To improve, the company should tap into diet and health food as well to prevent the threat
that might come, which is adult diabetes and obesity. The company also need to make a smart move
to snacks industry to beat their one an only rival, PepsiCo

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 INTRODUCTION
Market size, growth rate and overall profitability are three economic indicators that can be
used to evaluate soft drink industry. Soft drink market share is 46.8% of the non-alcoholic drinks
industry. Based on Datamonitor (2005), in 2004, the total market value of soft drinks reached
$307.2 billion while the volume was 325,367.2 million liters. The industry is having a high
potential for high profits, but not only that, the industry also need to find alternative to some
obstacles. One of the largest and well know soft drink industry is The Coca Cola Company.

The products are sold in more than 200 countries that makes the company has the largest
distribution system. According to the annual report of the company, from all types of beverage
consumed by people around the world, the trademarks owned by The Coca Cola Company
account for approximately 1.5 billion. In 2010, Coca Cola become the first brand to top 1 billion
in annual UK grocery sales.

COMPANY FOCUS

-VISION-

Serves as the framework for our Roadmap and guides every aspect of our business by
describing what we need to accomplish in order to continue achieving sustainable, quality
growth.

In order to survive in the next ten years and beyond, The Coca Cola Company tries to
understand the trends and forces that will shape the business in the future, which means be
ready for what is yet to come.

People: Be a great place to work where people are inspired to be the best they can be.
Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate and
satisfy people's desires and needs.
Partners: Nurture a winning network of customers and suppliers, together we create
mutual, enduring value.
Planet: Be a responsible citizen that makes a difference by helping build and support
sustainable communities.

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 Profit: Maximize long-term return to shareowners while being mindful of our overall
responsibilities.
Productivity: Be a highly effective, lean and fast-moving organization.

-MISSION-

Our Roadmap starts with our mission, which is enduring. It declares our purpose as a company
and serves as the standard against which we weigh our actions and decisions.

To refresh the world.

To inspire moments of optimism and happiness.
To create value and make a difference.

-VALUES-

Here are some of the values that every people in the company use as the base and guidance to
act and how they should behave in the world

Leadership: The courage to shape a better future

Collaboration: Leverage collective genius
Integrity: Be real
Accountability
Passion: Committed in heart and mind
Diversity: As inclusive as the brands
Quality: What they do, they do well

-STRATEGY-

Cost leadership
The most basic way to a low cost is to
remove all the extras from the product.
Economies of scale are one of the ways of
reducing costs used by The Coca Cola
Company. Not only that, it is also achieved
by learning, knowledge and experience in
production and operational processes. It also
achieved through effective/efficient

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 distribution networks and manufacturing systems.

Differentiation
Differentiation for Coca-Cola is achieved through perceived superior quality product, which
surpasses their nearest rivals, and high brand image and recognition. They also use their
packaging and promotion as a differentiation. For example the bottle that has become an
internationally recognized symbol. The bottle design was the first global marketing priority.
The Coca Cola Company uses something that the other rivals dont have as their
differentiation. The company also has been establishing a trademark in US. It also become
something that differentiate themselves by being known as the worlds largest manufacture,
distributor and marketer of non-alcoholic beverages and syrups. The Coca Cola Company
use the differentiation strategy by spending enormous amounts of money in advertising to
differentiate and create a unique image for their products. It has been very successful in
gaining a leading position among the competitors.

ANALYSIS
EXTERNAL ENVIRONMENT (MACROECONOMIC)

-POLITICAL-
Change in regulations and laws: changes in accounting standards, tax rate, taw laws,
environmental laws (domestic or foreign), and fluctuating exchange rates that could result in
a loss when trading overseas.
Change in business era: pricing policy pressures and changes about sales of share
Political condition (international trade): conflict of civil, changes in governmental, and
restrictions area (border)
Ability to penetrate emerging and developing markets: Coca-Colas ability to form strategic
business alliances with local bottlers and enhance production amenities, distribution
networks, sales equipment, and technology

-ECONOMICAL-
The example of economical factor is the recession. There are 2 recessions, which is on 2001 and
2010 in UK. During the recession on 2001, US government took actions and because of the
actions, the loan interest rates would likely to rise. Therefore, the company took low cost loans
to fund growth in 2002. The loan is used for research and development of new products. While

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 on 2010, it gives influence on Coca Colas retail sales. The sales at that time reached 1 billion
for Coca-Cola, Diet Coke, and Coca-Cola Zero.

-SOCIAL-
Majority people in US show the increasing interest in healthy lifestyle. This gives influence
to the sales of the non-alcoholic beverage sector as many customers switch to Diet Coke or
mineral water.
Customers in adult level concerned about their nutrition. As we know Coca-Cola is not really
healthy for the customers and gives bad influence to the health of the customers like diabetic
and obesity as the beverage contains lots of sugar.
Knowledge given to the customers about healthy lifestyle will prevent them from choosing
beverage that is not beneficial for their health, which means, in the future, people will not
consume Coca-Cola anymore.

-TECHNOLOGICAL-
Produced various applications for smartphone
Marketing: advertising through television, web, and social media.
Packaging design: designing a can or bottle that can be easily to carry because in the past, the
introduction of it could increase the sales volume due to how easy it can be carried and
dispose
New equipment: technology is keep on advancing, therefore new equipment that could help
to increase sales might be introduced. Because of new technologies nowadays, the sales
volume is increased compared to few years ago
New factories: build new factories with high technology to ensure the quality and sped of
delivering the product.

-LEGAL-
Changes in income or corporate tax. The increase of taxes could negatively effect the
financial position of Coca-Cola. The company earns income in many foreign countries. The
changes in income tax might affect the financial results of the company.

-ENVIRONMENT-
Challenge to use more sustainable and environmental friendly products for packaging.
Pollution: regarding the waste water produced by the company
Due to the challenge faced about the environment, the company has built a solution in
several areas. The company use recyclable plastic for their packaging. They also opened

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 water-recycling plant for recycling the wastewater and also plant lots of trees to save water
as the main ingredients for the beverage company is water.

INDUSTRY ANALYSIS

-NEW ENTRANTS-
The entry barriers for beverage industry like non-alcoholic beverage are relatively low. Coca-
Cola has been able to attract lots of consumers and many consumers if they talk about soft
drink, they will definitely Coca-Cola in their mind. Coca-Cola has held very significant market
share for a long time and loyal consumers are not very likely to try a new brand because they
dont know yet whether the price of the product and the taste is worth enough.
Soft drink industry needs huge amount of money to do advertising and marketing, just like what
Coca-Cola did on the past years, which is more than $1 billion. This is very hard for the new
competitor to struggle with current market. Because of the marketing and advertising, Coca-
Cola gained brand equity and strong loyal consumers, which makes it unfeasible for a new
competitor to enter.
Beverage industry of course will have their own bottlers, which dont allow them to make
another contract with other beverage industry for similar products. It will be hard for the new
competitor to find bottler, as Coca-Cola has lots of bottlers around the world.

-SUBSTITUTE PRODUCTS-
The substitutes of Cola are water, tea, beer, juice, coffee, etc. To become the substitute of Coca-
Cola, the companies need to spend huge amount of money for advertising to be recognize by the
people. Switching cost to substitute product is very low, the consumers will be easily to shift
from Cola to other substitute product, especially the healthy one because most people nowadays
really concern about their health for the future. Beside Coca-Cola, there are also many kinds of
energy drink with the same price. The perceived price and value of Coca-Cola is very low
because all products are comparatively the same. There is also no unique flavor that is owned
by Coca-Cola. The taste is the same with their one an only rival, Pepsi. They are only
differentiated by promotional activities.

-BARGAINING POWER OF BUYERS-

The most important buyers for soft drink industries are fast food fountain, vending machine,
convenience stores, food stores, restaurants, college canteens, etc. the profit earn from each
segment demonstrates the bargaining power of the buyers to pay with different prices. The

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 bargaining power in fast food fountain is high. The buyers will negotiate the prices as they are
buying in bulks. While vending machine and convenience stores have no bargaining power
because vending machine provide product in straight line.

-BARGAINING POWER OF SUPPLIERS-

Most of the raw materials of manufacturing soft drink are flavor, color, caffeine, sugar,
packaging, etc. The raw materials are basic commodities, which can be found everywhere and
in low cost that do not differentiate it with other suppliers. The raw materials also accessible,
which means switching cost to other supplier is low; manufactures can easily shift to other
supplier.

-RIVAL-
The main competitor of Coca-Cola is Pepsi, which also has a wide range of beverage products.
The two companies have been in competition since the late 19th century. They also have the
same ingredients and similar offerings. Not only Pepsi, Coca-Cola also competes with Dr.
Pepper Snapple Group. Dr. Pepper Snapple doesnt have a cola but it has some big brand of
juice markets and soft drink. As a consumer trends shift, there might be a possibility that people
will leave Cola as it is not really healthy and move to Juice brand owned by the other
companies.

INDUSTRY ATTRACTIVENESS

From the analysis done before, we can see that Coca-Cola did very well in the market.
They did well in doing marketing of their products. They became the sponsor for some events. In
terms of demand, it is growing bit by bit from year to year. But it is only growing by 7% or even
1%. By the flat demand, we can say that it will be quite easy for new entrants. The demand is not
showing high grow because of the customers awareness concerning the obesity. But the
company is able to find the alternative ways to increase the demand by producing Diet Coke.
Come of the analysts have suspect a grow in profit of the industry but it will make market
saturation. Due to that analysis, the competitors of Coca-Cola established an alternative markets,
such as snack, and also sport drinks industries.
The industry is not too attractive anymore if we see from the declining demand. But if we
see from the other side, it will be not easy as well for the new entrants to compete with Coca-Cola
because of the brand recognition owns by Coca-Cola. The tight competition and bargaining

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power of suppliers will create additional barriers for new entrants. In terms of competition, the
industry comprises of three major producers, which make up about 90% of US market and 80%
of world market. Those three industries have a quite high advertising and marketing cost, which
will raise the barrier for entrants higher and eliminate the growing possibility.
Centralization of major rivals in one geographic market also makes it harder for new
entrants to penetrate an established industry. Even one of the rivals needs to go through
acquisition first to gain momentum. The only chance is to create new demands by redefining
industry, overcome intense competition and quickly acquire the bargaining powers. Those plan
make Coca-Cola will be unattractive to new investors.

COMPETITORS ANALYSIS

As we can see from the table above, the competitors of Coca-Cola are Dr. Pepper Snapple
Group, Campbell Soup, PepsiCo and Procter & Gamble. All of the companies have different kind
of beverages but Coca-Cola has the highest brand reputation, which means people tend to buy
Coca-Cola rather than the others. From all of the companies, the highest revenue earned by
Procter & Gamble, then followed by PepsiCo and then finally Coca-Cola. Coca-Cola is not
having the highest revenue but it has the highest net margin and also cash flow, which means the
companys net income is 29.99% of the revenue, while the rest is only 12.24%, 12.5%, etc.
Coca-Cola benefit from having lots of segment and also sold in more than 200 countries
and also did better in advertising their products, which results in brand recognition. But compared
to its competitors the variety of products is low in Coca-Cola. While the other companies have
other industry than beverage (snack), Coca-Cola only has beverage, which makes Coca-Cola lose
or not being the first place compared to its competitors.

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 INTERNAL ENVIRONMENT (MICROECONOMIC)

-THE COMPANY-
It include strong work ethic, which is treat our people well, help them develop and give
them a rewarding life. Coca-Cola focus in the performance of the employees, develop skills
and move towards the employees career goals. The Coca Cola Company was ranked No.26 in
the Great Place to Work Institute.

-CUSTOMERS-
The Coca Cola Company believes that in the long term, customer loyalty will strengthen their
position. Coca-Cola listens very closely to their customers in order to know their needs and also
accept feedback to make an improvement of product, which creates mutual benefit both to
customers and the company itself. Coca-Cola also has Customer Development and Training
in order to help their customers become fully trained and know how to be more efficient and
profitable on their businesses.

-SUPPLIERS-
In the website of The Coca Cola Company, it offers a special page dedicated to suppliers. There
are a list of supplier expectations, diversity and also the guiding principles. Coca-Cola wants the
best suppliers that could maintain the best quality possible because suppliers are linked to
customer value. The company also provides training to suppliers and routine inspections. The
suppliers are considered to be the partners of Coca-Cola.

-COMPETITION-
Just like what have been explained in industry analysis part, there are some competitors of
Coca-Cola. The competitors might affect the price, advertisement, sales promotion and others.
The company is successful in deliver a better product to its consumers because it has created
brand awareness and successful in its advertising and also developing new products. Coca-Cola
now is in the process of developing a reseal able can. Coca-Cola must be aware of their
competitors activities so that they can respond to any changes made by the competitors to still
become the number one in the heart of consumers.

-PUBLIC-
Coca-Cola are constantly getting feedback from customers on how they want healthier products
and they care for their well being, because they have made their goal to make healthier products
and try to tackle obesity. The company not only produce product that show healthiness but also
spreading a message of being healthy by promoting activities and supporting organizations like

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 The Olympic Games and football associations. Coca-Cola also provides up-to-the minute
financial information on its website for investors. The company also provides a section in its
website to respond to the public (press release, speeches, etc.).

VALUE CHAIN

-INBOUND LOGISTICS-
Some of the suppliers for Coca Cola are Spherion, Jones Lang Lasalle, IBM, Ogilvy and
Mather, IMI Cornelius and Prudential. All of the companies mentioned before provide material
such as ingredient, packaging and machinery. The Coca Cola Company has some supplier
guiding principles, such as compliance with laws and standards, laws and regulations, freedom
of association and collective bargaining, forced and child labor, abuse of labor, discrimination,
wages and benefits, work hours and overtime, health and safety, environment, and
demonstration of compliance.
The main ingredient of The Coca Cola Company is water. But because of the challenges
happened, The Coca Cola Company uses high fructose corn syrup and this material is purchased
from US based suppliers and delivered via trucks. There are also some materials that need to be

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 purchased internationally like orange juice and orange juice concentrate, which is Florida and
Southern Hemisphere (Brazil). The inbound logistics are facilitated via ships and trucks.

-OPERATIONS-
The Coca Cola Company manufactures and sells concentrates, beverage bases and syrups to its
bottling partners, maintains ownerships of brand and applies marketing strategies. The operating
segments are divided into 7 groups, such as:
1. Eurasia and Africa
2. Europe
3. Latin America
4. North America
5. Asia Pacific
6. Bottling Investments
7. Corporate

-OUTBOUND LOGISTICS-
After finish in producing the product, the product will be sent to several places like
warehousing, order fulfillment, transportation, and distribution management. The products are
sold in more than 200 countries that makes the company has the largest distribution system. The
company also will send its products to some grocery stores (Sobeys), fast food restaurants
(McDonalds) and vending machines.
The Coca Cola Company has more that 300 bottling partners, starting from publicly traded until
small family owned, which shows the strategy made by the company to meet the needs of all
range of customers. The company also uses boat to ship their products, one of them is Indonesia
because waterways are often the main way to access the remote islands.

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-MARKETING AND SALES-
Out of all products that they produce, Coca Cola markets four of the worlds top sales drink.
The ultimate goal of this company is to deepen their brands connection. As a result, they
constantly reinvent their product. The marketing strategies used are from advertising, sales
promotions, events, and experiences. They also constantly develop new products and brands
and also change the design of packaging and advertising to be more eyes catching. The sales of
the products also keep on increasing year to year, which shows that the marketing strategies
used are working.

-SERVICE-
The Coca Cola Company maintain and enhance products value by customer support, repair
services, installation and training. To help their businesses become more effective and
profitable, they have established Customer Development and Training Centers that are available
to mote than 21,000 independent retailers. The company maintains its customer service via
online chat in official website.

-INFRASTRUCTURE-
Company Culture
The company has a dedication to ensure that their business is conducted in responsible
manner. They are committed to ensure that all people inside the company are treated fairly.
The strength of their culture derives from the passion, leadership and integrity demonstrated
by all people.

Control Systems
The companys has a principle to lead by example and learn from every experience as the
guidance to act. They have established high standards at all levels as they strive to ensure
that they achieve international best practices in terms of transparency and accountability.
They have developed control systems that are listed in their corporate governance guidelines,
codes for business conducts and laws. They also have established an audit, compensation,
finance, management development, public issue and diversity review, executive and directors
and corporate government committees American group, the north Asia Eurasia and Middle
East Group, and the North American Group.

-HUMAN RESOURCE MANAGEMENT-

The Coca Cola Company has approximately 37,000 employees under their human resource
department. All of the employees receive the best value and provided with benefits and options.

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 It includes health and life, retirement, tuition and program, and additional benefits. The training
program explained above also fall within this department.

-TECHNOLOGY DEVELOPMENT-
On 2003, the company formed a contract with Symbol Technologies. They help the company to
built a system that is useful. Because of the technology development, it helps the company to
increase productivity for sales representatives and increase number of sales visit (25%).

-PROCUREMENT-
The Coca Cola Company has plants, production sites and bottling facilities all around the world.
It is very beneficial for the company at they are one of the global leaders of non-alcoholic
beverage industry. The company uses outsourcing to be a world leader by implementing control
mechanisms to its contractors. The company also really concerns about corporate social
responsibilities and make sure that all of their business partner comply with the guiding
principles of the suppliers.

RESOURCES

-TANGIBLE RESOURCES-
Financial Resources
Coca-Cola owns strong and sustainable financial resources. They use it to invest billions of
dollars in major market, such as China, India, Russia and Vietnam. The invested money used
to build the brand, infrastructure and to develop close partner to expand distribution network.

Physical Resources
It includes manufacturing sites, distribution centers, telecommunications infrastructure and
others. The company owns the modern head office, which is divided by 4 department, such
as sales, human resource, marketing and ICT. Each department is equipped with appropriate
facilities for supporting the work of that department. Company headquarters is located is
located on a 350-acre office complex in Atlanta, GA. The complex includes a bot 2,000,000
square foot buildings including office, manufacturing, technical, and engineering facilities.
The company also owns and leases multiple facilities for administrative operations,
manufacturing, processing, packaging, packing, storage, and warehousing throughout the
United States. As of December 2004. Company owned and operated 33 principle beverage
concentrate and/or syrup manufacturing plants throughout the world. In addition, it owns 83

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 principle beverage bottling and canning plants located outside of United States.

Technology Resources
In term of technological resources, the company invest modernize machinery. Because of the
machine, all steps in the production process is almost fully automated. The company can
accelerate production process and keep the quality of product stable and secure working
environment. Coca-Cola also expands its network of hybrid engine truck. It helps to reduce
harmful emissions to the environment and also helps the company to reduce fuel costs. Coca-
Cola also do research and produce the Plant Bottle, which is the greenest bottle. This bottle is
more eco-friendly due to high decomposition and recycling capabilities.

Organization Resources
It presents the effectiveness of a companys organizational functioning derived from the
processes, structure, information technology and culture. The Coca-Cola Company is
organized into 5 geographic operating segments, such as North America, Africa, Asia,
Eurasia and Middle East, and Latin America.

-INTANGIBLE RESOURCES-
Reputation
The Coca-Cola Company has existed for more than 127 years. It has become one of the top 3
most valuable brands in the world. The products of Coca-Cola are popular and consumed in
more than 200 countries. It is the product most consume beverage.

Human Resource
The success of the company is depending on the motivation for an employee that is why
employee engagement is very important inside the company. Coca-Cola often organizes the
test to know the level of satisfaction and engagement with working conditions provided. The
company also attempts to build an ideal workplace. The company not only offer training and
development activities but also they motivate talented staff by paying them a high salary to
learn and offer great new job opportunities. The company is a multinational company with a
total of up to 146,200 employees. The employees come from different countries and different
social economic conditions and also different culture. That is why, the company recruited
human resources manager from around the world to manage employees in their own country.
The company also organizes international training to create international management team.

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 CAPABILITIES

The capability own by Coca-Cola is related with the concentrates and syrups of the
beverage with some unique tastes, which made the company popular around the world. Another
capability is the market share. Everyday about 55 million of beverages are served around the
world and Coca-Colas share is 1.7 billion, which is 3.1% of all beverages served.
The other one is strong brand recognition. The portfolio of the company includes 17
brands of products worth more than a billion dollar each. But the company also has becoming the
subject to lawsuit due to the presence of toxic elements in the drinks and also about the improper
quality of water. This might affect the reputation. There is a certain loss of consumer confidence
not only due to the issue but also because of the healthy way of living.
The other capabilities are related with the resources mentioned before. The company has
strong financial resources that help the company to develop market on a large scale in many
countries. The money used to develop facilities and infrastructure. The company owns more than
30 beverage concentrate manufacturing plants worldwide and more than 300 warehouses for
beverage distribution only in North America. The company also can use the financial resources to
implement various advertising strategies by advertise on television, newspapers, magazines and
posters.
Coca-Cola owns an efficient organizational capability. They can run more than 100
thousand people and offers more than 500 brands of soft drinks in for about 200 countries
worldwide. Their products appear in almost all of the restaurants, supermarkets, cinemas, school
and also vending machines on the road everywhere.

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 CORE COMPETENCIES

Coca-Colas core competencies include company brand, distribution system and human
assets. Coca-Cola is the most popular and biggest selling soft drinks in history and recognized as
the most valuable brand in the world. The company owns and licenses for about 400 brands. The
distribution system covers certified bottlers, and selling company everywhere. Coca-Cola is one
of the three most valuable brands in the world. Brand reputation is considered as the core
competency of Coca-Cola. They have lots of loyal customers. That is why they can earn stable
profits to develop company. Customers tend to choose familiar products and Coca-Cola has brand
name awareness much higher than other competitors.
The competitive advantage own by Coca-Cola is the ability to assemble and exploit an
appropriate combination of resources. The competitive advantage is achieved by developing
existing and creating new resources and capabilities to rapidly changing market conditions. Just
like what have been explained in Capabilities part above, the company constantly developing
consumer promotional campaigns by changing advertising, which stands in contrast to the
smaller firms.
Coca-Cola builds a positive and open working environment. The employees can share ideas
and also comments for the company in order to make an improvement of the company, such as
new ideas and also use the comment as the problem solving, so the company has creative and
repair problems. The company also establishes the business culture that fosters learning,
innovation, and value creation on a daily basis and cultivates a diverse workforce in order to meet
its long-term objectives.
Coca-Cola also holding lots of talented employees around the world. Every time they enter
new market around the world, they recruit lots of local staff to increase the ability to understand
new markets, so the ability to be market leader is achieved.

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 SWOT ANALYSIS & TOWS MATRIX

-Strengths-
1. Advertising and marketing capabilities
The companys annual advertising spending are $3,976
billion (2015), $3,499 billion (2014), and $3,266 billion
(2013), which is 6.9% of the annual revenue. On 2015,
The Coca Cola Company has becoming the largest
advertiser in the world. This can be seen from the table
on the right side. Because of that, it gives some
competitive advantages to the company itself, which
includes:
- Introduce new products to public
- Promote brand
- Inform consumers about product feature
- Communicate brand message
- Increase sales

The Coca Cola Company also has it marketing expense of

$6.8 billion on 2015 that results in $44.3 billion revenue,
which makes this company become one of the largest
company that spend high amount of marketing expense.
This can be seen from the table on the right side.
2. Extensive and diversified product portfolio
The Coca Cola Company owns various brands with different type of categories of
beverages, which makes this company have diversified product. The brands and categories
are listed below.

Brands

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 Categories

3. Strong partnerships with bottling companies

- Coca-Cola Bottlers Philippines, Inc. - Coca-Cola Korea (South Korea)
(Philippines) - Coca-Cola HBC AG (Switzerland)
- Coca-Cola Beverages Africa (Port - Coca-Cola Icecek (Turkey)
Elizabeth, South Africa) - Swire Group (Hong Kong)
- Coca-Cola Bottling Co. Consolidated - Kirin Company (Japan)
(Charlotte, North Carolina) - Coca-Cola FEMSA (Mexico)
- Coca-Cola Bottling Company of - Arca Continental (Mexico)
Northern New England - Embotelladora Andina S.A (Chile)
- Coca-Cola Bottling Company United - Coca-Cola Amatil (Australia)
(Birmingham, Alabama) - Coca-Cola European Partners PLC
- Swire Coca-Cola USA (Salt Lake City, (UK)
Utah)

4. Brand recognition and reputation

The Coca Cola Company has become
the leading player in global beverages
industry and the number one beverages
brand in terms of reach and sales. The
proof can be seen on the picture on the
right side that shows the sales of top 15
soft drinks and most of them are the
brands of The Coca Cola Company.

5. Extensive distribution channels

Global reach with presence in over 200 countries.

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6. Strong brand recall through advertising and marketing by using popular celebrities to be the
brand ambassadors
7. Corporate social responsibilities activities (recycling, education, health)

8. Long association with international sports events, sponsorship, etc

The sport events include English Football League (August 2004), Coca-Cola Football
Camp (2010 FIFA World Cup), NHRA, NASCAR, the PGA Tour, NCAA Championships,
the Olympic games, the NRL, the FIFA World Cups, the UEFA European Championships,
TOUR Championship, and Philippine Basketball Association. Television sponsorships
include American Idol and nightly talk show on PBS, Charlie Rose. Theme parks
sponsorships include Walt Disney Parks and Resorts, Merlin Entertainment, Universal
Parks & Resorts, Six Flags, Cedar Fair, and SeaWorld Entertainment, London Eye and
Orlando Eye.

-Weaknesses-
1. Dependence on income and profits from US market
2. The presence of traces of pesticides have caused damage to brand image
Coca cola has faced flak in the past due to its water management issues. Several groups
have raised lawsuits in the name of Coca cola because of their vast consumption of water
even in water scarce regions. At the same time, people have also blamed Coca cola for

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 mixing pesticides in the water to clear contaminants. Because of this issue, it gives impact
to the image of the company. (Negative Publicity)
3. Strong competition in the market
The strong competitor for The Coca Cola Company is PepsiCo. As we can see from the
table, the amount that PepsiCo earn and Coca Cola is not in a really big gap, there is a
possibility that the position that The Coca Cola Company has will be taken by PepsiCo.

4. No presence in the snacks and food industry

Unlike PepsiCo who makes a smart move to snack industry as well (e.g Lays), The Coca
Cola Company has not produce a snack products, which makes The Coca Cola Company
lose with PepsiCo in terms of snack category.
5. Health problem
Obesity rates are on the rise, especially in the United States and other first world countries,
and so the need for health or diet products is skyrocketing. Coca Cola does have a product
line called Zero in which contains the artificial chemical aspartame, which has been
documented time and time again to cause neuro-toxin like effects as well as possible
carcinogens. Many people also have allergic reactions to aspartame, sucralose, and
saccharin that is included in Cokes diet products, like Diet Coke, and Coke Zero.

-Opportunities-
1. Growing alcoholic beverage industry
2. Expansion of ready to drink coffee products
3. Growing ready to drink tea market, with many smaller brands that can be easily acquired
4. Increase the distribution channel to untapped countries
5. Acquire other companies

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6. Diversify its product portfolio
Diversification in the health and food business will improve the offerings of Coca cola to
their customers. Coca-Cola also can make a move to snack industry as well rather than
only soft drinks.

-Threats-
1. Obesity concerns may reduce demand for some of the companys products
Carbonated beverages are one of the major reasons for fat intake and Coca cola is the
largest manufacturer of carbonated beverages. The inference is that the consumption of
beverages in developed countries might go down, as people will prefer a healthy
alternative.
2. The rising US dollar exchange rate could negatively affect the companys revenue and
profits
3. Water scarcity and its poor quality could negatively impact The Coca Cola Companys
production costs and capacity
With the climate changing, and regions of various countries facing scarcity of water,
sooner or later someone might raise fingers on beverage companies. Thus, Water sourcing
is an axe, which can fall anytime on the head of Coca cola. If water is limited or rationed,
Coca cola can experience a major downfall in their revenue and capacity of distribution.
4. Increased competition and their capabilities could hurt the companys business
Coffee chains like Starbucks, Caf coffee day, Costa coffee are on the rise. These chains
offer a healthy competition to Coca colas carbonated drinks. They might not be a big
competition for Coke, but they do give a dent to its beverage market. Similarly, health
drinks like Real and Tropicana as well as energy drinks like Red bull and Gatorade are
stealing away the market share indirectly.

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 TOWS MATRIX

Strength 1. Create a line of energy drinks to Opportunities

meet growing demand
2. Increase marketing in Latin
America
1. Diversify beverage line 1. Increase sport drink product
(Alcoholic beverage) through sport sponsorship
2. Increase research and 2. Increase marketing in Europe
development spending 3. Creating flavored water drops
(Research production methods (Taking advantage of the
to ensure whether they are increasing demand for bottled
utilizing resources properly. water

1. Create lower calorie sport drink line

(Promote healthy drink) Weakness
Threat 2. Diversify product (Entering healthy
snack)

RECOMMENDATION

The Coca Cola Company is an American multinational beverage corporation and

manufacturer, retailer and marketer of nonalcoholic beverage concentrates and syrups. With all
the strengths that they have, The Coca Cola Company could make a killing in the beverage
market. It is better if the company not only focusing on the soft drinks while they also make a
smart move to snacks industry to beat their one an only rival, PepsiCo. The Coca Cola Company
has a good idea on focusing on corporate social responsibilities because of the scandal of
pesticides that give impact to the brand image. By doing lots of CSR, the company could become
one step ahead from their rival.

The Coca Cola Company really needs to tap into diet and health food as well to prevent the

threat that might come, which is adult diabetes and obesity. It also beneficial for the company as

it could help to increase brand reputation, as they are concern about the welfare of children and

that hopefully they will grow up to be healthy adults. Regarding the water scarcity faced by the

company, Coca Cola really must distribute from places with abundant water resources as well as

enforcing water renewal and purification procedures are also in place in the communities they
work in. It would be advisably to fund water purification and treatment research to benefit the

world.

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