American International University Bangladesh

Semester Project

Operation strategy of Coca-Cola

Submitted To: Dr. Md. Mamun Habib Assistant Professor American International University Bangladesh

Submitted By: Group Number # F Section: A Mohammad Anowarul Kabir Mohammad Anas Zakia Reza Khanum Fatema Akter Sunny Sanjida Yasmin 08-11542-2 08-11523-2 08-11543-2 08-11450-2 08-12190-3

Submission Date: 24 july, 2011

TABLE OF CONTENTS
Topic Chapter:1 Introduction Chapter:2 Literature Review Chapter:3 Discussion Chapter:4 Conclusion Referances Page number 1-5 6-10 11-15 16 17

Chapter: 1 Introduction
The Coca-Cola Company is the world's largest beverage company, refreshing consumers with more than 500 sparkling and still brands. Led by CocaCola, the world's most valuable brand, the Company's portfolio features 14 billion dollar brands including Diet Coke, Fanta, Sprite, Coca-Cola Zero, vitamin water, PowerAde, Minute Maid, Simply and Georgia. Globally, we are the No. 1 provider of sparkling beverages, juices and juice drinks and readyto-drink teas and coffees. Through the world's largest beverage distribution system, consumers in more than 200 countries enjoy the Company's beverages at a rate of 1.7 billion servings a day. With an enduring commitment to building sustainable communities, our Company is focused on initiatives that reduce our environmental footprint, support active, healthy living, create a safe, inclusive work environment for our associates, and enhance the economic development of the communities where we operate. History of Coca-cola: Coca cola describe their history in two ways: one is form of coca cola and another is bottle of coca cola. They think lots about their bottle. So, they have changed their bottle based on public demand and also situation. History of pattern of coke: In 1886, when Atlanta and Fulton County passed prohibition legislation, Pemberton responded by developing Coca-Cola, essentially a non-alcoholic version of French Wine Coca. The first sales were at Jacob's Pharmacy in Atlanta, Georgia, on May 8, 1886. It was initially sold as a patent medicine for five cents a glass at soda fountains, which were popular in the United

States at the time due to the belief that carbonated water was good for the health.[10] Pemberton including morphine claimed Coca-Cola cured many diseases, addiction, dyspepsia, neurasthenia, headache,

and impotence. Pemberton ran the first advertisement for the beverage on May 29 of the same year in the Atlanta Journal.

History of Bottle:
Coca-Cola originated as a soda fountain beverage in 1886 selling for five cents a glass. Early growth was impressive, but it was only when a strong bottling system developed that Coca-Cola became the world-famous brand it is today. 1894 A modest start for a bold idea In a candy store in Vicksburg, Mississippi, brisk sales of the new fountain beverage called Coca-Cola impressed the store's owner, Joseph A. Biedenharn. He began bottling Coca-Cola to sell, using a common glass bottle called a Hutchinson. Biedenharn sent a case to Asa Griggs Candler, who owned the Company. Candler thanked him but took no action. One of his nephews already had urged that Coca-Cola be bottled, but Candler focused on fountain sales.

1899 The first bottling agreement Two young attorneys from Chattanooga, Tennessee believed they could build a business around bottling Coca-Cola. In a meeting with Candler, Benjamin F. Thomas and Joseph B. Whitehead obtained exclusive rights to bottle CocaCola across most of the United States (specifically excluding Vicksburg) -- for the sum of one dollar. A third Chattanooga lawyer, John T. Lupton, soon joined their venture.
2

1900-1909 Rapid growth The three pioneer bottlers divided the country into territories and sold bottling rights to local entrepreneurs. Their efforts were boosted by major progress in bottling technology, which improved efficiency and product quality. By 1909, nearly 400 Coca-Cola bottling plants were operating, most of them family-owned businesses. Some were open only during hot-weather months when demand was high. 1916 Birth of the contour bottle Bottlers worried that the straight-sided bottle for Coca-Cola was easily confused with imitators. A group representing the Company and bottlers asked glass manufacturers to offer ideas for a distinctive bottle. A design from the Root Glass Company of Terre Haute, Indiana won enthusiastic approval in 1915 and was introduced in 1916. The contour bottle became one of the few packages ever granted trademark status by the U.S. Patent Office. Today, it's one of the most recognized icons in the world - even in the dark! 1920s Bottling overtakes fountain sales As the 1920s dawned, more than 1,000 Coca-Cola bottlers were operating in the U.S. Their ideas and zeal fueled steady growth. Six-bottle cartons were a huge hit after their 1923 introduction. A few years later, open-top metal coolers became the forerunners of automated vending machines. By the end of the 1920s, bottle sales of Coca-Cola exceeded fountain sales.

The Coke Company operates three primary delivery systems for its business channels: Bulk delivery for the channels of large Supermarkets, Mass Merchandisers and Club stores;

 For smaller channels Coke does advanced sale delivery for convenience stores, drug stores, small supermarkets and on-premise fountain accounts. Full service delivery for its full service vending customers. Key Channel Listing

Supermarkets Convenience Stores Fast Food Petroleum Retailers Chain Drug Stores Hotels/Motels/Resorts Mass Merchandisers

Chapter: 2 Literature review:

Global operation Strategy:
We know about 4 kind of global operation strategy:
1. International 2. Multinational 3. Global 4. Transnational

Coca cola is a part of transnational. They are activities same as transnational. And local responsiveness and cost reduction is so high. Showing it below based on graph:

H h ig

G b l Sr t g lo a t ae y

Sowt Analysis of Coca cola: TOWS Analysis is an effective way of combining to develop a strategy. a) Internal strengths with external opportunities and threats b) Internal weaknesses with external opportunities and threats.

Strengths Worlds leading brand Large scale of operations Robust revenue growth in three segment

weakness Negative publicity Sluggish performance in North America Decline in cash from operating activities

opportunities Acquisitions Intense competition Growing bottled water market Growing Hispanic population in US

Threats Intense competition Dependence on bottling partners Sluggish growth of carbonated beverages

Supply chain strategy of Coca cola: Coca cola is world largest beverage Food Company. And they are also a franchisor company. So, supply chain strategy is different one country to another country. But every franchisor maintains a basic supply chain. It is showing below.

Operation and marketing strategy of coca cola:

TARGET MARKET

Cokes commercials basically based on young generations, So, the young generation is the target market of Coke because they want to represent Coke with the youth and energy but they also consider about the old people they take then as a co-target market

MAJOR SEGMENTS

Major segments are basically those people who take this drink daily and those areas where the demands are higher than 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.
FACTORS EFFECTING SALES

There are so many factors, which affects the sale of coke. Here we are discussing three major factors which effects coke. 1. Per capita income 2. Competitors 3. Weather
MARKETING STRATEGY

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 refreshing Coca-Cola, a woman in Italy taking a tea break, a child in Peru asking for a juice drink, or
8

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.

Chapter: 3
9

Discussion:
Just three decades ago, the competitive environment of the

carbonated soft drink (CSD) industry was based on recognition of an implicit acquiescence to the dominance of The Coca-Cola Company. Beginning in the 1960s, however, Coca-Cola's dominance has been increasingly challenged, particularly by Pepsi-Cola. The new competitive environment is well publicized and intense. The Cola Wars were declared and the battle continues. Pepsi-Cola and Coca-Cola are widely recognized as being two of the premier marketing companies in the world. A great variety of new products and package types have been introduced. Celebrity advertising has been raised to a new level. Coca-Cola even changed the formula for Coke. These and other developments in the CSD industry came about from major changes in strategy by Pepsi-Cola and Coca-Cola. To some extent these strategic changes arose from Pepsi's challenge to Coke's dominance of the industry. In addition, several factors external and internal to the industry have been important catalysts for these changes. Rather than simply reacting to a changing competitive environment, PepsiCo and The Coca-Cola Company have created and implemented strategies that turned the new environment to their advantage (Muris, Scheffman & Spiller 1993).

Although Pepsi Cola attacked Coca-Cola's dominance and achieved near parity with Coke in bottled soft drinks, both Coke and Pepsi have benefited from fighting the Cola Wars because the battle between them has stimulated continuing growth in an industry regularly pronounced by the experts for many years to be on the verge of maturity (Muris, Scheffman & Spiller 1993). As the industry existed in the early 1970s, the reasons for predictions of impending maturity were not difficult to see. The apparent limits of the human stomach argued strongly against further significant

10

growth of per capita consumption of soft drinks. Certainly, substantial growth in sales of the limited number of products offered by Pepsi and Coke appeared unlikely (Muris, Scheff man & Spiller 1993). The competitive advantages of the two industry leaders were built on delivering a few unchanging, high-quality products through a distribution system that, although complicated, was effective. In the face of the predicted maturation of their domestic market, the prudent course appeared to be a holding action in the United States, with attention and resources shifted to offshore markets and diversification a classic cash cow strategy.

Strength Strengths are the strong points of the business. To know the strengths of the things that should be known includes the sources of the companys revenue, the market share of the company in various product lines, the availability of strong brands of a company, the effectiveness of the advertisement of the brand or product, the availability of pool of skilled workers, the morale of the employees, the innovativeness of the company and the ability of the company to withstood international competition. Cocacola strength is the international popularity it has. The company is known throughout the world. People from all over the world purchase and drinks the different products the two companies have.

Strength of the company is the strong brand name it has. The strong brand name is what makes the company and its products popular. It brings the company huge amounts of profit and worldwide notoriety. Furthermore strength of the company is the effective advertising it uses. The company uses a different advertising method. The company uses television and magazine commercials as well as other methods for people to be informed of its product. Lastly strength of Coca Cola is its website that is easy to use,

11

attractive, and informative. The website is visited by people from different countries and this can help companies promote its products. The website of the company is attractive, informative and easy to use for clients this gives the clients interest in purchasing the companys products.

Weakness Weaknesses are the current problems of the company. To determine the weakness of the company the things that should be known includes the products that are least profitable, areas of the company that is not able to recover cost, the weak brands, the ability of the company to raise money when it needs to, the ability of the company to stand price pressures against competitors, the ability of the company to create new ideas, the faith of employees in management and the ability to compete with other companies in the technology front. The main weakness of the company is the health issues when their product is partaken. The products they have can cause health problems when taken so many times. The company cannot restrict the consumption of their product at all times, thus they might not be able to stop health problems to be present to clients.

A weakness of the company is its inability to restrict certain gender from using their product. Young children who might acquire health problems from taking their products are not restricted. Children who can get their products anywhere might over-consume their products since they are not given proper warning and restriction. Lastly a weakness of the company is it not being able to separate from other beverage companies. When Coca Cola is being talked about Pepsi can also be talked about subsequently. They have a strong brand name but they dont have one thing that gives them distinction.

12

Opportunities Opportunities are those events or situations that may arise in the future. To determine the opportunities of the company the things that should be known includes competitive position of the company, new technologies that the company can innovate for low costs, the capacity and opportunity to extend brands, the capacity to implement incentive plans to boost employee effectiveness, the ability of the company to move up the value chain, the ability of employees to be multi-skilled to reduce levels of redundancy, opportunities to cooperate with companies that are not competitors for both companies to be beneficial.

Opportunity for the company is to create products that can give not only satisfaction to clients but health benefits as well. The company can create a product that is not harmful to ones health at the same time it does not taste bad. An opportunity for the company is to find out more ways to give a distinctive taste to their product. By doing this the company will not be co related with Pepsi and other competitors products. Lastly an opportunity for the company is to reach newer territories where it can offer its products and services. The company can reach more territories not yet reached by its competitors. Threats Threats are problems that may arise and should be avoided. To determine the threats of the company the things that should be known includes the capacity of employees to be adequately trained, the capacity of the company to withstand sudden changes in the environment, the ability of the brands to withstand price competition, the financial being on the verge of liquidity, is the company considered a good employer, and the ability of the

13

company to cope up with technological changes. Coca Colas threat includes the laws in the country they are operating in. Laws are a vital part of a country. These laws are the ones that initiate order and discipline in the country. There may be laws that can cause some delay in selling the products. These laws can hamper business transactions to be completed. These laws are enacted to protect the welfare of local sellers in that specific country. Since there are different laws in different countries it can also cause problems for the company. Laws in Taiwan are different from the laws in Switzerland therefore the laws in one country may cause problems for the company while in another country it may not be a problem. Another threat to the company is the tariffs and taxes that the company has in different countries, each countries has its own rate of taxes and tariff. Taxes and tariffs are collected by the countries government as additional funds for their projects in that country. The taxes and tariffs collected by a country depend on what the law of the country states. The taxes and tariffs collected by a country is a threat because this causes expenditures to a company.

14

Chapter: 4 Conclusion
Coca Cola Company is currently one of the biggest and most recognized soft beverage brands in the world. With over 3000 products in more than 200 countries, Coca-Cola Company has surely become part of peoples lives. The Coca-Cola Company owes its success to the people who do their best to achieve the task at hand. Thus, the Cola-Cola Company takes cares of its employees in return by creating a good working environment and working along with unions and government agencies to make sure its employees are safe. The Coca-Cola Company understands that in todays business world technology is very essential to run such a big company like Coca-Cola. Therefore, the Coca-Cola Company uses different types of technology such as creating databases and data warehouse about their customers and suppliers, doing business with consumers and other businesses through the internet. The Coca-Cola Company knows that no business can run without a plan. Because the Coca-Cola Company has been able to the set the entry barrier in the beverage business very high, new companies are discourage to compete with Coca-Cola. In addition, the Coca-Cola Company has agreements with many of its supplier (mostly bottling company) to exclusively provide by their services to Coca-Cola. Thus, it is almost impossible for new comers to keep up with Coca-Cola and similar competitors with recognized names in the business such as Pepsi. The CocaCola success isn't something that has been achieved over night. Many years has passed since John Pemberton created the secret formula for Coca-Cola in 1886.

15

References:
1. http://www.thecoca-colacompany.com 2. http://www.coca-cola.com 3. http://www.google.com 4. http://www.wikipedia.org 5. Coca-Cola Beverage Private Limited in Dhaka 6. www.cocacolastore.com.

16