Coca-Cola

The global drink

Najmus Saqib Jahanzeb Siddiqui, Waseem Usmani &

Mehdi Abbas
 Mission
Our mission, vision and values outline who we are, what
we seek to achieve, and how we want to achieve it. They
provide a clear direction for our Company and help
ensure that we are all working toward the same goals.

Everything we do is inspired by our enduring Mission:

– To Refresh the World...in body, mind, and spirit.
– To Inspire Moments of Optimism...through our
brands and our actions.
– To Create Value and Make a Difference...
everywhere we engage.
 Vision
• To achieve sustainable growth, we have established
a Vision with clear goals:
– People: Being a great place to work where people are
inspired to be the best they can be.
– Planet: Being a responsible global citizen that makes a
difference.
– Portfolio: Bringing to the world a portfolio of beverage
brands that anticipate and satisfy peoples' desires and
needs.
– Partners: Nurturing a winning network of partners and
building mutual loyalty.
– Profit: Maximizing return to shareowners while being
mindful of our overall responsibilities.
 Values
• We are guided by shared Values that we will
live by as a company and as individuals:
– Leadership: “The courage to shape a better future”
– Passion: “Committed in heart and mind”
– Integrity: “Be real”
– Accountability: “If it is to be, it's up to me”
– Collaboration: “Leverage collective genius”
– Innovation: “Seek, imagine, create, delight”
– Quality: “What we do, we do well”
Coca-Cola Statistics
• Coca cola owns more than
½ of the world’s beverages.
• Coke is affordable in all the
countries we surveyed. It
was not out of the price
range for an afternoon
snack.
• Coke comes in a variety of
sizes worldwide so you can
use it for a crowd or as a
personal snack drink
 Advertising
• Coke was first advertised as a
remedy for headaches and
exhaustion
• Coke has been advertising on
television for 50 years.
• Songs used in coca cola
commercials have become
popular.
• They use catchy mottos such
as:
“Adds a refreshing relish to
every form of exercise”
 The Other Side of Coke
• There are 27 different • Some of the other brands
varieties of coke made under the Coca-Cola
by Coca-Cola Company are:
– Sprite
• First bottle of Coke
– Barq’s Root beer
was sold 120 years
– Dasani
ago on May 8, 1886
– Dr. Pepper
in Atlanta, Georgia. – Fresca
– Hi-C
– Minute Maid
 Marketing Worldwide
• In 1998 Coke international
created its first ad for the
celebration of the Muslim
holiday of Ramadan. It was
run in 20 countries
worldwide.

• Coke is a Kosher drink, so it

is sold internationally.

This coke can is written in Hebrew

 Coca-Cola Recognition
• Coca-Cola is
recognized by 94% of
the world’s population
• Approximately 10,450
Coca-Cola brand drinks
are consumed around
the world each second
of every day
 International Coca-Cola
• In Hong-Kong, heated Coke
is served as a cold remedy
• Coke advertises 200 in
countries around the world.
• In Japan people use money
chips on their cell phones to
pay for drinks.
 In the Old Days
• Coca-Cola sold only • A single share in
25 bottles in the first Coke that was
year bought in 1919
• Nowadays, they sell would be worth
over one billion $92,500 in 1997
bottles per day • 1919 is when the
Coca-Cola went
public
 INTRODUCTION
The company is the largest manufacturer,
distributor and marketer of nonalcoholic
beverage concentrates and syrups in the
world.
Finished beverage products bearing its
trademarks, sold in the United States
since1886, are now sold nearly 400 brands in
more than 200 countries and include the
leading soft drink products in most of
these countries.
 BUSINESS OBJECTIVES

• Coca-Cola Company articulates its missions

as a promise: Our Company exists to benefit
and refresh everyone it touches.
• The project generalizes company’s basic
objectives as six items, and how they can
be achieved are as follows:
 CONTD…

• Accelerate carbonated soft-drink growth, led by Coca-

Cola
• Selectively broaden company’s family of beverage
brands to drive profitable growth
• Grow system profitability and capability together with
the bottling partners
• Serve customers with creativity and consistency to
generate growth across all channels
• Direct investments to highest-potential areas across
markets
• Drive efficiency and cost effectiveness everywhere
From Vegees to a Chilling glass of Coca Cola
 Valuation Ratios
Company Industry Sector S&P 500
 

P/E Ratio (TTM) 22.09 20.69 19.96 19.52

P/E High - Last 5 Yrs. 28.79 27.95 28.43 34.04
P/E Low - Last 5 Yrs. 18.59 18.20 17.48 14.18
 
Beta 0.68 0.62 0.60 1.00
 
Price to Sales (TTM) 4.53 3.52 2.42 2.65
Price to Book (MRQ) 5.92 5.89 5.89 3.93
Price to Tangible Book (MRQ) 13.11 12.31 16.00 8.17
Price to Cash Flow (TTM) 18.33 16.50 15.67 14.31
Price to Free Cash Flow (TTM) 41.68 52.50 39.85 28.50
 
% Owned Institutions 66.61 59.60 55.89
 Dividends

Company Industry Sector S&P 500

 

Dividend Yield 2.57 2.34 2.98 2.41

Dividend Yield - 5 Year Avg. -- 1.93 2.22 1.79

Dividend 5 Year Growth Rate 11.20 16.51 11.82 14.38

Payout Ratio (TTM) 52.10 45.07 40.32 26.80

 Growth Rates
Company Industry Sector S&P 500
 
Sales (MRQ) vs Qtr. 1 Yr. Ago 20.91 17.30 14.92 13.44

Sales (TTM) vs TTM 1 Yr. Ago 20.70 17.33 12.84 15.06

Sales - 5 Yr. Growth Rate 8.08 9.10 8.39 15.60
 
EPS (MRQ) vs Qtr. 1 Yr. Ago 17.34 11.07 12.69 11.08
EPS (TTM) vs TTM 1 Yr. Ago 18.93 11.42 14.33 10.04
EPS - 5 Yr. Growth Rate 9.89 13.17 9.81 23.56
 
Capital Spending - 5 Yr. 14.13 12.58 9.97 13.43
Growth Rate
 Financial Strength

Company Industry Sector S&P 500

 
Quick Ratio (MRQ) 0.80 0.74 0.56 1.12

Current Ratio (MRQ) 0.96 1.11 1.21 1.63

LT Debt to Equity (MRQ) 0.14 0.30 0.68 0.60

Total Debt to Equity (MRQ) 0.46 0.53 0.90 0.78

Interest Coverage (TTM) NM 21.56 13.29 14.52

Profitability Ratios Company Industry Sector S&P 500
 
Gross Margin (TTM) 63.88 57.83 46.30 44.66
Gross Margin - 5 Yr. Avg. 64.42 58.72 44.52 44.02
 
EBITD Margin (TTM) 28.96 23.18 19.98 23.36
EBITD - 5 Yr. Avg. 29.79 23.66 19.49 22.56
 
Operating Margin (TTM) 24.89 20.68 17.28 18.60
Operating Margin - 5 Yr. Avg. 25.76 21.04 16.80 19.26
 
Pre-Tax Margin (TTM) 26.85 21.87 15.22 16.75
Pre-Tax Margin - 5 Yr. Avg. 27.69 22.25 16.28 18.42
 
Net Profit Margin (TTM) 20.64 16.53 11.99 12.40
Net Profit Margin - 5 Yr. Avg. 21.18 16.71 11.50 12.82
 
Effective Tax Rate (TTM) 23.15 24.46 29.02 29.45
Effective Tax Rate - 5 Yr. Avg. 23.53 25.52 29.93 30.66
 Management Effectiveness
Company Industry Sector S&P 500
 
Return On Assets (TTM) 15.52 15.25 9.49 8.51
Return On Assets - 5 Yr. Avg. 16.53 15.37 12.10 8.02
 
Return On Investment (TTM) 23.34 21.64 13.51 12.13
Return On Investment - 5 Yr. Avg. 24.16 21.54 17.11 11.65

 
Return On Equity (TTM) 30.91 31.36 25.86 20.38
Return On Equity - 5 Yr. Avg. 31.38 30.95 29.60 19.46
Efficiency
Company Industry Sector S&P 500
 
Revenue/Employee (TTM) 332,961 316,003 500,203 980,385

Net Income/Employee (TTM) 68,718 51,935 51,196 119,421

Receivable Turnover (TTM) 9.59 9.19 11.85 10.33

Inventory Turnover (TTM) 5.00 6.80 6.30 12.44

Asset Turnover (TTM) 0.75 0.97 0.89 0.96

 Industry Dynamic
Technological Environment:
� Innovations in computerized technology could affect the bottling process,
which involves specialized, high-speed lines
� Hot-fill, reverse-osmosis, or other specialized equipment is necessary to
bottle the noncarbonated beverages that have higher profit margins than
the carbonated soft drinks (CSD)

Social Environment:
� Consumer trends shifting away from original product lines for health
reasons– from diet soda, to lemon-line, to tea-based drinks, to other
popular non-carbonated beverages
� An increasing trend in teen consumption of CSDs
� Metal and Plastic containers commonly used by bottlers are recyclable are
viewed as environmentally friendly
� Cultural differences across international markets are challenging when it
comes to daily operations and marketing cola industry products
 Industrial Outlook
• Leading national & global soft drink manufacturers were challenged by small,
no-frill, no-advertising brands in market
• Being a developing economies, informal business were easier to start & grow
• Global brands loosing market share to so called B brands across many product
categories
• Leading brands in Brazil are threatened due to the rapid proliferation of the
Private brands
• Major problem for established brands in Brazil was the unfair competition
from companies that had no legal existnce & from those who were registered
but did not pay taxes
• 90% of 750 regional brands of soft drink do not pay the tax
• This is the reason why tubainas can compete on the basis of price
• Taxes amounted to 40% of the Soft Drinks sale price
• Use of promotional tools also seemed to impact the share of traditional brands
• To fight price competition, leading brands increased their trade promotional
activities
 Competitors
- Pepsi
- AMBEV
- Tubainas
- RC cola
 Industry Dynamic
Demographic Environment:
� Explosive population growth in foreign countries intoexplosive growth
potential for those markets
� Aging baby boomer population in United States may lead to a decrease in
cola product demand

Political and Legal Environment:

� Soft Drink Interbrand Competition Act of 1980 secured the right of
Concentrate Producers (CPs) to grant exclusive territories to bottlers
� Anti-trust legal suit against Coca-Cola by Pepsi over fountain drink
monopolization in the domestic market was dismissed in 2000
� Pressure from the scientific community for the FDA to research the affects
of caffeine consumption and to enforce caffeine labels warning of the
dangers of caffeine consumption
� Obstacles in international operations included political instability,
regulations, price controls, advertising restrictions, foreign exchange
controls and lack of infrastructure
 Industry Dynamic

Industry Dominant Feature

Growth rate
There is a huge potential for the Baverage industry with a forecast of
7 % annual growth rate.
Market Size
Experts expect that the volume to cross 12 billion litres and per capita
consumption to increase to 112 litres.
Scope of Competition
The competition is not limited to domestic region and is extenden to global
market.
Number of Rivals
More than 3500 brands and 700 manufactures.
Buyer Needs and Requirements
Different taste preferences, low priced, and high perceived value.
 Drivers of Change in Industry
S. # FORCES COMMENTS
1 Increase in Globalization As industry is moving to internationally so
competition is not limited and industry is on his
maturity stage.

2 Changes in cost & efficiency The industry is its maturity stage and competition
is getting tuff therefore pricing is the main
essence so in order to compete in this
environment cost & efficiency is very much
important.

3 Quality control and Through out the industry key player and other
Technological enhancement known manufacture are investing in technology
and process improvement .

4 Lack of regulatory influence Unofficial side of the brazilin economy was quiet
and weak government policies high

5 Changing societal concerns, Increasing health consciousness among consumers.

attitudes and life style Brazilian economic stabilization restore the
purchasing power of the low income segment of
the population
 Core Competencies
- Company more then 100 year old

- Largest commercial fleet

- Strong distribution network

- Among the few companies with proper legal status

 Coca Cola Facts
Comprises of -Coca Cola Industries Ltda
- Recofarma Industries do Amazonas Ltda.
- 39 bottling plants operated by 16 independently managed
companies
Head Count 25,000 (Direct) & 250,000 (Indirect)

Commercial Fleet 9,000 Vehicles

Market Share 50% of soft drink market

Per Capita Cons. 34.2 Ltrs

Product Lines Bottled Water, Iced Tea, Juices, Energy Drinks
Market Share Coca Cola Regular & Diet 35.6% market share
Combined Sales 50.0% market share

Competitor AmBev Soft Drink 17.0% market share

Others Soft Drink 33.0% market share
 Brazilian Soft Drink Market
Economy - Top ten largest economies Issues
Population - 180 million 1- Majority population resided in
Packing - Glass Bottles, PET & Aluminiun urban Areas
Capacity - 200ml to 2.5ml 2- Several millions lived in small
No. of Brands - More than 3,500 brands communities spread through
No. of Plants - More than 700 out the country
Market Consumption 1986 : 4.9 Billion Liters
3- Due to cost & accessibility
related issues, few consumer
1994 : 6.4 Billion Liters
products reached these areas
2002 : 11.6 Billion Liters
4- Super markets being primary
Forecast 2004 : 12.0 Billion Liters
distribution channels foe Soda
Per Capita Consumption 1986 : 82.8 Liters
account for only 25% & still
1994 : 95.3 Liters untapped market account for
2002 : 104.9 Liters 75%
Ranking (Flavour) Cola 41.8% 5- Soft drinking vending machines
Guarana 23.9% are not widely available
Orange 11.4% 6- Soft Drink market could be
Forum The Brazilian Association of Soft Drink & easily developed by simply
Non-Alcoholic Beverages Manufacturers improving & expanding
distribution
 AMBEV – A MAJOR COMPETITOR
Formed in 1999 Issues
No. of Facilities 49 1- Formed as a merger between
Head Count 18,000 Brahma & Antartica, two leading
beer & soft drink companies
Merger Between Interbrew, Beck’s, Stella, Artois, Labat
2- Realized the threats &
& other brands sold in 140 countries
opportunities posed by
Competitive Advantage Superior Distribution Structure globalization & join forces
Product Lines Bears, Soft drinks, Bottled Water, Iced 3- With merger became the
tea, Isotonic Beverages
2nd Largest in soft drink market
Popular Brands Brahma, Antarctica, Skol, Bohemia 5th largest beer manufacturer
Product Reach 1,000,000 points 7th Largest beverage company
Located in 6,000 municipalities 70% of the Brazilian beer market
New Co. Sales US$ 11.9 Billion 4- Developed impressive market in
Sold Beer 195 Million Hectoliters
Argentina, Bolivia, Paraguay &
Uruguay
Soda 25 Million hectoliters
5- In 2004, a grand alliance between 6
Famous Brand Guarana Antartctica
companies & a new company
InterbrewAmBex emerged
6- Became largest brewery company
in the world
7- Began production & distribution in
Europe also
 TUBAINAS – A MAJOR COMPETITOR
Formed in 1940 since more than 70 Issues
years 1- In 1950’s Tubainas was allowed to be used as
suffix with an aim to promote brand name
No. of More than 700 2- Tubainas become general term for low-
Facilities manufacturers of profile soft drink
Tubainas 3- Different categories of manufacturers exist
from, those who do not have a legal business
Market Share 32% of soft drinks market or pay taxes, to quite structured companies
with regional coverage, considerable
Competitive - Sold at price revenues & sizeable market share
Advantage 4- Market ignored their existence till 1990
significantly lower 5- By 2004, some manufacturers owned
than nationally modern plants & latest bottling technology
marketed soft drink 6- In the past, mostly sold through small
point of sales is now available in leading
- Sold in various flavors super markets
7- Historically using cheap prices to attract
customers, now manufacturers are investing
in quality control, product development,
packaging, advertising & marketing
8- Some brands have gained customer trust &
loyalty
 Successful Tubainas Manufacturer
Refrigerantes Xereta Distribuidora Guararapes Bebidas Dom
de Bedibas
- Present in the market - Leading distributor of - 40 years old operations
for more than 30 years beer in Sao Paulo
- To avoid competition - Develops new line of - Achieved impressive
introduced soft drink soft drink ‘FREVO’ market share mostly
XERETA in aluminium - Low priced than through word of muth
cans traditional competitors
- Xereta became 3rd best - Available in four
selling brand competing flavors
with Coca Cola & - After 2 years, gained
Guarana Antarctica 25% share in Recife,
- 30% of canned Xereta is Brazils largest
exported metropolitan area
- Even available in US, - Production increases
Lebanon & China from 1.1 million liter
to 21.4 million liters
- Distributed in 7 of the
9 states
 Pepsi Cola & AmBevs Partnership
Available in Brazil For over 50 Years
No. of Facilities None
Head Count N/A
Market standing Fourth Best selling Brand
Market Share 6% of soft drinks market
Competitive Advantage Differentiation strategy, wide
market distribution
Product Lines Cola, light drinks
Popular Brands Pepsi Cola, Pepsi Light, Teem,
Diet Team, Seven Up,,
diet Seven Up, Mountain Dew
Product Reach 60,000 points
Located in 600,000 outlets
Issues
1- 1997 signed a franchise contract
with Brahma to produce & distribute
2- Baesa handled 80% Pepsi volume
before bought by Brahma
3- Despite significant marketing investment
by Pepsi, the brand failed to appeal to
younger upper class consumer
5- Pepsi distribution was also rather
limited & concentrated
6- Failed to compete cheaper brands
7- By 2004 AmBev was the largest bottler
& distributor of Pepsi in Brazil
6- Pepsi started gaining access to new
points where Ambev had a strong position
7- Pepsi helped Ambev to distribute its
Guarana Antarctice in overseas market
8- Launched ‘Mountain Dew’ targeting
young Brazilians
9- Most of the growth attributed to
launch of new Pepsi Twist
10- Launched in differentiated bottle,
taller & easier to handle
 B Brands in Brazil
1- Attacked established brands in the territories they
had ruled for ages
2- Having lean operations, allowed them to offer
products at half of the proces
3- Brand leaders in 57 product categories, lost 63%
market share
4- Holds 17 % of super market sales
 Coca Cola fights Back
1- Markets share declined to 48% from 50%, it took several action
2- It froze its product prices
3- Cuts its prices from R$ 1.80 to R$ 1.25
4- Promoted changes in distribution channel by bying back its
franchise operations
5- These actions brought back its share to 50%
6- Expanded its number of brands to confront hard hitting
competition
7- Expanded the output of soft drink ‘Guarana Kuat’ to take over
huge segment of Guarana Market
8- Renovated production facilities & planted 200 hectare of guarana
9- The above secured 11% of the guarana market
 Coca Cola fights Back
10- Expanded Fanta’s mix
11- Incorporated new flavors such as citrus & strawberry
12- Took over a few competitor in order to stop tubainas growth
13- Buying competitor brands could not prevent former owners
from reentering markets or new competitors from emerging
14- Coca Cola own bottler distributed a Tubaina called ‘JESUS’,
a sweat shocking pink beverage, holding 20% of regional market
15- Lastly Coca Cola attempted to build closer ties with consumer
to improve image & goodwill
16- Increasingly sponsored & participated in local, regional &
national events & celebrations
 The Unfair Competition Controversy
1- Coca Cola deeply harmed by tubainas unfair competition
2- Price advantage taken through tax evasion practices
3- Disappointed attitude of Brazilian authorities
4- A two liter bottle of tubainas sold for 50C Vs 1.50C of Coke
5- Coca Cola lobbied to persuade federal law makers & tax
agencies to exert more rigid control
6- Local competition accused the Giant of economic abuse & unfair
business practices, threatening smaller competitors, bribing
public authorities & coerced retailers to restrain them from
selling tubainas
7- Coca Cola fight back & won many court judgments
 Competitors Profile Matrix
Strategic Factors Weight Coca-Cola AMBEV TUBAINAS
Rate Wt Rate Wt Rate Wt
Technology
- Ability to improve production 0.1 4 0.4 3 0.3 2 0.2

- Expertise in technology 0.1 4 0.4 3 0.3 2 0.2

Manufacturing
- Economies of Scale 0.1 4 0.4 2 0.2 3 0.3

- Learning Curve 0.2 4 0.8 4 0.8 4 0.8

- Ability to manufacture according to 0.1 4 0.4 4 0.4 4 0.4

customer specification

Distribution
- Strong network of wholesale
0.1 3 0.3 4 0.4 3 0.3
distributor/dealer
- Ability to secure favourable display
0.1 3 0.3 3 0.3 2 0.2
space on retailer shelves

Marketing
- Breadth of product line and product
0.1 3 0.3 4 0.4 3 0.3
selection

- Brand Name 0.3

0.1 4 0.4 3 2 0.2

Total 1.0 3.7 3.4 2.9

 20
Stars Problem Child
17

15
BCG Matrix Coca-Cola

13

10

9
Fruit
7 Soft Based
DrinkEner
Bottl
5 s
Tea ed gy
Drinks
3 s Wate Drin
r ks
1 Cash
Dog
Cows

2.0 1.0x 0.5

 Cash Cows

Coca-Cola Company at this stage matches in the Cash Cows, as

its huge annual cash flow and its the highest market share
compared to its competitors.

Second, it has a high growth rate due to its variety of other

brands and its mass advertising.

Third, as its large scale of profits, it invests heavy money to

advertise and to keep their product on the No.1 position

BCG matrix recommends investing profits to produce new

products and sell them in the market.
 Competitive Rivalry

HUFA MUFA Neutral MFA HFA

Factors Status Comments
(Low/High)

1 2 3 4 5

Composition of Competitors Unequal X More than 3500

Brands & 700 plants

Market Growth Rate High X Industry Growth rate

is unstable
Scope of Competition Domestic X Large number of
competitors
Capacity Increases large X Consumption per
capita is on a
constant rise
Degree of Differentiation Commodity X Almost Similar
features
Strategic Stake High x Key players have
been In the market

2 2 3 4 5
Threat of New Entrants

Factors Status HUFA MUFA Neutral MFA HFA

Comments
(Low/High)

1 2 3 4 5

Economies of Low x Market easily

Scale accessible.

Capital Required Low x Low initial

investments.

Access to Ample x Distribution

Distribution channel
Channel
Expected Low x Growing number of
Retaliation manufacturers

Differentiation Low x Almost similar

feature

Brand Loyalty Low x Least important

3 4 3
 Power of Supplier
HUFA MUFA Neutral MFA HFA
Factors Status Comments
(Low/High)
1 2 3 4 5

Number of Important Many x Many supplier

Supplier available
Switching Cost Low x Easy to switch

Availability of Substitutes Many x Number of supplier

in the market

Importance of Buyer Low x Buys high proportion

Industry to Supplier

Suppliers Product an Less imp. x As many supplier

important input to available
buyer’s business

8 15
 Exit Barriers
HUFA MUFA Neutral MFA HFA
Factors Status Comments
(Low/High)
1 2 3 4 5

Specialized Assets Low X Simple mfg process

Fixed Cost Exit Low X Inexpensive machinery

involved
Strategic Low x There is no strategic
Interrelationship relationship with the
supplier as many are
available

Government Barriers Low X Unofficial side of the

economy was quiet
large
3 2
 Substitutes
HUFA MUFA Neutral MFA HFA
Factors Status Comments
(Low/High)
1 2 3 4 5

Threat of Obsolescence of Low X Not possible in

Industry product Carbonated drinks

Aggressiveness of
Substitute Product in
Low X No major substitutes
are available in the
Promotion
market
Switching Cost Low X Easily move to another
product

Perceived Price / Value Low X The brand image of

soft drinks is high

1 6 4
ANALYSIS BASED ON PORTER’S MODEL
Unfavorable Neutral Favorable

Exit Barriers 1.25

Rivalry among existing firms 2.67

Entry Barriers 1.67

Power of Supplier 4.6

Threat of Substitute 2.75

High Strategic Groups

P Coca
R Cola
I
C AMBEV
E

Tubainas

Low High

Geographical Coverage
 EFE Matrix

Opportunities
Soft drink market on a continuous growth trend
Brazil among the Top ten economies of the world
Availability of Sophisticated technology enabling the company to serve
large geographic markets
Still 60% of the market is untapped
Declining growth rate of Tubainas
Majority of the competitors have weak legals status or are into tax evasion
practices, implementation of good corporate governance can be a major
threat to such competitors

Threats
Increasing awareness of health consciousnes
Allegation on big brands for unfair competition practices
Entry barrier are low
Local brand entering global market
Mergers & acquisition in the local soft drink industry
Rapid proliferation of private brands
 EFE Matrix
Key External Factors Weight Rating Weighted Score

Opportunities
Soft drink market on a continuous growth trend 0.10 3 0.30
Brazil among the Top ten economies of the world 0.05 3 0.15
Availability of Sophisticated technology enabling the company to serve 0.10 4 0.40
large geographic markets

Still 60% of the market is untapped 0.10 3 0.30

Declining growth rate of Tubainas 0.10 2 0.20
Majority of the competitors have weak legals status or are into tax 0.10 4 0.40
evasion practices, implementation of good corporate governance can
be a major threat to such competitors

Threats

Increasing awareness of health consciousness 0.10 2 0.20

Allegation on big brands for unfair competition practices 0.05 3 0.15
Entry barrier are low 0.10 3 0.30
Local brand entering global market 0.05 2 0.10
Mergers & acquisition in the local soft drink industry 0.10 3 0.30
Rapid proliferation of private brands 0.05 2 0.10
Total (Analysis shows that company aware and is taking action ) 1.00 2.90
 IFE Matrix

Strengths:

Extremely recognizable brand is one of greatest strengths.

Worldwide network of bottlers and distributors of Company products
Sophisticated marketing capabilities
Global presence
Wide distribution network & largest commercial fleet
Product mix catering five market segments
Leader in soft drink category
Legal corporate establishment

Weaknesses:
Lack of branding among class C Brazilian consumers
Not focusing in beer manufacturing
Highly priced & lower margins as compared to competitors
Introduced marketing strategies not earning targeted results
Vending machines were not widely available
Bottlers entering into manufacturing of their own brands
 IFE Matrix
Key Internal Factors Weight Rating Weighted
Score
Strengths
Extremely recognizable brand is one of greatest strengths. 0.100 4 0.400
Worldwide network of bottlers and distributors of Company products 0.100 4 0.400
Sophisticated marketing capabilities 0.075 3 0.300
Global presence 0.075 3 0.225
Wide distribution network & largest commercial fleet 0.050 3 0.150
Product mix catering five market segments 0.010 3 0.300
Leader in soft drink category 0.100 4 0.400
Legal corporate establishment 0.100 3 0.300
Weaknesses
Lack of branding among class C Brazilian consumers 0.100 1 0.100
Not focusing in beer manufacturing 0.040 2 0.150
Highly priced & lower margins as compared to competitors 0.075 1 0.075
Introduced marketing strategies not earning targeted results 0.075 1 0.100
Vending machines were not widely available 0.050 2 0.100
Bottlers entering into manufacturing of their own brands 0.050 2 0.150
TOTAL ( Analysis shows company is strong ) 1.000 3.15

TOWS
Matrix
Opportunities
- Soft drink market on a continuous growth trend
- Brazil among the Top ten economies of the
world
- Availability of Sophisticated technology
enabling the company to Serve large geographic
markets
- Still 60% of the market is untapped
- Declining growth rate of Tubainas
- Majority of the competitors have weak legal
status or are into tax evasion practices,
implementation of good corporate
governance can be a major threat to such
competitors
Threats
- Increasing awareness of health consciousness
- Allegation on big brands for unfair
- Competition practices
- Entry barrier are low
- Local brand entering global market
- Mergers & acquisition in the local soft drink
industry
- Rapid proliferation of private brands
Strengths Weaknesses
Extremely recognizable brand is one of greatest Lack of branding among class C Brazilian
strengths. Consumers
Worldwide network of bottlers and distributors of Not focusing in beer manufacturing
Company products Highly priced & lower margins as
Sophisticated marketing capabilities compared to competitors
Global presence Introduced marketing strategies not earning
Wide distribution network & largest commercial targeted results
fleet Vending machines were not widely available
Product mix catering five market segments Bottlers entering into manufacturing of their own
Leader in soft drink category brands
Legal corporate establishment
S-O Strategies W-O Strategies
- Make strategic alliance to capture untapped market. - Create awareness through aggressive marketing campgin to
highlight brad trade.
- Enhancement in product mix.
-Start beer manufacturing
- Allocate more funds for advertisement campaigns.
-Focus on maximum capacity utilization. By reducing pricing
-Uuse appropriate forum for the strict implementation of laws and reaching economies of scale
pertaining to corporate governance.
-Make strategy according to consumer preferences.
S-T Strategies W-T Strategies
-Introduced more products to cater the needs of health -Introduce wide range of product line to cater more than one
conscious consumers. classes of society
- Be more transparent in marketing strategies adopted and -Restrict local brand by creating stiff competition within the
create positive image of a fair market player. industry
- Emphasis more on quality aspects of its products and run -Consider the option of further acquisition to minimize
campaigns, and bring awareness among consumers. rivalry for itself
-Make conclusive contracts with bottler restricting them to
launch their own product.
 SPACE Matrix (Y axis)

Financial Strength (FS) Environmental Stability ( ES)

Return on Investment =+6 Technological change =-4

Leverage =+5 Rate of Inflation =-3

Liquidity =+5 Demand variability =-3

Working capital =+5 Range of competitive products =-2

Cash Flow =+4 Barriers to entry =-6

Ease of exit =+1 Competitive pressure =-2

Risk Involved =+2 Price elasticity of demand =-2

Total Score = + 28 Total score = - 22

Average Score = 28/7 = 4.00 Average Score = -22/7 = - 3.14

 SPACE Matrix Calculation X axis

Industry Strength ( IS) Competitive Advantage (CA)

Growth Potential =+5 Market Share =-2
Profit Potential Product Quality =-2
=+3 Product life cycle =-4
Technological Know how = + 3 Customer Loyalty =-3
Resource utilization =+4 Competition’s capacity utilization = - 3
Capital Requirement =+4 Technological Know how =-2
Ease of Entry =+2 Control over suppliers and
Productivity, capacity Distributors =-2
utilization =+4 Total Score = 18
Total Score = +25
Average CA Score = -18/7 = -2.57
Average IS Score = 25/7 = + 3.57
 SPACE Matrix

Conservative FS Aggressive

                CA          IS

Defensive
Competitive
ES
 Returnable Bottles - a wrong move
1- Coca Cola to confront Tubainas, reintroduced in returnable glass
bottles
2- Sales of soft drinks went up by 10%
3- Priced closer to Tubainas & appealed to class C & D consumers
4- The distribution was extended to nearly 7,000 points of sale
5- This move elicited mixed reaction from consumer, large retailors
were not so sure, as it posed a major problem
6- Strategist shared their concerns that cost associated with
transporting, cleaning & storing bottles could nul any apparent
savings
7- The real objective was to increase Coca Cola’s profitability in
Brazil
8- By the end of 2003, returnable bottled accounted for less than
10% & there were no signs of growth in market share
 Future outlook
1- Coca Cola showed encouraging signs
2- Partnership with ‘NORSA’ resulted in regaining control of
distribution in several north eastern states having 28% of the
population
3- Coca Cola market share reached 44.5 in 2003 (42%:2002) which
led the operational profit to grow by 40%
4- Taubaina’s share dropped from 42.8% to 38.8%
5- Coca Cola should offer all possible taste & price levels
6- The consumer benefited most in terms of price & variety
 Emerging Competition
1- Market became more competitive with the entry of RC Cola
2- Bebidas signed franchise agreement to produce & distribute RC
cola for 20 years
4- In blind test between RC, PEPSI & Coke, consumers preferdn RC
5- One of the strategies to be adopted by RC was to oofer sampling
in super markets
6- Counting on RC tastes & technical expertise, RC Cola is expected
to gain 5% of Brazilian market in next three years
7- The product was being produced & distributed in five north
eastern cities & in various type of containers
8- The brand is also launched at 10-15% lower than Coke
THANK YOU