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Akshay Berry

Deepika Mittal
Gurveen Kaur Richa Joshi Shekhar CVR

The Philosophy
All of us in the Coca-Cola family wake up each morning knowing that every single one of the worlds 5.6 billion people will get thirsty that day. If we make it impossible for these 5.6 billion people to escape Coca-Cola, then we assure our future success for many years to come.

THE COMPANY
The Coca-Cola Company exists to benefit and refresh everyone it touches. Founded in 1886 Corporate Headquarters - Atlanta, with local operations in over 200 countries around the world. World's leading manufacturer, marketer, and distributor of non-alcoholic beverage concentrates and syrups, used to produce nearly 400 beverage brands.

The CSD Industry


Top-10 CSD Companies and Brands (2004)
Rank 1 2 3 4 5 6 7 Companies Coca-Cola Co. Pepsi-Cola Co. Dr Pepper/Seven Up (Cadbury) Cott Corp. National Beverage Royal Crown Big Red Share 43.1 31.7 14.7 3.1 2.1 1.2 0.4 change -0.4 flat +0.5 +0.4 +0.1 -0.1 +0.1 (millions) 4377.5 3119.5 1455.1 310.0 205.0 115.4 35.7 change -0.5% +0.6% +3.4% +14.8% +5.7% -7.5% +5.9%

8
9 10

Seagram's
Monarch Co. Private label/other

0.3
0.1 2.6

flat
-0.1 -0.5

29.0
12.3 270.5

+3.6%
-22.6% -12.0%

Source - Beverage Digest/Maxwell

The CSD Industry


Others 11%

CadburySchweppes 15%

Coca Cola 42%

Pepsi Cola 32%

In India
Origin - 1950s Eventually out of the country in 1977 for violating investment laws. Refused to abide by Indias FERA - Multi-Nationals to sell 60% of their equity to an Indian interest. In 1993, a new political and economic climate of liberalized trade and investment policy - Coke was allowed back into the country where they promptly purchased the leading domestic soft drink brand. Since then, Coke has invested more than $1 billion in India. The company operates 27 wholly owned bottling plants and another 17 franchise owned bottling operations and is constantly looking to expand its presence in a country.

What is a Mission Statement ?


Declaration of attitude Arouses positive feelings and emotions Inspires or motivates the reader Generates an impression that a firm is successful Has a direction Worthy of time, support and investment Basis for generating strategic options

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.

Evaluation Matrix
Customers Products Market World Refresh Everywhere-World

Technology Concern for Survival, Growth and Profitability


Philosophy Self-Concept Concern for Public Image Concern for Employees

Create Value, Make a Difference


Refresh, Inspire Create Value, Make a Difference Optimism, Actions -

Products
What brands can we associate with the Coca-Cola Company?
CATEGORIES OPERATIONS Coke sells close to 400 drink brands worldwide including coffees, juices, sports drinks and teas in 200 countries. Concetrated Soft Drinks (CSD) Botted Fruit Juices Mineral Water Energy Drink

The Coca-Cola Company owns four of the top-five selling softdrink brands in the world Coca-Cola, Diet Coke, Fanta and Sprite.

Products

Technology
Marketing Information System (MIS). - The main goal of MIS is to create customers through many different avenues and approaches. Electronic Web-Page - Reaching its existing customers in order to convey such things as, new products, information on health issues pertaining to Coca Cola consumption, and different brands of soft drinks owned by Coca Cola.

Creating customers, is only half the battle faced by todays business marketing environment. The other half of the battle is keeping them.
SAP R/3 ERP Software - Allows all members of the organization to access the information at anytime where ever they are in the world.

Coca-Cola has a patent portfolio of 800 US patents and 1800 patents outside of the US

The Coca-Cola Bottle


The Coca-Cola bottle is probably the most easily recognised containers in the world. Described by the Pop artist Andy Warhol as, the Design Icon of the Decade'. Originally conceived in the early 1900's It was a time when both the packaging and the actual Coca-Cola product was being imitated. Find The Coke Bottle (1916) - In the dark. Shape - Even if broken, one could tell at a glance what it was.

Public Image
Helping people all over the world live healthier lives through beverages Coke invests millions of dollars each year in order to passionately convince the consuming public that their product is good for you, or at least harmless. The Beverage Institute for Health and Wellness - In March 2004 Coke created a research institute with the goal of countering criticism about their role of soft drinks in the obesity epidemic. Cokes Website Coke uses its website to highlight many of its strategic programs and initiatives around the world. The Coca-Cola Company has partnered up with UNAIDS and other NGOs to help setup programs and put into place important initiatives.

PR Initiatives

STRATEGIC FUNDING Australian Sports Commission American Academy of Pediatric Dentistry American Council on Science and Health

UNIVERSITY LINKS- 26 Columbia University Dartmouth College Emory University Harvard University

Public Relations Firms

Vision

PROFIT

PLANET

Sustainable Growth

PEOPLE

PARTNERS

PORTFOLIO

Vision
Profit: Maximizing return to shareowners while being mindful of our overall responsibilities. People: Being a great place to work where people are inspired to be the best they can be. 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. Planet: Being a responsible global citizen that makes a difference

PEST Analysis

Political
Consumer Protection Laws Quality Controls in Manufacturing & Bottling Process Bottling Subsidiaries ; Advertising Standards Council

Change in laws & regulations

Environmental Protection legislation

Coke Boycott in New York University


Exit from Indian market in 77, declining demand in Indonesia Campaign by Centre for Science & Environment

Civil Unrest / Government Changes

Pressure Groups

Economic
Soft Interest Rate Regime/consumer Purchasing power Lower borrowing Costs for Co., incre ased consumer dmd Demand pick up in Japan, Argentina & Brazil

Economic Cycles in International Markets

Free market economies

Increased Competition

Taxation

Impact on bottomline, Contribution to parent Co.

Social
Lifestyle changes / Fashion & Fads / Consumerism Health Consciousness, education levels Diet Coke, Cappuccino, Vanilla Coke Entry into Bottled Water market, diversification into health beverages

Consumer Awareness about substitutes

Cost Management Product differentiation Effective marketing


Bigger market, youth oriented positioning

Demographics

Technological
Industry focus on technology

State of the art Bottle Cleaning Process

Internet, FM Radio

Adaptation of advertising strategy

New Discoveries & development, speed Of technology transfer

Introduction of Cans & Plastic Bottles

Improved Production Methodologies

Improved Turn Around Time (TAT) & Quality Control

Scenarios of Industry Analysis


Rival Intensity Threat Entrants Buyer Power Supplier Power Threat Substitutes Example

Low

Low

Low

Low

Low

Microsoft Windows

High

High

High

Low

Low

Dell

High

High

High

Low

High

Barnes & Noble

Your Organization

Corporate Survival Model


Potential Entrants
Government Ideology & Policy
Redefining industries and markets Threat of New Entrants

Lobby Groups
Changing ground rules and values

Suppliers
Bargaining Power of Suppliers

Threats to Corporate survival

Bargaining Power of Buyers

Buyers

Increasing rate or degree of change Threat of Substitutes

Loss of Support

Fashion & Fickleness

Complementors

Substitutes

Source Adapted from Porter, M.E. Competitive Advantage (Free Press 1995) and Grove, A.S. Only the Paranoid Survive (Harper Collins 1996)

Five-Forces Analysis
The five forces are environmental forces that impact on a companys ability to compete in a given market. The purpose of five-forces analysis is to diagnose the principal competitive pressures in a market and assess how strong and important each one is.

The Five Forces


Threat of New Entrants

Threat of New Entrants


Economies of Scale

Barriers to Entry

Product Differentiation Capital Requirements Switching Costs Access to Distribution Channels Cost Disadvantages Independent of Scale Government Policy

Expected Retaliation

Strong barriers to new entrants in the CSD industry: very difficult to a new Concentrate Producer to enter the market. Coke and Pepsi are the first movers in the industry,have more than 100 years of existence in the market. Both have kept their formula a trade secret and built a strong brand image.

also difficult for a new bottler to enter the CSD industry, given (i) the amount of capital investment required, (ii) the interdependence that exists between concentrate producers and bottlers, (iii) the exclusivity of territories in which bottlers distribute products, (iv) the access to retail channels, with which Coke and Pepsi sustained favorable and long term relationships.

The Five Forces


Threat of Threat of New New Entrants Entrants Bargaining Power of Suppliers

Bargaining Power of Suppliers


Suppliers exert power in the industry by: * Threatening to raise prices or to reduce quality Powerful suppliers can squeeze industry profitability if firms are unable to recover cost increases

Suppliers are likely to be powerful if: Supplier industry is dominated by a few firms Suppliers products have few substitutes
Buyer is not an important customer to supplier Suppliers product is an important input to buyers product Suppliers products are differentiated Suppliers products have high switching costs Supplier poses credible threat of forward integration

The inputs for Coke products are primarily sugar and packaging. Some of the suppliers are:
Nutrasweet Manufactures Aspartame for use in Cokes diet soft drinks, Owens-Illinois Plastic Group plastic containers and closures, Rexam Cokes largest global supplier of aluminum cans, SouthEastern Container Supplys US Coke bottlers with PET plastic bottles, Tate & Lyle In February 2005, Coke chose Tate & Lyles Splenda sucralose sweetener for its new version of Diet Coke. Tate & Lyle makes sweeteners and other ingredients for food items and drinks.

Low Bargaining Power of Suppliers


Sugar can be purchased from many sources on the open market, and if sugar became too expensive, the firms can easily switch to corn syrup(as in the early 1980s). Suppliers of nutritive sweeteners do not have much bargaining power against Coke, or their bottlers. Coke can take or leave any particular supplier The same principle is true for aluminum and plastic containers.

The Five Forces


Threat of Threat of New New Entrants Entrants

Bargaining Power of Suppliers

Bargaining Power of Buyers

Bargaining Power of Buyers


Buyer groups are likely to be powerful if: Buyers are concentrated or purchases are large relative to sellers sales Purchase accounts for a significant fraction of suppliers sales Products are undifferentiated Buyers face few switching costs Buyers industry earns low profits Buyer presents a credible threat of backward integration Product unimportant to quality Buyer has full information
Buyers compete with the supplying industry by: * Bargaining down prices * Forcing higher quality * Playing firms off of each other

Retail Channels: food stores, convenience stores, fountain outlets, and vending. Different levels of bargaining power exist among groups of buyers:
Vending: concentrate producers sell products directly to consumers via vending machines where there is no buyer bargaining power. Fast food chains: have more power to negotiate the price, as they sell products of only one single manufacturer.

Supermarkets: the principal customer for soft drink makers, are highly fragmented industry. the stores count on soft drinks to generate consumer traffic, need Coke. due to tremendous degree of fragmentation (US-the biggest chain makes up 6% of food retail sales, and the largest chains controlled up to 25% of a region), these stores do not have much bargaining power. their only power is control over premium shelf space, which can be allocated to Coke or Pepsi products.

The Five Forces


Threat of Threat of New New Entrants Entrants

Bargaining Power of Suppliers

Bargaining Power of Buyers

Threat of Substitute Products

Threat of Substitutes
Keys to evaluate substitute products: Products with similar function limit the prices firms can charge Products with improving price/performance tradeoffs relative to present industry products Example: Electronic security systems in place of security guards Fax machines in place of overnight mail delivery

The threat of substitutes is reduced by the expansion of products portfolio:


CSD have many alternative beverages, such as bottled water, juice and tea, which are becoming more popular. Coke and Pepsi have responded, either by launching new non carbonated soft drinks, or by acquiring new brands.

The Five Forces


Threat of Threat of New New Entrants Entrants

Bargaining Power of Suppliers

Rivalry Among Competing Firms in Industry

Bargaining Power of Buyers

Threat of Substitute Products

Rivalry Among Existing Competitors


Intense rivalry often plays out in the following ways:
Jockeying for strategic position Using price competition Staging advertising battles Increasing consumer warranties or service Making new product introductions

Occurs when a firm is pressured or sees an opportunity


Price competition often leaves the entire industry worse off Advertising battles may increase total industry demand, but may be costly to smaller competitors

Rivalry Among Existing Competitors


Cutthroat competition is more likely to occur when: Numerous or equally balanced competitors Slow growth industry

High fixed costs High storage costs


Lack of differentiation or switching costs Capacity added in large increments Diverse competitors High strategic stakes

High exit barriers

The Five Forces are Unique to Your Industry


Five-Forces Analysis is a framework for analyzing a particular industry.
Yet, the five forces affect all the other businesses in that industry.