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Strategic Management

University of Lahore

Strategic Management
Project Report:
Coca Cola Pakistan
Submitted To: Miss Aqsa
Submitted By: Abdul Rafay MBA-
02093076
Raza Mehdi MBA-
02093117
Mohammad Kashif MBA-
02093072
Shahan Rafiq MBA-
0209385
Numan Ahmad MBA-
02093127
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Strategic Management
Rubina Waris MBA-
02093-099

Lahore Business School

Table of Contents
University of Lahore .....................................................................................1

Table of Contents....................................................................................................... 2

INTRODUCTION...........................................................................................................4

HISTORY OF COCA COLA............................................................................................6

Coke History in Pakistan.......................................................................................9

VISION STATEMENT..................................................................................................10

MISSION STATEMENT................................................................................................11

External Environment Audit......................................................................................12

Pestle Analysis.......................................................................................................12

Industry Analysis (Coca Cola):...............................................................................14

Competitive Analysis.............................................................................................19

Internal Environmental Audit....................................................................................22

Value Chain Analysis.............................................................................................22

Objectives (Strategic & Financial)............................................................................25

The Role Of Corporate Governance..........................................................................25

Proposed Strategy-Formulation Analytical Framework.............................................26


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Stage 1:.................................................................................................................... 26

EFE Matrix of Coca-Cola Company.........................................................................26

Competitive Profile Matrix of Coca-Cola................................................................28

IFE Matrix of Coca-Cola Company..........................................................................30

Stage 2:.................................................................................................................... 32

SWOT Analysis of Coca-Cola Company..................................................................32

Space Matrix..........................................................................................................35

Space Matrix Calculations..................................................................................36

BCG Matrix............................................................................................................ 37

IE Matrix................................................................................................................39

Grand Strategy Matrix of Coca-Cola......................................................................40

Stage 3:.................................................................................................................... 41

Quantitative Strategy Planning Matrix(QSPM) of Coca-Cola..................................41

Strategy Evalution (Corporate Controls)...................................................................43


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INTRODUCTION
Founded in 1886, the coca-cola company is the world’s leading manufacturer, marketer,
and distributor of nonalcoholic beverage concentrates and syrups. The company’s
corporate headquarters are in Atlanta, with local operations in over 200 countries
around the world.

Although Coca-Cola was first created in the United States, it quickly became popular
wherever it went. Our first international bottling plants opened in 1906 in Canada, Cuba
and Panama, soon followed by many more. Today, Coca-Cola has a portfolio of more
than 3,000 beverages. Coca-Cola has 92,400 employees worldwide. More than 70
percent of our income comes from outside the U.S., but the real reason we are a truly
global company is that our products meet the varied taste preferences of consumers
everywhere.

The scope of the project is to discuss the marketing strategies adopted and applied by
‘Coca Cola’, Pakistan. From the last month or so our group is in the process of a
continuous research on marketing functions and strategies adopted by ‘Coca Cola’.
These marketing functions mainly include the marketing mix i-e, Product Strategy,
Pricing Strategy, Pricing Tools and Strategies and Placement and Distribution
Strategies as well as other market strategies.

Moreover the project also discusses the analysis of competition, market growth
and trend, opportunity analysis and strategies for creating competitive advantage
adopted by ‘Coca Cola’.

We will like to add that the project will provide the readers and listeners very high
profile information about the marketing strategies as a whole and also about the Coca
Cola Company. In the end we hope that the project will result very profitable for the
readers and Coca Cola. Your feedback in the end either critical or substantial will be
very highly appreciated.
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Strategic Management

Type Soft Drink (Cola)


Manufacturer The Coca- Cola Company
Founder(s) John S. Pemberton
Country of Origin United States
Introduced 1886
Area served Over 200 countries
Color Caramel E-150d
Flavors Cola, Cola Green Tea, Cola Lemon, Cola
Lemon Lime, Cola Lime, Cola Orange and
Cola Raspberry.
Related Products Pepsi, Irn Bru, RC Cola, Cola Turka, Zam
Zam Cola, Mecca Cola, Virgin Cola, Parsi
Cola, Qibla Cola, Evoca Cola, Corsica
Cola, Breizh Cola, Afri Cola
Employees 92,400
Servings per Day 1.6 Billion
Website www.coca-cola.com
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HISTORY OF COCA COLA

Coca-Cola was first introduced by John Syth Pemberton, a


pharmacist, in the year 1886 in Atlanta, Georgia when he
concocted caramel-colored syrup in a three-legged brass
kettle in his backyard. He first “distributed” the product
by carrying it in a jug down the street to Jacob’s
Pharmacy and customers bought the drink for five cents
at the soda fountain. Carbonated water was teamed with
the new syrup, whether by accident or otherwise, producing a drink that was
proclaimed “delicious and refreshing”, a theme that continues to echo today
wherever Coca-Cola is enjoyed.

Dr. Pemberton’s partner and book-keeper, Frank M. Robinson,


suggested the name and penned “Coca-Cola” in the unique flowing script
that is famous worldwide even today. He suggested that “the two Cs would
look well in advertising.” The first newspaper ad for Coca-Cola soon
appeared in The Atlanta Journal, inviting thirsty citizens to try “the new and
popular soda fountain drink.” Hand-painted oil cloth signs reading “Coca-
Cola” appeared on store awnings, with the suggestions “Drink” added to
inform passersby that the new beverage was for soda fountain refreshment.

By the year 1886, sales of Coca-Cola averaged nine drinks per day.
Pemberton grossed $50 and spent $73.96 on advertising. Dr. Pemberton
never realized the potential of the beverage he created. He gradually sold
portions of his business to various partners and, just prior to his death in
1888, sold his remaining interest in Coca-Cola to Asa G. Candler, an
entrepreneur from Atlanta. By the year 1891, Mr. Candler proceeded to buy
additional rights and acquire complete ownership and control of the Coca-
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Strategic Management
Cola business. Within four years, his merchandising flair had helped expand
consumption of Coca-Cola to every state and territory after which he
liquidated

his pharmaceutical business and focused his full attention on the soft drink.
With his brother, John S. Candler, John Pemberton’s
former partner Frank Robinson and two other
associates, Mr. Candler formed a Georgia
corporation named the Coca-Cola Company. The
trademark “Coca-Cola,” used in the marketplace
since 1886, was registered in the United States
Patent Office on January 31, 1893.

The business continued to grow, and in 1894,


the first syrup manufacturing plant outside Atlanta was opened in Dallas,
Texas. Others were opened in Chicago, Illinois, and Los Angeles, California,
the following year. In 1895, three years after The Coca-Cola Company’s
incorporation, Mr. Asa G. Candler announced in his annual report to share
owners that “Coca-Cola is now drunk in every state and territory in the
United States.”

As demand for Coca-Cola increased, the Company quickly outgrew its


facilities. A new building erected in 1898 was the first headquarters building
devoted exclusively to the production of syrup and the management of the
business. In the year 1919, the Coca-Cola Company was sold to a group of
investors for $25 million. Robert W. Woodruff became the President of the
Company in the year 1923 and his more than sixty years of leadership took
the business to unsurpassed heights of commercial success, making Coca-
Cola one of the most recognized and valued brands around the world.
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COKE HISTORY IN PAKISTAN


“To provide Coca-Cola at arms ‘length”

The Coca-Cola Company began operating in Pakistan in 1953. Coke,


Fanta and Sprite are the brands with whom Coca-Cola is operating in
Pakistan. The Coca-Cola System in Pakistan operates through eight bottlers,
four of which are majority-owned by Coca-Cola Beverages Pakistan Limited
(CCBPL). The CCBPL plants are in Karachi, Hyderabad, Sialkot, Gujranwala,
Faisalabad, Rahim Yar Khan, Multan and Lahore. The Coca-Cola System in
Pakistan serves 70,000 customers/retail outlets. The Coca-Cola System in
Pakistan has nearly 3,000 people working constantly for the company.
During the last two years, The Coca-Cola Company in Pakistan has invested
over $130 million (U.S) and coke has successfully provided 56 years of
dedicated service to its customers in Pakistan. Since
the beginning of Coke Company the firm has been
continuously changing its slogans and that’s a very
creative idea to get the attention of the customers.

. Here we would like to include some of the


popular slogans of coke since the coke journey started.

 1886 Drink Coca-Cola


 1908 Get the genuine
 1923 Enjoy thirst
 1934 When it's hard to get started, start with a
Coca-Cola
 1942 The only thing like Coca-Cola is Coca-Cola
itself
 1956 The friendliest drink on earth
 1963 Things go better with Coke
 1993 Always. Coca-Cola
 2001 Life is Good
 2003 Jo Chaho Ho Jaye Coca Cola Enjoy
 2004 Flight Of Delight
 2005 Galay Delicious Taste
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 2006 Thanda matlab coca cola
 2007 khaly pily jila coca cola
 2008 Aja jashan mena ly

TODAY
Today CCBPL is operated directly under the supervision of the Coca-
Cola International based in Atlanta Georgia State___ USA .It owns 8 plants all
around in Pakistan. Coca Cola Company offers the brand range as Coca Cola,
Diet Coke, Fanta, Sprite and Kinley water in Pakistan.

VISION STATEMENT

Our vision guides every aspect of our business by describing what we need
to accomplish in order to continue achieving sustainable growth.

 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.
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 Planet: Be a responsible citizen that makes a difference by helping
build and support sustainable communities.

 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 STATEMENT
Mission statement is a statement of organization’s purposes that what it
wants to accomplish. In order to achieve mission of increasing market share
and maintaining good relations with our customers all over the world, we
wish to create value for all the constraints we serve, including our
consumers, our bottlers, and our communities. The Coca Cola Company
creates value by executing business strategy guided by four key beliefs:

 Customer is king; Customer demand drives everything we


do.
 Brand Coca Cola is the core of our business.
 We will serve consumers a broad selection of the
nonalcoholic ready-to-drink beverages they want to drink
throughout the day.
 We will be the best marketers in the world.

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.
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External Environment Audit
Pestle Analysis
• POLITICAL FACTORS
The political environment of Pakistan affects the coca-cola beverages and
Coca-Cola Export Corporation, to some extent. For instance, the political
instability in Pakistan causes trade and import policies to change rapidly as
the government changes which causes many problems in the import of raw
materials. Trade barriers such as tariffs and duties on the import of syrup
(concentrate) from USA increases the operational cost. A relaxation has
been given by the current government. So the situation for the beverage
industry is getting better day by day for the last couple of years. Also the
policies have been more or less constant and also the emaciation of free
trade zones by the government will help the Coca-cola to flourish more
effectively in Pakistan.

• ECONOMIC FACTORS
The economic condition of Pakistan has not been stable for a long time but
The recent economic indicators suggest that the economy is growing and
macroeconomic issues are getting sold but at the same time there has not
any marked increase in the consumer buying power (inflation). When the
recession occurs the price of bottles are dropped down to increase the
sales and to achieve the targets of the company. So overall economy of
Pakistan directly affects the cost and price of the Coca-Cola Company.

On the contrary in the all parts of the country coke is viewed as the partner
in the major events like Basant and promoter of music thereby making a
place in the hearts of young generation of the society.

• Social environment
In 2000, when eastern Pakistan suffered its worst droughts, The Coca-Cola
system initiated a famine-relief program to help victims and was the first
private-sector company to assist. The Coca-Cola system in Pakistan initiated
a voluntary Hajj program that allows one employee from each plant, selected
through a draw, to be sent on the Holy Pilgrimage to Mecca at the
Company’s expense.
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• TECHNOLOGICAL FACTORS
The making of Coke, Fanta, Diet coke and sprite involves "mixing and
blending, filling and capping ". For this process, concentrate or syrup is
imported from USA and is then mixed in the local plants .Machinery for the
local plants was also imported but now the coca-cola company
follows Local content law as most of the spare parts are locally made. The
system is automated and equipment is fully operational and up-to-
dated. In technology Coca-cola company is far ahead than the several other
local beverage brands of Pakistan. It is a Highly Technical 10 Steps Process.
Which are all done in the local plants using local content law.

• Legal factors
Changes in laws and regulations, including changes in accounting standards,
taxation requirements, (including tax rate changes, new tax laws and revised
tax law interpretations) and environmental laws in domestic or foreign
jurisdictions.

• Environmental Factor
We have always sought to be sensitive to the environment, we must use our
significant resources and capabilities to provide active leadership on
environmental issues, particularly those relevant to our business. We want
the world we share to be clean and beautiful. We are always innovating to
bring you different delicious beverages. This same spirit of innovation comes
alive in our environment programs. We’re committed to preserving our
environment, from use of more than $ 2 billion (U.S) a year in recycling
content and suppliers, and environment

Management initiatives, are down to very local neighborhood collection and


beautification efforts. Here’s a sample of what we’re doing in different
communities around the world regarding the conservation of water and
natural resources, climate changes, waste environment education.
The Coca-Cola system in Pakistan operates through eight bottlers. Four of
which are majority-owned by Coca-Cola Beverages Pakistan Limited (CCBPL).
Demographic environment.
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• Demographic environment
Demographic environment of any country is having a great influence on the
purchasing pattern of consumers. It involves age, gender, race, occupation,
location and density of population. It varies from country to country. Coke in
Pakistan is focusing on the demographic variables of its customers in order
to create a positive image in their minds and position their brand also. For
example coke is having its focus on the mobile generation who are born in
1980’s.

• Global Environment:
A large part or our relationship with the world around us is our relationship
with the physical world. While we have always sought to be sensitive to the
environment, we must use our significant resources and capabilities to
provide active leadership on environmental issues, particularly those
relevant to our business. We want the world we share to be clean and
beautiful. We are always innovating to bring you different delicious
beverages. This same spirit of innovation comes alive in our environment
programs. We’re committed to preserving our environment, from use of
more than $ 2 billion (U.S) a year in recycling content and suppliers, and
environment.

Industry Analysis (Coca Cola):


Five forces model is a framework for the industry analysis and development
of business strategy. Three (3) of Porter’s five (5) forces refers to rivalry from
external/outside sources such as micro environment, macro environment
and rest are internal threats. It draws ahead Industrial Organization
economics to develop five forces that conclude the competitive intensity and
consequently attractiveness of a market place or industry. Attractiveness in
this framework refers to the generally overall industry profitability. An
"unattractiveness" in industry is one in which the mixture of these five forces
proceed to constrain behind overall profitability. An extremely unattractive
industry would be one moving toward "pure competition", in which existing
profits for all companies are moving down to zero.

1. The threat of the entry of new competitors


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• Advertising and Marketing
Soft drink industry needs huge amount of money to spend on advertisement
and marketing. In 2000, Pepsi, Coke and their bottler’s invested
approximately $2.58 billion. In 2000, the average advertisement expenditure
per point of market share was $8.3 million. This makes it exceptionally hard
for a new competitor to struggle with the current market and expand
visibility.

• Customer Loyalty/ Brand Image


Pepsi and Coke have been investing huge amount on advertisement and
marketing throughout their existence. This has resulted in higher brand
equity and strong loyal customers’ base all over the globe. Therefore, it
becomes nearly unfeasible for a new comer to counterpart this level in soft
drink industry.

• Retail Distribution
This industry provides significant margins to retailers. For example, some
retailers get 15-20% while others enjoy 20-30% margins. These margins are
reasonably enough for retailers to entertain the existing players. This makes
it very difficult for new players to persuade retailers to carry their new
products or substitute products for Coke and Pepsi.

• Fear of Retaliation
It is very difficult to enter into a market place where already well-established
players are present such as Coke and Pepsi in this industry. So these players
will not allow any new entrants to easily enter the market. They will give
tough time to new entrants which could result into price wars, new product
line, etc in order to influences the new comers.

• Bottling Network
In this industry manufacturers have franchise contracts with their presented
bottler’s that have privileges in a definite geographic area in eternity such as
both Pepsi and Coke have contracts with their presented bottler’s. These
contracts forbid bottler’s from taking on new competing brands for similar
products. Latest consolidation between the bottler’s and the backward
integration with Coke buying considerable numbers of bottling firms, it
makes very difficult for new player to contract with bottler’s agreeable to
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distribute their brands. The alternative is that new entrances build their
bottling plants, which will need intense capital and exertion. Because in 2000
new bottling plant needs capital of $80 million.
2. Rivalry among the competitors
The industry is almost dominated by the Coke and Pepsi. This industry is well
known as a Duopoly with Coke and Pepsi as the companies competing. These
both players have the majority of the market share and rest of the players
have very low market share. Otherwise; competition is comparatively low to
result any turmoil of industry structure. Coke and Pepsi primarily are
competing on advertising and differentiation rather than on pricing. This
resulted in higher profits and disallowed a decline in profits. Pricing war is
nevertheless experienced in their global expansion strategies.

• Composition of Competitors
Except the Coke and Pepsi other competitors are of unequal size especially
in local markets. Coke and Pepsi both players have the majority of the
market share and rest of the players have very low market share.

• Scope of Competition
Scope of competition in this industry is generally global; Coke and Pepsi are
approximately presents in 200 countries.

• Market Growth Rate


The soft drinks business will not see growth in near future, with the smoothie
and bottled water sectors mainly hit by a decline in 2008, and across all
sectors volume declined by 1.1 percent.

• Fixed Storage Cost


This industry needs huge manufacturing plants and contracts with bottling
network companies. These contracts make sure that bottler’s must have
standard manufacturing plant; these plants need huge capital and exertion.

• Degree of differentiation
Marketing and Product differentiation have become more significant. Coke
and Pepsi mainly are competing on advertising and differentiation rather
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than on pricing. Coke has diverse advertisement campaigns according to
conditions. Coca-Cola is recognized as the best-known brand name in the
globe. More prominently, its consumers would not do without it, and have
established a loyalty.

• Strategic Stake
Coke’s core operation is the manufacturing and distribution both for itself
and beneath franchise, of non-alcoholic beverages and related products.
Because of the strategic stake the main brand of the Coke has been around
for a lot of years.

3. The threat of substitute products


This industry is enriched with enormous statistics of substitutes such as:
water, tea, beer, juices, coffee, etc presented to the end-consumers. But all
the suppliers of these substitutes need massive advertising, brand equity,
brand loyalty and making sure that their brands are effortlessly accessible to
the consumers. Most of the substitutes cannot counterpart the existing
players’ offers or diversify business by offering new product lines of the
substitute products to safeguard themselves from rivalry.

• Aggressiveness of substitute products in


promotion
Soft drink industry companies spend huge amount of money on
advertisement and marketing to differentiate their products from others and
also create brand equity, base of loyal customers and increase visibility.

• Switching Cost
Switching cost of the substitute products is very low so consumers can easily
shift towards the substitute products.

• Perceived price/ value


Perceived price/value in this industry is very low because all products are
comparatively same and are only differentiated by promotional activities.
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4. The bargaining power of Customers (Buyers)


The most important buyers for the Soft Drink industry are fast food fountain,
vending, convenience stores, food stores, restaurants, college canteens and
others in the categorize of market share. The profitability/revenue in each of
these segments obviously demonstrates the bargaining power of the buyers
to pay different prices.

• Fast Food Fountain


Pepsi and Coke mainly regard this segment as “Paid Sampling” due to small
margins. This division of buyer’s is the slightest profitable because of the
high bargaining power of the buyers. The bargaining power of the buyers is
high because they purchase in bulks.

• Vending Machines
Vending Machines provide products to the customers in a straight line with
enormously no power with the buyer.

• Convenience Stores
This segment is tremendously fragmented and has no bargaining power due
to which it has to pay superior prices.

• Food Stores
This segment of buyers’ is fairly merged with few local supermarkets and
numerous chain stores. Since this segment presents best shelf space it
demands lower prices.

5. The bargaining power of Suppliers


Most of the raw materials desirable to manufacture soft drink are basic
merchandise such as flavor, color, caffeine, sugar, and packaging etc. The
suppliers of these commodities have no bargaining power over the pricing
due to which the suppliers in soft drink industry are relatively weak.

• Number of important Suppliers


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Raw materials for soft drink are basic commodities which are easily available
to every producer and have low cost which makes no difference for any
supplier.

• Switching cost
All the raw material ingredients are basic merchandize and easily accessible to
manufacturers. Switching cost to the suppliers is very low; manufactures can easily shift
towards the other suppliers.

• Availability of substitutes
Soft drink products have standard raw material ingredients which could not
have any alternatives or used instead of the actual ingredients.

• Threat of forward integration


Threat of forward integration is very low in this industry because
manufacturers of the soft drinks need huge manufacturing plants, bottling
network, strong distribution network and best shelf space. Suppliers could
not afford such kind of well-established network.

• Importance of buyer industry to suppliers


Soft drink industry is very important to the suppliers because buyers
purchase larger amount of raw material. This encourages suppliers to remain
in good contact with buyers.

• Suppliers’ product an important input to the


buyer’s
Product of the suppliers is very important input for the manufacturers in this
industry because these products do not have any substitute.

Competitive Analysis

COMPETITORS
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Coke’s major competitor is “PEPSI” and there is no hesitation to say
this because every one knows that and all the other cold drinks and
water, coffee, tea is the competitors.

MAJOR COMPETITORS

Consumers firstly decide that they are going to have a soft drink.
Then they compete brands with each other. Like they compete Coke with
Pepsi and Sprite with 7up and team. So the major competitor of Coke is
Pepsi.

When they motivate to any other brand or on Coke it’s in instinct


basically that based on messages derive certain feelings.

But Coca Cola thinks in a different way, they believe that RC Cola,
new coming Beverages, and all juices, even they take water and tea as
their competitors.

MAJOR COMPETITOR
PEPSI INTERNATIONAL

HISTORY
PepsiCo is a world leader in convenient foods and beverages, with
revenues of about $27 billion and over 143,000 employees. The company
consists of the snack businesses of Frito-Lay North America and Frito-Lay
International; the beverage businesses of Pepsi-Cola North America,
Gatorade/Tropicana North America and PepsiCo Beverages International; and
Quaker Foods North America, manufacturer and marketer of ready-to-eat
cereals and other food products. PepsiCo brands are available in nearly 200
countries and territories.

Many of PepsiCo's brand names are over 100-years-old, but the corporation
is relatively young. PepsiCo was founded in 1965 through the merger of
Pepsi-Cola and Frito-Lay. Tropicana was acquired in 1998 and PepsiCo
merged with The Quaker Oats Company, including Gatorade, in 2001.would
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entertain the listener with the latest musical selections rendered by violin or
piano or both. The new name, “Pepsi Cola”, is derived from the two of the
principle ingredients, Pepsin and Kola Nuts. It was first used on the August
28. At that time, Braham’s advertising praises his drink as “Exhilarating,
invigorating, aids digestion”.

1990-2010
The advertisement of the Pepsi changes to, “You got the right one
baby, Uh-Huh!” With the extensive usage of the stars in the ads, the
popularity of Pepsi increase. In 1992 Pepsi-Cola formed a partnership with
Thomas J. Lipton Co. Today Lipton is the biggest selling ready-to-drink tea
brand in the United States. Outside the United States, Pepsi-Cola Company's
soft drink operations include the business of Seven-Up International. Pepsi-
Cola beverages are available in more than 190 countries and territories.

PEPSI’S PRODUCTS

• Pepsi

• Teem

• Miranda

• Pepsi Max

• Pepsi Lemon

• Pepsi Blue

• Mountain Dew

• 7up
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Internal Environmental Audit


Value Chain Analysis
A value chain is a model used to disaggregate a firm into its strategically
relevant value generating activities, in order to evaluate each activity's
contribution to the firm's performance (Terms V 2006). Through the analysis
of this model we can gain insight as to how a firm creates their competitive
advantage and shareholder value.

The value chain of the nonalcoholic beverage industry contains five main
activities. These include inbound logistics (suppliers), operations, outbound
logistics (buyers/ customers), marketing and sales, and service.

Inbound Logistics (Suppliers)

Some of Coca Cola most notable suppliers include Spherion, Jones Lang
LaSalle, IBM, Ogilvy and Mather, IMI Cornelius, and Prudential. These
companies provide Coca Cola with materials such as ingredients, packaging
and machinery. In order to ensure that these materials are in satisfactory
condition, Coca-cola has put certain standards in place which these suppliers
must adhere to (The Supplier Guiding Principles). These include: 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 (Coca Cola 2006).
From time to time, Coca-Cola uses third parties to assess their suppliers by
having interviews with employers and contract workers. If a supplier has
issues about the supplier guiding principles, they are usually given a certain
amount of time to take corrective measures; if not, Coca-Cola has the right
to terminate their contract with these suppliers.
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Operations
Coca Cola core operations consist of Company-owned concentrate and syrup
production (Coca Cola 2006). According to their website, some of the main
environmental impacts of their business occur further along the value chain
through system's bottling operations, distribution networks, and sales and
marketing activities (Coca Cola 2006). Management of these operations
across the business value chain tends to be more challenging outside of the
core operations. According to Coca Cola, they continue to address this by
working with their partners to reduce the effects at every level of the
manufacturing process by enlarging their comprehension of the complete
environmental impact of their business through the entire lifecycle of their
products from ingredient procurement to production, delivery, sales and
marketing, and post-consumer recycling (Coca Cola 2006).
Please see Appendix for additional information.

Outbound Logistics (Buyers/ Customers)

The activities required to get finished products to customers include


warehousing, order fulfillment, transportation, and distribution management.
Coca Cola has the world largest distribution system. They own, lease, and
operate in over 800 plants around the world (Coca Cola 2006). The 2,400
beverage products which they market reach consumers in more than 200
different geographic locations (Coca Cola 2006). Grocery stores such as
Sobeys, fast food restaurants such as McDonalds (fountain sodas), and
vending machines are just a few of the distribution units used to ultimately
reach consumers.
Coca Cola has over 300 bottling partners which range from publicly traded
businesses to small family owned operations (Coca Cola 2006). They have
implemented the Coca Cola Systems in which they work cohesively with their
partners in order to develop strategies aimed to meet the needs of all their
customers.
Examples of their commitment to these strategies are seen in their plant in
Indonesia, where boats are used to transport the products between hundreds
of islands throughout the Amazon. This is often because waterways are often
the main way to access these remote islands. In some of the higher
elevations of in the Andes, Coca Cola products are sometimes transported by
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four-legged power. Across much of Africa, bottlers deliver to thousands of
family-run kiosks and home-based stores.

Marketing and Sales

Out of approximately 2,400 products, Coca Cola markets four of the worlds
top sales drink brands. Although the industry is relatively small and they only
directly compete with two companies, creativity is a vital marketing strategy
to Coca Cola.
Coca Cola ultimate goal is to deepen their brands connection with
consumers. As a result, they have to constantly reinvent their product (Coca
Cola 2006). The marketing strategy they use is directly linked to the
consumer; from advertising, to point of sale, to ultimately opening and
consuming a Coca Cola beverage. Techniques which they have used to
achieve this include developing new products and brands, changing the
design of their packaging, and designing various new advertising campaigns
(Coca Cola 2006).
On October 19th, Coca Cola reported their earnings for the third quarter.
Earnings per share are up which results in higher benefits for shareholders.
According to Neville Is dell, CEO of Coca Cola, they have experienced a
growth in sales of five percent compared to the same quarter last year. This
is as a result of balancing performance across their global markets and their
product portfolio (Coca Cola 2006).

Service
Activities that maintain and enhance a product value include customer
support, repair services, installation and training.
Coca Cola customers range from large international retailers and restaurants
to smaller independent businesses and vendors. As a result, they provide
services tailored to meet their customer’s needs.
Coca Cola also supports their customers by providing them with the training
necessary to help their businesses become more effective and profitable.
They have established Customer Development and Training Centers which
are available to more
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Objectives (Strategic & Financial)


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 quality beverage brands that anticipate
and satisfy people's desires and needs.

· Partners: Nurturing a winning network of customers and suppliers, together we create


mutual, enduring value.

· Planet: Being a responsible citizen that makes a difference by helping build and
support sustainable communities.

· Profit: Maximizing long-term return to shareowners while being mindful of our overall
responsibilities.
Coca-Cola's financial objectives are to make money.

The Role Of Corporate Governance


The Coca-Cola Company is committed to sound principles of corporate
governance.
The Board is elected by the shareowners to oversee their interest in the long-
term health and the overall success of the business and its financial
strength. The Board serves as the ultimate decision making body of the
Company, except for those matters reserved to or shared with the
shareowners. The Board selects and oversees the members of senior
management, who are charged by the Board with conducting the business of
the Company.
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The Corporate Governance Guidelines, along with the Charters of the each of
the Board Committees and the key practices of the Board provide the
framework for corporate governance at The Coca-Cola Company. The
Corporate Governance Guidelines and the Charters of each of the Board
Committees can be accessed by clicking on the links below the image.

Corporate Responsibility
Corporate responsibility is managed through the Public Policy and Corporate
Reputation Council, a cross-functional group of senior managers from our Company
and bottling partners. The Council identifies risks and opportunities faced by our
business and communities and recommends strategies to address these challenges.

Proposed Strategy-Formulation Analytical


Framework

Stage 1:

EFE Matrix of Coca-Cola Company


External Factor Evaluation (EFE) matrix is a strategic-management device
which is frequently used for evaluation of current business environment. The
EFE matrix is a superior instrument to prioritize and visualize the
opportunities and threats that a company is facing. An external factor in the
EFE Matrix comes from social, political, legal, economic and other external
forces. An example of external factor evaluation (EFE) matrix is given for the
Coca-Cola Company.

Steps in the Construction of EFE Matrix


In the first column, lists down all the opportunities and threats. EFE matrix
should include 10 to 20 key external factors.
In the second column assign weights to each factor that ranges from 0.0
(not important) to 1 (most important). The total weights must sum to 1.00 (It
should be noted that the importance of weights depend upon the probable
impact of factors on the strategic position of the company).
In the column three, rate each factor (ranging from 1 to 4) on the basis of
company’s response to that factor. (Here, 1 shows poor response, 2 shows
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average response, 3 shows above average response and 4 shows superior
response).
In the column four, calculate the weighted score by multiplying the each
factor’s weight by its rating.
Find the total weighted score by adding the weighted score for each variable.

External Factor Evaluation Matrix of Coca-Cola Company

By adding the weighted score of various opportunities and threats of Coca-


Cola Company, we get the total weighted score of 3.05. Here it should be
noted that the highest possible total weighted score of a firm is 4 whereas
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the lowest possible total weighted score is 1. The total weighted score
remains in the limit of 1 to 4 regardless of the total number of opportunities
and threats. Similarly, the average total weighted score is 2.5. If the total
weighted score of a company is 4, it means that the company is effectively
taking advantage of existing opportunities and is also able to minimize the
risk. On the other hand, the total weighted score of 1 show that firm is not
able to take advantage of current opportunities or avoid external threats.
In the case of Coca-Cola Company, the total weighted score is above
average, which means that the Coca-Cola Company strategies are effective
and the company is taking advantage of existing opportunities along with
minimizing the potential adverse effects of external threats.

Competitive Profile Matrix of Coca-Cola


A competitive profile matrix (CPM) categorizes a firm’s main rivals and its
particular strengths and weaknesses in relation to a design firm’s strategic
position. In Competitive Profile Matrix an organization assess itself as well its
rivals by giving rating and weights to the critical/key success factors. It then
recognizes its strategic competitive place with its major rivals. A firm which
obtains superior weighted points would have the strong competitive place
than its rivals. The construction of competitive profile matrix for the Coca-
Coal company is given below:

Steps in the construction of CPM


Here we will be using weighted rating system for the construction of
competitive profile matrix. Some of the important steps involved in the
construction of competitive profile matrix are given below:
In the first column, lists down all the key success factors of Industry
(usually from 6 to 10).
In the second column, assign weights to each factor ranging from 0.0 (not
important to 1 (most important). Greater weights should be given to those
factors which have grater influence on the organizational performance. The
sum of all weights must equal 1.

Now rate each factor ranging from 1 to 4 for all the firms in analysis. Here,
rating 1 represents major weakness, rating 2 shows minor weakness.
Similarly, rating 3 indicates minor strength whereas rating 4 shows major
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strength. It means that weakness must receive 1 or 2 rating while strength
must get 3 or 4 rating.
Calculate weighted score by multiplying each factor’s score by its rating.
Find the total weighted score of all the firms by adding the weighted scores
for each variable.

Competitive Profile Matrix for the Coca-Coal


Company
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The competitiveness of a company can be assessed on the basis of its


general strength rating. If the dissimilarity among firm’s overall rating and
the points of lower-rated rivals is greater then the firm has greater net
competitive advantage. Alternatively, if the dissimilarity among a firm’s
overall rating and the points of higher-rated rivals is larger then the company
has net competitive disadvantage. In the above example, CPM Matrix
demonstrates that Coca-Cola is the market leader and dominates its rivals
with highest points of 3.74. Pepsi is the runner up with 3.42 points and
Cadbury Schweppes is the weakest rival among these three with the score of
2.80. This Matrix also shows that Coca-Cola is strong in all the aspects of
rivalry and has strong position in the market place.

IFE Matrix of Coca-Cola Company


Internal Factor Evaluation (IFE) matrix is a strategic management instrument
for assessing main strengths and weaknesses in useful areas of a company.
IFE matrix also gives a foundation for recognizing and assessing associations
among those parts. The IFE matrix is utilized in strategy formulation. An
example of internal factor evaluation matrix is given for the Coca-Cola
Company.

Steps in the Construction of IFE Matrix


In the first column, lists down all the strengths and weaknesses. IFE matrix
should include 10 to 20 key internal factors.
In the second column, assign weights to each factor ranging from 0.0 (not
important to 1 (most important). Greater weights should be given to those
internal factors which have grater influence on the organizational
performance.
The sum of all weights must equal 1.
In the third column, rate each factor ranging from 1 to 4. Here, rating 1
represents major weakness, rating 2 shows minor weakness. Similarly, rating
3 indicates minor strength whereas rating 4 shows major strength. It means
that weakness must receive 1 or 2 rating while strength must get 3 or 4
rating.
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In the fourth column, calculate weighted score by multiplying each
factor’s score by its rating.
Find the total weighted score by adding the weighted scores for each
variable.

IFE Matrix of Coca-Cola Company


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The total weighted score ranges from 1 to 4 (where 1 is low, 4 is high and
2.5 is average) regardless of the total number of internal factors used in the
analysis. If the total weighted score is less than 2.5 it indicates that the
organization is weak internally. On the other hand, the scores above 2.5
show strong internal position. An internal factor could be included twice in
the IFE Matrix if the factor is both strength and weakness. In case of Coca-
Cola Company the total weighted score is above than average, it means that
the company is strong internally.

Stage 2:

SWOT Analysis of Coca-Cola Company


Coca-Cola is the world’s largest soft-drink company which manufactures and
markets non-alcoholic beverage concentrates and syrups. Besides the well
known Coca-Cola and Coke brands the company offers more than 500 brands
in over 200 countries or territories and serves 1.6 billion servings each day. It
is headquartered in Atlanta, Georgia.
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Strengths
1. Coca-Cola is the world’s most valuable brand and has strong brand
loyalty.
2. Wide variety of Coca-Cola products is sold in the restaurants, stores
and vending machines over 200 countries.
3. Coke is the dominant market leader of the global soft-drink industry
right through the 20th century.
4. Coke primarily competes on advertising and differentiation and has the
high market share.
5. Coca-Cola has enormous distribution and production facilities of non-
alcoholic beverages and related products.
6. Joint venture with Nestle has resulted in the formation of Beverage
Partners Worldwide (BPW).
7. The company has strong financial position and profits throughout the
history. Its average ROE (return on equity) for the past five years is
37.08% whereas its ROC (return on capital) is 33.6%.
8. Coca-Cola has the heavy advertising and promoting activities.
9. More than 70 percent of revenue comes from outside the United
States.
10. Enormous number of loyal customer’s and brand equity all over
the world.

Weaknesses
1. New coke formula leading to a backlash which results in bad image of
coke.
2. The company is facing high burden of external debts for the last few
years. In 2002, long-term debt of the company was 2700 million
dollars.
3. Product offering is restricted to beverages.
4. In November 2009, because of a dispute over wholesale prices of Coca-
Cola goods, Costco blocked the replenishment of their shelves with
Diet Coke and coke.
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5. Coca-Cola has discontinued its many products after few years of
launching such as New Coke, Coca-Cola with Lemon, Coca-Cola with
Lime, Coca-Cola Blak, etc. which result in bad image of the brand.
6. Coke has taken less aggressive market standing in today’s changing
economic surroundings.
Opportunities

1. Bottled water drinking has increased 11 percent.


2. Consumers prefer to drink new smaller beverage products that are not sold on a
mass scale.
3. One of the biggest opportunities is to diversify into the non-carbonated drinks
such as coffee, water, juices, etc.
4. The company can offer the hygienic products due to increasing number of health
conscious consumers.
5. European market and China show marvelous potential for growth.
6. The economic conditions are improving globally after economic meltdown 2007-
10.
7. Diversify into complementary food products which will ultimately increase the
drink consumption.
8. Coca cola should increase its partnership with fast food chains.

Threats
1. There is Low growth rate in the carbonated drinks market in North
America which is the main market of Coca-Cola.
2. There is a problem with Coke to raise its prices by an edge that would
permit it to keep pace with inflation.
3. Huge numbers of substitutes such as beer, water, juices, coffee etc are
accessible to the end consumers.
4. Pepsi is the strong competitor which competes with advertising and
differentiation.
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5. Since the consumer lifestyle is changing rapidly and they are becoming
more health conscious therefore there demand is shifting towards non-
carbonated products such as juices, tea and bottled drinks.
6. Many smaller players are furious competitors which are also creating
the competition severe.
7. The prices of raw material such as sugar and metals used in
manufacturing of cans are increasing rapidly.
8. Carbonated drink revenues have been decreasing due to association of
sugar to obesity and lofty fructose lump syrup to heart disease.
9. Pepsi has more diversified selling beverage and food products as
compared to the Coca Cola.
10. Coca Cola is facing various regulations in respective countries
around the globe.

Space Matrix
The Strategic Position and Action Evaluation Matrix commonly (SPACE
Matrix) is one of the important tools to assess the company and its
environment. It has four quadrants and each quadrant indicates which
strategy a firm should adopt i.e. competitive, aggressive, conservative, or
defensive in a current position. X axis of the SPACE Matrix contain internal
dimensions (Competitive Advantage (CA) and Financial Strengths (FS)) and
Y-axis contain external dimensions (Industry Strengths (IS) and
Environmental Stability (ES)). These four dimensions are the most important
determinants of a firm’s overall strategic position. Each dimension holds
many factors from EFE, IFE, and SWOT Analysis etc.
How to Construct Space Matrix?

Following are some of the important steps involved in the construction of


Space Matrix.
1. Choose a set of variables to define industry strength (IS),
Environmental stability (ES), Competitive advantage (CA), and financial
strength (FS).
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2. Assign numerical values to all the variables of FS and IS ranging from
+1(worst) to +6 (best).
3. Assign numerical values to all the variables of ES and CA ranging from
-1(best) to -6 (worst).
4. Calculate the scores for CA, ES, FS, and IS.
5. Plot the average for CA, ES, FS, and IS on the appropriate axis.
6. Now add the two scores on the Y-axis and plot the resultant point on Y.
Similarly add the two scores on the x axis and plot the resultant point
on X and Plot the intersection of the new XY point.
7. Sketch a directional vector from the origin of the SPACE Matrix through
the new intersection point. The vector shows the type of strategies
recommended for the organization: competitive, conservative
defensive, and aggressive.

SPACE Matrix of Coca – Cola Company

Space Matrix Calculations


ES Average Score = -1.83 + Average FS Score (+5.00) = +3.17
Average CA Score = -1.50 + Average IS Score (+5.00) = +3.50
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according to the graph above, we noticed that the Coca-Cola Company falls
into the aggressive quadrant of the SPACE matrix. It is located at the
coordinates of +3.50 for x-component and a y-component of 3.17. It shows
that the company has an admirable position to use its IS in order to take
advantage of external opportunities, overcome weaknesses, and avoid
threats. So, in this position Coca-Cola Company has set of possible strategies
such as market development, product development, market penetration,
forward integration, backward integration, horizontal integration, horizontal
diversification, concentric diversification and conglomerate diversification
depending on detailed conditions that face the company.

BCG Matrix
In the BCG approach, a company classifies all its Bus according to the
growth share matrix.
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Coke is one of the main product lines of the Coca Cola Company. It is
the one which is giving maximum revenues to it by different products in this
line. Here we have classified some of its major products in the BCG matrix on
the basis of their fame and liking of the people.

STAR
Coke Classic is the basic product through which the Coca Cola
Company got the fame. It is one product, which gives the maximum revenue
from all over the world. It is one flavor, which has the maximum consumers
all over the world. Coke has already worked a lot on it by launching new
flavors in it, but still it is a product they can turn as famous as coke Classic.

CASH COWS
Fanta and Sprite are the products, which the Coca Cola Company can
never think of stop producing. It is the one which make the coke company a
huge success; it was one product which gives billions of dollars as revenue
from world over. Whenever the company thinks of launching its product in a
country the first product they launch is coke classic as they know that if
don’t work here then nothing else can.

QUESTION MARK
Products that are still not a big hit as they haven’t consumed much
time yet. Sprite 3G, Sprite Zero, Diet Coke and Kinley are the examples of
these question marks as the question marks as they have not taken much
time yet to get a hold of market & not even the large percentage of the
people have tasted it. So it needs time to be fully tested by the company &
the company needs to think whether it should continue the production or
should divert to something new.
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Strategic Management
DOGS
A product that has not worked good or a product which has been a
source of loss. flavored Fanta is one product that was not a big hit. Even it’s
not a long period which flavored Fanta has consumed but still there are signs
that it won’t be a success. So it’s better for the company to get rid of it.

IE Matrix

IFE

4 3 2 1
2.86
4
1 2 3

E
3
F 3.05 4 5 6
E

2 7 8 9

Harvest
Grow Hold and
and
and Build Maintain
Divest

IFE = 2.86
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EFE = 3.05

As it lies in 5th place so it will have hold and maintain strategy.

Grand Strategy Matrix of Coca-Cola


Grand Strategy Matrix is famous tool for alternative strategies in addition
to Space Matrix, BCG Matrix, IE Matrix and SWOT Matrix. All the firms can
fall in one of the GSM’s four strategy quadrants. Grand strategy Matrix
evaluation is based on two dimensions i.e. market growth and competitive
position. Each quadrant provides the set of possible strategies in which
company falls such as Quadrant 2 contains market development, market
penetration, product development, horizontal integration, divestiture, and
liquidation strategies. Quadrant 3 contains the set of retrenchment,
related diversification, divestiture, unrelated diversification and
liquidation strategies. Quadrant 4 contains the set of diversification, joint
ventures and unrelated diversification strategies.

Grand Strategy Matrix of Coca-Cola Company


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As figure identify that Coca-Cola Company comes in the 1stquadrant. The


company management must focus on current market and achieve growth
by adopting product development, market development and market
penetration strategies. The company has abundant resources and
competitive advantage through which it can achieve growth by adopting
the backward and forward integration strategies. Coca-Cola Company can
also adopt the related diversification strategy to reduce its risk with broad
portfolio or product line. Coca-Cola can afford to take benefit of external
opportunities in many areas. It can also take risks being aggressive when
necessary.

Stage 3:
Quantitative Strategy Planning Matrix(QSPM) of Coca-Cola
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Strategy\Structure Match:
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Strategy Evalution (Corporate Controls)

Multi-domestic Strategy
It is the second alternative available to international firm. A multi-
domestic corporation views itself as a collection of relatively
independent operating subsidiaries, each of which focuses on a specific
domestic market.

Global Strategy
It is the third alternative available for international firms. A global
corporations views the world as a single marketplace and has as its primary
goal the creation of standardized goods and services that will address
the needs of customers worldwide.

Transnational Strategy
The transnational corporation attempts to combine the benefits of
global scale efficiencies with the benefits of local
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responsiveness.
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Corporate Level Strategy


Corporate level strategy attempts to define the domain of business
the firm intends to operate. Corporate level strategy fundamentally is
concerned with the selection of businesses in which the company should
compete and with the development and coordination of that portfolio of
businesses. A firm might adopt any of three forms of corporate strategy:

• A single business strategy

• Related diversification strategy and

• Unrelated diversification strategy.

Coca-Cola Company follows related diversification strategy that is


calls for the firm to operate in several different but fundamentally
related businesses. Each of its operations linked to the others Coca-Cola
characters, the Coca-Cola logo, and a theme of wholesomeness and a
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reputation for providing high quality family products. Coca-Cola
Company follows this strategy because it has several advantages. At
first, the firm depends less on a single products so it is less vulnerable to
competitive or economic threats. Secondly, related diversification may
produce economies of scale for a firm. Thirdly, related diversification
may allow a firm to use technology or expertise developed in one market
to enter a second market more cheaply and easily. Corporate level
strategies of Coca-Cola Company is following—

Business Unit Level Strategy


A strategic business unit may be a division, product line, or other
profit center that can be planned independently from the other business
units of the firm. Corporate strategy deals with the overall where as
business strategy focuses on specific business, subsidiaries or
operating units within the firm. Business seeks to answer the
question “how should we compete in each market we have chosen to
enter?” The firms develop unique business strategy for each of its
strategic business units, or it may pursue the same business strategy for
all of them. The three basic business strategy are differentiation,
overall cost leadership and focus. Coca-Cola Company uses the
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differentiation strategy effectively. Functional Level Strategy the functional
strategies attempts to answer to question “How we manage the
function?” The functional level of the organization is the level of the
operating divisions and departments. The strategic issues at the functional
level are related to business processes and the value chain. Functional level
strategies in marketing, finance, operations, human resources, and R&D
involve the development and coordination of resources through which
business unit level strategies can be executed efficiently and effectively.
Functional units of an organization are involved in higher level strategies by
providing input into the business unit level and corporate level strategy,
such as providing information on resources and capabilities on which the
higher level strategies can be based. Once the higher-level strategy is
developed, the functional units translate it into discrete action-plans that
each department or division must accomplish for the strategy to
succeed.