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Shaking Things Up:

A Coca-Cola Case
Study

By David Iskander
Every Fortune 500 Company now operates at a multinational level and competes with
foreign firms. Intrusively, they face competition from foreign competitors in the US market.
Coca-Cola, with 127 years behind its name, and ranked number 3 on Interbrands Best Global
Brands list at $79.2 billion not million - brand names in the world, can highlight some
interesting points about globalization in 2014.
According to Coca-Cola, with over 1.9 billion services of the
Coca-Cola Company beverages each day, the company is the
worlds largest beverage company. In mid-2013, Coca-Cola
inaugurated its first ever-bottling plant in Myanmar, a $200 million
dollar investment. This highlights, Coca-Colas focus to be an
industry leader in non-alcoholic beverages. Today, Coca-Cola has
17 billion dollar brands like Sprite, Diet Coke, and Fanta. The vivid
numbers show that Coca-Cola is inspiring moments of happiness
and refreshing the world.

Current Status
In 2012, Coca-Cola recorded approximately $48 billion dollars
in revenue with $9 billion in profit, an almost 20 percent profit
margin. With nearly 4.5 billion shares outstanding and a share price
average in March 2014 of $40, Coca-Colas market capitalization
stands at over $160 billion.
Also, in 2012, Coca-Colas dividend yield was almost 3 percent.
[Warrant Buffetts company, Berkshire Hathaway Inc., currently
owns just about a 10 percent stake of the company. Resulting in ownership of 400 million
shares at a sum valuation of roughly $15 billion. Buffett said, Im the kind of guy who likes to
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bet on sure things, at a recent Coca-Cola shareholders meeting. Creating moments of
happiness appears to be worth investing heavily into.]
Coca-Cola employees over 150,000 people globally. These employees serve to progress
over 500 plus drink choices in 200 plus countries with 17 of those being billion dollar brands
and 20 other megabrands generating more than $500 million in annual retail sales. Today,
North America generates roughly 45 percent of their sales.
Headquartered in Atlanta, Georgia, Coca-Colas CEO Muhtar Kent has held his position for
almost five years. Since taking his position, the company has faced many issues that Kent
addressing in a recent interview. In the interview with the Harvard Business Review in 2008,
Kent gives us not-so-clear vision for the future. Mainly, Kent outlines priorities at CEO,
branding, obesity, and sustainability issues.

2020 Vision
Establishing a long-term vision (2020 Vision) and restoring growth in North America Kent
emphasized as the priority to get Coca-Cola to reach new levels of success. He elicits turning
things around for the company would be to go from a company-centric focus by using new
forces to stabilize the company. These new forces consisted of bring in people from all around
the world. As Kent describes this, he then loosely cultivates his own thoughts about the
matter. He states that the people he brought in from all around the world were people from
the company.

Case Analysis
The first discussion of this case study was to analyze and evaluate Mr. Kents replies to the
interviewers questions. The company has faced many hardships due to decreasing sales and
becoming what some called too big. Addressing this issue was a concern about the company
holding too many meeting with just Coke people. His response was to get people from all
around the world. Dimly helpful, the people were Coke people.
Further, the 2020 Vision, namely, has been set out to double revenues by the year 2020. It
has a vision for profit, people, portfolio, partners, planet and productivity. Kents discussion
about the vision and its potential is large. This global company is setting out to supersede
benchmarks and towers of success. Under a closer analysis, the road to success seems very
unclear. The company has guided its vision but has not made itself clear on its objectives.
Peter Drucker, an Austrian-born American management consulter said it right that, You cannot
manage what you do not measure. It seems that Mr. Kents large speech, vast vision, and on-
track plan seem to be nothing more than a conversational topic. With that, analyzing the
numbers shows revenues drop from 2012 fiscal year to 2013 fiscal year by almost $2 billion.
The Wall Street Journal published an article on April 10 that Coke-Colas flagship soft drinks
are getting a hard hit in their North American market. Further underling our discover that a
goal without a plan is just a wish.


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Brand Value
Coca-Cola has over 500 different drink options and only one of those is titled Coca-Cola.
That brand value has risen to extraordinary levels of valuation. When asked by the Harvard
Business Review about applying the companys name to other beverages Mr. Kent replied,
Because branding does not work that way. Reflecting on this reply, evaluate McDonalds
McChicken, McFlurry, and McCafe. Also, Nikes swoosh on all Nike products. Similarly, Apple
puts its name and logo on each and every one of its products. This draws the conclusion that
there may be deeper issues on why the 3
rd
most reputable brand value is not used on other
Coke products. That is, Coke-Cola has issues with its Coke brand name that affect its other
brands. For example, Coke products do not touch any shelfs in supermarkets like Trader
Joes, Sprouts, or Whole Foods, a set of supermarket chains that have taken a presumptuously
large growth over the past couple years. Because these stores focus on health (Whole Foods),
price (Sprouts), and uniqueness (Trader Joes) these companies dare not to put Coke on their
shelves. Or do they? In any one the many Sprouts locations you can find Zico Premium
Coconut water, a Coke brand. Similar in the other stores as well, this gives Coke a way to skip
on the obesity issue and not trample on conflicting markets. A final analysis of Mr. Kents reply,
without making any farfetched conclusions, indicates that there is a lot more to this story than
just branding.
This brings us back to the transparency of the article written by the WSJ on April 10. Coke
has suffered immense pressure from around the world that their drinks are a main source of
obesity with so many sugary, unhealthy beverages. Kent refers to this by initiatives of
promoting education about health, sports, and activity. This issue has long due issue with how
Coke will reach its 2020 Vision especially as its biggest market is now taking Coke out of the
fridge.

Corporate Social Responsibility
Sustainability or Corporate Social Responsibility (CSR) has held itself as bigger and bigger
news as globalization grows and grows. With its large CSR initiatives, water sustainability is
mandatory for the continued success of Coca-Cola on a global level. Today, over 350 billion
liters of water a year is used for its business processes. Also,
with the 2020 Vision, Mr. Kent said, were committed to
water neutrality by 2020.
A major feat indeed, ambitious in all respects, there are
some issues. The World Wildlife Fund (WWF) both measures
its water use and water conservation efforts. A conflict-of-
interest to say at the least. The current amount used to
produce one liter of Coke is 2.26 liters of water according to
the WWF. One way Coke deals with this problem is by
building wells in Africa. In hindsight, without disregarding the beauty of building wells in Africa
for people in need, this does not sold the issue. For instance, if Coke uses 1 million gallons of
water in a small city in India at one of its plant a year and brings neutrality by building enough
wells to equal 1 million gallons in Africa, all this is does in make the numbers equal. Yet,
Sustainability: leaving mother
earth at sundown the same way
you found her at sunup.

CSR: Extra-legal, social programs

Both terms are used more and
more in corporate boardrooms.
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people in India are left in a greater demand for water. In final analysis, it is safe to conclude
that Coca-Cola has a big water issue to deal with.


Conclusion
Coca-Cola, moving into its second century, is a well-matured company that has had
substantial growth through difficult times. Delivering moments of happiness bottled up in
bubbly refreshment has seen a new day. That is, globalization has taken on its once well-to-do
product to a realization that this could easily end up like the cigarette companies ridiculed,
hated, and bad-mouthed on the news. CVS has made a commitment to take out all cigarettes
from its stores. This move comes out as health concerns are pressing forward and unhealthy
products are moving back. Processed sugars, and unhealthy drinks dont seem to be on the
rise but the decline. Maybe it as it was easy for Buffett to bet on sure things, it may be just as
easy for him to change his bet on sure things, we will see. In all, globalization will have
something to say about all this.

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