Beruflich Dokumente
Kultur Dokumente
Management Division
CASE NO.
TITLE
Submitted to
Prof. Yvonne Gomos
, 2015
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
enduring value.
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.
Concern for public image. How the company responds to the varying social and environmental
concerns was no explicitly illustrated in the mission statement. The companys concern for
public image is answered by the optimism and happiness that it inspires the public, and the
value and difference that it brings in everywhere it engages. Its obligation and contribution to the
society should be stated.
Concern for employees. The company gave much importance to its employees, regarding them
as valuable assets. Although this is the case, Coca-Cola has not illustrated in its mission
statement how it gives value to its employees.
The Coca-Cola Companys has mentioned that it hopes to refresh the world, to inspire
moments of optimism and happiness, and to create value and make a difference. The
companys mission statement is clear enough for the readers to understand. After evaluating its
mission statement using the 9 components, the group found that Coca-Colas mission statement
lacks some of the components.
Concern for public image. Coca-Colas vision statement shows that it has concern for
the environment, as suggested by their vision for the planet. The company aims at being mindful
of its responsibilities not just to its shareowners but also to the planet.
Concern for employees. The company gave much value to its employees and so it
aspires to provide employees a place that is great to work at and where these employees would
be inspired to be the best they can be.
Generally, Coca-Colas existing vision statement is very thorough and has included what
it wants to achieve in the long run for the organization and for different sectors be it for the
employees, the products, the society, and shareowners among others.
2.4 Proposed Vision and Mission Statements
Although the company operates and engages itself in a fast-changing environment with
a lot of rivals operating in the different parts of the world that offers beverage products, the
companys current Vision and Mission statements are still applicable for them in the long run
because of it reflects their commitment to their stakeholders, customers, employees and
managements and other publics.
(2013) defined childhood obesity as the result of eating too many calories and not getting
enough physical activity. Because of the growing problem of child obesity, many states in the
United States have implemented federal regulations banning the selling of some soft drink
brands in public schools. School beverage guidelines were implemented in order to control the
shipment of beverages, especially full-calorie soft drinks, to schools (ABA, 2015). Because of
such regulation, beverage mix in schools have resulted to a continued shift to waters, portioncontrolled sports drinks, diet drinks, and 100 percent juices (ABA, 2015).
One ecological factor that may affect the operation of Coca-Cola is the problem on the
limitation of water. Water is a limited resource and it is especially true in many parts of the world.
The problem with water supply is a big challenge for Coca-Cola most especially since water is
known to be the main substance in the manufacturing of soft drinks. This serves as a threat to
the company since costs in manufacturing the products increases. However, at present, many
major multinational companies are addressing this issue and are actively working to improve
water availability, quality and sustainability, for both continuing their operations and for the
benefit of the communities where they operate (Biswas & Bozer, 2015). Another ecological
factor that is a threat to the company is in terms of the natural disasters that seem inevitable.
These disasters are not under the companys control and they bring great damage to the
company. One natural disaster for example that had struck the company is the Hurricane that
took place in Florida in 2006. Coca-Cola acquires their supply for oranges, to be used in the
production of fruit juices or drinks, in the said state. The hurricane left a huge damage,
destroying the orange plantations, and leaving the companys production to a halt.
Coca-Cola has also been involved in issues regarding environmental pollution. In India,
the company has earned the reputation toxic-cola because of the atrocious activities its been
practicing which involves polluting the people, the water and the land (Srivastava, 2006). CocaCola threw its wastes in surrounding areas causing land pollution and also affecting the
groundwater thereby making it unfit for human consumption. The pollution that the company
have caused brought with it the effect of having its sales in the region decreased. Issues and
scrutinies such as this one are very harmful for any company because not only will it affect the
company financially, but it will also result to a tarnishing of the companys reputation to its
consumers and the general public.
An economic factor that brings a major threat to Coca-Cola is that the dollar has
weakened compared to other countries currencies. The company draws approximately 72
percent of their revenues outside the United States. Foreign exchange rates play a huge part in
the process. This foreign exchange is the value of one currency relative to another countrys
currency. When the economy of lets say the Philippines is doing well, the PHP appreciates and
the USD depreciates. When this happens, it would mean that it would take Coca-Cola
by trying to foray the brewable coffee industry through their dispensing technology via the Far
Coast brand. Coke is doing test marketing efforts for this huge plan. This technology that Coke
will be using enables astounding speed in the process of preparing brewed coffee for customers
from establishments like restaurants, cafes, and kiosks (Rubner, 2006). This venture towards
the coffee industry entails an advantage since the markets overall consumption of coffee is
increasing while the sales in carbonated soft drinks is dropping in some certain areas (Rubner,
2006).
The Coca-Cola Company offers several refreshment products yet the company is known
for its carbonated drinks. In the production of these drinks, ingredients include water, sugar,
carbon dioxide, and their secret concentrate labeled as the merchandise 7X. With the increase
in manufacturing costs per unit of water in areas where water is limited, Coca-Cola aims to
enhance the manufacturing process of water so as to lessen costs. This new technology,
labeled as the new water recovery system, is expected to solve Coca-Colas dilemma with the
rising water costs because this advancement could turn wastewater into water that is suitable
for drinking (Clancy, 2012). According to Heather Clancy, a journalist specializing in
transformative technology and innovation, The giant beverage company figures it could save
close to 26.4 billion gallons of water annually across its global bottling operations (Clancy,
2012). Sugar is another main ingredient in the production of Coca-Colas products and the most
controversial one due to health concerns. In the latest discovery, a shrub that is used as
sweetener in South America could reduce this health concerns. Stevia is a natural sweetener,
200 times sweeter than sugar and is considered friendly to those people with diabetes since it
does not raise blood sugar levels in the body (Hagan, 2014).
the same and readily available products therefore Coca-cola, when suppliers decide to exert
some influence over the company, Coca-cola could easily switch to another supplier.
Threat of Substitute products
The drinking industry has shifted because health-conscious customers are now
patronizing bottled water, juices and sports drinks. The increasing varieties of water and sports
drinks also appeal to the different tastes of the consumers. Caffeine, which is found in soft
drinks could also be obtained from coffee and tea. In particular, a lot of tea shops and blend
coffee stores are sprouting all over the world. It is relatively cheap for customers to switch to
these substitutes coffee and tea because these items are priced lower or at par with the soft
drink products. In addition, these beverages are available in ready-to-drink packages, which
made them easily accessible and convenient to the buyers.
Bargaining Power of Buyers
The bargaining power of bulk buyers is high while for individual purchasers is low. The
frequent buyers of Coca-cola are the large grocery stores and restaurants who purchase Cocacola products in large volumes so they could ask for bulk discounts. Individual buyers are also
becoming health-conscious nowadays that is why they are purchasing and consuming less soft
drinks. The bargaining power of these customers could increase due to the decreasing demand
for soda products. Since soft drinks are not that important for survival, customers who are
sensitive of the price are willing to change brand preference if its product becomes more
expensive. Meanwhile, in a research done in America last 2013, an average American drinks
over 38.6 gallons of soda each year yet, since the average price of a soft drink is under $ 2.00,
making individual purchase relatively insignificant.
Threat of New Entrants
Brand Loyalty. Coca-cola and Pepsi are the dominant players in the soft drink industry. These
companies have been offering soda drinks to the world for decades and they are considered
established companies with famous brand names, thus entering the industry would be difficult.
High capital investments. In order for new companies to engage themselves in operating in the
soft drink industry, they must High fixed costs for warehouses, trucks, labor and economies of
scale; difficult to compete in price without the economies of scale
Setup. Apart from the fixed investments, new entrants must consider supplier relationships to
ensure the timely and quality supply of raw materials. Further, distribution channels should also
be laid well so that the customers could easily access or purchase their products.
Absolute cost advantages. A lot of companies such as Coca-cola, are starting to locate their
plants and factories in Asian countries like China and India to exploit cost and performance
advantages.
New offerings. New entrants must offer differentiated products or invest heavily in marketing in
order to effectively promote, position their products and obtain a part of the established brands
market share. In addition, because of the heavy fundings of the existing established companies
in their R & D and commitment to product innovation, Coca-cola and Pepsi still continuously
bring out new products to the market.
every day. The company operates in multiple channels. The company has various suppliers
providing the company with the ingredients for the beverages, materials for packaging and
machinery among others. In addition to this, Coca-Cola operates as manufacturers of
concentrates, beverage bases and syrups and the company sells these to bottling investments.
The Coca-Cola System, as mentioned by Coca-Cola (2015), owns the various brands and is
responsible for consumer brand marketing initiatives. Because the company has various bottling
investments, they have no doubt not much of a problem regarding the manufacturing of the
beverages. The bottling investments of the company has the responsibility of manufacturing,
packaging, merchandising and distributing the final branded beverages to the companies
retailers, vending partners and customers. Coke is known to have the largest beverage
distribution system in the world, with more than 900 bottling and manufacturing facilities at
present. This being the case, Coca-Cola is able to distribute its products to more geographic
locations, reaching its customers in different areas. The company is pretty much vertically
integrated as suggested by the number of value chain stages that its operating in.
With what technology does the organization perform its customer functions?
Coca-Cola reaches out to its consumers through media. The company makes use of
advertising campaigns which attracts a huge amount of buzz from the public. Among the
companys most recent digital campaign is Share a Coke which gives people the chance to
order personalised Coke bottles. This campaign brought a massive success on social network
causing an increased by 870% traffic on the Coke Facebook site (Moth, 2013). The companys
website is up-to-date, providing recent updates about their company. Information becomes
readily available in the process. Another program launched by Coke is the My Coke Rewards
which started in 2006. This program was developed by Coca-Cola in order to reward its
consumers for picking Coca-Cola beverages.
In order to effectively pursue the different campaigns and programs that Coca-Cola have
for its consumers, it is important that the products are readily available to the end users. As
earlier mentioned, the company has the worlds largest distribution system thus it is able to
distribute its products to more geographic locations. Because of this, Coke products could be
bought and enjoyed by consumers with convenience. Beverages of Coke are distributed to
grocery stores, retailers, street vendors, and restaurants making it more accessible for
consumers to enjoy the drink. Vending machines are also effective means in making Coke
beverages more available.
would require strict adherence to quality control measures, efficient systems processes and
affordable yet quality raw materials to lessen costs.
However, in order to maintain and improve further the companys market share, the company
needs to differentiate itself from its competitors. Since Coke is a well-renowned brand, it is
perceived to be of superior quality coupled with its high brand image and recognition. Moreover,
the Coca-cola bottle has become an international symbol that is recognizable worldwide due to
the companys intensive promotion and packaging strategies. In 2010 alone, Coca-cola spent
$2.9 billion on advertising, which is much more compared to Microsoft with $1.6 billion and
Apple with $ 691 million combined on the same year (Bhasin, 2011).
Intended competitive position
These key success factors that would enable a company operating in the soft drink industry to
succeed are possessed by Coca-cola Company, which makes them undeniably the market
leader in this industry.
Product Innovation. This term is defined that could be the changes in the design of existing
products, the use of new materials or ingredients or the development of entirely new products.
The changing customers wants, demands and preferences including other external factors
paved the way for soft drink industry players to improved and maintain their position by varying
their product tastes, ingredients used and product storage. Coca-cola recently launched Cocacola Life, by offering the first-ever reduced-calorie sparkling cola that is sweetened by cane
sugar and stevia leaf extract. According to the company page, this beverage is said to have 35
percent fewer calories than other colas (Journey Staff, 2014). To further cater to the increasingly
health conscious trend and prevent wastage, Coca-cola started introducing smaller portion
packages such as 7.5 oz. mini cans and 8 oz. glass bottles (Coca-cola Ambassador, 2013).
Strong global presence. Although the United States remains to be a top consumer for soft drinks
and other carbonated drinks, In order for soft drink companies to access an extensive global
reach, they have utilized various ways and selling points such as vending machines, stores,
restaurants and eateries. The United States market for soft drinks is becoming saturated, that is
why these companies are pursuing global expansion. For Coca-cola, its products are patronized
worldwide as evidence by this percentage of market share - Coca-cola (50%), PepsiCo (21%),
Cadbury Schweppes at 7%. Accordingly Coke products are not available in the countries of
Cuba and North Korea.
Size of the organization. The organization size is also critical in bringing success because large
organizations produce more products and possess connections such as large distributors that
would also be establishing relationships to schools, stadiums, groceries and restaurants.
Ability to manage external contracts. Companies should also consider and effectively manage
outsourcing non-core functions to lower costs and this would allow them to focus on what they
do best such as product innovation and advertising. Coca-cola relied on its contracts with
various independent companies the Mosanto Chemical Company, Hershey Chocolate
Company and others that obtain, processes and refine the critical materials used in creating the
carbonated drinks. This is also a beneficial strategy for Coca-cola because the company could
now focus on performing what they do best, which is the manufacture of the syrups and
advertising which entails low cost and high efficiency for their part.
Price. Consumers who dont have a strong brand preference will purchase the product with the
most competitive price and the company offers products that are more or less the same price
with their competitors which is evident by the low switching cost from one brand to another or
one beverage to another.
Marketing and Differentiation. The soft drink industry is characterized by its tough competition,
therefore, the major players are investing heavily on their advertising and research and
development to drive demand for their products. According to Quester (1998), an important and
effective marketing practice used by the players in the soft drink industry would include the
corporate sponsorship in sports and other activities because of the extensive television press
coverage that appeals to everyone from different countries and relates universal messages of
hope, pain or victory (as cited in Saeidinia, et. al, 2012). Coca-cola is one of the official
sponsors of the 2014 Sochi Winter Olympics and it contributed in generating an 11% growth in
the Russian unit case volume in 2014 (Bailey, 2014). In addition, in a study done with reference
to the Pepsi Challenge organized by PepsiCo in 1979, it was concluded the possibility that the
respondents preferred Pepsi over Coke during the blind test because of its sweeter taste.
However, the case would be entirely different if the respondents were allowed to see the name
of the brand they are trying because ad campaigns could override the impact of the taste buds.
Brand Loyalty. It is defined to be a form of repeating purchasing behavior caused by a positive
attitude and conscious decision to continue buying the same brand (Solomon, et al., 2007). This
brand loyalty is evident when the PepsiCo is gaining its market share from Coca-colas and the
company resorted to introducing a New Coke. However, the customers prefer the classic one
and instead of purchasing Pepsi products, the people instead intensified their call in bringing
back Cokes original recipe which after a while, the company decided to give in to their
demands.
Market Share. It is important for companies to be mindful of the market share because it is the
percentage of an industry or markets total sales that is earned by a company over a particular
period (Investopedia, 2014). Market share shows more or less an idea regarding the size of the
company relative to its market and competitors. According to Beverage Digest (2013), Cocacola comprises 34.2% share of the overall liquid refreshment beverages while Pepsi was trailing
behind at 25.8%. Meanwhile, the carbonated soft drinks market share of Coca-cola declined by
2.2% while PepsiCo decreased by 4.4% primarily. A significant reason for such decline could be
traced from the health conscious trend that is hitting the market nowadays.
Perceived quality. It refers to the customers perception of the overall quality of superiority of a
product or service with its intended purpose compared with the alternatives. Some dimensions
of perceived quality could include product features and performance. Coca-cola strictly adheres
to its standards to maintain high quality products because they believe that it is the cornerstone
of their success and part of their heritage. This belief is reflected in the companys gold standard
that, Perfect Product, Trusted Everywhere.
HR and Management. Another key success factor that should be considered are the human
resources and the management because these people drives the company, utilizes its
resources and in a way, helps in creating a reputation for the firm they are working with. In 2013,
Coca-cola was named as one of the Worlds Top 25 Global Employers by the Great Place to
Work Institute primarily because of the companys sustainability and entrepreneurship efforts.
Moreover, employees of Coca-cola also served as global ambassadors of Coke especially
during major global events such as the Olympics and World Cup (Unbottled Staff, 2014). In
order for the company to attract, develop and retain a highly talented workforce, Coca-cola
organized the Coca-cola University which is intended for the companys high performance
employees to allow them develop their knowledge, skills and expertise. The management also
sees to it that open communication is practiced throughout the organization to create a healthy
and well-updated workplace by providing talks, offering speeches and posting them online for
the employees to read and understand. The companys focus on beverages also proved to be
an appropriate choice since the management and the employees themselves could focus in
what they are doing best because the company operates in related fields. According to some
articles, PepsiCo lost the cola wars because of its constant shuffling of its managers between
the different departments and brands hurt the companys sales. During the first quarter report of
PepsiCo in 2012, the company experience a 2.5% percent decline in drink sales and 4 percent
decrease in soda sales primarily because the management themselves find it hard to support a
particular brand when no one stays long enough on a brand to build up knowledge about how to
improve and/or maintain its position in the market (Russell, 2012).
Brand positioning. This term refers to the perception of the customers of a particular brand in
comparison with that of the competitors or simply put, the mental image of a brand or a
company in the minds of the public. When Coca-cola was launched in the 1880s, it created a
new category of beverage was created and the brand name became the name of the product
itself. Due to the brilliant advertising campaigns of Coca-cola which circulates around cultural
themes like the Santa Claus in 1930s, the selling of Coke products to American GIs during the
Second World War which provided comfort and encouragement to these soldiers and the
promotion of peace and unity among countries through the Hilltop commercial, Id Like to Teach
the World to Sing. In addition, the company has successfully positioned its brand with images
of happiness and togetherness, tradition and nationalism. PepsiCo has also established itself as
the choice of the new generation by utilizing the appeal of celebrity endorsers, popular music
and young people in their ad campaigns.
5.1.3 Company Self-Concept
Performance Goals and Objectives
2020 Vision: Roadmap for Winning Together: TCC and our Bottling Partners
Our Vision
Our Goals
Our Metrics
Profit
Total shareholder
system revenue
return
while increasing
system margins.
market execution.
growth
Be a great place to
Engagement
work.
talent.
Employer of choice
Workplace rights
Diversity
Retention
our servings to
share
Servings growth
Be #1 in NARTD
Brand health
business in every
Category ranking
# of new billion
category that's of
dollar brands
value to us.
Coca-Cola.
Commercialization:
Percentage Speed
our portfolio:
Longevity
Quality index
Partners
Be the most
Customer
preferred and
relationship health
trusted beverage
partner.
Company product
consumption growth
Global leadership
Reputation tracking
in sustainable
Environmental
water use.
commitments:
performance
PLANET Industry
Community
Safety record
leadership in
Workplace
packaging, energy
and climate
protection
Productivity
Manage people,
Market-driven
spending levels
greatest
system:
effectiveness.
growth.
2011
2010
2009
2008
2007
280+
~ 150
~ 150
120+
N/A
115+
~ 100
~ 100
85
N/A
To support the increasing clamor to support women and provide them with jobs and sources of
living, the company sees to it that could empower women through their business operations that
as of 2011, about 131 000 women are provided with jobs.
The company also allocated 1% of their annual operating income to the Coca-cola Foundation
to fund activities involving youth development, HIV/AIDS prevention and awareness programs
and emergency relief.
Year
2011
2010
2009
2008
2007
Charitable contributions
and
equivalent
percentage of operating
income
$ 124 MM
$102 MM
$88 MM
$ 82 MM
$ 99 MM
1.2%
1.2%
1.1%
1.0%
1.4%
Principles among independent franchise bottling partners and suppliers to maintain and
encourage the well-being of the employees and ensure good and quality performance within the
organization and its partners.
Water is a valuable resource for soft drink companies such as Coca-cola. To save cost and
maintain the companys reputable name in the ecological and environmental concern spheres,
the company managed to improve its water efficiency in manufacturing by 20 percent annually
compared to the 2004 baseline. The company would also aim to perform a comprehensive
wastewater treatment in order to reduce the companys carbon footprint and wastage.
2011
2010
2009
2008
2.16
2.26
2.37
2.43
96
93
89
88
382, 94
323, 86
250, 70
203, 56
35%
33%
22%
N/A
The company also plans to improve the packaging material efficiency and invest in recycling
programs to achieve their goals of recovering about 50% of the equivalent bottles and cans that
the company is using annually.
Leadership Style
Democratic leadership
This leadership style is headed by a leader who is sharing his/her decision-making abilities with
the group members through the promotion of their interests and the practice of social equality.
The group, which is made up of the managers, junior managers and employees are involved in
the generation of ideas as well as in the final decision-making process. Employees are
empowered in this type of leadership and the more they would feel comfortable in interacting
with the people within the organization and create decisions with them. Usually, the democratic
leadership produces contented, happy and productive employees because they would feel
respected and honored. Moreover, because the management practices this type of leadership, it
is open-minded and ready to accept feedbacks and opinions coming from the managers in the
different countries that the company is operating to create sound and appropriate strategies for
the company.
Autocratic Leadership
An autocratic leadership is also practiced by Coca-cola because the management keeps a strict
and a close control over the employees through the use of the policies and procedures followed
and implemented. This leadership style is evident inside the factories and bottling plants of
Coca-cola to ensure that the guidelines are followed and consistency in the quality of the output
would be achieved.
Risk-taking Behavior
The company knows that risk is present in every industry and in every business decision it
makes. Coca-cola does not view risk in isolation and recognize that it is impossible to eliminate
all risk. Therefore, to remain competitive globally and to obtain the objectives that are indicated
in their 2020 Vision, the company ensured the assignment of a Board and management
responsibilities.
Shareowners elected the Board members and allow them to oversee their interest on the overall
success of the business and security of financial strength. They see to it that assets are
safeguarded well, appropriate financial and internal controls are maintained and complied and
regulations and laws are properly followed. In addition, some of their major responsibilities
would include risk oversight, evaluation of the risk management processes, to nurture an
environments of integrity and risk awareness and to maintain an open communication between
the management and Directors.
The Management meanwhile is in-charge with managing risks and ensure that the internal
processes and environment are present and always available in identifying and managing risks
while sharing this information with the board. Programs such as the enterprise risk management
program, the establishment of a Risk Management Committee and disclosure of internal
management issues during every meetings are some of the management activities that are
done by Coca-cola.
Founders Philosophy
Coke was developed because of John Pembertons innovative spirit to create some sort of
medicine to cure headaches by creating a flavored drink made from syrup and carbonated
water, thus Coca-cola was born. Up to this day, the company maintained its position because of
its constant product innovation to keep up with the varying preferences and needs of the
consumers worldwide.
The founders also consider marketing as a major contributor of the companys success. Asa
Candler, a salesman who purchased Coca-cola from Pemberton is noted for his excellent
marketing campaign in distributing clocks, urns and calendars that bear the Coca-cola logo to
attract customers and make the products, as well as the company, well-known.
With the trend towards healthy eating and drinking, if the company would continue
producing a lot of carbonated products over those which offers nutritional values, there is a
large possibility that their large chunk in the market share would be taken by those companies
which concentrate in offering healthy beverages. However, since the company has been staying
up in the list of top companies for over a century, there is a greater chance that they could still
remain at the top with the appropriate strategy.
5.2.2 Financial Dimension
Coca Cola Company's income statement showed an increase of all the items in the
income statement except for the 18.36 decline in Total Other Inc/Exp Net. The increase in
percentage of the total revenue for three years is recorded to be 4.73%, greater than the
increase of 3.46% in their cost of revenue and yielding to an increase in the gross profit from
5.45%. Other significant increases include Coca-Cola's interest expense with 7.06% and the
income tax expense of 7.31%. The net income also improved by 2.39% in from 2004-2006.
The vertical analysis in the company's income statement project a decrease of the cost
revenue's percentage from the company's total revenue. From 35% in 2004 and 2005, it
dropped down to 34% in 2006. However, an increase in the percentage of selling, gen, and
admin is evident from 39% in 2004 to 40% in 2006. This means that Coca-Cola increased their
marketing efforts. However, although an increase could be sighted in the net income's horizontal
analysis, it is evident in the vertical analysis that Coca-Cola's net income decreased as a
percentage in revenue.
Coca-Cola's balance sheet shows a decrease of 39% in the company's handling of cash
and other cash equivalents. This implies that the company is using its cash more to finance their
operations and that they are taking advantage of opportunities in the industry. This usage of
cash could be evident in the company's increase of short term investment by 67.73%. The
decline in the company's cash and other cash equivalents largely contributed to the decline of
16.45% in their total current assets. Although the inventory increased by 17.91%, the large
decline in cash caused the company's total assets to decline by 2.12%. In the liabilities side,
the decrease in the company's short term liabilities by 26.31% and the decrease of 15.13% in
other liabilities caused the decline of the company's total liabilities.
In the company's vertical analysis, it shows that in 2004, the largest percentage in the
company's total assets in the company's cash and cash equivalents of 21%, followed by their
long-term investments of 20% and 19% from property, plant & equipment. However, in the year
2005-2006, the largest percentage shifted towards the company's long-term investments and
property, plant and equipment. The company's cash and cash equiv decreased to 8% in 2006.
This could imply that the funds from cash and other cash equiv were invested in long-term
securities or were spent in the company's fixed assets. In the company's Liabilities side, a
decrease in the current liabilities from 35% in 2004 to 30% in 2006 is largely evident. This
decrease in the company's current liabilities caused a decline in the total liabilities percentage
over TLSE. In the Equity side, a significant increase in the retained earnings from 93% to 106%
to 112% in 2004 to 2006, respectively, could be observed. Moreover, huge decreases in
treasury stock is also evident.
access them through the computers, hand-held devices and smartphones that are provided by
the company. Decision-making, high standards and processes would be disseminated and
understood well to ensure consistency and quality.
The Coca-Cola System also recently adopted KORE, a framework that would aid them
in governance and in the management system of their company and operations. The main goals
of this framework to ensure the sustainable performance, drive continuous improvement and
other pertinent goals. It is a flexible system that has the ability to allow Coca-cola to locally
customize their products and operations according to global requirements. KORE also allows a
culture of collaboration within the system. Contrary to the past system that the quality and
operational control is the responsibility of the top level, the current system, however relies on
people in the operations at all levels of the supply chain which is good in empowering and
motivating individuals. The KORE Information System also provides information that is
accessible to everyone to enable collaboration and information sharing. This information system
also includes the following:
A documentation library which shows the beverage and product requirements, standards
methods and requirements for operations with environmental and employee consideration and
specifications on using packaging and facility operations.
A collaborative Wiki-style reference tool that would serve as an accessible reference and guide
for information and decision-making where anyone is allowed to post articles about their
respective expertise.
STRENGTHS
WEAKNESSES
1. Being the world's largest company, Coca- 1. Failure to meet expectations in Japan, 3%
cola could easily act upon opportunities.
decline in unit sales volume
2. Coca-Cola's recognized presence globally 2. Healthy beverages are lagging behind
with their seven geographical segments.
PepsiCo's
3. The percentage of Coca-Cola's net income 3. Decline in Net Operating Revenues by
from revenue is
PepsiCo's 16.12%.
21.09%,
greater
6. Highest market share among players in the 5. Declining Coke sales in the east, south
soft drink industry
Asia and Pacific Rim of 1% which is brought
about by the political and economic
7.Test marketing of coffee dispensing instability in these areas.
technology
6. Negative reputation of Coca-cola in India
8. Strong leadership team
because of the pesticide content in their
products that made their products dubbed to
9. Compared from PepsiCo, the Coca-cola has as "toxic colas".
better employee efficiency
10. Increase in revenue by 4.73%
OPPORTUNITIES
THREATS
about 2.5%.
7. Economic problems and uncertainty in
Europe could limit Coca-cola growth in the
said region.
8. Market saturation and sluggishness in the
United States because of the arrival of
healthier beverages.
9. Strength of PepsiCo's healthy products
(Glaceau, Gatorade, Aquafina)
10. PepsiCo complementary
(snacks and beverages)
SO Strategies
products
ST Strategies
Develop new products, perform intensive Look and for other suppliers from other
market studies, purchase and/or acquire locations (S1, T3)
undervalued or underperforming companies
that are offering healthy drinks (S1, O2)
WO Strategies
WT Strategies
Increase product portfolio with healthier and events together with Coca-colas healthy
beverages, provide more advertisements on brands (W3, T7)
the existing healthy drinks (W3, O2, O5)
Improve retail and distribution networks in
this area, e.g., trucks, vending machines,
engage in ERP (W5, O4)
6.4 IE Matrix
Considering Coca-Colas scores from their IFE matrix with 3.11 and their
EFE matrix with 2.95, the company belongs to the fourth division in the IE matrix.
This means that the company should grow and build through integration and
intensive strategies.
In the beverage industry, where Coca-Cola is competing actively, the revenue growth for
each quarter is 6.6%. Since it exceeds the average market growth of 5%, the beverage industry
is said to be rapidly growing. Coca-Colas competitive position in this growing industry is strong
considering that they have the highest market share of $111.18B compared to their strongest
rival whose market share is $103.10B. Moreover, Coca-Colas market share is way beyond the
industry average of $2.21B. Thus, with an industry considered to have a rapid growth, and
Coca-Cola having a strong competitive position, the company could be located in the 1st
quadrant of the grand strategy matrix. This means that they could proceed with strategies like
market development, market penetration, product development, forward integration, backward
integration, horizontal integration, and related diversification.
6.6 QSPM Matrix
6.7 Recommendations: STRATEGIC CHOICE
It is recommended for Coca-cola to perform market penetration because a series
of intensive marketing strategies to increase market share for their current products in the
markets that they are operating. Market penetration offers the lowest amount of risk and
provides more opportunity to increase revenues and profit. This intensive strategy is beneficial
for the firm because Coca-cola is operating in a familiar business environment with the existing
human capital, infrastructure and facilities and strong management team.
In order to sell more to current customers and find new customers, the company must
first differentiate itself within the industry. Promotional campaigns featuring the benefits and
availability of the companys products should be pursued. Another option is to broaden
distribution and retail network so that customers could be attracted to the products availability
and ease of access. Altering product usage such offering smaller sizes for convenience and
additional purchases would be made, more sales would be achieved and market share would
be increased. In addition, market share could be increased through the combination of pricing
strategies in order to attract non-loyal buyers, attractive advertising and sales promotion to
attract new and hopefully retain these consumers. A detailed market and competitor intelligence
should also be present such as market penetration analysis and compilation of market research
pertaining to competitor and industry products.
The company also has existing sports drinks and energy drinks that are always way below the
performance and sales of PepsiCos healthy and sports-related products. An intensive
marketing approach is to find appropriate brand ambassadors and host major sports events and
sponsorships to make the advertisements and marketing campaigns more appealing and
effective because the buyers would perceive that in order to reach the potential to being a good
athlete or sportsperson, consuming Coca-colas products would aid in their performance. Cocacola also possesses one of the most efficient distribution network for Coke that is why, the
company could utilized these existing resources to make their healthy beverages available and
accessible.
Increase collaboration and communication among departments (finance and marketing) and
other geographical units
7.2 Marketing ALISA
With Coca-Colas strategy of market penetration, this implies that the company should
increase marketing efforts so as to increase their market share especially in their healthy
beverages. This is in response to the trend towards healthy drinking among consumers. Given
that Coca-Cola already has a portfolio of energy drinks, flavored water, and juices which are
healthier compared to their carbonated products, they should prioritize these healthy beverages
in their marketing efforts and advertisements. They could do these by sponsoring leading varsity
teams in famous schools, hiring famous sports icons as brand ambassadors, and organizing
sports events to facilitate the promotion of these healthy beverages. With the intensive
marketing efforts planned for these non-carbonated beverages, the marketing department
should also facilitate the distribution of these products for it to be highly available to anyone in
the different geographic segments. Also, the differences in culture among the different market
segments should be taken into consideration to effectively appeal the promotional message to
the target consumers. Another way to effectively market these products to the consumers is to
provide attractive labels to make it more appealing to the eyes of the consumers. In this action,
the marketing department should to increase their efforts and think of more creative ways to
design and to advertise their healthy beverages. With these plans for intensive marketing
efforts, this would entail an increased budget in the marketing department to finance such
activities. But, the marketing department should continue to be as resourceful as possible to
somehow minimize costs.
7.3 Production and Operations VAL
Capitalize on their existing distribution networks (accessible and available to the public)
Quality assurance not to tarnish their reputation like what happened in India
7.4 Finance ALISA
7.4.1 Total Project Cost/ Investment Cost
7.4.2 Financial Modelling
7.4.3 Vertical and Horizontal Analysis
-3- years, use year-year
-increase or decrease growth rate
Since the company would pursue a market penetration strategy, Coca-cola would need
to be knowledgeable and mindful about environmental concerns of the areas that they are
operating. Further, in performing intensive marketing campaigns such as organizing fun runs
and sporting activities, the company should also provide trash and recycling bins to show and
provide a positive perception in the minds of the attendees that Coca-cola is an
environmentally-ethical company. Another option is to offer sari-sari and other micro-enterprises
tarpaulins with the name of the store and the Coca-cola logo because not only would it add to
the companys marketing efforts, it would provide a more sustainable and attractive addition to
their stores. In pursuing marketing efforts, Coca-cola must consider environmental laws and
regulations, environmental activists and other environmental concerns because different
countries have different perspective on how things are managed in their area.
STRATEGY EVALUATION
Strategies
Criteria for
Evaluation
Strategy
Develop products
advantage
of
opportunities
to take Focus
on
marketing
and
existing advertising healthy beverages
a. Suitability
b. Validity
c. Consistency
d. Feasibility ALISA
e. Vulnerability VAL
f. Potential
ALISA
Rewards
The strategies and policies that the company is currently pursuing are as follows:
In order for the company to implement the strategy well a well-organized structure, leadership
style, systems and culture must be fostered first. The organizational structure that would match
this strategy is the functional organizational structure wherein there are top level managers and
sub-level managers of both different departments and low-level employees. It dictates the
hierarchy of power and determines who reports to who. In addition, the leadership style must be
a combination of democratic and autocratic wherein employees and basically, everyone are
given the chance to speak up, give suggestions and offer solutions to problems during company
meetings and or through personal interaction with the immediate supervisor. Top to bottom and
bottom to up information or a two-way communication relationship must be maintained. An
autocratic leadership is also important to show that the company is strict in adhering to the
company regulations and standards to ensure the products are of the best quality and decisions
made are consistent and appropriate. An open, creative and nurturing culture must also be
promoted so that employees are encouraged to air out their concerns and the management
likewise are committed in knowing the situations of the employees and their suggestions.
Currently, the company possesses more or less the desired structure, leadership style, systems
and culture that would aid in fully-implementing the recommended strategy.
achieving it and in cases wherein unexpected occurrences happen, the managers are open for
reconsideration and determine what made the strategy ineffective.
9.0 REFERENCES
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Bailey, S. (2014). Investing in Coca-cola: the worlds largest soft drink company. Retrieved from
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Bhasin, K. (2011). 15 facts about Coca-cola that will blow your mind. Retrieved from
http://www.businessinsider.com/facts-about-coca-cola-2011-6?op=1
Biswas, A.K., & Bozer, A.C. (2015). Water: Future, prospects and challenges. Retrieved from
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from
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Srivastava, Amit (2006). Coca-Cola: poisoning water, land, and people. Retrieved from
http://www.indiaresource.org/campaigns/coke/2006/cokepoisoning.html
The Coca-Cola Company (2012). The Coca-Cola sustainability project: product safety and
quality. Retrieved from http://www.coca-colacompany.com/sustainabilityreport/me/productsafety-and-quality.html#section-our-policy-on-biotechnology
The Coca-Cola Company (2015). The Coca-Cola system. Retrieved from http://www.cocacolacompany.com/our-company/the-coca-cola-system
With the trend towards healthy lifestyle, and Coca-Cola Companys healthy products lagging
behind PepsiCos, the company needs to formulate a strategy to address this problem and at
the same time to take advantage of opportunities such as the increase in bottled water and
coffee consumption in some areas of the geographic segment.