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The Coca-Cola Company Case Study

Farouk Almujahid
Seina Heights University
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Table of Contents

INTRODUCTION...........................................................................................................................3
CASE STATEMENT.......................................................................................................................4
EVALUTAION OF MISSION STATEMENT.................................................................................4
Table 1. Mission Statement Evaluation Matrix...........................................................................5
VISION STATEMENT....................................................................................................................5
EXTERNAL ASSESSMENT..........................................................................................................6
EFE MATRIX..................................................................................................................................6
INTERNAL ASSESSMENT...........................................................................................................9
IFE MATRIX...................................................................................................................................9
SWOT ANALYSIS........................................................................................................................11
FINANCIAL ANALYSIS..............................................................................................................13
INVESTORS PROFILE AND STRATEGY................................................................................14
INDUSTRY ANALYSIS...............................................................................................................15
The Porter's Five Forces Model for Coca-Cola.........................................................................15
Competitors Rival in the Industry..............................................................................................15
Potential of New Entrant into the Market..................................................................................15
Threat of Substitute Products.....................................................................................................16
Bargaining Power of Suppliers..................................................................................................16
Bargaining Power of Customers................................................................................................17
SWOT MATRIX OF COCA-COLA COMPANY.........................................................................17
SWOT Matrix Discussion..........................................................................................................19
THE QUANTITATIVE STRATEGIC PLANNING MATRIX (QSPM).......................................21
QSPM Discussion......................................................................................................................24
IMPLEMENTATION PLAN.........................................................................................................24
Management..............................................................................................................................24
Company Strategy:................................................................................................................25
Supporting Policies:...............................................................................................................25
Divisional Objectives:...........................................................................................................26
Production Department Objectives:.......................................................................................26
Operations..................................................................................................................................26
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Human Resources......................................................................................................................27
Accounting and Finance Issues.................................................................................................27
Resource and Development Implementation.............................................................................27
Management Information Systems............................................................................................28
References......................................................................................................................................29

INTRODUCTION

The Coca-Cola Company is a U.S. publicly traded company with history that can be

traced back to 1886. In 1886, John Pemberton, an Atlanta pharmacist invented the first prototype
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of soda (Coca-Cola, 2014). In the next century, the Coca-Cola continued its progress and

generated syrup with a quantity of 10 billion gallons. The top brands of Coca-Cola includes soft

drinks like Sprite, Coca-Cola, Fanta and diet Coke etc. While vitamin water, minute maid and

PowerAde are also small brands of the company (Biz Yahoo, 2014). Globally, the company is

ranked number one in non-alcoholic beverages. Consumers of its products are found in more

than 200 countries and according to the Sustainability Report about 1.8 billion cold drinks and its

beverages are consumed each day (Coca-Cola Company, 2013). In 2011, the company also

began focusing on promoting the healthy and active lifestyles through diversifying beverage

products. To accomplish this goal, the company introduced about 100 new low calorie soft drinks

for its consumers. By taking this step, Coca-Cola was the 4th company which took initiative to

protect the human rights along with its supply chains. The company helped to establish the

Global Business Initiative on human rights in all over the world.

The Company is working on strengthening their commitment to expand and also do more

in the communities which its products are available. The Sustainability Report provided on

Coca-Colas website introduces a variety of charitable events, human right acts, and programs

that are assisting the company to become more reputable and recognized in different nations.
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CASE STATEMENT

Coca-Cola is facing a highly competitive industry in todays technological world. The

biggest challenge for the company is to struggle with the emerging competitors in all around the

world while maintaining the production capacity and cost at the same time.

EVALUTAION OF MISSION STATEMENT

The mission of Coca-Cola is To refresh the world in mind, body and spiritTo inspire

moments of optimism through our brands and actions.To create value and make a difference

everywhere we engage.

Customers: Yes Technology: No

Products: Yes Markets: Yes

Philosophy: No Self Concept: Yes

Public Image: Yes Employees: No Survival, Growth, Profitability: Yes

Table 1. Mission Statement Evaluation Matrix

As we can see clearly from Table 1 that Coca-Coal company does not include all the

necessary and essential components for a good mission statement. Mission statement evaluation

matrix shows us the concern for its customers. Customers are the consumers of Coca-Cola

including children and aged persons. All of the person in all around the world are considered to

be the consumers of Coca-Cola. The company also concerns for its products and markets as it is

obvious from the mission statement evaluation matrix. The company concerns all of the other

important factors of a mission statement including, public image, self-concept, profitability, and

survival growth. However, the mission statement of Coca-Cola lacks the concern for technology,

philosophy and its employees. Although philosophy may not affect much the mission of the
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company but technology and employees are of critical importance in a mission statement of a

company. It seems obviously that Coca-Cola is focusing much on technological aspects. These

technological aspects are changing every moment in todays technological world. The company

focuses on its employees methodologies but its mission statement does not talk about

employees. It is also possible that Coca-Cola did not include this factor in its mission statement

because company already have developed a clear and concise employee strategy.

VISION STATEMENT

The vision statement of Coca-Cola is actually comprised of 6 Ps which are as follows:

Productivity:-

Become a very successful, and fast-growing company.

People:-

Become an excellent place to be effective where individuals tend to be motivated to be

unique they can easily be.

Profit:-

Increase long term retreat to shareowners even while becoming aware about all of our
entire commitments.

Portfolio:-

Provide the whole world a stock collection of good quality drinks which count on and
gratify individual's needs and desires.

Planet:-

Become an accountable citizen who seem to creates an improvement through supporting

develop and assist eco-friendly local communities.

Partners:-
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Cultivate an absolute system of consumers and manufacturers, and jointly we produce

common, long lasting valuation.

EXTERNAL ASSESSMENT

The external assessment allows us to evaluate and analyze the risk factors for the
beverage industry from threats and opportunities outside the company. Upon completing this
assessment, we have found that Coca-Cola ranked fairly well in handling the threats and
opportunities. They received a 2.75 total on the EFE Matrix when the average is a 2.5. This
shows that Coca-Cola is doing above average.

EFE MATRIX

Sr. External Factors Weigh Ratin Weighte

No t g d
. Score
Opportunities
1 Sales of bottled water boosted up by 4.1% in 2015 that is 5 0.04 4.00 0.16
times as fast as the 0.9 percent growth of beverage sales
overall
2 Energy drink sales will increase to 21 billion per year by 0.08 3.00 0.24
2017
3 Coca-Cola has an estimated 8% EPS future growth rate 0.05 4.00 0.20
4 Many foreign countries still not experiencing a high 0.10 2.00 0.20
development of soda in their market
5 The Company earned an amount of total $1.89 billion 0.10 4.00 0.40
having growth rate of almost 13% in 2015
6 1% of global population is still without adequate 0.07 2.00 0.14
drinking water supply
7 Consumers are becoming extremely health conscious in 0.06 3.00 0.18
products they consume. Took over Innocent Drinks, a
British company, which focuses on healthy drinks
8 Exploring acquisition deal with Monster who has become 0.07 3.00 0.21
a force to be reckoned with in the beverage market
Threats
1 Pepsi is more diversified offering both food and beverage 0.10 3 0.30
products
2 Carbonated drink sales are decreasing due to high sugar 0.08 2 0.16
content
3 Pepsi could become a more popular drink 0.03 2 0.06
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4 "Diet" soda is on the decline as well with nearly an 8% 0.08 2 0.16

fall
5 Health conscious groups giving negative publicity to 0.06 2 0.12
Coca-Cola for their products
6 Increase in sugar prices 0.05 2 0.10
7 Emergence of other beverage brands could provide 0.04 3 0.12
competition
TOTAL 1.00 2.75

In analyzing the threats and opportunities for Coca-Cola, we came up with eight

opportunities and seven threats. The opportunities are as follows:

1. Sales of bottled water boosted up by 4.1% in 2015 that is 5 times as fast as the 0.9 percent growth

of beverage sales overall.

2. Energy drink sales will increase to 21 billion per year by 2017.
3. Coca Cola has an estimated 8% EPS future growth rate.
4. Many foreign countries still not experiencing a high development of soda in their market.
5. The Company has posted net earnings of about $1.89 billion, which is a growth rate of

about 13% in 2009.

6. 11% of global population is still without adequate drinking water supply.
7. Consumers are becoming extremely health conscious in products they consume. Such as

turning to British Company, took over healthy drinks.

8. Exploring acquisition deal with Monster who has become a force to be reckoned with in

the beverage market.

From those opportunities from With regard to how Coke handles these opportunities, the

company scored a 3, 2, and 4 out of 4 respectively. This tells us that Coke is handling the rise in

popularity for energy drinks well. Coke already has several energy drinks of its own and are

currently exploring a partnership by acquiring Monster, one of the leading energy drink

companies in the business. In regard to the score of a 2 in how Coca-Cola handles the

opportunity of many foreign countries and why they still do not have a high development of soda
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in their market is because they fail to capitalize on this. Coca-Cola is already present in 200

countries and they are not prioritizing focusing on more at the moment.

Coca-Cola has seven threats in its external assessment. These are as follows:

1. Pepsi is more diversified offering food and beverage products,

2. Carbonated drink sales are decreasing due to high sugar content,
3. Pepsi could become a more popular drink,
4. Diet soda is on the decline as well, with nearly an 8% fall,
5. Health conscious groups giving negative publicity to coca cola for their products,
6. Increase in sugar prices, and
7. Emergence of other beverage brands could provide competition.

Number 1 (Pepsi is more diversified offering food and beverage products), 2 (Carbonated

drink sales are decreasing due to high sugar content), and 4 received the highest weights. Coca-

Cola received a rating of 3, 2, and 2 respectively on these threats. Pepsi has had food products

for quite some time now and it hasnt derailed Coca-Cola yet, and we dont anticipate it doing so

in the future. The fitness fad that is taking over now offers a severe threat for the company.

They have resorted to diet soft drinks, however these too are starting to slump.

INTERNAL ASSESSMENT

It is vital to assess the companys internal strengths from the aspects of accounting,

operations, development, management, marketing, production, research, and finance systems

operations. Understanding the internal strengths and weaknesses allow us to plan for operational

and managerial efficiency and to help us make vital financial decisions in the future.

IFE MATRIX

Sr. Internal Factors Evaluation (IFE) Weigh Ratin Weighte

No t g d Score
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.
Strengths
1 Coca-Cola being a valuable brand known as leader of all 0.09 4.00 0.36
beverages companies
2 Product Variety 0.08 3.00 0.24
3 High market share 0.09 4.00 0.36
4 Leader of soft drink industry 0.08 3.00 0.24
5 Large distribution and production facilities 0.07 3.00 0.21
6 Very strong financial position 0.03 3.00 0.09
7 Strong advertising and marketing 0.07 3.00 0.21
8 Strong global company 0.09 4.00 0.36
Weaknesses
1 Larger long-term debt 0.08 2.00 0.16
2 Negative publicity in India 0.06 2.00 0.12
3 Debt-to-equity ratio below .99 0.06 3.00 0.18
4 Low sale on products (i.e. Energy Drinks) 0.07 2.00 0.14
5 Products limited to beverages 0.06 3.00 0.18
6 Numerous discontinued product 0.03 1.00 0.03
7 Weaker marketing strategy to younger market compared 0.04 2.00 0.08

Pepsi
TOTAL 1.00 2.96

The above matrix led us to investigate and study important strengths and weaknesses of

the company. It provides a basis of identifying and evaluation relationships among various

categories of Coca-Cola. Some of highly weighted strengths of Coke include, Coca-Cola being

the most reliable brand in beverage field today. Having a high market share in the soft drink

industry, and being a strong global company. These specific strengths received a rating of .09 and

have all received a rating of 4. These strength factors play an important role in the advancement

of Coca-Cola and provide an edge over competitors in future business endeavors and should be

maintained and held at such high regards. In contrast, we have also listed some of the companys

main weaknesses. After adding the weighted scores of each strength and weaknesses, we have

come to a grand total of 2.84. Using a weighted score of 2.5 as a reference to an average internal

performance, Coca-Colas total score of 2.84 places the company just slightly above average.
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SWOT ANALYSIS

Based on the internal assessment, the strongest point under the strength sections is that

Coca-Cola is regarded the top manufacturers of soft drink markets. The company is providing

better and efficient products. Company is maintaining its strength by providing variety of

products to its customers in all around the world. Coca-Cola owns a competitive financial

economy through its valuable market shares and it provides largest manufacturing and

distribution in most of the countries.

On the other hand, there also some serious flaws and weaknesses in Coca-Cola also. The

company should avoid long term debt ratio which is usually increasing every year especially in

Middle East countries. The company should also focus to improve the sale of its energy drinks.

Coca-Cola Company unfortunately lacks adequate sale of energy drinks. The company should

focus on new strategies to advertise its energy drinks globally which eventually will result in

increasing sale of energy drinks.

Based on the external assessment, the company can enjoy a variety of opportunities in

future to sufficiently increase its market share in the world. Coca-Cola can increase its sales in

energy drinks to a value of 21 billion per year by increasing the energy drink sales in global

market. Coca-Cola can take advantage of the opportunity to increase its earnings per share to a

value of 8% by increasing the earnings per share, company will be able to maintain its market

share with great strength which eventually will offer a great challenge to its competitors. Global
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needs of water supply are not enough in regions of Middle East and Africa. Coca-Cola have

opportunity to achieve this space by providing its soft drink products to a population of 11%

globally. This 11% global population is facing inadequate supply of water. The company should

focus to achieve this target in order to supply its soft drink products to the areas facing

inadequate supply of water.

As people are more aware of health today, so company can utilize this opportunity

through social media to provide them uniqueness of its product regarding health issues. As Coca-

Cola Company is producing soft drinks which are not harmful for the humans. The company can

focus on this opportunity to confidently increase the sale of its soft drink products.

While taking a look at the threats in external assessment, we can notice that the company

continuously has challenges to face. Pepsi being its one of the big competitors has more

diversity its products. The Coca-Cola lacks in diversity of products. Other competitors are

focusing more on food and beverage products all the same time. Another threat which company

is facing is the higher rate of sugar content in its products. Low sugar content drinks are

becoming more popular in all around the world and the prices of sugar are also increasing on

yearly basis. So the company have to revise its policy regarding percentage of sugar content in

beverages.

FINANCIAL ANALYSIS

Coca-Cola Company enjoys world-wide brand recognition which will assist in gaining market

share in those areas not already saturated with Coke products. Strong brand recognition and

consumer loyalty also allows Coca-Cola Company to pass on (to some degree) increased

commodity costs to consumers. Emerging markets will continue to increase Coca-Cola market
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share but the company will have to be watchful of trends developing in emerging markets similar

to those in the United States as emerging markets evolve into developed, slower-growth markets.

Coca-Cola also reports increasing investment in other emerging markets such as China,

Myanmar and India. China is expected to see a $4 billion investment over the next three years

while India can expect a $5 billion investment increase over the next eight years (Coca-Cola

Steps Up, 2012).

Factors 2015 2014 2013 2012 2011 Industry Average

Quick Ratio 0.77 0.78 0.85 0.95 0.62 0.80

Current Ratio 1.09 1.05 1.17 1.28 0.94 1.12

Inventory Turnover 6 6.34 5.07 4.88 5.16 N/A

Total Asset Turnover 0.58 0.61 0.58 0.69 0.76 N/A

EBITDA Margin % 26.32 26.55 42.25 29.99 29.52 30.92

Debt to Equity Ratio 0.99 0.9 0.76 0.48 0.45 0.72

Receivables Turnover 9.89 9.96 8.58 9.05 9.94 N/A

Calculated Tax Rate % 24.78 26.1 18.04 24.98 19.63 22.10

Return on Assets % 10.83 11.21 19.42 15.3 13.82 14.12

Return on Equity % 27.92 27.37 42.32 30.15 27.44 31.04

Cash Flow per Share 2.36 2.07 2.06 1.77 1.63 1.97

Reference of Statistics: Mergent Online Database, Strayer University

Resource Center Retrieved March 23, 2017
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INVESTORS PROFILE AND STRATEGY

According to Brigham and Ehrhardt in the textbook Financial Management, in addition to

calculating and comparing ratios in researching sound investments, the American Association of

Individual Investors (AAII) suggests to look into qualitative factors (Brigham & Ehrhardt, 2014,

p. 119) These include understanding the reliance on products or suppliers, percentage of

companys business overseas and political instability, differentiation, regulatory environment,

and competitors. Having a diversified portfolio will also assist in reducing the risks for the

investor (U.S. Securities and Exchange Commission, 2013).

Investing in Coca-Cola Company in addition to other investments will be a sound option

for an individual looking to gain a return on their investment. According to the Financial Ratio

Analysis Model, currently Coca-Cola has more assets than it have debt. If the company had to

liquidate right now, Coca-Cola would be in a good position as they have enough liquidity assets

on hand, if Coca-Cola had to sale them, and still be in the positive. This could be a low-risk

investment but a solid one to add to a diversified portfolio.

INDUSTRY ANALYSIS

The Porter's Five Forces Model for Coca-Cola

Competitors Rival in the Industry
Whenever we take into account Coca-Cola and its competitors, Pepsi is usually the

greatest primary opponents, and as it should be. Both of the companies used fundamentally the

same ingredients and have some fundamentally offerings beverages: Pepsi and Coke both of the

organization additionally possesses equivalent non-pop pursuits, by way of example, squashed

orange and strained water. Basically, Pepsi additionally possesses Doritos, Rice-A-Roni and

Quaker Oats etc., and it changes the concentration of in this way (Butler, 2017). Coca-Cola
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doesn't have a comparable chance or opportunity. With the time buyer patterns move, Coca-Cola

could be left powerless, however the refreshment organization has a loyal after. The hazard about

there is less.

Potential of New Entrant into the Market

Newcomers into beverage business are an additional chance. While organizations like

Coca-Cola as well as competitors will have particular accreditation deals, such as having their

goods sold in takeaway food restaurants, and various supply deals, an additional organization

might obtain a grip if this click into the trends in the correct moment. It will have a really good

and incredibly popular impression to make the kind of company popularity that Coca-Cola

enjoys today. In addition, some sort of customers shift in the direction of more healthy

alternatives, it ought to be just one innovative entrant that triggers a challenge for the

refreshment industry. As smaller sized businesses make an effort to go into the refreshment

industry, this risk gets to be more of the probability.

Threat of Substitute Products

Threat of substitute is always present for an organization. The important issue here it to

address what to take necessary steps that will keep the consumers stick to its products only.

Coca-Cola also faces the same situation in this regard. As an example, we can say that a popular

coffee can replace the Coke in near future. If we notice on the growth of other coffee companies

like Starbucks, it will be clear to know that coffee companies are introducing new flavors to

attract its customers. Starbucks is offering its customers with variety of products and flavors

including coffee roaster, Green Mountain etc. (Butler, 2017).

Customers may also select drinks for example fresh made shakes rather than Coca-Cola's

canned drinks. As increasing numbers of individuals think more about their health today, they
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always prefer a healthier drink with their favorite food. Although Coca-Cola enjoys a reputable

destination in international market but there is always a threat of substitute product. Investors

and traders always think deeply how to make their investment safe (Butler, 2017).

Bargaining Power of Suppliers

This can lead towards the last competitive force which is distributors of Coca-Cola. As

large as the drink firm is, and also as several agreements because it very likely has featuring its

distributors securing charges, distributors continue to have some strength, and few of it might be

out of their hands. With the consideration of all the things, sugar is often an item; just as some

other goods, its price differs with time along with availability. Several disasters may affect sugars

cane harvests and affect Coca-Colas recyclables expenses. Due to agreements the business most

likely has in position, the consequence could be minimal unless those mishaps happened over

and over again during the period of several years.

Bargaining Power of Customers

Bargaining power of consumers is extremely good and also this power is driven through

the accessibility to good selection of cola refreshments. Furthermore, there is not any transferring

expense for purchasers as well as the cost flexibility of goods more raises purchaser buying

strength. As well, the instances of Coca Cola addiction has appeared in the news numerous times,

addiction of Peter Lawrie, a specialist golfer being a remarkable example. As a result, it could be

argued that bargaining strength of little section of clients who could be viewed as Coke addicts

is insignificant.

Since the Coca-Colas products it not directly purchased by its end consumers, suppliers

and buyers have a vital role in it. Most of the bargainers and suppliers are directly associated

with fast food restaurants colleges and university canteens and food markets. The company also

has to keep focus on the end consumer. The end price should have to maintain in order to keep
the bargaining flow in a sequence (Butler, 2017).
SWOT MATRIX OF COCA-COLA COMPANY
Strengths (S) Weaknesses (W)
1. Coca Cola leader as a
most valuable brand
2. Product Variety
3. High market share
4. Leader of soft drink
industry
5. Large distribution and
production facilities
6. Very strong financial
position
7. Strong advertising
and marketing
8. Strong global
company
Opportunities SO Strategies WO Strategies
1. Sales of bottled water 1. Add 2 new beverages
boosted up by 4.1% in geared towards
2015 that is 5 times as consumers who are
fast as the 0.9 percent healthy conscious (S2,
growth of beverage O7)
sales overall 2. Increase bottled water
2. Energy drink sales production by 10%
will increase to 21 (S5, S6, O1)
billion per year by 3. Expand sale of bottled
2017 water to countries in
3. Coca-Cola has an need of adequate
estimated 8% EPS water source (S8, O6)
future growth rate 4. Expand sale of soda
4. Many foreign to foreign countries
countries still not without a high
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1. Larger long-term debt
2. Negative publicity in
India
3. Debt-to-equity ratio
below .99
4. Low sale on products
(i.e. Energy Drinks)
5. Products limited to
beverages
6. Numerous
discontinued product
7. Weaker marketing
strategy to younger
market compared to
Pepsi
1. Solidify acquisition
deal with Monster to
reap benefits of
potential increase in
energy drink sales
(W4, O2, O8)
2. Utilize the increase in
net earnings to
absolve some of the
debt Coca-Cola has
accumulated. (W3,
W1, O5)
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experiencing a high development for said

development of soda beverage (S1, S8, O4)
in their market
5. The Company earned
an amount of total
$1.89 billion having
growth rate of almost
13% in 2015
6. 1% of global
population is still
without adequate
drinking water supply
7. Consumers are
becoming extremely
health conscious in
products they
consume. Took over
Innocent Drinks, a
British company,
which focuses on
healthy drinks
8. Exploring acquisition
deal with Monster
who has become a
force to be reckoned
with in the beverage
market
Threats ST Strategies WT Strategies

1. Pepsi is more 1. Add 2 new 1. Gain foothold in

diversified offering healthy beverages the food market
both food and geared towards by adding 2 food
beverage products consumers who products to
2. Carbonated drink are conscious production (T1,
sales are decreasing about their health T7, W5)
due to high sugar (S2, T2, T5, T4) 2. Increase amount
content 2. Raise price of spent in social
3. Pepsi could become a beverages by 3% networking
more popular drink (S8, T6) advertising to help
4. "Diet" soda is on the 3. Increase gain popularity
decline as well with advertising and among the
nearly an 8% fall marketing expense younger
5. Health conscious by 4% each in the population (T3,
groups giving U.S. and W7)
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negative publicity to internationally

Coca-Cola for their (S6, S7, S8, T7)
products
6. Increase in sugar
prices
7. Emergence of other
beverage brands could
provide competition

SWOT Matrix Discussion

After conducting our EFE and IFE for Coca-Cola, we went ahead and created our SWOT

matrix for the company. First, we will start by going over our strengths-opportunities strategies.

As you know, many people have become more aware of the foods and beverages they consume

and have become conscious of their health. Obviously soft drinks are not the best type of

beverages to consume so Coca-Cola must take advantage of this opportunity. Therefore, our first

SO strategy is to add two new beverages geared towards consumers who are health conscious.

Due to the increase of bottled water sales in 2011 and the lack of adequate water supply in parts

of the world, we also look to take advantage of that area of beverages. We plan on doing that by

increasing our bottled water production by 10% (SO strategy 2) and also expand our sale of

bottled water to countries in need of adequate water source (SO strategy 3). There is also a lack

of high development of soda in many foreign countries. Coca-Cola should also continue

development of their leading product so we recommend expansion of soda to these countries as

well (SO strategy 4).

Next, we will cover our weakness-opportunities strategies for Coca-Colas SWOT matrix.

Coca-Cola has had some low sale on its products in the past few years, especially with energy

drinks. Since energy drinks sales are on the rise and could potentially reach $21 billion per year

we would like to change this weakness into strength. Coca-Cola has already begun exploring an

acquisition sale with Monster and the best route for them to take would be to solidify this deal
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(WO strategy 1). By doing this, Coca-Cola will gain a brand name that has already established

itself as a top product in the energy drink market. This will set up Coca-Cola to reap the benefits

of the increase in energy drink sales. We also recommend that Coca-Cola utilize the increase in

net earnings they have earned to absolve some of the debt that has accumulated over the past few

years (WO strategy 2).

Currently, the biggest threat for Coca-Cola is the fact that people are becoming more

aware of their health and what they consume. As we mentioned before, we want to take

advantage of this by adding two new healthy beverages geared towards health conscious

consumers. This will also be our first strength-threat strategy as we believe this is an important

issue for our company moving forward. Coca-Cola also needs to combat the rise of sugar prices

as many of their products use this. We recommend raising the price of beverages by 3% to help

deal with the increase in price (ST strategy 2). Of course our biggest competition in the market

would be Pepsi-Cola, and currently they are on pace to become a more popular drink.

Emergences of other beverage brands could also provide additional competition to our company

as well. To help fight off the competition, Coca-Cola should increase its advertising and

marketing expense by 4% in the United States and internationally (ST strategy 3).
Pepsi has also proven to be more diversified as they also offer food products as well. If

Coca-Cola does not want to be topped by Pepsi, then it is essential for them to diversify as well.

For our first weakness-threat strategy, we recommend adding two food products to production to

gain a foothold in the food market. Coca-Cola has also lost popularity among the younger

generation as either Pepsi or another beverage brand is preferred more. To help gain some

popularity back from the younger generation, Coca-Cola should increase amount spent in social

network advertising (WT strategy 2). Social networking is very popular among the younger

generation so we must utilize it as a tool to improve our popularity.

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THE QUANTITATIVE STRATEGIC PLANNING MATRIX (QSPM)

Strategy#1 Strategy#2 Strategy#3

Add new and Add food Spend more
healthy products to budget to
beverages for gain foothold increase
consumers in market popularity
among younger
generation
No Factors Weight AS TAS AS TAS AS TAS
.
Opportunities
1 Sales of bottled water 0.04 3.00 0.12 1.00 0.04 1.00 0.04
boosted up by 4.1% in 2015
that is 5 times as fast as the
0.9 percent growth of
beverage sales overall
2 Energy drink sales will 0.08 3.00 0.24 2.00 0.16 1.00 0.08
increase to 21 billion per
year by 2017
3 Coca-Cola has an 0.05 - - - - - -
estimated 8% EPS future
growth rate
4 Many foreign countries 0.10 3.00 0.30 1.00 0.10 1.00 0.10
still not experiencing a
high development of soda
in their market
5 The Company earned an 0.10 - - - - - -
amount of total $1.89
billion having growth rate
of almost 13% in 2015
6 1% of global population is 0.07 3.00 0.21 1.00 0.07 1.00 0.07
still without adequate
drinking water supply
 Almujahid 22

7 Consumers are becoming 0.06 4.00 0.24 2.00 0.12 2.00 0.12
extremely health conscious
in products they consume.
Took over Innocent
Drinks, a British company,
which focuses on healthy
drinks
8 Exploring acquisition deal 0.07 3.00 0.21 1.00 0.07 2.00 0.14
with Monster who has
become a force to be
reckoned with in the
beverage market
Threats
1 Pepsi is more diversified 0.10 1.00 0.10 4.00 0.40 1.00 0.10
offering both food and
beverage products
2 Carbonated drink sales are 0.08 4.00 0.32 1.00 0.08 1.00 0.08
decreasing due to high
sugar content
3 Pepsi could become a 0.03 2.00 0.06 3.00 0.09 4.00 0.12
more popular drink

4 "Diet" soda is on the 0.08 3.00 0.24 2.00 0.16 1.00 0.08
decline as well with nearly
an 8% fall
5 Health conscious groups 0.06 4.00 0.24 1.00 0.06 1.00 0.06
giving negative publicity
to Coca-Cola for their
products
6 Increase in sugar prices 0.05 2.00 0.10 1.00 0.05 1.00 0.05
7 Emergence of other 0.04 3.00 0.12 2.00 0.08 4.00 0.16
beverage brands could
provide competition
1.00
Strengths
1 Coca-Cola being a 0.09 2.00 0.18 3.00 0.27 3.00 0.27
valuable brand known as
leader of all beverages
companies
2 Product Variety 0.08 3.00 0.24 3.00 0.24 1.00 0.08
3 High market share 0.09 2.00 0.18 3.00 0.27 3.00 0.27
4 Leader of soft drink 0.08 2.00 0.16 1.00 0.08 1.00 0.08
industry
5 Large distribution and 0.07 - - - - - -
 Almujahid 23

production facilities
6 Very strong financial 0.03 - - - - - -
position
7 Strong advertising and 0.07 1.00 0.07 1.00 0.07 4.00 0.28
marketing
8 Strong global company 0.09 - - - - - -
Weaknesses
1 Larger long-term debt 0.08 - - - - - -
2 Negative publicity in India 0.06 2.00 0.12 2.00 0.12 3.00 0.18
3 Debt-to-equity ratio 0.06 - - - - - -
below .99
4 Low sale on products (i.e. 0.07 3.00 0.21 4.00 0.28 2.00 0.14
Energy Drinks)
5 Products limited to 0.06 1.00 0.06 4.00 0.24 1.00 0.06
beverages
6 Numerous discontinued 0.03 1.00 0.03 1.00 0.03 1.00 0.03
product
7 Weaker marketing strategy 0.04 1.00 0.04 1.00 0.04 4.00 0.16
to younger market
compared Pepsi

TOTAL 1.00 3.79 3.12 2.75

QSPM Discussion
The QSPM was based on three strategies. Strategy#1 was about producing new healthy

product for consumers who are health conscious; strategy#2 was to gain foothold in the food

market by adding two food products; and last but not least, our third strategy, was to increase the

amount spent in advertising to gain popularity among the young generation.

After our careful analysis, study of the Quantitative Strategic Planning Matrix (QSPM) and other

strategic assessments, we have come to the decision that it would be in Coca-Cola Companys

best interest to employ strategy #1 of including healthy beverages that accommodate to the trend

of health conscious consumers. This strategy will help Coca-Cola Company gain a larger

domestic and global market share while boosting sales and future profits.
 Almujahid 24

IMPLEMENTATION PLAN

Management
When implementing Coca-Colas new strategy, management will have a number of issues

that they must address. First, they must have strong annual objectives to help ease the transition

to this new strategy. These objectives will be based upon the revised long term objective, which

is to increase our market share domestically and internationally. Setting annual objectives to

increase percentage of market share per year coincides with our healthier beverage strategy

because some of the market has been taken up by healthier options. In order to get that share

back, Coca-Cola also has to offer a healthy alternative. Company policies will be driven towards

establishing quality control with our new product while also offering incentives (such as profit

sharing) for employees to help increase productivity. Resource allocation is a very important

management issue as well. We would like to provide adequate financial and human resources to

marketing and R&D as we want to regain some of the market and a stable new product. R&D

will also require a healthy amount of physical and technological resources too. Since Coca-Cola

is changing its strategy, it is imperative to change its structure too. The best structure for our

situation would be a divisional structure by product since our strategy is based around a new

special product. All these changes can be threatening to us as well because of the possibility of

resistance to it. If we encounter resistance, the best course of action to follow for our situation is

the educative change strategy. Although this is the slowest alternative, we want to execute our

strategy the best way possible. In order to do that, we must have all hands on deck and the best

way to attain that is to educate our employees so they can accept the change better.
 Almujahid 25

Company Strategy:

To develop a healthier and affordable product to meet our customers needs and increase

our market share and profitability objectives.

Supporting Policies:

1. Research and development should take steps in order to invent and diversify in the juice

and beverage business.

2. A monthly control report must be submitted by all the divisions based on the monthly

data. (This will help maintain where we are spending our money and can tell us where to

cut back or increase expenses.)

Divisional Objectives:

Increase the beverages revenue by 15%.

Supporting Policies:

1. Starting from January 2018, each division's salesperson must follow up with clients and

conduct a quality survey to ensure they received quality products in their order. (This

would ensure quality control over our products, especially with our new healthy

beverage.)

2. From January 2018, salespersons will receive 5 percent of gross revenue from beverages

as a bonus if we reach our divisional objective. (Provides an incentive for our employees

that will help them strive to achieve our objective.)

Production Department Objectives:

Increase Production units to 40,000.

 Almujahid 26

Supporting Policies:

1. From January 2018, employees will receive a $150 bonus if production units reach

40,000 by the end of the year. (This will provide productivity increase in workers in the

form of incentives.)

2. From January 2008, production department will be worked in two shifts. (Even though

this will take away some hours from workers we want fresh workers on the line so we

can maintain quality control of our product.)

Operations

When Coca-Cola introduces the new product, decisions must rely heavily on quality

control, cost control, inventory control, and creating an operations plan which needs to be

restricted to meet their objectives but also somewhat unrestricted to allow for flexibility and

creativity. A trial and error phase should be developed on a smaller scale to ensure that the

strategic decision is a financially feasible one. If the trial and error phase is successful, then the

plan should move forward and the company should complete the introduction of the option of

healthy beverages.

Human Resources

When Coca Cola implements its new strategy of healthier drink choices the company

must address the changes of the organizational structure of their company and additional staffing

needs and concerns. Human Resources must develop a strategic approach for their staffing needs

and define the role that each staff member will play when they attempt to accomplish their goal

of introducing healthier versions of their product to the consumer market.

Accounting and Finance Issues

 Almujahid 27

A successful strategy implementation will require additional capital. One way of

generating the needed income to fund our strategic projects is to carefully assess and analyze the

companys debt and equity within its financial structure. One way to analyze if Coca-Cola has

sufficient capital to fund our strategies is by conducting a projected financial statement analysis.

The projected financial statement analysis can be used to know about the impacts of our strategic

implementation decision of adding an addition to the Coca-Cola product line. This will be

implemented by accurately forecasting sales and knowing about the cost of goods sale as well as

knowing the expenses by using percentage of sales method.

Resource and Development Implementation

The approach Coca-Cola will take in implementing research and development is to be the

first firm to market new technological products. Coca-Cola will utilize its strategy of healthier

drink choices and its underlying issue of declining market share. It will focus on being the first to

offer new, healthier convenient beverage options, especially to new and developing markets that

do not have access to these options. Innovative imitators have difficulty entering the market and

so it is important that Coca-Cola uses research and development to ensure it is the first to market

health-conscious technological developments in convenient food and beverage.

Management Information Systems

The way that Coca-Cola will implement its management information system is by

making sure that all the places Coca-Cola wishes to do business with can communicate with

them. If Coca-Cola wants to provide its products to the world, then the world must be able to

communicate to Coca-Cola. The ordering system must be available in multiple languages making

it easy for those countries that do not speak English to order from Coca-Cola. The employees of
 Almujahid 28

Coca-Cola must also be able to intemperate the information coming from those other countries

whether it be the use of translators or a program that changes the information over into readable

data for the Coca-Cola employee.

Finally, it is important that we carefully evaluate the worth of Coca-Cola Company.

Evaluating the worth of our organization is central to strategy implementation and will allow us

to realize opportunities of acquiring other firms in our goal to produce a new line of health

conscious products. Determining our businesss worth can be done so by assessing what our firm

owns, what our firm earns, and what our firm will bring in the market. The valuation of our

firms worth is based on financial facts, but common sense and intuitive judgment must enter

into the process as well.

 Almujahid 29

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Porter, M. E., Michael E. Porter and Thomas H. Lee, MD, & Clayton M. Christensen and

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