Strategic Management Case

Of
Coca-Cola

Presented by

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Contents

(1) Coca-cola's Current situation (1)

a. Current performance
b. Strategic posture
 Vision & mission
 Objectives
 Strategies
 Policies
(2) Strategic Management (2)
a. Board of Directors
b. Top Management
(3) External Environment (EFAS Table) (3)
a. Opportunities
b. Threats
(4) Internal Environment (IFAS Table) (3)
a. Strengths
b. Weaknesses
(5) Analysis of Strategic Factors (SWOT) (6)
a. Situational Analysis SWOT analysis.
b. Review of current mission and objectives.
(6) Strategic Formulation & Strategic alternatives & recommended strategy.(7)
a. SPACE matrix
b. BCG
c. IE Matrix
d. QSPM

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I – Current situation

a. Current performance
- Good Financial Position, as shown in exhibit (3) : Ratio analysis.
- Good profitability ratio despite the decrease in E/S from 2.57 to 2.162 as shown
in exhibit (4): common size Income statement.
- Company is more stable in getting loans from institutions to keep tax saving.

b. Strategic Posture
1 – Vision and mission
- Coca-Cola vision guides every aspect of its business by describing what it
need to accomplish in order to continue achieving sustainable growth.
People: Being a great place to work where people are inspired to be the best
they can be.
Portfolio: Bringing to the world a portfolio of quality beverage brands that
anticipate and satisfy people's desires and needs.
Partners: Nurturing a winning network of customers and suppliers, together
we create mutual, enduring value.
Planet: Being a responsible citizen that makes a difference by helping build
and support sustainable communities.
Profit: Maximizing long-term return to shareowners while being mindful of
our overall responsibilities.
- Coca-Cola mission declares its purpose as a company. It serves as the
standard against which it weigh its actions and decisions.
(1) To refresh the world in body, mind and spirit.
(2) To inspire moments of optimism through our brands and our actions.
(3) To create value and make a difference everywhere we engage.
2 – Objectives
1 – To be profitability leader in industry for every product line.
2 - To be number one in total customer satisfaction.
3 – To increase profitable market share growth all over the world.

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 3 – Strategies
1 – Outsource Coca-Cola distribution networks.
2 – Global growth through acquisition of potential competition business.
3 – Strengthen its brand to maintain its strong market position.
4 – To compliance with all regulatory environmental requirements.
4 – Policies
1 – innovation in branding.
2 – promotion to develop a market penetration.
3 - Operation cost reduction on the account of increase of the R&D Cost.

II – Strategic Management

a. Board of directors.
Chairman and Chief Executive Officer
Director Since 2006 John  F.  Brock
Coca-Cola Enterprises Inc.
Chairman, Chief Executive Officer, and President
Director Since 2005 Fernando Aguirre
Chiquita Brands International, Inc.
Former Senior Vice President, U.S. Operations
Calvin Darden
United Parcel Service, Inc. (UPS)
Executive Vice President and President Bottling Investments and
Supply Chain
Irial Finan
Director Since 2004
The Coca-Cola Company
Former Chairman of the Board
Director Since 1992 L. Phillip Humann
SunTrust Banks, Inc.
President
Director Since 2005 Donna A. James
Lardon & Associates LLC
Former Chairman and Chief Executive Officer
Thomas H. Johnso
Director Since 2007
n
Chesapeake Corporation

Former Vice Chairman and Chief Risk Officer

Suzanne B. Labarg
Director Since 2007
e
RBC Financial Group
President and Chief Executive Officer
Director Since 2007 Curtis R. Welling
AmeriCares Foundation Inc.

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b. Top management
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III – External Environment (EFAS Table; See exhibit 1)
- Key external factors.
a. Opportunities
O1. Possible growing demand. (Economics)
O2. Expansion – Reaching all segments. (Bargaining power of buyer)
O3. Globalization. (Economics)
O4. Catering to Health Consciousness of People. (Sociocultural)
O5. Bottled water growth.
O6. Acquisitions of smaller players.

b. Threats
T1. Health Drinks – Fruit Juice Companies.
T2. Key competitors (Pepsi ,etc.).
T3. Commodity prices growth.
T4. Image perception in certain parts of the world.
T5. Smaller, more nimble operators/players

IV – Internal Environment IFAS Table; See exhibit (2)

a. Strengths
World’s leading brand Coca-Cola has strong brand recognition across the globe.
The company has a leading brand value and a strong brand portfolio. Coca-Cola is
one of the leading brands in their top 100 global brands ranking in 2006.8The value
of the Coca-Cola was $67,000 million in 2006. Coca-Cola ranks well ahead of its
close competitor Pepsi which has a ranking of 22 having a brand value of $12,690
million. Furthermore; Coca-Cola owns a large portfolio of product brands. The
compan8y owns four of the top five soft drink brands in the world: Coca-Cola, Diet
Coke, Sprite and Fanta. Strong brands allow the company to introduce brand
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 extensions such as Vanilla Coke, Cherry Coke and Coke with Lemon. Over the years,
the company has made large investments in brand promotions. Consequently, Coca-
cola is one of the best recognized global brands. The company’s strong brand value
facilitates customer recall and allows Coca-Cola to penetrate new m2arkets and
consolidate existing ones. Coca-Cola Company, The large scale of operations with
revenues in excess of $24 billion Coca-Cola has a large scale of operation. Coca-Cola
is the largest manufacturer, distributor and marketer of nonalcoholic beverage
concentrates and syrups in the world. Coco-Cola is selling trademarked beverage
products since the year 1886 in the US. The company currently sells its products in
more than 200 countries. Of the approximately 52 billion beverage servings of all
types consumed worldwide every day, be8verages bearing trademarks owned by or
licensed to CocaCola account for more than 1.4 billion. The company’s operations
are supported by a strong infrastructure across the world. Coca-Cola owns and
operates 32 principal beverage concentrates and/or syrup manufacturing plants
located throughout the world. In addition, it owns or has interest in 37 operations
with 95 principal beverage bottling and canning plants located outside the US. The
company also owns bottled water production and still beverage facilities as well as a
facility that manufactures juice concentrates. The company’s large scale of
operation allows it to feed upcoming markets with relative ease and enhances its
revenue generation capacity. Robust revenue growth in three segments Coca-cola’s
revenues recorded a double digit growth, in three operating segments. These three
segments are Latin America, ‘East, South Asia, and Pacific Rim’ and Bottling
investments. Revenues from Latin America grew by 20.4% during fiscal 2006, over
2005. During the same period, revenues from ‘East, South Asia, and Pacific Rim’
grew by 10.6% while revenues from the bottling investments segment by 19.9%.
Together, the three segments of Latin America, ‘East, South Asia, and Pacific Rim’
and bottling investments, accounted for 34.8% of total revenues during fiscal 2006.
Robust revenues growth rates in these segments contributed to top-line growth for
Coca-Cola during 2006.

b. Weaknesses
Negative publicity, Company received negative publicity in India during
September 2006.The Company was accused by the Center for Science and
Environment (CSE) of selling products containing pesticide residues. Coca-Cola
products sold in and around the Indian national capital region contained a
hazardous pesticide residue. These pesticides included chemicals which could cause
cancers, damage the nervous and reproductive systems and reduce bone mineral
density. Such negative publicity could adversely impact the company’s brand image
and the demand for Coca-Cola products. This could also have an adverse impact on

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 the company’s growth prospects in the international markets. Sluggish performance
in North America Coca-Cola’s performance in North America was far from robust.
North America is Coca-Cola’s core market generating about 30% of total revenues
during fiscal 2006. Therefore, a strong performance in North America is important
for the company.

c. Summery points
 Strengths
S1. Leading brand value and a strong brand portfolio Coca-Cola, Diet Coke,
Sprite and Fanta Large investments in brand promotions sells its products in
more than 200 countries Company also owns bottled water production and
still beverage facilities as well as a facility that manufactures juice
concentrates.
S2. These three segments are Latin America, East, South Asia, and Pacific
Rim and Bottling investments.
S3. Return on total assets increases over the period consistently 2005, 06, 07
15.47%, 16.55%, and 16.95% respectively.
 Weaknesses:
W1. Negative publicity in India
W2. Inventory turnover decreased by 13.29%
W3. Return on equity decreased by 40.50%
W4. Sluggish performance in North America
W5. Coca-Cola’s performance in North America was far from robust
W6. Collection form debtors decreased by 15.68%

V – Analysis of strategic factors (SWOT)

a. Situational Analysis SWOT analysis

- Strengths
S1. Brand equity/image & recognition.
S2. Product distribution and worldwide network.
S3. Solid financial performance.
S4. One of the world's most recognized brand.
S5. Product diversification (water, juices, soft drinks, sport drinks, etc).
S6. Co-operate identity.
S7. Innovation.

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 - Weaknesses
W1. Credit rating
W2. Customer concentration, particularly in the US (Wal-Mart accounts for
more of Coca Cola's business in the US).
W3. A lot of loyal Pepsi customers are not enough loyal Coca Cola customers
W4. Does not enjoy the number one position in India, Pakistan.
- Opportunities
O1. Possible growing demand.
O2. Expansion – Reaching all segments.
O3. Globalization.
O4. Catering to Health Consciousness of People.
O5. Bottled water growth.
O6. Acquisitions of smaller players.
- Threats
T1. Health Drinks – Fruit Juice Companies.
T2. Key competitors (Pepsi, etc).
T3. Commodity prices growth.
T4. Image perception in certain parts of the world .
T5. Smaller, more nimble operators/players.

b. Review of current mission and objectives

Improved Mission Statement
(1) At Coca Cola they're committed to achieving business and financial
success while leaving a positive imprint on society – delivering what it call
Performance with Purpose.

(2) Coca-Cola's mission is to be the world's premier consumer Products

Company focused on convenient foods and beverages. it seek to produce
financial rewards to investors as it provide opportunities for growth and
enrichment to its employees, its business partners and the communities in
which it operate. And in everything it do, it strive for honesty, fairness and
integrity.

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 Improved Vision Statement
(1) Coca cola Co responsibility is to continually improve all aspects of the
world in which we operate – environment, social, economic – creating a
better tomorrow than today."
(2) Coca-Cola's vision is put into action through programs and a focus on
environmental stewardship, activities to benefit society, and a commitment to build
shareholder value by making Coca cola Co a truly sustainable company.
VI – Strategic Formulation & Strategic alternatives & recommended strategy.

a. SPACE Matrix
The SPACE matrix is a management tool used to analyze a company. It is
used to determine what type of a strategy a company should undertake. The
Strategic Position & Action Evaluation matrix or short a SPACE matrix is a
strategic management tool that focuses on strategy formulation especially
as related to the competitive position of an organization.
The SPACE matrix can be used as a basis for other analyses, such as the
SWOT analysis, BCG matrix model, industry analysis, or assessing strategic
alternatives (IE matrix).
The SPACE matrix calculates the importance of each of these dimensions and
places them on a Cartesian graph with X and Y coordinates.
The following are a few model technical assumptions:
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- By definition, the CA and IS values in the SPACE matrix are plotted
on the X axis. -CA values can range from -1 to -6. - IS values can take
+1 to +6.
-The FS and ES dimensions of the model are plotted on the Y axis. -
ES values can be between -1 and -6. - FS values range from +1 to +6.

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b. BCG

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c. IE Matrix

d. QSPM of Coca-Cola

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 Exhibit (2)

Key internal Factors Weight Rating

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Exhibit (1)

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Exhibit (3)

Ratio Analysis

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 Exhibit (4)
Common Size Income Statement

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