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Business and Marketing Strategy Individual Assignment Muhammad Ahsan Riaz Dr.Wang Hui 130479MAR MBA (Finance) A CM 706 April 2011-April 2012 7th July 2011 2085

INTRODUCTON
Coca Cola is a leading Soft Drink manufacturer in the world, selling 1.3 billion beverage servings worldwide every day. Operating from its head office in Atlanta America, it started its global business in 1919 and now operating in more than 200 countries offering approximately 400 beverage products worldwide. Its red and white trade mark is the globally well-known brand symbol. The aim of this report is to discuss the Environmental issues affecting Coca Colas global marketing strategy, relevant threats and opportunities. Global Business and Marketing practices of Coca Cola and application of relevant analytical techniques. Q1) Provide the detailed assessment of the environmental issues affecting Coca Cola global business and marketing Strategy. Given guidance in terms of opportunities or threats they may pose for the company in the future. Ans1) Since Coca Cola started its global operations, it has received lots of criticism for its production procedure and poor environmental record. It has recently made lots of efforts to combat this issue. For example, in India there is a lot of criticism about raw materials being used in manufacturing process? It is believed that water being used by Coca Cola contains pesticides like DDT, linden and chlorpyrifos and other dangerous chemicals. The Case Study conducted by CSE in 2003 revealed that Coca Cola India has pesticides remains of 30 times over European Union regulations while similar test conducted in US found no traces of such chemical. David Cox, Coke's Hong Kong-based communications director for Asia, accused Sunita Narain, CSE's director, of "brand jacking" using Coke's brand name to draw attention to her campaign against pesticides. Narain defended CSE's actions by describing them as a natural follow-up to a previous study it did on bottled water. In 2004, an Indian parliamentary committee was set up to developing the world's first pesticide standards for soft drinks. Coca Cola claims that it uses water treatment plant which removes all harmful chemicals, all its products are tested and meet minimum criteria. But Coca Cola has suffered 11% drop in its sales since 2003. An Indian Court judgement was passed against Coca Cola & other soft drinks manufacturers in 2006 banning it because of high percentage of harmful pesticides in its products, which was eventually overturned in Karala High court on the basis that only federal government can impose such a ban. In March 2004, Coca Cola plants in Kerala India Were shut down by local officials blaming
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for severe fall in quantity & quality of water for local residents this was also overturned in April 2005. Later a scientific study ordered by the High Court found that the most significant reason for fall of water level was lack of rains. Critics say that a socially & ethically responsible organisation should not operate from such a drought-stricken area. In Plachimada,Coca Cola is blamed for water shortages and polluting environment and water. Coca Cola is fighting its case in Indian Supreme court to get its license back. In Varanasi, Coca Cola is blamed for polluting water. Company officials agree that there had been some problems in the past but these have now been resolved.Indian environmental activist Vandana Shiva argues that it takes nine litres of clean water to manufacture a litre of Coke ,though Coca-Cola says it is only an average of 3.12 litres. Some activists argue that packaging material used by Coca Cola has damages environment, but Coca Cola denies such charges. In response to these issues Coca Cola has developed a strategy to reduce its carbon footprint, reduce Energy use, recycling its packaging material, and reduce water usage and treatment of its waste before dumping in to the environment. It also provides environmental friendly fridges, vending machines and 100% recyclable screw bottle tops.#

Q 2) Select and highlight the business and marketing practices which Coca Cola has adopted when tapping in to global markets.
Ans 2) Coca cola has adopted a mix marketing strategy to market its products globally. It has started its global operations in 1919 and now working in more than 200 countries across the world. It is one of the most recognised brand s in the world and also has a large portfolio of other soft drinks like Schweppes, Oasis, 5live, Kea Oar, Fanta, Liit, Dr Pepper, Sprite and Powerade.It often struggles especially in Asian countries against its arch rival PEPSI. Arguments in favour of Standardisation and in favour of Adaption are as under.

Standardisation
Converging Customer Needs and Preferences Levitt proposed that globalisation which is largely influenced by advancement in technology, ease of transportation, establishment of road and rail links has resulted in global harmonisation of customer needs and tastes. To take advantage of this large number of multinationals have come with globally recognised Brands , organisations will be able to export and market their products globally. Driving force will be the universal product, its global appeal and Brand recognition. Coca Cola has made very few changes in its red and white logo and glass bottles over the years. Economies of Scale/Experience Organisations can reduce their costs significantly by standardisation which will also bring competitive advantage. An organisation can get discounts by bulk buying, sharing manufacturing, marketing, and production facilities and management resources. Coca Cola enjoys economies of scale by global franchise system for bottling and distribution. Technological Viability The vision of Coca Cola is to provide its global customers with same taste, for that reason
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Coca Cola has adopted standardisation of its product and process.This has resulted in enhanced cost efficiencies and streamlined procedures.Levitts argues that organisations opting to produce an assortment of product serving different customer segments would not be able to survive globally due to inefficient operations and will find it difficult to compete.

Arguments in Favour of Adoption

Consumer Diversity Customer tastes and preferences vastly vary in different countries due to geographic,demographic,economic and cultural diffrences.Differences exist in terms of customer tastes, habits, income levels, shopping levels, product preferences and customer attitudes. If an organisation acts on Adoption strategy and establish differences carefully, this can prove to be a source of competitive advantage. Dennis and Harris describe Global Branding Strategy as a local plan for each individual local market. So if an organisation fails to take in to account these differences while making its strategy is likely to fail. Like drinking alcohol is not legally allowed in Islamic countries and a product needs to be non-alcoholic in order to market it in those countries. Increased Cost Using a different adverts in different electronic and print media worldwide will cost more than using a single advert. Different advertisement methods could be used to accommodate local differences but again it will cost more than normal. Traditionally, Coca Cola has used a standardised marketing strategy and have used advertisements from a common pool for different small markets. Accommodate Local Needs and Preferences Coca Cola has adopted an approach to accommodate local needs and prefrences.Brand remains the same which gets lots of attention and recognition worldwide while at the same time accommodating local needs and preferences. Coca Cola has printed local languages like Arabic and Chinese to target those markets and has changed size of its bottles to accommodate local standards. Differences in Infrastructure and Regulations Organisations have discovered that operating from one central location can cause competitive disadvantage.Infact an organisation can take advantage of cheap resources, transportation and labour. Strong Brand as Coca Cola has strong identity worldwide it gives very strong bargaining power while entering in to new markets. Coca Cola describes itself as Multi-Local as it adjust itself to accommodate different food laws. Conclusion Not necessarily all or nothing approach, Coca Cola should adopt a strategy that contains best elements of both. Standardisation will help to reduce costs and build Brand image but have to consider local laws and values as well. Customer satisfaction should be the top most priority in order to survive tough competition and increase market share.

Q 3) Apply the strategic concepts and analytical techniques which you have studied relating them to practical examples. You should use recognised theories and models to support your arguments.
Ans 3) Large number of models and techniques are available which we can use in our case like porters 5 forces, SWOT analysis, market segmentation PEST analysis etc.I have used PEST ANALYSIS to describe Coca Colas Position and its prospects. PEST ANALYSIS This models takes in to account, Political, Economical, social and Technological aspects to understand the current position and future prospects of an organisation. We will discuss these one by one. POLITICAL If a government changes, new government may come up with new ideas, laws etc. which may directly affect an organisation. Under FDA laws Non-alcoholic soft drinks are part of food category. The government may come up with new laws and legislations and if an organisation fails to meet those, it may have to incur heavy fines, withdrawal of Government grants etc.These changes may be in the form of new accounting laws, tax laws, environmental laws, ban on foreign exchange transfers, change in exchange rates, interest rate & inflation ban on alcoholic soft drinks, fixed pricing, labour laws, minimal wages. A politically stable country will attract lots of foreign multinationals and the country will prosper while a large multinational like Coca Cola will be reluctant to operate in a country which is politically not very much, as the investor is always risk averse. The ability to form or acquire distribution channels, the availability of raw materials, the infrastructure road and rail system within the country, availability of latest technology, well trained labour and marketing and sales personals will attract investors attention. Economical Economical conditions of a country largely influence the operation of a multinational organisation like Coca Cola. Like Economic boom increasing demand or recession causing drop in demand. Rate of interest, inflation consistent application of Economical policies can play a vital part in attracting and facilitating organisations. Recent events worldwide have affected Coca Cola badly causing drop in its sales revenue. The inflation rate is increasing and buying power of consumers is falling. But now world is coming out of recession, some countries performing better than others. Different Governments have come up with different plans to deal with recession like drop of interest rate, which will eventually help to increase customer demand. Organisations are offered low interest rate loans. So Coca Cola can take advantage of this situation by investing in its Research an development section and in manufacturing new products. This may result in development of advanced products with less cost and great taste. The world is gradually coming out of recession and consumer confidence is again increasing, so with the passage of time spending on soft drinks will increase resulting in increased revenue generation for Coca Cola. The economies of Japan, Germany and Brazil are turning around, these emerging markets will play key role in the growth of the soft drink industry. SOCIAL These involve changing habbits, cultures and life style and their impact on soft drink consumption. In todays world majority of women are working along with men. This has lead to making of food and drinks which are easy to carry, less in weight and in general time saving. With the changing lifestyle, majority of consumers prefer Diet coke instead of normal
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one, and use of distilled water has also increased. Consumers from 37-55 years age group are becoming more conscious about nutrition and other ingredients. The healthy lifestyle is now becoming a norm and this will stimulate the demand of healthier soft drinks. TECHNOLOGICAL This is primarily concerned with general advancement in technology, improved production methods, new marketing techniques like greater emphasis on E-marketing and internet and development of new advanced products. Coca cola is using Extensive E-marketing to increase its Brand recognition and marketing. With the help of technological advancement Coca cola has made disposable bottles and 330ml cans which are light in weight and easy to carry. By using technological advanced machinerary Coca Cola was able to increase its production, save production time and reduce environmental pollution. So, in short Coca Cola has a well renowned Brand, rich history, unique taste, global marketing and distribution channels which put it in a better position against most of its rivals.

BIBLIOGRAPHY
WEB SITES
1) 2) 3) 4) http://www.thecoca-colacompany.com/citizenship/reporting.html http://www.thecoca-colacompany.com/ourcompany/index.html http://www.coca-cola.co.uk/environment/ http://www.thecocacolacompany.com/ourcompany/awards_recognition.html?awardSe ction=environment 5) http://www.coca-cola.co.uk/faq/environment/ 6) http://www.coca-cola.co.uk/environment/ 7) http://www.thecoca-colacompany.com/citizenship/reporting.html 8) http://www.guardian.co.uk/environment/2003/jul/25/water.india 9) http://www.answers.com/topic/the-coca-cola-company 10) http://www.answers.com/TOPIC/THE-COCA-COLACOMPANY#IXZZ18IHMI3DS 11) http://www.answers.com/TOPIC/THE-COCA-COLACOMPANY#IXZZ18IHMI3DS 12) http://www.answers.com/topic/the-coca-cola-company 13) http://www.answers.com/topic/the-coca-cola-company 14) http://www.sasnet.lu.se/plachimada.pdf 15) http://www.business-standard.com/india/news/coke-sales-fall-11pesticidecontroversy/159950/ 16) http://www.washingtonpost.com/wpdyn/content/article/2006/09/22/AR2006092200277.html 17) http://www.cokezone.co.uk/home/catalogue/category/Coca-Colahttp://www.cocacola.co.uk/faq/environment/are-the-screw-tops-on-your-bottle-productsrecyclable.html 18) www.scribd.com 19) http://www.economist.com/node/4492835 20) http://greenresistance.wordpress.com/2007/10/29/coca-cola-environment-andresistance/ 21) http://www.youtube.com/watch?v=B7drEvHo7vA 22) http://www.youtube.com/watch?v=aP5jed6gQi0

JOURNALS
23) Customer segments as moving targets: Integrating customer value dynamism into segment instability logic Christopher P. Blockera, , and Daniel J. Flintb, 1, Industrial Marketing Management Volume 36, Issue 6, August 2007, Pages 810-822 24) Kellogg on branding: the marketing faculty of the Kellogg School of Management Alice M. Tryout, Tim Calkins, Kellogg School of Management Market Segmentation, product differentiation, and marketing strategy vol 51 (April 1987),110 The Journal of Marketing 1987 American Marketing Association