CB859 Managing the Multinational Enterprise

Jiajia Zhang

Introduction Multinational Enterprise (MNE) is not just a corporation whose only international involvement takes the form of exporting either finished, intermediate goods or factor inputs, or which has portfolio investments in some foreign distributions. It has some essential elements: direct investment abroad, collective transfer of resources and income-generating assets in a number of countries. In order to better identify modern multinational enterprise during the module, our group decided to choose Coca-Cola as our case study. The main reasons of choosing Coca-Cola are because it is a globally recognised brand with broad range of products, and the company adapts local cultural specifications, mass appeals to consumers and also manufactures in a variety of locations worldwide. This report aims to summarize the main points of eight weeks case study of Coca-Cola with important relevant frameworks and finally offer a conclusion.

Case Study of the Coca-Cola Company 1. Company Profile The Coca-Cola Company was created by John Pemberton in 1886 in Atlanta, sold in his pharmacy for 5 cents a glass. In 1893, it finally became a brand. Then the company grew rapidly in new century, moving into Canada, Panama, Cuba, Puerto Rico, France, and other countries and U.S. territories. In 1923, Robert Woodruff becomes company president, where he would stay for 60 years. Later between 1940 and 1970, other products like Fanta, Sprite, Tab and Fresca appeared and Diet Coke in 1980s (The Coca-Cola Company, 2011). In the present, the Coca-Cola Company are producing more than 3300 products in over 200 countries, employed 92800 people worldwide with 1.6 million servings per day, as well as over 300 local bottling partners (The Coca-Cola Company, 2011). The commitment of Coca-Cola is focusing on local market, considering what do people like to drink from different cultures, as well as how and where they want to drink. The evolution of the coke bottle benefits the expansion fast and the unique culture of Coca-Cola makes them surprisingly strong.
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CB859 Managing the Multinational Enterprise

Jiajia Zhang

2. Integrated Approaches-Pakistan Dunnings Eclectic Paradigm helps us to analyse the evolution of the country of origin of Coca-Cola through the investment development path. We collected the net outward investment data of Pakistan, which showed the money in has determined the net significantly, but money out has fluctuated very little. The reasons of the trends are mainly because Pakistan has suffered from decades of internal political disputes and low levels of foreign investment. However, the recent increase in the development in the financial and manufacturing industry, there has been more investment into the country. Currently, there is more investment into Pakistan by MNEs as opposed to investment out of the country. It is believed Coca-Colas investment development is based on the countrys evolution directly.

3. Strategy Analysis Dominant strategy is a mix of local adaption and global integration. Coca-Cola aims to strengthen the marketing and innovation to improve the efficiency of the system and creating potential brand with both health and wellness (The Coca-Cola Company, 2011). The local adaptation takes the form of local manufacturing as well as integration with local business. Coca-Cola uses local employees and local resources to lower the manufacturing and distribution costs, as well as locally adapted prices. From global integration, which takes t he form of consistent brand image, Coca-Colas trademarked brand image is universal, globally recognisable, and everyone can find it because of the wide distribution network. According to the Integration-Responsiveness Framework, we put Coca-Cola at the position of high foreign sales but low foreign product diversity. The high place in national responsiveness is because of using local resources and workforce to complete the brand image. And the part-way up global coordination means the subsidiaries are not interdependent but localised under the Coca-Cola brand.
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CB859 Managing the Multinational Enterprise

Jiajia Zhang

These results are also shown by drawing International MNE Coordinated Federation of Coca-Cola. In order to approach Coca-Colas evolution of the external environment, we used The Across and Within Framework. Coca-Cola belongs to the Dispersed Network and Non-Specialised Activities part. The evidences are disperse network and unspecialised activities in subsidiaries, who all produces the same core items, but has to be integrated within the local network in order to achieve items economically and local specifications. From across density, it is because each subsidiary controls every area of business from production to distribution, which leads low specialised responses. In a word, Coca-Cola operates in a network which is unspecialised and widely dispersed, and aims to support the local population in order to strengthen existing business as well as creating new job opportunities.

4. Research and Development activities Coca-Cola engages a lot in research and development in order to maintain a sustained competitive advantage, which including products, packaging, equipment, marketing and promotion. For example, Coca-Cola was increasing their efforts in Turkey with building R&D centre (Turkey-re.com, 2009). Besides, Coca-Cola is supporting green products. The Greenpeace applauds them using climate0friendly coolers and vending machines in the Beijing 2008 Olympic Games (The Coca-Cola Company, 2007). Also, examples like the innovation of battles can be taken from specific areas. In accordance with Hymer, Coca-Cola can keep their core activities in house while exploiting the benefits of local advantages. The special ingredient is shipped to all different locations where it can be transformed into what each region knows as Coca-Cola.

Conclusion Last but not the least, it is essential to map the activities undertaken by Coca-Cola in a global value chain. Coca-Colas main activities take part in the USA,
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CB859 Managing the Multinational Enterprise

Jiajia Zhang

where the bottling plants established according to consumer consumption. And other drinks like water and juices are produced based on changing demands. Among the locally responsive markets, Coca-Cola is also coordinating new technology and innovation by joining ventures and partnerships (Coca-Cola Hellenic Bottling Company S.A., 2011). Coca-Cola wants to be present in every place of the world despite significant differences in income and strong economic volatility. To conclude, Coca-Colas strategy is nationally responsive and their network is made up of small local value chain. It is believed the Coca-Cola Company is doing their best efforts to become a legend in worlds drink industry.

CB859 Managing the Multinational Enterprise

Jiajia Zhang

References:

Coca-Cola Hellenic Bottling Company S.A. (2011) What we do. Available: http://www.coca-colahellenic.com/aboutus/whatwedo (accessed March, 2011). Dunning, J.H. (1979) Explaining Changing Patterns of International Production: In Defence of the Eclectic Theory, Oxford Bulletin of Economics and Statistics, 41(4), Nov., 269-95.

Dunning, J.H. (2001) The key literature on IB activities: 1960-2000, chapter 2 in Rugman, A.M. and Brewer, T.L (eds.), The Oxford Handbook of International Business, New York: Oxford University Press.

Dunning, J.H. (2001), The eclectic (OLI) paradigm of international production: past, present and future, International Journal of the Economics of Business, vol. 8, no. 2, pp. 173-190.

Dunning, J.H. and Rugman, A.H. (1985) The Influence of Hymers Dissertation on the Theory of Foreign Direct Investment, American Economic Review: Papers and Proceedings, 75, 288-32

Rugman, A.M. and Brewer, L. (eds.) (2003) The Oxford Handbook of International Business, Oxford University Press, Oxford

The Coca-Cola Company (2007) Greenpeace: Coca-Cola wins first Green Medal. Available: (http://www.coca-cola.co.uk/press-centre/2007/september/greenpeace_green_medal.ht ml (accessed 17th September, 2007).

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CB859 Managing the Multinational Enterprise

Jiajia Zhang

http://www.thecoca-colacompany.com/ourcompany/ar/map.html#/per-capita-consum ption (accessed March, 2011). The Coca-Cola Company (2011) Heritage Timeline, Available:

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Turkey-re.com (2009) Coca-Cola to establish R&D center in Turkey, Available: http://www.europe-re.com/system/main.php?pageid=2526&articleid=13516 (accessed 4th March, 2009).