Coca-Cola

Report On: Coca Cola

International Business Bus-503

Prepared For
K. M. RaziuddinTaufique

Submitted By
Khaleda Akter Shova Armin Sultana Doris Leah Hasda A.S Azheruddin Ahmed Rezuanul Hauqe ID: 092080025 ID: 092013025 ID: 092054025 ID: 092071025 ID: 092149025

23ed February 2012

Coca-Cola

LETTER OF TRANSMITTAL
23rd February, 2012
To K. M. RaziuddinTaufique Assistant Professor Presidency University

Subject: Apply to accept Report on Coca-Cola

Dear Sir,
We would like to thank you for giving us opportunity. In accordance with your instruction we carried out a short study on Coca-Cola . Here is the report on Coca-Cola. Within this short period, we tried our level best to make this case a successful one.. The practical exposure while on this case helped our team of bridge the academic work and practical knowledge. We have prepared a case on how to handle the situation mentioning in the case while doing business internationally.

Although it was not an easy task particularly the information collection phase was full of many though experiences but we enjoyed and learned a lot in the process of carrying out that report. Then we tried our best to finish this case according to all of your requirements. We hope this case will meet your expectations. If you have further queries, please let us know.

Sincerely Yours
Khaleda Akter Shova Armin Sultana Doris Leah Hasda A.S Azheruddin Ahmed ReznaulHaque ID: 09208025 ID: 092013025 ID: 092054025 ID: 092071025 ID: 092149025 . .. ............. ................................... .

ACKNOWLEDGEMENT

We would like to pay our gratitude to all of the people who helped us a lot for the completion of this assignment before, during, and after the period. At first we would like to acknowledge the Almighty, who helped us every time and was with us and gave us moral support and strength every moment.

Then we would like to express our heartiest gratitude to K. M. Raziuddin Taufique, the course instructor of International Business Bus-503 who introduced us such a Case to do. He has always been among us with his affectionate support and encouragement; we could overcome all the unavoidable obstacles, which occurred occasionally.

Our group member were really co-operative, we did our work properly.

TABLE OF CONTENT
1 2 3 4 5 6 7 8 9 Executive Summary Introduction History of Coca-Cola Development & Growth Demographic/ Social SWOT Analysis Corporate Level Strategy Business Level Strategy Findings 1 2 2 3 4-5 6-7 7-8 9 10-12

10 11

Recommendation References

13 14

Executive Summary:
Coca-Cola has more positioning and production leverage than any other competitor exists in other soft drink industry. Coca-Colas strategy had always been to take risks in emerging markets. It had always understood the need to be first in new markets to gain the competitive advantage. Coca-Cola is committed to local markets, paying attention to what people from different cultures and backgrounds like to drink, and where and how they want to drink it. With its bottling partners, the Company reaches out to the local communities it serves, believing that Coca-Cola exists to benefit and refresh everyone it touches. During the 1980s , Coca-Cola aggressively acquired smaller family owned bottlers in the United states between 1980 and 1984, bottlers representing 50% of the companys volume underwent a change of ownership .it has good brand image all over the country. It is the largest and most profitable soft drink company in the world. Over a 10- year period, revenues have grown at a compounded growth rate of 11.9 percent. By 1995, worldwide revenues exceed $18 billion and net income was littlie under $3 billion. As Coca-Cola, especially in its first 100 years, there has been a commitment to intense marketing and to the preservation of its patented formulas and processes to make its special syrup. The intense secrecy that always has surrounded Coke's formula has long fostered an organizational obsession with secrecy pertaining to other information about Coke and its operations. "Bringing refreshment to a thirsty world is a unique opportunity for our Company... and for all of our Coca-Cola associates... to create shareholder value. Ours is the only production and distribution system capable of realizing that opportunity on a global scale. And we are committed to realizing.

Introduction:
The Coca-Cola Company is a beverage company, manufacturer, distributor, and marketer of non-alcoholic beverage concentrates and syrups. The company is best known for its flagship product Coca-Cola, invented by pharmacist John Stith Pemberton in 1886. The Coca-Cola formula and brand was bought in 1889 by As a Candler who incorporated The Coca-Cola Company in 1892. Besides its namesake Coca-Cola beverage, Coca-Cola currently offers more than 400 brands in over 200 countries or territories and serves 1.6 billion servings each day. The company operates a franchised distribution system dating from 1889 where The Coca-Cola Company only produces syrup concentrate which is then sold to various bottlers throughout the world who hold an exclusive territory. The Coca-Cola Company is headquartered in Atlanta, Georgia. Its stock is listed on the NYSE and is part of DJIA, S&P 500 Index, the Russell 1000 Index and the Russell 1000 Growth Stock Index.

History of COCA-COLA
The Coca-Cola Company was originally established in 1891 as the J. S. Pemberton Medicine Company, a co-partnership between Dr. John Stith Pemberton and Holland. The company was formed to sell three main products: Pemberton's French Wine Cola (later known as Coca-Cola), Pemberton's Indian Queen Hair Dye, and Pemberton's Globe Flower Cough Syrup. In 1884, the company became a stock company and the name was changed to Pemberton Chemical Company. The new president was D. D. Doe while Holland became the new Vice-President. Pemberton stayed on as the superintendent. The companys factory was located at No. 107, Marietta St. Three years later, the company was again changed to Pemberton Medicine Company, another copartnership, this time between Pemberton, A. O. Murphy, E. H. Blood worth, and J. C. Mayfield. Finally in October 1888, the company received a charter with an authorized capital of $50,000. The charter became official on January 15, 1889. By this time, the company had expanded its offerings to include Pemberton's Orange and Lemon Elixir.

Development & Growth:

In 1886, Coca-Cola brought refreshment to patrons of a small Atlanta pharmacy. Now well into its second century, the Company's goal is to provide magic every time someone drinks one of its more than 500 brands. Coca-Cola has fans from Boston to Budapest to Bahrain, drinking brands such as Ambasa, Vegitabeta and Frescolita. In the remotest comers of the globe, you can still find Coca-Cola. Coca-Cola is committed to local markets, paying attention to what people from different cultures and backgrounds like to drink, and where and how they want to drink it. With its bottling partners, the Company reaches out to the local communities it serves, believing that Coca-Cola exists to benefit and refresh everyone it touches. From the early beginnings when just nine drinks a day were served, Coca-Cola has grown to the worlds most ubiquitous brand, with more than 1.7 billion beverage servings sold each day. When people choose to reach for one of The Coca-Cola Company brands, the Company wants that choice to be exciting and satisfying, every single time. Coca-Cola's products are consumer products, and as such are somewhat sensitive to consumer's disposable income. Coca-Cola's management report two trends that serve to shape its planning related to this factor. First, Coke consumers view soft drinks as inexpensive pleasure. As such, even in a temporary environment of steady or slightly declining disposable income, Coca-Cola's research suggests that consumers are unlikely to forgo soft drinks. Second, Coca-Cola monitors disposable income in over 200 countries where it sells soft drinks. In 1993, this information suggests that disposable income is generally rising around the world. Coca-Cola interprets this to mean more purchases of consumer products, particularly in countries where consumer product purchasing has been minimal. Inflation is another economic factor that influences Coca-Cola's success. Asked about this recently, Coca-Cola's management offered this comment: "Inflation is a factor in many markets

around the world and consequently impacts the way the company operates. In general, we believe that we are able to adjust prices to counteract the effects of increasing costs and generate sufficient cash flow to maintain our productive capacity".

Demographic/Social:
Consumption of soft drinks has long been inversely correlated with a person's age. In other words, as you age you drink fewer soft drinks, while younger people drink most soft drinks. The average age of the populations in the United States and most European countries is increasing. Outside the United States and Europe, Coke management observes: "The world is getting younger and young people are the most enthusiastic purchasers of consumer products".

Technological:
The world is getting smaller and smaller. Ease of travel and increasingly sophisticated, instantaneous worldwide communication capabilities drive this phenomenon. Coca-Cola's management views this as favourable: "As the world has gotten smaller, a 'global teenager' has emerged. In Germany and around the world, these teenagers share similar tastes in music, clothing, and consumer brands. With its global scope and the power of the world's most ubiquitous trademark, the Coca-Cola system is uniquely equipped to market to this group" These are a few of the remote environmental factors that influence Coca-Cola's future and how Coke management views them. Let's now look at some factors within their more immediate 'industry environment' and see how Coca-Cola's management views these, too.

Rivalry:
The Coca-Cola Company is rather vague on how it assesses rivals. Recent comments are both brief and generic, such as: "The commercial beverages industry, of which the soft-drink business is a part, is competitive. The soft-drink business itself is highly competitive. In any part of the world in which Coca-Cola does business, demand for soft drinks is growing at the

expense of other commercial beverages. Advertising and sales promotional programs, product innovation, increased efficiency in production techniques, the introduction of new packaging, new vending and dispensing equipment, and brand and trademark developments and protection are important competitive factors". In general, Coke's intense rivalry with Pepsi results in a 'rivalry ante' that virtually eliminates other, lesser rivals. That intense rivalry (known as the 'cola wars'), unceasing for 20 years, has resulted in an ever-increasing share of a growing market for both Pepsi and Coke at the expense of other players. In this 'war', advertising and sales promotional programs are becoming crucial.

Suppliers:
The principal raw material used by the soft-drink industry in the United States is high fructose corn syrup, a form of sugar, which is available from numerous domestic sources. The principal raw material used by the soft-drink industry outside the United States is sucrose. It likewise is available from numerous sources.Another raw material increasingly used by the soft-drink industry is aspartame, a sweetening agent used in low-calorie soft-drink products. Coke managers have long held 'power' over sugar suppliers. They view the recently expired aspartame patents as only enhancing their power relative to suppliers.

Buyers:
Individual consumers are the ultimate buyers of soft drinks. However, Coke and Pepsi's real 'buyers' have been local bottlers who are franchised -or are owned, specially in the case of Coketo bottle the companies' products and to whom each company sells its patented syrups or concentrates. While Coke and Pepsi issue their franchise, these bottlers are in effect the 'conduit' through which these international cola brands get to local consumers. Also, the three most important channels for soft drinks are supermarkets, fountain sales, and vending. In 1987, supermarkets accounted for about 40% of total U.S. soft drink industry sales, fountain sales represented about 25%, and vending accounted for approximately 13%. Other retailers represent the remaining percentage. While both Coca-Cola and Pepsi distribute their bottled soft drinks through a network of bottling companies, Coca-Cola uses its own network of

wholesalers for their fountain syrup distribution, and Pepsi distributes its fountain syrup through its bottlers.

SWOT analysis:
Strengths
1. It has $23 billion Company in 200 nations.

2. It sells 400 drink brands including four of top five sellers. 3. They own 36% of the largest coke bottler in the world. 4. Staff facilities all over the world. 5. Brand loyalty all over the world. 6. Good marketing skills. 7. Good material management system. 8. It has ability to maintain the cost of differentiation advantage. 9. Appropriate management style. 10. Appropriate organizational structure. 11. Ability to manage strategic change. 12. Well-developed corporate strategy. 13. It has the capability to exploit new markets. 14. Capability to extend cast or differentiation advantage. 15. Diversify into new growth businesses. 16. Strategy is always having been to take risk in emerging market. 17. Coca-Cola ultimately wins market share in tough markets by offering best price with other facilities to consumers.
18. Operate margin outpaced income than major competition.

Opportunity:
1. Can be filled up 2% of the worlds daily consumption of 64 ounces of liquid. 2. Can be established strong position in foreign markets in decades.

Weakness:
1. Rising manufacturing costs. 2. Decline in R&D innovation. 3. Bad portfolio management 4. Coca-Cola spends less on advertising than its major rival company Pepsi Company. 5. Slowly losing international market share.
6. 7. 8. 9.

Coca-Cola does not take aggressive more like Pepsi Company.

Its foreign competition is increasing. Rising in new or substitute product. Slower market growth.

Threat:
1. Negative attitude toward large multinationals company. 2. High taxes for foreign investment. 3. Aloofness foreign investment like such a way i.e. in India an political party BJP adopted a much used phrase microchips, not potato chips.

Corporate level strategy:

Corporate-level strategy Diversification The Coca-Cola produced new RTD (Ready-To-Drink) coffee with Italy-based caf. International expansion Their products are launched in more than 200 countries.

Three levels of plan:

Three levels of plan The corporate-level plan How to manage their affiliates The businesslevel plan. To make a connection to restaurants etc. The functional-level plan.How to advertise their products.

Structure:
Structure Coca-Cola companies structure Hybrid Structure. The company includes many organizations. Example, Allen & Company Incorporated Delta Air Lines, Hearst Magazines, and Expedia. We will show the companys figure.

Environment: Environment the Companys environment is faster than other companies. The company has to change drinks to fit taste and flavor into season or public demand. Fast.

Other Organizational Structures: 1. Technology Routine 2. Human resources Skilled and non-skilled 3. Strategy We are building on our fundamental strengths in marketing and innovation, driving increased efficiency and effectiveness in interactions with our system and generating new energy through core brands that focus on health and wellness.

We are poised to capture the opportunity in so many ways. Here are just a few: With the world's most recognized family of brands, we deliver more than 3,500 beverages to over 200 countries around the world -- not just soft drinks, but juice and juice drinks, sports drinks, water, even coffee and milk. And every day we explore new ways to create and share beverages to energize, relax, nourish, hydrate and enjoy.
y

As the world's largest distributor of non-alcoholic beverages, we maintain a trusted local presence in every community we serve. We are constantly looking ahead to anticipate what our communities may need and gathering resources to support them.

We've increased our annual marketing budget substantially, launched many new products, and developed a model to help our retail customers maximize their sales while we continue to plan for the next one, five and ten years in business.

We need highly skilled, ambitious, experienced professionals who think entrepreneurially and thrive on teamwork.

Business level of strategy:

This case analyses we find out coca cola business level strategy according to previous system as like this way its main target is attracts and with its fizzy flavor in fashionable bottles to produce everyone likes to take Coca Cola with them wherever they go as Coca Cola fashionable bottles are convenient to take out. Coca Cola has many customers in 206 countries. With consideration for its customers, Coca Cola innovates different flavors. For people who do not like drinking pop will become liking to taste Coca Cola by watching its advertisement one of its reach point to customers. By taking chance of the emergence of the technology, Coca Cola targets to get more customers on Face book and twitter. Also some details with point about business level strategy of Coca Cola Company. 1. Offering consumers the best price relative to value. 2. Pervasive penetration in the marketplace. 3. Making coca cola the preferred beverage every where. 4. Also the are try to maintain all of customer satisfaction. 5. Even coca cola is finding new ways of building relevant value into the business. Coca Cola has been using all differentiation and low cost strategies. Customers satisfaction increases; Coca Cola has no problem to introduce its innovated products. Moreover, Coca Cola gives its customers more information about beverages by having a big museum in Atlanta. Not

only customers like the fizzy Coca Cola flavor but also they like Coca Colas positive mission, vision, and slogans are persuasive and positive. With customers support, Coca Cola also satisfies its suppliers, bottlers.. However, maintaining its shareholders and customers satisfaction, time after time, while producing differentiated low-cost beverages will be a puzzle question for CocaCola CEO.

Findings:
International Strategy:
Customer needs and preferences. 1. Attention on value of customer needs and wants worldwide. 2. Strong brand image. y Coca-colas strategy had always been to take risks in emerging markets. It had always understood the need to be first in new markets to gain the competitive advantage. y Coca-Cola is investing heavily in bottling operation in order to maximize the strength and efficiency of production, distribution, and marketing. Their strategy is to get involved in the bottling business so that it fuels continued growth of their syrup business. The companys strategy for sustaining its brand image is the three PS: 1. Pervasive Penetration in the marketplace 2. Offering consumer the best price relative to value 3. Making Coca Cola the preferred beverage every

Coca-Cola used a standardized marketing campaign strategy where it would pull advertisement for specific markets from a common pool of adverts designed to have universal appeal local culture.

y Offers varied product line up to capture different consumer tastes.

Comparative advantage coca cola have cover its major rival Pepsi Co
y Coke outsells on one third overseas. Thats the main advantage of coke have in the competition against PepsiCo. y Pepsi decided to come back in the market strongly with a plan called Project Blue. To gain more market share internationally. They decided to give up the traditional red, white, and blue can in place of an electric blue one. This could be a shameless way to go attraction of the consumers according to the Economist. On the other hand, Coke have strong brand image with their red color. Even if the Project Blue is a success full go Pepsi will be able to close the gap to 2 to 1. So Coca cola can be tension free with its competitors.

Pros and cons of Coca-Colas investing further in Indians market

Pros:
y Economy growth rate increased 6%, 8 million, new jobs created and most importantly. Direct investment of $ 818 million of U.S in 1994 surely indicates ample opportunity to invest in India. y Foreign companies like McDonalds, Baskin-Robbins &PepsiCo are moving ahead despite the difficulties in India. y Cons: y Negative attitude of locales towards foreigners. They think the foreigners will run roughshod over them. y y The ruling party BJP was against the big American consumer brands. The -age old Indian labor law. Surely India is a vast market with a huge amount of population.

Pros and cons of Coca-Colas investing further in Chinas market

Pros:
y y y As an economic force. China is entering and altering the global market place. Domestic companies are not connected internally. So, foreign companies are using this chance to remain in the Chinese market. y y Chinese people love brands. So, there is a good demand of multinational brands. High unemployment in china will fuel crime & corruption, which is already on the rise. So, chines government will be happy for foreign investment because this will remove unemployment problem. y Chinas large economy will be doubled in next 8 years. So, investment would not go fruitless

Cons:
y China is thinking to scale the tax preference in a way that will put foreign businesses at a disadvantage to the local ones. y Foreign companies have to struggle with the changing central government rules which benefit the local officials.

Douglas daft recommended:

Coca cola strategy has always been to take risks in emerging markets. So, Douglas daft should recommend to the senior executive committee that the project should be given green signal. The possible recommendation is given below:

For India:
y If PepsiCo can run their business in India, then coca cola should invest more to gain full access of the vast Indian market. y y y Have to make good relationship with the locals to remove their fear. Maintaining a healthy relationship with political leaders is a must. The safest time to start this project is after the election.

For china:
y Have to come up with a better plan to impress Chinese government regarding unemployment problem, technology transferring etc. y y Wait for the entering of china in the WTO. Chinas large economy will be double in the next 8 years and will worlds sixth-largest economy, so it is a great opportunity to increase market by investing further more.

Recommendation:
Use the integrated marketing communication tools effectively and efficiently. More advertisements should be aired. The government type is bureaucratic which may acts like controller or influencers. Has to have the ability to adapt new changes and ability to handle uncertain situation. To merge with the local companies and to expand more segmentation.