Strategic Management: Cocacola 18020 Essay Example

South America, from Mexico to Argentina. The Greater Europe Group includes both Western Europe's established markets and the rapidly expanding Eastern and Central European countries, spanning from Greenland to Russia's Far East. The Africa and Middle East Group encompasses the entire continent of Africa and the Middle East. The Asia Pacific Group operates in India, China, Japan, Australia, and the Pacific region. Minute Maid Company in Houston, Texas is recognized as the leading worldwide promoter of juices and juice drinks.

The Minute Maid Company offers various products, such as Minute Maid Premium Orange Juice with calcium, Minute Maid Premium Lemonade Iced Tea, Minute Maid Coolers, Hi-C Blast, and Five Alive. Local businesses have contracts with The Coca-Cola Company or its local subsidiaries to bottle and sell their soft drinks within specific territories. These contracts ensure high quality and consistency.

Corporate Objective

The Coca-Cola Company is a publicly traded corporation that was established in Delaware on September 5, 1919. As of December 31, 1998, there were approximately 389,000 shareholders who held about 2.47 billion shares of the company's common stock. The Coca-Cola Company's stock (ticker symbol KO) is listed and traded on the New York Stock Exchange in the United States.

The Coca-Cola Company trades its common stock on various exchanges in the United States, such as the Boston, Cincinnati, Chicago, Pacific, and Philadelphia exchanges. It is also listed and traded on exchanges outside of the United States in Germany and Switzerland. Throughout its long history spanning over a century, the Company has remained dedicated to social responsibility and philanthropy. Its reputation for being a responsible corporate citizen stems from its charitable donations, employee volunteerism, technical assistance, and other support

provided in communities worldwide. In addition to these efforts, the Coca-Cola Company sponsors major sports events like the World Cup Football,;National Football League (NFL), National Basketball Association (NBA), NASCAR races,;Tour de France cycling event,;Rugby World Cup tournaments,;COPA America football championship tournament along with numerous sports teams.

The Coca-Cola Company has been sponsoring the Olympic Games since 1928.

Resources

Human resources

The company employs around 31,000 individuals in nearly 200 countries. They are dedicated to promoting equal opportunities, affirmative action, and embracing diversity within their workforce. The company is committed to creating a work environment that is free from discrimination based on race, gender, color, nationality, religion, age, sexual orientation or disability. Employee benefits include health insurance, dental insurance, life insurance; short-term and long-term disability coverage; retirement plan; tuition assistance program; and participation in the Company Thrift Plan. The company policy focuses on providing employees with opportunities to improve their skills for better job performance.

The Coca-Cola company recruits individuals who possess expertise in marketing and finance, as well as general skills. They operate in a pay-for-performance business environment and their Total Compensation programs strive to foster value creation, provide significant rewards, and promote ongoing learning. The personnel within the Coca-Cola business system play a vital role in the company's pursuit of long-term shareholder value, operating across nearly 200 countries.

Physical resources

The company's headquarters is located in Atlanta, USA, with branches in various countries worldwide. Their portfolio of beverage brands is highly diverse and globally renowned. In the United States, they offer a range of popular brands including Coca-Cola classic, diet Coke, and Sprite. They also provide Barq's root beer, Minute Maid Soda, Nestea, Fruitopia, Citra, and Cherry Coke. Additionally, their product

lineup includes POWERaDE line products as well as Minute Maid juices and Hi-C. Recently, they have introduced Dasani bottled water to their offerings. Furthermore, the company has plans to expand their frozen Coca-Cola line.

In China, they sell Tian Yu Di (teas, waters and fruit juices), in Japan Mori no Mizudayori (mineral water), in Spain the new SONFIL (juice/dairy blend), in Brazil Kuat (guarana-flavored soft drink) and numerous local beverages. Adding Schweppes products last year gave them 39 new brands across more than 160 countries.

Bottlers

The company owns Coca-Cola Enterprises, the world's largest soft-drink bottler operating in eight countries. They also have business relationships with three types of bottlers: independently owned bottlers without any ownership interest; bottlers where they have invested and hold a non-controlling ownership interest; and bottlers where they have invested and hold a controlling ownership interest.

One of Coca-Cola's key strategies is to collaborate with specific bottling operations, where they have a non-controlling ownership interest. These bottlers, known as key or anchor bottlers, are highly responsible and perform well. Their strong commitment to profitable volume growth contributes to the achievement of Coca Cola's strategic goals and benefits its global production, distribution, and marketing systems. These bottlers are typically large and have diverse geographical presence along with significant financial resources for long-term investment and strong management capabilities. This partnership allows Coca-Cola to have strategic business partners on all major continents, giving them a competitive advantage as they hold a stake in two-thirds of the bottlers they collaborate with, enabling them to exert influence.

Regarding financial resources

Coca-Cola views its ability to generate cash from operations and reinvest it into its business as one of its fundamental financial strengths.

The

firm finances its operations through various means, such as sales, franchising, loans, and stock flotation.

Investments

In 1999, the Company acquired beverage brands from Cadbury Schweppes plc in over 160 countries worldwide. They also invested in the bottling operations of Embotelladora Arica S.A., F;N Coca-Cola Pte Limited, and Coca-Cola West Japan Company, Ltd. Their acquisition and investment activities amounted to $1.9 billion in 1999. In 1998 and 1997, their acquisition and investment activities totaled $1.4 billion and $1.1 billion respectively.

The Company sponsors and/or contributes to pension and post retirement health care and life insurance benefit plans for almost all U.S. employees as well as certain employees in international locations.

In July 1999, they completed the acquisition of Cadbury Schweppes plc beverage brands in 155 countries for approximately $700 million.

The purchase included several soda brands such as Schweppes, Canada Dry, Dr Pepper, Crush, and some regional ones. However, certain countries like the United States, South Africa, Norway, Switzerland, and European Union member nations (excluding the United Kingdom, Ireland, and Greece) were not part of this deal. In September 1999, they successfully bought Cadbury Schweppes beverage brands in New Zealand for about $20 million. Additionally, they acquired the carbonated soft drink business of Cadbury Schweppes (South Africa) Limited in South Africa along with Botswana,
Namibia,
Lesotho,
and Swaziland for approximately $250 million in a separate transaction.

Coca-Cola invests heavily in marketing to support their brands and achieve their long-term growth objectives. These marketing investments improve consumer awareness and preference for the brands, resulting in increased volume, per capita consumption, and market share of non-alcoholic ready-to-drink beverages worldwide. The company utilizes integrated marketing programs, including advertising, point-of-sale merchandising, and product sampling, to enhance consumer awareness

and appeal for their brands.

Intangible resources

The Coca-Cola brand holds the distinction of being the most recognized trademark globally.

The Coca-Cola bottle and logo are globally recognized. "Coke" is a commonly used term for any cola beverage. The company has a commendable reputation for its charitable initiatives and top-notch products. As part of their generosity, they are currently engaged in building multigrade schoolhouses in the Philippines to provide education and assistance to local communities. In light of recent floods in Mexico and Venezuela, they have assigned their consumer hotline, through the Red Cross, to aid individuals in reuniting with missing family members. They have also dispatched trucks filled with water and essential supplies to support relief efforts.

Coca-Cola is known for having incredibly loyal customers, with almost everyone worldwide considering it to be the best soft drink.

Unique resources

One of Coca-Cola's key advantages is its distinctive name, image, and taste. No other brand can match the level of loyalty that Coke inspires. Many competitors have attempted to replicate the taste or package their products to resemble Coke, but without success. This uniqueness may be the company's biggest competitive edge.

The Competitive Environment

Coca-Cola faces competition from other companies in the soft drink industry that target the same customers. However, none of these competitors have achieved the same level of success as Coca-Cola. The company is known for its simplicity, affordability, and enjoyable nature. It focuses on creating a sensory experience for its customers through bottle design, effervescence sensation, and unique flavor. To remind consumers of this experience, Coca-Cola employs different strategies such as Sensa-Domes in South Africa which offer a 3-D movie experience with

special effects to enhance the enjoyment of drinking Coke. Overall, these efforts contribute to reinforcing and strengthening the brand.

Competition in the industry, where products are often indistinguishable from each other, relies on factors such as price, advertising, and packaging. Lesser-known brands and supermarket brands offer similar products at lower prices, often imitating the iconic red packaging with white lettering of Coca-Cola. Although many new entrants have emerged in this industry, only a few manage to survive, as demonstrated by the short-lived Buzz Cola. The strong product differentiation of Coca-Cola and Pepsi has impeded the success of these new competitors.

Customers view these brands as having superior quality and value, expressing loyalty to the brand but may choose more affordable options during financial difficulties. Coca-Cola possesses a distinct reputation that is only matched by its closest rival, Pepsi. Virgin Cola made an unsuccessful effort to establish a comparable image. Pepsi serves as the primary competitor of Coca-Cola.

Pepsi-Cola is a major player in the US soft drink market, offering various brands such as Diet Pepsi, Pepsi-One, Mountain Dew, Slice, and Mug. This market represents about $56 billion in value and accounts for almost one-third of all soft drink sales. Moreover, Pepsi-Cola products are widely available in approximately 170 countries worldwide.

Furthermore, Pepsi-Cola North America collaborates with Lipton and Starbucks to manufacture and promote ready-to-drink iced teas and coffees. As a consumer products company, PepsiCo, Inc. has achieved remarkable global success. In just 1999 alone, it generated revenues exceeding $20 billion and had a workforce of 116,000 employees.

PepsiCo is a global company operating in approximately 190 countries and territories. It is renowned for its well-known brands. The company consists of

various entities: The Pepsi-Cola Company, which is the second largest beverage company globally following Coke; The Frito-Lay Company, which holds the title of the largest manufacturer and distributor of snack chips worldwide; Tropicana Products, Inc., recognized as the leading marketer and producer of branded juices on a global scale.

PepsiCo's Mission Statement

PepsiCo aims to enhance value for shareholders' investments by pursuing sales growth, implementing cost controls, and making wise resource investments. The company firmly believes that its commercial success depends on providing quality and value to consumers and customers. This includes offering products that are safe, wholesome, economically efficient, and environmentally responsible. PepsiCo remains committed to delivering fair returns to investors while maintaining high standards of integrity. Its achievements can be attributed to exceptional products, high performance standards, unique competitive strategies, and employee integrity.

PepsiCo, Inc. (symbol: PEP) is listed on various stock exchanges including the New York Stock Exchange in the United States, Amsterdam, Chicago, Swiss, and Tokyo. Pepsi-Cola products represent approximately 25% of global soft drink sales. Aside from brands sold in the United States, notable products include Mirinda and Pepsi Max. Pepsi-Cola North America encompasses the United States and Canada.

Pepsi-Cola is present in various international markets, including Argentina, Brazil, China, India, Mexico, Philippines, Saudi Arabia, Spain, Thailand, and the United Kingdom. The company has also expanded into emerging markets such as the Czech Republic, Hungary, Poland, Slovakia, and Russia. In fact, Pepsi-Cola was the first U.S. consumer product to be marketed in Russia. Pepsi-Cola offers advertising, marketing, sales, and promotional support to bottlers and food service customers. Their advertising campaigns are widely known and loved around the world.

New advertising and exciting promotions maintain the

youthful image of Pepsi-Cola brands. The company is renowned for its advertisements and the blue packaging of its products. Unlike other competitors of Coke, who consistently choose the red packaging to mimic Coke, Pepsi positions itself as an alternative and a rival. I believe this differentiation is one of the key factors contributing to Pepsi's success. Additionally, the company operates in almost as many countries as Coke, offers a larger variety of brands, and boasts the second most successful juice brand globally. Pepsi's iconic brands, 7UP and Pepsi, are equally recognizable worldwide as Coca-Cola's brands.

Political Influences

The company's global reach exposes it to numerous Macro Environmental Influences. Political situations in all the countries where they operate have an impact on the company's operations. If the USA is engaged in warfare or encounters issues with a country that has dealings with Coca-Cola, it can greatly harm the company's business in that specific country. Consumers may direct their negative sentiments towards the company due to their feelings towards the USA. The company is also influenced by foreign trade regulations and taxation policies in both the US and the countries it trades with.

Legislation on employment and equal opportunities affects the firm's hiring and treatment of employees. There are also Deposit laws that require beverage bottlers and distributors to charge a refundable deposit on beverage containers.

Environmental Protection

The company is committed to protecting and preserving the environment in their business practices. They promote a philosophy of shared responsibility, where all participants in the supply chain take responsibility for environmental impacts within their specific part of the chain. By working together with suppliers, customers, regulators, and environmental partners, they aim to achieve

a balance between responsible environmental stewardship and economic success.

At The Coca-Cola Company, we believe that the key to our success lies in creating the best possible environment. To adapt to the rapidly changing environmental landscape, we have developed a comprehensive environmental management system. This system is tailored to align with our operations and focuses on addressing environmental issues directly related to our business. Our Environmental Management System (TCCEMS) is characterized by compliance, waste minimization, pollution prevention, continuous improvement, and identifying cost savings.

At the heart of The Coca-Cola Environmental Management System is a fundamental principle: we will conduct our business in ways that protect and preserve the environment. This principle is reinforced by a range of policies, requirements, and practices. Our system supports and encourages various environmental leadership initiatives worldwide. These initiatives serve three main purposes:

• To enhance our understanding of the environmental challenges we face in our business.
• To foster innovative and new solutions to address these challenges.
• To facilitate constructive dialogue and drive improved environmental performance.

Economic Influences

Business cycles, such as recessions and booms, have an impact on our company. During times of recession, people are more inclined to purchase cheaper alternatives to our product since it is not considered essential. Decreased income leads individuals to prioritize spending on vital necessities instead of discretionary items.

The company's performance is influenced by the interest rate and exchange rate of other countries. When exporting goods from the US to countries like Britain, where their currency holds a higher value, Coke can expect higher profitability. The firm is also affected by inflation in various global markets. In response to increasing costs caused by inflation, the company can raise prices to compensate and

ensure enough cash flow to sustain its productivity.

Approximately 70 percent of the company's 1999 operating income is generated from outside the United States. This means that any weakness in one currency can be balanced out by strength in others over time. To further minimize their exposure to currency fluctuations, Coca-Cola uses derivative financial instruments.

Euro Conversion

In January 1999, certain member countries of the European Union established fixed conversion rates between their existing currencies and the Euro. The transition period for introducing the Euro will be phased in until January 1, 2002, when the existing currency will no longer be in circulation.

The Company has been preparing for the introduction of the Euro for several years. They must comply with legal requirements and coordinate with vendors, distributors, and customers to phase out existing currencies. This work includes converting IT systems, recalculating currency risk, adjusting financial instruments, and evaluating contract continuity. They will also modify processes for tax, accounting, payroll, and customer records.

New Accounting Standards

In June 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No.

The company must adhere to SFAS No. 133, which mandates that all derivatives be reported at fair value on the balance sheet and introduces new accounting regulations for hedging instruments. To comply with this, the company will need to modify its current procedures.

Socio-cultural Impact

Factors such as income distribution, population, and lifestyle will influence the company's decision on whether or not to expand into a specific region.

The availability of suitable staff before establishing new factories is dependent on the levels of education. Before purchasing costly equipment, the firm must consider technological factors such as the speed of technological

transfer and the rate of obsolescence. Given the threat posed by Pepsi, it is crucial for the company to avoid wasting funds on equipment that will soon become outdated. Despite being a multinational organization, Coca-Cola operates in a predictable environment. The brand name and image of Coca-Cola are the main strengths of the company, closely followed by their marketing and distribution channels.

The company asserts that it is a responsible corporate entity with a primary obligation to the public and its customers. However, I believe their main allegiance lies with their shareholders and board of trustees. Coca-Cola's ultimate goals in their business strategy include increasing volume, expanding their market share in the global non-alcoholic ready-to-drink beverage industry, maximizing long-term cash flow, and enhancing economic-value-added through improved economic profit. With over 16 million customers worldwide, Coca-Cola's products are sold or served directly to consumers. The Company has the potential to reach nearly six billion individuals globally as potential consumers.

Ultimately, the success of achieving their mission depends on satisfying more beverage consumption demands and adding value for customers. Based on the strategic analysis above, the company's strengths include:

• The brand name Coca-Cola (Coke)
• The image of the company/product (the real thing)
• Their position in the market
• Their weakness

The fact that the product can be easily substituted (customers will opt for a cheaper alternative if necessary, as the product is similar to rival products in taste and appearance) presents their main opportunity to explore new markets. However, the presence and continuous growth of Pepsi-Cola pose a major threat to the company.