INTRODUCTION

A global perspective is a matter of survival for businesses. Strategic management is the process
of specifying an organization's objectives, developing policies and plans to achieve these
objectives, and allocating resources so as to implement the plans. The Coca-Cola Company
(Coca-Cola) is a leading manufacturer, distributor and marketer of Non-alcoholic beverage
concentrates and syrups, in the world. The company owns or licenses more than 400 brands,
including diet and light beverages, waters, juice and juice drinks, teas, coffees, and energy and
sports drinks. The company operates in more than 200 countries. Coca-Cola Enterprises is the
world's largest marketer, producer and distributor of Coca-Cola products. It operates in 46 U.S.
states and Canada, and is the exclusive Coca-Cola bottler for all of Belgium, continental France,
Great Britain, Luxembourg, Monaco and the Netherlands. Coca-Cola is the non alcoholic bottled
beverages.

ORIGIN OF THE REPORT

We are lucky to say that our honorable course teacher Md. Muzahidul Islam Lecturer,
Department of Management Studies, Faculty of Business Administration and Management,
assigned us a report on “Strategic Management Issues of Multinational Companies
(MNCs): A Case Study on Coca-Cola Company”. This report is prepared on the basis of
secondary data.

O BJECTIVES OF THE STUDY

Every successful study should have specified and well-defined objectives. A careful statement of
the objective helps in preparing a well-decorated report facilitating others to take decision on it.
The specific objectives of the study are to have knowledge about-

 To know about the strategic management issues of multinational companies

 To know about the strategies of the multinational companies
 To characterize the challenges of international strategic management
 To know about the international strategic management process
 To identify and characterize the levels the international management strategies
 To know about the Coca-Cola Company’s strategies management process
SCOPE OF THE STUDY

This study has focused upon the Management Issues those are followed by the Coca-Cola
Company for capturing the global market. Through our report we try to find out the global
challenges of International Strategic Management to assess the basic strategies, describe the
international strategic management process of Coca-Cola Company. We hope this study will
help to whom, who want to know more clearly about strategic management, its issues as well as
the key factors which affect the process of Internationalization for a company.

Data and method

We examine secondary data of which related to the Strategic Management Issues at the global
based Market. Data are collected on various issues from annual report of Coca-Cola Company
(2005-2009). In our report we analysis the monthly, quarterly, half-yearly news Review of this
company. Based upon this data we like to analysis the Economic Review, Statistical Strategic
condition of the Coca-Cola Company. Both the official and regional website helps us to find out
more related to the issues with the global market. Form those huge data we take the necessary
and used them for the analysis. Our analysis data are clearly represented in our main part of the
report through relevant chart, graph with proper description

Limitation

As a student of faculty of Business Administration and Management, 7th semester, this is our
first initiative for making a report on “Strategic Management Issues of Multinational Companies
(MNCs): A Case Study on Coca-Cola”. We were really unable to collect enough information
from due to their official restrictions. Many things were so confidential that we were not entitled
to access there. Beside this we have faced the following hindrances in preparing this report:

Lack of knowledge and experience

Short of time
Lack of computer facilities
Lack of sufficient privileges
Lack of communication facilities

Defn of Strategic management

Strategic management is the process of specifying an organization's objectives, developing

policies and plans to achieve these objectives, and allocating resources so as to implement the
plans. It is the highest level of managerial activity, usually performed by the company's Chief
Executive Officer (CEO) and executive team. It provides overall direction to the whole
enterprise.

International strategic management is a comprehensive and ongoing management planning

process aimed at formulating and implementing strategies that enable a firm to complete
effectively internationally. The process of developing a particular international strategy is often
referred to as strategic planning. Strategic Management is the study of function and
responsibilities of senior management.

Five Essential Parts of Strategic Management

Goal-setting
Goal-setting enables a firm to articulate its vision: identify what needs to be accomplished,
define short-and long-term objectives, and relate them to what the organization needs to do

Analysis

Analysis guides to collect and consider information so that a firm understands the situation.
Assess external environments and internal situations to identify the strengths and weakness of
the organization and the opportunities and threats face to reach the goals.

Strategy Formulation

To determine a strategy, the firm reflects prioritize, develop options, and make decisions.
Review the results of the analysis, identify the issues that a firm implementing partners need to
address, and prioritize them in terms of their urgency and magnitude. Use these results to design
alternative strategies and plans that address the key strategic issues.

Strategy Implementation

To implement the strategy, assemble the necessary resources and apply them. Put the chosen
plans into practice, marshal the resources and commitments necessary for moving ahead, tap
existing capacity and/or build new capacity, and seek to achieve results.

Strategy Monitoring

Monitoring allows checking the progress toward achieving the firm’s goals and assessing
whether any changes in the environment necessitate alternatives to the firm’s strategy. Modify
plans and actions to adjust to the impact of changing in the operating environment.

Significance of Str. Mgt,

Strategic management integrates the knowledge and experience gained in various functional
areas.

• It helps to understand and make sense of complex interaction in various areas of

management.

• It helps in understanding how policies are formulated and in creating appreciation of

complexities of environment that the senior management faces in policy formulation.

• Managers need to begin by gaining an understanding of the business environment and to

in control
 • They should know to manage and understand information technology, which is changing
the face of business

Issues in Strategic Management Decision Making

• While making a decision the company might have different people at different periods of
time.

• Decision requires judgments; personal related factors are important in decision-making.

Hence decision ma y differs as person change.

• Decisions are not taken individually, but often there is a task in decisions which could be
Individual Vs Group decision making. There will be a difference between the individual
and group decision-making.

On what Criteria a company should make its decision, for evaluation of the efficiency &
effectiveness of the decision making process, a company has to set its objectives which serves as
main bench mark.

3 Major Criteria in decision making are---

a. The concept of Maximization

b. The concept of satisfying.
c. The concept of instrumentalism.
Based on the concept chosen the strategic decisions will differ.
Generally decision-making process is logical and there will be rationality in decision-making.
• When it comes to Strategic decision making point of view there would be proper
evaluation & then exercising a choice from various available alternative resources, which
leads to attain the objectives in a best possible way.

• Creativity in decision-making is required when there is a complete situation & the

Decision taken must be original & different.

• There could be variability in decision-making based on the situation & Circumstances.

• International strategic management results in the development of various international

strategies, which are comprehensive frameworks for achieving a firm’s fundamentals
goals. Conceptually, there are many similarities between developing a strategy for
 competing in a single country and developing one for competing in multiple counties. In
both cases, the firm’s strategic planners must answer the same fundamental questions—

What products and/or services does the firm intend to sell?

Where and how will to make those products or services?

Where and how will it sell them?

Where and how will it acquire the necessary resources?

How does it expect to outperform its competitors?

But developing an international strategy is far more complex than developing a domestic one.
Because managers developing a strategy for a domestic firm must deal with one national
government, one currency, one accounting system, one political and legal system and usually a
single language and a comparatively homogeneous culture. But managers responsible for
developing a strategy for an international firm must understand and deal with multiple
governments, multiple currencies, multiple political and legal system, and variety of language
and cultures.

Various Roles of Strategic Management

Senior management plays n important role in Strategic Management

Role of Board of Directors: Board of Directors is the supreme Authority in a company. They
are the owners/ shareholders/ lenders. They are the ones who direct and responsible for the
governance of the company. The Company act and other laws blind them and their actions &
they sometimes do get involved in operational issues. Professionals on the B.O.D help to get new
ideas, perspectives and provide guidance. They are the link between the company and the
environment.

Role of C.E.O:
Chief Executive Officer is the most important Strategist and responsible for all aspects from
formulations/Implementation to review of Strategic Management. He is the leader, motivator &
Builder who forms a link between company and the board of directors and responsible for
managing the external environment and its relationship.

Role of Entrepreneur: They are independent in thought and action and they set / start up a new
business. A Company can promote the entrepreneurial spirit and this can be internal attitude of
an organization. They provide a sense of direction and are active in implementation.

Role of Senior Management: They are answerable to B.O. Directors and The C.E.O as they
would look after Strategic Management a responsible of certain areas / parts of terms.
Role of SBU – Level Executives: They Co-ordinate with other SBU’s & with Senior
Management. They are more focused on their product / burners line.
They are more on the implementation role.

Role of Corporate Planning Staff: It provides administrative support tools and techniques and
is a Co-ordinate function.

Role of Consultant: Often Consultants may be hired for a specified new business or Expertise
even to get an unbiased opinion on the business & the Strategy.

Role of Middle Level Managers: They form an important link in strategizing &
Implementation. They are not actively involved in formulation of Strategies and they are
developed to be the future management.

COMPANY OVERVIEW
The Coca-Cola Company (Coca-Cola) is a leading manufacturer, distributor and marketer of
Non-alcoholic beverage concentrates and syrups, in the world. The company owns or licenses
more than 400 brands, including diet and light beverages, waters, juice and juice drinks, teas,
coffees, and energy and sports drinks. The company operates in more than 200 countries.
Approximately 74% of its products are sold outside of the US. The company is headquartered in
Atlanta, Georgia and employs 71,000 people as of September 2006.The company recorded
revenues of $24,088 million during the fiscal year ended December 2006, an increase of 4.3%
over 2005. The increase in revenue was primarily due to increase in sales of Unit cases of
company’s products from approximately 20.6 billion unit cases of the company’s Products in
2005 to approximately 21.4 billion unit cases in 2006, the increase in the Price and
Product/geographic mix also boosted the revenue growth. The company-wide gallon sales and
unit case volume both grew 4% in 2006 when compared to 2005. The operating profit of the
company was $6,308 million during fiscal year 2006, an increase of 3.7% over 2005. The net
profit was $5,080 million in fiscal year 2006, an increase of 4.3% over 2005.

History
Coca-Cola was first introduced by John Smyth Pemberton, a pharmacist, in the year 1886 in
Atlanta, Georgia when he invented caramel-colored syrup in a three-legged brass kettle in his
backyard. He first “distributed” the product by carrying it in a jug down the street to Jacob’s
Pharmacy and customers bought the drink for five cents at the soda fountain. Carbonated water
was teamed with the new syrup, whether by accident or otherwise, producing a drink that was
proclaimed “delicious and refreshing”, a theme that continues to echo today wherever Coca-Cola
is enjoyed.

Dr. Pemberton’s partner and book-keeper, Frank M. Robinson, suggested the name and penned
“Coca-Cola” in the unique flowing script that is famous worldwide even today. He suggested
that “the two Cs would look well in advertising.” The first newspaper ad for Coca-Cola soon
appeared in The Atlanta Journal, inviting thirsty citizens to try “the new and popular soda
fountain drink.” Hand- painted oil cloth signs reading “Coca-Cola” appeared on store awnings,
with the suggestions “Drink” added to inform passersby that the new beverage was for soda
fountain refreshment.

By the year 1886, sales of Coca-Cola averaged nine drinks per day. The first year, Dr. Pemberton
sold 25 gallons of syrup, shipped in bright red wooden kegs. Red has been a distinctive color
associated with the soft drink ever since. For his efforts, Dr. Pemberton grossed $50 and spent
$73.96 on advertising.

Dr. Pemberton never realized the potential of the beverage he created. He gradually sold portions
of his business to various partners and, just prior to his death in 1888, sold his remaining interest
in Coca-Cola to Asa G. Candler, an entrepreneur from Atlanta.

By the year 1891, Mr. Candler proceeded to buy additional rights and acquire complete
ownership and control of the Coca-Cola business. Within four years, his merchandising flair had
helped expand consumption of Coca-Cola to every state and territory after which he liquidated
his pharmaceutical business and focused his full attention on the soft drink. With his brother,
John S. Candler, John Pemberton’s former partner Frank Robinson and two other associates, Mr.
Candler formed a Georgia corporation named the Coca-Cola Company. The trademark “Coca-
Cola,” used in the marketplace since 1886, was registered in the United States Patent Office on
January 31, 1893.

The business continued to grow, and in 1894, the first syrup manufacturing plant outside Atlanta
was opened in Dallas, Texas. Others were opened in Chicago, Illinois, and Los Angeles,
California, the following year. In 1895, three years after The Coca-Cola Company’s
incorporation, Mr. Candler announced in his annual report to share owners that “Coca-Cola is
now drunk in every state and territory in the United States.”

As demand for Coca-Cola increased, the Company quickly outgrew its facilities. A new building
erected in 1898 was the first headquarters building devoted exclusively to the production of
syrup and the management of the business. In the year 1919, the Coca-Cola Company was sold
to a group of investors for $25 million. Robert W. Woodruff became the President of the
Company in the year 1923 and his more than sixty years of leadership took the business to
unsurpassed heights of commercial success, making Coca-Cola one of the most recognized and
valued brands around the world.

HISTORY OF BOTTLING

Coca-Cola originated as a soda fountain beverage in 1886 selling for five cents a glass. Early
growth was impressive, but it was only when a strong bottling system developed that Coca-Cola
became the world- famous brand it is today.

Year 1894: A modest start for a bold idea

In 1894 the Coca-Cola Company is in a candy store in Vicksburg, Mississippi, brisk sales of the
new fountain beverage called Coca-Cola impressed the store's owner, Joseph A. Biedenharn. He
began bottling Coca-Cola to sell, using a common glass bottle called a Hutchinson. Biedenharn
sent a case to Asa Griggs Candler, who owned the Company. Candler thanked him but took no
action. One of his nephews already had urged that Coca-Cola be bottled, but Candler focused on
fountain sales.

In 21st century the Coca-Cola bottling system grew up with roots deeply planted in local
communities. This heritage serves the Company well today as consumers seek brands that honor
local identity and the distinctiveness of local markets. As was true a century ago, strong locally
based relationships between Coca-Cola bottlers, customers and communities are the foundation
on which the entire business grows.

VISION OF COCA-COLA COMPANY

Our mission declares our purpose as a company. It serves as the standard against which we
weigh our actions and decisions. It is the foundation of our Manifesto.
• To refresh the world in body, mind and spirit
• To inspire moments of optimism through our brands and our actions
• To create value and make a difference everywhere we engage.

MISSION OF COCA-COLA COMPANY

To create consumer products, services and communications, customer service and bottling
system strategies, processes and tools in order to create competitive advantage and deliver
superior value to;

• Consumers as a superior beverage experience

• Consumers as an opportunity to grow profits through the use of finished drinks

• Bottlers as an opportunity to grow profits in volumes

• Bottlers as a trademark enhancement and positive economic value added

• Suppliers as an opportunity to make reasonable profits when creating real value-added in

an environment of system-wide team work, flexible business system and continuous
improvement

• Refresh the World... In body, mind, and spirit

• Inspire Moments of Optimism... Through our brands and our actions

• Create Value and Make a Difference... Everywhere we engage.

VISION FOR SUSTAINABLE GROWTH

Our vision guides every aspect of our business by describing what we 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

QUALITY POLICY

Coca-Cola Company follows different quality standard for different countries across the globe.
Coca-Cola Company has a long-standing commitment to protecting the consumers whose trust
and confidence in its products is the bedrock of its success. In order to ensure that consumers
stay informed about the global quality of all Coca-Cola products sold in World, Coca-Cola
products carry a quality assurance seal on them. The ‘One Quality Worldwide’ assurance seal
appears on the entire range of Coca-Cola Company’s beverages.

CURRENT ORGANIZATIONAL ORGANOGRAM have to d.load

Factors affecting the strategic management issues

Factors affecting the strategic management issues of domestic and international operations of Coca-Cola
Company

Table 1: Factors affecting the strategic management issues

Language

Culture

Politics

Economy

Governmental interference

Labor

Financing
Mkt research

Ad.

Money

Transportation

Control

Labor relation

Figure Due

There are some factors which affect strategic of Coca-Cola Company in case of international
operation. Language is one of the main considerations when it does business domestically, they
generally domestic language. But when it does business outside the country it follows
Polycentric policy that is it used different language in different countries. Side by side culture is
relatively homogeneous in domestic operation and quite diverse, both between countries and
within countries. Political stability and policy also be considered by the Coca- Cola Company.
Control function is done by centrally in case of domestically but when it goes beyond outside, it
must work a tightrope between over centralizing and losing control to much decentralizing.
Labor is another consideration because their skills and collective bargaining that is labor relation
differ from country to country. Advertising in domestic country is very easy because domestic
cultures are known to them. But in case of international operation it faces many problems for
advertising such as shortage of media, huge advertising cost and so forth. However economy is
relatively uniform in domestic’s country but outsides, it faces wide variation among countries
and among region within country. In case of Coco-Cola Company the market research data is
easy to collect but when it goes to foreign sometimes face difficult and expensive to collect data.
At last we see that government interference in case of domestically, it is minimal and reasonably
predictable but in international operation it is often expensive and subject to rapid change.

Strategic Alternatives of Multinational Companies

Multinationals corporations typically adopt one of four strategic alternatives in their attempt to
balance the three goals of global efficiencies, multinational flexibility, and worldwide learning.
There four strategies are as follows—
Home Replication Strategy

In this strategy, a firm utilizes the core competency or firm-specific advantage it developed at
home as its main competitive weapon in the foreign markets that it enters.

That is, it takes what it does exceptionally well in its home market and attempts to duplicate it in
foreign markets.

Multi-domestic Strategy

It is the second alternative available to international firm. A multi- domestic corporation views
itself as a collection of relatively independent operating subsidiaries, each of which focuses on a
specific domestic market.

Global Strategy

It is the third alternative available for international firms. A global corporation views the world
as a single marketplace and has as its primary goal the creation of standardized goods and
services that will address the needs of customers worldwide.

Transnational Strategy

The transnational corporation attempts to combine the benefits of global scale efficiencies with
the benefits of local responsiveness

Strategies for Coca Cola Company

These four strategy are shown in the following figure— p. 25

From these four strategies Coca-Cola Company follow the Multi- domestic strategies. They produce their
products independently in different countries. All countries product are not same. They produce their
products by following different strategy for different countries, based on the internal and external
environment of the country. Coca- Cola Company developed their strategy by considering the nature of
the people of different county’s people, culture, status and so many other related factors. Behind the
reasons of following of this strategy may be that, different countries economies of scale for production,
distribution, and marketing are low, side by side cost of coordination between the parent corporation and
its various foreign subsidiaries is high. Because each subsidiary in a multi-domestic corporation must be
responsive to the local market, the parent company usually delegates considerable power and authority to
managers of its subsidiaries in various host countries.

Levels of Strategies followed by Coca-Cola Company

There are three levels of strategies followed by Coca-Cola Company.

This may be stated as the following— p.26

Corporate Level Strategy

Corporate level strategy attempts to define the domain of business the firm intends to operate. Corporate
level strategy fundamentally is concerned with the selection of businesses in which the company should
compete and with the development and coordination of that portfolio of businesses. A firm might adopt
any of three forms of corporate strategy:

• A single business strategy

• Related diversification strategy and

• Unrelated diversification strategy.

Coca-Cola Company follows related diversification strategy that is calls for the firm to operate in several
different but fundamentally related businesses. Each of its operations linked to the others Coca-Cola
characters, the Coca-Cola logo, and a theme of wholesomeness and a reputation for providing high
quality family products. Coca-Cola Company follows this strategy because it has several advantages. At
first, the firm depends less on a single products so it is less vulnerable to competitive or economic threats.
Secondly, related diversification may produce economies of scale for a firm. Thirdly, related
diversification may allow a firm to use technology or expertise developed in one market to enter a second
market more cheaply and easily. Corporate level strategies of Coca-Cola Company is following— p. 27

Business Unit Level Strategy

A strategic business unit may be a division, product line, or other profit center that can be planned
independently from the other business units of the firm. Corporate strategy deals with the overall where as
business strategy focuses on specific business, subsidiaries or operating units within the firm. Business
seeks to answer the question “how should we compete in each market we have chosen to enter?” The
firms develop unique business strategy for each of its strategic business units, or it may pursue the same
business strategy for all of them. The three basic business strategy are differentiation, overall cost
leadership and focus. Coca-Cola Company uses the differentiation strategy effectively.

Functional Level Strategy

The functional strategies attempts to answer to question “How we manage the function?” The functional
level of the organization is the level of the operating divisions and departments. The strategic issues at the
functional level are related to business processes and the value chain. Functional level strategies in
marketing, finance, operations, human resources, and R&D involve the development and coordination of
resources through which business unit level strategies can be executed efficiently and effectively.

Functional units of an organization are involved in higher level strategies by providing input into the
business unit level and corporate level strategy, such as providing information on resources and
capabilities on which the higher level strategies can be based. Once the higher-level strategy is developed,
the functional units translate it into discrete action-plans that each department or division must
accomplish for the strategy to succeed.

Good points of Coca-Cola Company

• Brand Promotion

• Attractive products selection

• Look and feel 8

• Provision of multimedia product, catalogue pages

• Personal attention

• Community relationships

Weak points of Coca-Cola Company

• Performance and service: that is not easy navigation, shopping and purchasing, and prompt
shipping and delivery.

• Discount pricing is not being offered

Developing International Strategies

Developing international strategies is not a one-dimensional process.. Simply put, put strategy
formulations deciding what to do and strategy implementation is actually doing it. Firms generally carry
out international strategic management in two broad strategies-

Strategy Formulation
In strategies formulation, a firm establishes its goals and strategic plan that will lead to the achievement
of their mission goals. In international strategy formulation, managers develop, refine, and agree on
which markets of enter (or exit) and how best to compete in each.

Strategy Implementation

A firm develops the tactics for achieving the formulated international strategies is known as strategy
implementation. Strategy implementation is usually achieved via the organization’s design, the work of
its employees, and its control systems and processes.

Every Multinational Companies are developing their international strategies so that they can survive in
the complex business situation. Now the modern market is fully globalized and as a result it’s really
difficult for every multinational organization in the right track. In such aspect the importance of strategy
formulation and strategy implementation played an important role. Side by side there is some important
process which helps in international strategy formulation.

Developing International Strategies in Aspects of Coca-Cola Company

TCCQS is the Coca-Cola system’s branded quality management system. It helps coordinate and guide our
activities to ensure quality in everything they do. For entering in to a new market and be survive in the
market it always ready to cope with change. Different government policy, economic condition, political
situation, barrier and ban are associated with different market.

Coca-Cola Company’s basic strategies are to develop a mission statement for entering a new market
depending on a fully fledged market survey. Identifying external and internal environment strength,
weakness, opportunity, and threats is the next management strategies. Depending on the scope and
opportunity the company will go forward as well as try to resolve the weakness and threats. After entering
into a new market Coca-Cola Company try to achieve strategic goals and guide its daily activities with
proper observation.

Lastly this company establishes a control framework for controlling the managerial and organizational
systems and process as well. This company believes that, for taking a position in a new country is fully
depends on the good formulation strategies and keeping it. To do business outside the local market is
depending on the quality control of the product and quality ensures the customer perception and the
choice for consuming this products.

P. 32
Through this model, we see that the company is first take the response of customers and consumers
through market survey. Then the management accumulates the best quality resources for making their
products. This process includes-

• Skilled employee involvement for production and quality control

• High quality materials for production

• Up to date technology for quality control

• Effective methods and newly developed strategies

They will follow some sequential steps in developing the international strategy formulation. Those steps
help the Coca-Cola Company to enter and establish their business in multinational base. They are
following multi-domestic strategies for their produced product as well as their marketing system. The
analysis of different levels of strategic formulating of Coca-Cola Company is given below.

Developing the Mission Statement

Coca-Cola Company begins the international strategic planning process by creating a mission statement,
which clarifies the organization’s purpose, value, and directions. The mission statement is often used as a
way of communicating with internal and external constituents and stakeholders about the firm’s strategic
direction.

Mission statement of Coca-Cola Company

This company focused on driving growth in of their business in selected profitable and emerging
categories. To develop, implement and continuously improve the integrated management systems in a
culture of continuous improvement which:

• Directs the continual up-gradation for efficient and environment friendly manufacturing
technology.

• Monitor and improve the efficiency and effectiveness of all business processes.

• Promotes professional and flexible work environment, teamwork and innovation through
employee participation and process ownership.

• Drives customer orientation at all levels within the organization.

• Monitor and economize the Cost of Quality.

Comments on mission Statements

(In terms of how they support the strategies)

The vision statement of this company supports the existing strategies that are (generic strategy)
that Coca Cola needs to pursue is that of differentiation. In their current vision and mission
statements, the company says it aims to be a low cost leader, yet through their analysis of the
strategic direction, the company needs to adopt a generic strategy of differentiation. This will
allow Coca cola to do two things;

1. Increase unit sales

2. Gain buyer loyalty

However, at the expense of sounding simplistic, it is necessary that the company communicate its
differentiation to its customers, otherwise these two advantages will not avail themselves.
Initially Coca cola will need to adopt a focused differentiation approach, which means that they
should selectively choose which markets will profit them the most and then target only those
markets until such provisions are in place from where the company is able to expand its target
base. After which they should opt for a broad differentiation generic strategy.

COCA-COLA COMPANY, THES WOT ANALYSIS

SWOT ANALYSIS

The Coca-Cola Company (Coca-Cola) is a leading manufacturer, distributor and marketer of

Non-alcoholic beverage concentrates and syrups, in the world. Coca-Cola has a strong brand
name and brand portfolio. Business-Week and Inter brand, a branding consultancy, recognize
Coca-Cola as one of the leading brands in their top 100 global brands ranking in 2008. The
Business Week-Interbred valued Coca-Cola at $67,000 million in 2008. Coca-Cola ranks well
ahead of its close competitor Pepsi which has a ranking of 22 having a brand value of $12,690
million The Company’s strong brand value facilitates customer recall and allows Coca-Cola to
penetrate markets. However, the company is threatened by intense competition which could have
an adverse impact on the company’s market share. P. 35

Analyzing the primary competitor and identifying their Strengths, Weaknesses, Opportunities,
and Threats (SWOT Analysis) help determine target markets, marketing plan, and customer
service, sales forecasting and sales planning. Examining the following will assist in the
competitive analysis:

Identify the level of rivalry among competing sellers in the industry

Review strategies of companies to encourage customers to switch from a competitor

 Analyze ease of entry for new competitors

Determine bargaining power for suppliers of key materials and components

 Determine bargaining power for buyers of the product

SWOT Analysis represents the analysis of the following four things—

STRENGTHS

Distribution network: The Company has a strong and reliable distribution network. The network
is formed on the basis of the time of consumption and the amount of sales yielded by a particular
customer in one transaction. It has a distribution network consisting of a number of efficient
salesmen, 700,000 retail outlets and 8000 distributors. The distribution fleet includes different
modes of distribution, from 10- ton trucks to open-bay three wheelers that can navigate through
narrow alleyways of Indian cities and trademarked tricycles and pushcarts.

Strong Brands: The products produced and marketed by the Company have a strong brand image.
People all around the world recognize the brands marketed by the Company. Strong brand names
like Coca-Cola, Fanta, Limca, and Maaza add up to the brand name of the Coca-Cola Company
as a whole. The red and white Coca-Cola is one of the very few things that are recognized by
people all over the world. Coca-Cola has been named the world's top brand for a fourth
consecutive year in a survey by consultancy Inter brand. It was estimated that the Coca-Cola
brand was worth $70.45billion.

Low Cost of Operations: The production, marketing and distribution systems are very efficient
due to forward planning and maintenance of consistency of operations which minimizes wastage
of both time and resources leads to lowering of costs.

WEAKNESSES

Low Export Levels: The brands produced by the company are brands produced worldwide
thereby making the export levels very low. In India, there exists a major controversy concerning
pesticides and other harmful chemicals in bottled products including Coca-Cola.

Small Scale Sector Reservations Limit Ability to invest and Achieve Economies of Scale: The
Company’s operations are carried out on a small scale and due to Government restrictions and
‘red- tapes’, the Company finds it very difficult to invest in technological advancements and
achieve economies of scale.

OPPORTUNITIES

Large Domestic Markets: The domestic market for the products of the Company is very high as
compared to any other soft drink manufacturer. Coca-Cola India claims a 58 per cent share of the
soft drinks market; this includes a 42 per cent share of the cola market. Other products account
for 16 per cent market share, chiefly led by Limca. The company appointed 50,000 new outlets in
the first two months of this year, as part of its plans to cover one lakh outlets for the coming
summer season and this also covered 3,500 new villages. In Bangalore, Coca-Cola amounts for
74% of the beverage market.

Export Potential: The Company can come up with new products which are not manufactured
abroad, like Maaza etc and export them to foreign nations. It can come up with strategies to
 eliminate apprehension from the minds of the people towards the Coke products produced in
India so that there will be a considerable amount of exports and it is yet another opportunity to
broaden future prospects and cater to the global markets rather than just domestic market.

Higher Income among People: Development of India as a whole has lead to an increase in the per
capita income thereby causing an increase in disposable income. Unlike olden times, people now
have the power of buying goods of their choice without having to worry much about the flow of
their income. The beverage industry can take advantage of such a situation and enhance their
sales.

THREATS

Imports: For example: As India is developing at a fast pace, the per capita income has increased
over the years and a majority of the people is educated, the export levels have gone high. People
understand trade to a large extent and the demand for foreign goods has increased over the years.
If consumers shift onto imported beverages rather than have beverages manufactured within the
country, it could pose a threat to the Indian beverage industry as a whole in turn affecting the
sales of the Company.

Tax and Regulatory Sector: The tax system in India is accompanied by a variety of regulations at
each stage on the consequence from production to consumption. When a license is issued, the
production capacity is mentioned on the license and every time the production capacity needs to
be increased, the license poses a problem. Renewing or updating a license every now and then is
difficult. Therefore, this can limit the growth of the Company and pose problems.

Slowdown In Rural Demand: The rural market may be alluring but it is not without its problems:
Low per capita disposable incomes that is half the urban disposable income; large number of
daily wage earners, acute dependence on the vagaries of the monsoon; seasonal consumption
linked to harvests and festivals and special occasions; poor roads; power problems; and
inaccessibility to conventional advertising media. All these problems might lead to a slowdown in
the demand for the company’s products.

COCA-COLA COMPANY, THEPEST ANALYSIS

A scan of the external macro-environment in which the firm operates can be expressed in terms
of the following factors:

• Political

• Economic

• Social

• Technological

The acronym PEST (or sometimes rearranged as "STEP") is used to describe a framework for the analysis
of these macro environmental factors. A PEST analysis fits into an overall environmental scan, which
consists of significant political, economic, social and technological analysis for a firm to reach their
desirable position or to attain the goals and objectives. For operating a business worldwide it is too much
important, because its analysis represent the overall environmental scanning as shown in the following
diagram: p. 40

Coca-Cola Company’s perform/ operate their business unit in different country based on the developing
of the PEST analysis. The PEST analysis of Coca-Cola Company is as following—

Political Factors

It is one of the significant parts of a company where, in which country they operate their business unit.
Political factors include government regulations and legal issues and define both formal and informal
rules under which the firm must operate. Some examples include:

• Tax policy

• Employment laws

• Environmental regulations

• Trade restrictions and tariffs

• Political stability

Economic Factors

Another most imperative element for PEST analysis is economic factors. Economic factor affects the
purchasing power of potential customers and the firm's cost of capital. The following are examples of
factors in the macro-economy:

• Economic growth

• Interest rates

• Exchange rates

• Inflation rate

Social Factors

Social factors include the demographic and cultural aspects of the external macro environment. These
factors affect customer needs and the size of potential markets. Some social factors include:

• Health consciousness

• Population growth rate

• Age distribution

• Career attitudes
 • Emphasis on safety

Technological Factors

Technological factors can lower barriers to entry, reduce minimum efficient production levels, and
influence outsourcing decisions. Some technological factors include:

• R&D activity

• Automation

• Technology incentives

• Rate of technological change

Develop Strategic and tactical goals and plans of Coca-Cola Company

After completion of SWOT and PEST analysis as context, international strategic planning is largely
framed by the setting of strategic goals. Based on different market situation as well as customers response
this company will set up their tactical goals for being a strong position in the global market place.
Strategic goals are the major objectives that the Company wants to accomplish through pursuing a
particular course of action.

The basic objective of set up this strategic and tactical plan and goals is to exploit the firm’s strengths and
environmental opportunities, neutralize external threats and overcome the firm’s weakness. Depending on
those vital factors this Coca-Cola Company is develop a Control Framework for their overall controlling
of management. Through this framework managerial and organizational systems are observed, monitor,
and processed

Findings

By preparing this report about the strategic management issues of multinational companies (MNCS), the
case study on the Coca-Cola Company, we get some important things. These findings are as follows —

• Coca-Cola Enterprises is the world's largest marketer, producer and distributor of Coca-Cola
products.

• Coca-Cola was first introduced by John Smyth Pemberton, a pharmacist, in the year 1886 in
Atlanta, Georgia when he invented caramel-colored syrup in a three-legged brass kettle in his
backyard.
 • It operates in 46 U.S. states and Canada, and is the exclusive Coca-Cola bottler for all of
Belgium, continental France, Great Britain, Luxembourg, Monaco and the Netherlands. Coca-
Cola is the non alcoholic bottled beverages.

• The company owns or licenses more than 400 brands, including diet and light beverages, waters,
juice and juice drinks, teas, coffees, and energy and sports drinks.

• The company operates in more than 200 countries

• Strategic management integrates the knowledge and experience gained in various functional
areas.

• 3 Major Criteria in decision Making are---the concept of Maximization, the concept of satisfying,
the concept of instrumentalism.

• The vision of Coca-Cola Company is to refresh the world in body, mind and spirit

• Bringing to the world a portfolio of quality beverage brands that anticipate and satisfy people's
desires and needs Coca-Cola Zero® has been one of the most successful product launch in Coca-
Cola’s history

• It has soft drinks, energy drinks, juice drinks, sports drinks, tea and coffee, water and other
drinks.

• Coca-Cola Company follows the multi-domestic strategy for operating their business.

• After entering into a new market Coca-Cola Company try to achieve strategic goals and guide its
daily activities with proper observation.

• Good points of Coca-Cola Company are brand promotion, alternative products selections,
Provision of multimedia product, catalogue pages and so on.

CONCLUSION
Being in such a tense competition (just like the brand Coca-Cola), Coca-Cola should not take the direct
and tough attack upon it. There is no good to either side. The best way is to keep a peaceful relationship
with it and always compare with others; we should find their disadvantages and show our advantages on
this aspect. Then by and by, the people would think ours is betted Of course the most important rule is to
improve ourselves to meet the consumers. An organization’s strategic thinking is governed by the
situation prevalent in its external environment. The external environment comprises of the strategic
moves adopted by the organization’s competitors. The organization has to carefully study these moves
and accordingly devise strategies to gain competitive advantage. For the same, the organization needs to
conduct an industry and competitive analysis. The paper discusses the steps and processes involved in the
same. In formulating business strategy, managers must consider the strategies of the firm's competitors.
While in highly fragmented commodity industries the moves of any single competitor may be less
important, in concentrated industries competitor analysis becomes a vital part of strategic planning.