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Coca-Cola Company

Submitted By-

Chandan Kalia

Ans 1.

Introduction and Coca-Cola Company’s overview

The Coca-Cola Company is an American multinational beverage corporation and

manufacturer, retailer and marketer of non-alcoholic beverage concentrates and syrups, which
is headquartered in Atlanta, Georgia.[2] The company is best known for its flagship
product Coca-Cola, invented in 1886 by pharmacist John Stith Pembertonin Columbus,
Georgia.[3] The Coca-Cola formula and brand was bought in 1889 by Asa Griggs
Candler (December 30, 1851 – March 12, 1929), who incorporated The Coca-Cola Company
in 1892. 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 owns its anchor bottler in North America, Coca-Cola Refreshmens.

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. Its current chairman and CEO is Muhtar

The Coca-Cola Company together with the bottling companies forms the best production and
distribution system in the world, the system is designed in such a way that employees
dedicated and put the company’s objectives as their number one priority. Products of this
company have proven to be the number one soft drink in quenching consumer’s thirst of non-
alcoholic soft drinks from Moscow to Montreal and from Beijing to Boston all over the world
for more than 115 years of its existence. One of the key objective of the company is to
increase its market share-value, which was achieved by operating with associates with the
aim of satisfying customers and valuing customers interest as well as protecting company’s
assets and minimizing business ricks.



It includes Political changes in accordance with the ruling government, changes that has to do
with government regulations, policies as to how a company should operate and how the
products should be. By setting up these rules and regulations the government intervenes with
the company’s decisions because the board have to make sure that under no circumstance, no
rule is to violated, some of which includes monitory policy, trade restriction, recruiting
policy, environmental policy.

The Coca-Cola Company being a non-alcoholic beverages company falls in the category of
what is known as the Food and Drug Administration (FDA) which is a globally recognized
agency originated from the United State of America to monitor and verify ingredients that are
being used in manufacturing non-alcoholic products. However, aside from the FDA’s
requirements other political majors that are being set in accordance with the jurisdictions of
countries include income tax, import and export regulations and the uncertainty of political
crisis. Political crisis can be in form of protest, which might affect the demand of products, as
well as political violence that makes it hard for the products to penetrating in political crisis

These include interest rate, inflation, standard of living, wages, exchange rate, unemployment
rate and the overall economic growth of the country. These factors differs in each of the
operating countries, which is why before any venture the above mentioned factors of the
country have to be comprehensively analysed.

Coca-Cola Company uses this tool to market their product across the world, which brought
about the 63 different types of currency being used by the company. However, due to
constant fluctuation on exchange rate strong or weak currency are some of the determinants
of exporting product worldwide which is very important as the company generate 72% of its
operating profit outside the United State.

Furthermore, another major economical tool is the interest rate imposed on borrowed money.
Changes in interest rate affect the financial status of a company and further investments as it
increase total cost, the Coca-Cola company manage to cope with interest rate fluctuation by
implementing a derivative instrument. In the case of inflation, the Coca-Cola Company sort
their employees with higher wages and salaries in countries with high inflation rate so as to
enable them cope with the situation. This increase in wages increase product cost and
couldn’t be reflected on the product price due to the competitive and risk of the market, a
threat being faced by external environment in most companies.


The social factors have to do with people’s cultures, traditions, health perception, safety
majors, population growth and new trends among the population.

This is a very important section as regards to a company like Coca-Cola that has a direct link
to the customers, companies of this nature are considered to be B2C. Countries are diversify
in terms of culture and tradition, this element have to be absolutely analyse before
introducing marketing and introducing products. Coca-Cola Company has about 3300+
different products, in penetrating new market after intensive market analysis the Company
start by introducing few of their products based on the social factors of the general population
subsequently increasing products based on social factors.
Consumers and government are very cautious on the issue of health and safety, in beverages
industries obesity is the most common concern of the general public. This concern is mostly
raised by younger generations so as to maintain good physique. According to a study
consumers of Coca-Cola are very concern with nutritional content nowadays. This is one
threat that the management was able to turn into opportunity by introducing dietary products
such as Coca-Cola Zero, Light Coke and Diet Coke.

In a non-alcoholic beverages company, most of the market share comes from youth and
children, which is why population growth is being given high emphasis in market analysis
and being one of the major factor of social analysis.


Technology plays several functions in beverages industry as with the manufacturing new
products, packaging product and distribution of products.

Coca-Cola Company rely on its bottling partner for packaging, 83% of case volume produce
across the world is being manufactured by bottling partners which the company don’t have
total control power over. The availability of different Coca-Cola packaging has everything to
do with the advance in technology, various vending machines are available all over the world.
This let to the production of some stylish non-refillable bottles and cans, which are trending
among youth and attractive to children which also serves as a marketing tool for promoting


Legal laws includes, employment law, antitrust law, customer law, health and safety law and
discrimination law to mention few.

Various acts and regulations exist in the United State of America some of which includes
Federal Food Act, Federal Trade Commission Act, Drug and Cosmetic Act, health and safely
Act apart from the upper mentioned Acts several environmental regulations are being
implemented within the State some of which include, regulations on advertising, sales and
production. Slight alteration in either of the laws, regulations or act could yield to positive or
negative impact on the company. Furthermore, violation of any of the upper mentioned laws,
acts, or regulations will escalate serious penalty which will definitely affect the company.



1. World’s foremost brand: Coca-Cola as a brand is considered to be the global

leading brand. In the year 2006 an international branding consulting firm ranked
Coca-Cola number one brand among the top 100 global brand in the same year week-
inter-brand valued the brand at $67,000,000. The brand is ranked far above its
competitors in the beverages industry, the brand following it in the beverages industry
is Pepsi which was ranked number 2 with brand value of $12,690,000. Moreover,
aside from being the number one brand, it owns the top four beverages brand in the
world that include Fanta, Sprite, Coca-Cola, and Diet Coke. This is why the Coca-
cola brand posses the largest portfolio of product brand in the beverages industry.
This advantage is what the company look at in introducing new brand example of
which are Vanilla Coke, Cherry Coke, and Lemon Coke. Coca-Cola Company heavily
invests in promoting the brand over the years. This is one major advantage the
Company uses in penetrating new market meanwhile strengthening existing markets.

2. Large scale of operations: In the whole world Coca-Cola Company is the largest
beverages company operating with more than $24 000,000,000 (twenty four billion
USD), it manufacture, market and distributes its product in more than 200 countries
with approximately 52,000,000,000 (fifty two billon) consumers everyday. The
company account for more than 1.4 billion USD in beverages bearing trademarks.
These operations are being supported by strong infrastructures with 32 high standard
manufacturing plants distributed across the world along with 95 bottling and canning
plants outside the United State. In addition the company also produces bottle water
and juices. This advantage enables the company to be able to meet up its high
demands of products as well as increase the company’s revenue.
3. Vigorous revenue growth: Coca-Cola Company’s revenues doubled in Latin
America, Pacific Rim and East, South Asia. In the year 2006 its recorded revenue
grew by 20.4% in Latin America, and grew by 10.6% in East/South Asia and Pacific
Rim. Furthermore, the bottling company accounted for 34.8% of revenue generated
during the fiscal year 2006. This vigorous rise in revenue in those segments
contributed effectively in the overall growth of the Company during the year.


1. Negative Publicity: The Company has been involved in various unethical related
issues which prompt lawsuits against the Company on issues of human right
violations, there have been rapid allegations raised concerning the Middle East and
U.S foreign policy over the years. In the year 2006, the company received negative
publicity concerning ingredients used for producing its products by CSE (centre for
Science and Environment). The products were asserted to contain pesticide residue.
The President/CEO of Coca-Cola Company Mr. Muhtar Kent received a note on the
10th of December 2008 from FDA warning him about some of its product that are
violating the Act. Products include Diet Coke, Plus, 20FL and OZ. Furthermore,
Coca-Cola Company has been sued by the United State Consumer Group I early
January 2009 against the company’s flavours for Vitamins Water.

2. Slow performance in some regions: In North America Coca-Cola Company

generated about 30% of its total revenue during the fiscal year 2006, this significantly
shows how important this region is to total revenue growth of the Company. Prior to
this, a study estimated a weak market performance in this region due to weak trends
of sparkling beverages in the region, where the company recorded a decrease supply
in company’s warehouse. Slow performance in this region will definitely impact the
company’s negatively in terms of revenue growth and hinder the company in entering
the top growth list of companies.

1. Acquisitions: In the year 2006 Coca-Cola Company acquired Kerry Beverages
(KBL) this made it possible for the company to take control over manufacturing and
distributing its product across Chinese provinces operating in form of joint ventures.
Likewise in Germany Apollinaris was acquired, a company that is engaged in
sparkling and mineral water. Also the company owns 100% interest in South African
company named TJC Holdings, more acquisitions were made in Australia and New
Zealand in the year 2006. This acquisition did not only expand the company’s revenue
but rather strengthened the company’s international operation, which is an added
advantage. Furthermore, as we mentioned earlier robust international operations
increase the company’s overall growth and make it much easier for the company to
penetrate into a new and existing markets. Coca-Cola Enterprises is one of the
biggest bottling company in North America was also acquired by Coca-Cola
Company on 25th of February 2010.

2. Emergence of Bottled Water: In beverage market today bottled water is the fastest
growing commodity. Study has showed that in the year 2006 bottled water generated
revenue of $15.6 billion. This is due to increase in health concerns, in the years 2006
consumption of bottle water was estimated around 30 billion volume of litres and
increased to 38.6 billion units in 2010.
The value of bottle water reached $19.3 billion in 2010 while the revenue generated
by the flavour (slightly sweetened refreshing flavour) is annually increasing by $10
billion. In the United State Coca-Cola bottle water Dasani brand is rated to be the
third bestselling water.

3. Rapid population growth: Rapid increase in Hispanic population across the United
State is an added prospect for the company to snatch so as to generate higher revenue
on products consumption. In the year 2013 its confirmed that 11.6 million households
in United State are Hispanic, where at the same year census estimated that Hispanic
population will increase to more than 60 million by 2020 (18% of United State
Population). Translating this to buying power, the Nielsen media proclaimed Hispanic
buying power will increase to $1.5 trillion by the year 2017.

1. High Competition: Coca-Cola Company being among the non-alcoholic
beverages find itself in highly competitive position in various market within the
United States and outside. PepsiCo is the major competitor of Coca-Cola
Company; other companies include Danone, Krafft Foods, Cadbury Schweppes,
and Nestle. The presence of these competitors elevated the factors which include
issues of pricing, innovations, brand, advertising, sales and protection. High
competition rate could impact the company’s general performance.

2. Dependence on bottling companies: The Company generate share of its revenue

through sales of concentrates and syrups to many bottling companies of which the
Coca-Cola Company have no total control of. It was approximated in 2006 that
83% of the total volume unit is being produce and distributed by various bottling
companied across the world.

Porter’s Five Forces In Action: Sample Analysis of Coca-Cola

Since its introduction in 1979, Michael Porter’s Five Forces has become the de facto
framework for industry analysis. The five forces measure the competitiveness of the market
deriving its attractiveness. The analyst uses conclusions derived from the analysis to
determine the company’s risk from in its industry (current or potential). The five forces are:

Threat of New Entrants/Potential Competitors: Medium Pressure

 Entry barriers are relatively low for the beverage industry: there is no consumer switching
cost and zero capital requirement. There is an increasing amount of new brands appearing
in the market with similar prices than Coke products
 Coca-Cola is seen not only as a beverage but also as a brand. It has held a very significant
market share for a long time and loyal customers are not very likely to try a new brand.
Threat of Substitute Products: Medium to High pressure
 There are many kinds of energy drinks/soda/juice products in the market. Coca-
cola doesn’t really have an entirely unique flavor. In a blind taste test, people can’t tell
the difference between Coca-Cola and Pepsi.

The Bargaining Power of Buyers: Low pressure

 The individual buyer puts no pressure on Coca-Cola
 Large retailers, like Wal-Mart, have bargaining power because of the large order quantity,
but the bargaining power is lessened because of the end consumer brand loyalty.

The Bargaining Power of Suppliers: Low pressure

 The main ingredient for soft drink include carbonated water, phosphoric acid, sweetener,
and caffeine. The suppliers are not concentrated or differentiated.
 Coca-Cola is likely a large, or the largest customer of any of these suppliers.

Rivalry Among Existing Firms: High Pressure

 Currently, the main competitor is Pepsi which also has a wide range of beverage products
under its brand. Both Coca-Cola and Pepsi are the predominant carbonated beverages
and committed heavily to sponsoring outdoor events and activities.
 There are other soda brands in the market that become popular, like Dr. Pepper, because
of their unique flavour. These other brands have failed to reach the success that Pepsi or
Coke have enjoyed.
Porter’s Model of Generic Strategies

The three generic business strategies according to Michael Porter are; Overall Cost
Leadership, Differentiation and Focus Strategy. The Coca-Cola Company has been an
established trademark in the United States since 1886. Since then, the company has been able
to differentiate themselves by being known as the world’s largest manufacturer, distributor
and marketer of non-alcoholic beverages and syrups. There are over 3000 products bearing
their famous trademark that are now sold in more than 200 countries worldwide. The Coca-
Cola Company follows the differentiation strategy by spending enormous amounts of money
in advertising to differentiate and create a unique image for their products. It provides
different products to the customers and has been very much successful in gaining a leading
position among the competitors.

Given that Coca-Cola is already well established around the world, they do not need to apply
an overall cost leadership strategy. The price of their products do not need to be cheaper than
their competitors in order to gain an advantage, because of how differentiated they make the
brand to already be. They also do not use a Focus strategy, because Coca-Cola offers many
different beverages to market to a broad scope of people. These drinks include; fruit drinks,
energy and sports drinks, bottled water, and an assortment of different flavours of carbonated.
Value Chain Analysis of Coca-Cola

A value chain is a model used to disaggregate a firm into its strategically relevant value
generating activities, in order to evaluate each activity's contribution to the firm's
performance. Through the analysis of this model we can gain insight as to how a firm creates
their competitive advantage and shareholder value. The value chain of the non-alcoholic
beverage industry contains five main activities. These include inbound logistics (suppliers),
operations, outbound logistics (buyers/ customers), marketing and sales, and service.

Inbound Logistics (Suppliers)

Some of Coca Cola most notable suppliers include Spherion, Jones Lang LaSalle, IBM,
Ogilvy and Mather, IMI Cornelius, and Prudential. These companies provide Coca Cola with
materials such as ingredients, packaging and machinery. In order to ensure that these
materials are in satisfactory condition, Coca-Cola has put certain standards in place which
these suppliers must adhere to (The Supplier Guiding Principles). These include: compliance
with laws and standards, laws and regulations, freedom of association and collective
bargaining, forced and child labour, abuse of labour, discrimination, wages and benefits,
work hours and overtime, health and safety, environment, and demonstration of compliance
(Coca Cola 2006). Coca-Cola uses third parties to assess their suppliers by having interviews
with employers and contract workers. If a supplier has issues about the supplier guiding
principles, they are usually given a certain amount of time to take corrective measures; if not,
Coca-Cola has the right to terminate their contract with these suppliers.

Coca Cola core operations consist of Company-owned concentrate and syrup production
(Coca Cola2006). According to their website, some of the main environmental impacts of
their business occur further along the value chain through system's bottling operations,
distribution networks, and sales and marketing activities (Coca Cola 2006). Management of
these operations across the business value chain tends to be more challenging outside of the
core operations. According to Coca Cola, they continue to address this by working with their
partners to reduce the effects at every level of the manufacturing process by enlarging their
comprehension of the complete environmental impact of their business through the entire
lifecycle of their products from ingredient procurement to production, delivery, sales and
marketing, and post-consumer recycling (Coca Cola 2006).Please see Appendix for
additional information.

Outbound Logistics (Buyers/ Customers)

The activities required to get finished products to customers include warehousing, order
fulfilment, transportation, and distribution management. Coca Cola has the world largest
distribution system. They own, lease, and operate in over 800 plants around the world (Coca
Cola 2006). The 2,400 beverage products which they market reach consumers in more than
200 different geographic locations (Coca-Cola 2006). Coca Cola has over 300 bottling
partners which range from publicly traded businesses to small family owned operations (Coca
Cola 2006). They have implemented the Coca Cola System in which they work cohesively
with their partners in order to develop strategies aimed to meet the needs of all their
customers. Examples of their commitment to these strategies are seen in their plant in
Indonesia, where boats are used to transport the products between hundreds of islands
throughout the Amazon. This is often because waterways are often the main way to access
these remote islands. In some of the higher elevations of in the Andes, Coca Cola products
are sometimes transported by four-legged power. Across much of Africa, bottlers deliver to
thousands of family-run kiosks and home-based stores.

Marketing and Sales

Out of approximately 2,400 products, Coca Cola markets four of the world’s top sales drink
brands. Although the industry is relatively small and they only directly compete with two
companies, creativity is a vital marketing strategy to Coca Cola. Coca Cola ultimate goal is to
deepen their brands connection with consumers. As a result, they have to constantly reinvent
their product (Coca Cola 2006). The marketing strategy they use is directly linked to the
consumer; from advertising, to point of sale, to ultimately opening and consuming a Coca
Cola beverage. Techniques which they have used to achieve this include developing new
products and brands, changing the design of their packaging, and designing various new
advertising campaigns (Coca Cola 2006).On October 19th, Coca Cola reported their earnings
for the third quarter. Earnings per share are up which results in higher benefits for
shareholders. According to Neville Is dell, CEO of Coca Cola, they have experienced a
growth in sales of five per cent compared to the same quarter last year. This is as a result of
balancing performance across their global markets and their product portfolio (Coca


Activities that maintain and enhance a product value include customer support, repair
services, installation and training. Coca Cola customers range from large international
retailers and restaurants to smaller independent businesses and vendors. As a result, they
provide services tailored to meet their customer’s needs. Coca Cola also supports their
customer by providing them with the training necessary to help their businesses become more
effective and profitable. They have established Customer Development and Training Centres
which are available to more.
Ans 2-

Recommendation 1

The Coca-Cola Company has a high level of uncertainty when it comes to the raw materials it
uses. For a few of the ingredients, the company only has one or two viable suppliers. This
could be extremely problematic for a variety of reasons. The Coca-Cola Company has less
bargaining power if there is little substitutability in suppliers. Another problem could arise if
a supplier experiences an event that economically devastates them. If a supplier goes
bankrupt, or is in some type of natural disaster, The Coca- Cola Company would suffer
greatly as well.

The Coca-Cola Company can improve and secure relationships with suppliers using a few
tactics such as minority ownership or strategic alliances. The most optimal method would be
to use backward vertical integration and purchase a supplier. The results of such a strategy
would allow the company to keep profits that used to be earned by the supplier, save on costs,
and have a reliable source of supplies. Besides the actual purchase of the organization,
another costly aspect of vertical integration is high bureaucratic costs (Jones, 2007).

The Coca-Cola Company should look at buying the following companies: The NutraSweet
Company, Ajinomoto Co., Inc., Nutrinova Nutrition Specialties & Food Ingredients GmbH,
or Tate & Lyle. These companies are one of two possible suppliers for important raw
materials (Annual Report, 2014). Although the company has not experienced significant
problems, future events are always uncertain. The most secure way to control suppliers for a
company is through ownership. While ownership of a sugar/sweetener company is clearly out
of the company's domain, the move would make their core business more profitable. The
Coca-Cola Company would be able to purchase one of these companies through financing.
The organization has a high credit rating and, therefore, would be able to raise money for the
acquisition at a low cost.

Recommendation 2

The Coca-Cola Company's decision making process does not fit into its structure or mission,
vision, and values. Their decision making process is more centralized, and when compared to
everything else going on at The Coca-Cola Company, it does not match. The Coca-Cola
Company has a more organic structure and their mission and values preach creativity and
employee involvement. They would improve their decision making and enforce their organic
structure by implementing a strategy for organizational learning. They can begin by shaking
things up more often by changing managers for different departments on a periodical basis.
This will force managers to think outside the box when making decisions (Jones, 2007). This
will also enforce a learning organization and in still the organic culture into everyone's mind
frame. Because of this, The Coca-Cola Company will have the ability to solve large problems
more quickly and become a stronger community as a result.

Another way The Coca-Cola Company could match their decision making skills to their
structure is by making sure employees do get involved. They should implement an open door
policy in which any employee can go to their manager and suggest ideas for solving different
problems. This will allow the management to become aware of small problems before they
become large ones. By changing their decision making process, they will also become more
accustomed to their recently adopted mission, vision, and values. They will inspire optimism
in all stakeholders by making decisions in a timelier manner. This will show stakeholders that
The Coca-Cola Company has a great outlook for the future because problems will seem like
less of an obstacle for them. By including more, lower level employees in their decision
making process, they are promoting leadership and inspiring collaboration and innovation.

Recommendation 3

The Coca-Cola Company has become highly criticized for the actions of its bottling partners
in Colombia. The bottling company is alleged to have killed employees due to their ties with
a union, and even while The Coca-Cola Company does not own that plant, The Coca-Cola
Company has been the target of boycotts and lawsuits. Even if The Coca-Cola Company was
unaware and uninvolved in what happened, their name is attached to the product. In order to
make the situation better, The Coca- Cola Company should buy the bottling partners in
Colombia. The company can use its resources to create stable bottling plants. Managers
would need to work with union leaders to create an agreement that was fair for both sides.
While taking over and running the plants would cost the organization money, the company
would have full control over the activities of managers. This increased accountability and
dedication to correcting any wrong doings would garner some positive publicity for the
company's operations, and provide the benefit of having a stable distribution channel in the
region. Although the organization does not own most of their bottling plants, acquiring the
Colombian bottlers would provide The Coca-Cola Company with the ability to foster better
relationships with the citizens of the country

Ans 3-(1)

The Coca Cola Company used forward vertical integration to move a step closer to their
consumers. Forward vertical integration refers to a management style of involves a form of
vertical integration whereby activities are expanded to include control of the direct
distribution of its products”. A cash cow is defined as a “business, product or asset that, once
acquired and paid off, will produce consistent cash flow over its lifespan”. Companies in this
category require very little maintenance and bring in a steady cash flow for the company over
a long period of time. One benefit of being a cash cow company, or having a cash cow
product, is that the company can invest the profits into other branches of the business, making
acquisitions to grow the company, or giving back to shareholders in the form of dividends.
Coca-Cola is considered a cash cow because of their high market share and relatively low
market growth. They aren’t growing as much anymore in the market because they have been
around for 126 years.
Ans 4(1)-

There are now just two countries in the world where Coca-Cola cannot be bought or sold - at
least, not officially. They are Cuba and North Korea, which are both under long-term US
trade embargoes (Cuba since 1962 and North Korea since 1950).

Cuba was actually one of the first three countries outside the US to bottle Coke, in 1906.

But the company moved out as Fidel Castro's government began seizing private assets in the
1960s, and has never returned.
In North Korea - the other Coca-Cola-free zone -recent media reports suggested it was
being sold in a restaurant in Pyongyang. But Coca-Cola says if any drinks are being sold in
either North Korea or Cuba, they are being smuggled in on the black market, not via official
I think instead of going in these countries, the company should focus on launching new
products in the countries where there is a less variety of products.eg Pakistan where the
company has only two flavours.

Ans 4-(2)
The Coca-Cola company should locate its value chain in countries where there is cheap
labour eg- India, Kenya, Pakistan, Senegal, Sri Lanka, Egypt. Like India, Pakistan has a
population that can speak in English. So there is a huge amount of knowledge available in
such places which will surely help the company in expanding their business. Also because
such countries also have cheap labour, the problem of high labour costs is reduced and the
company can earn more profits if it located the value chain in such places. Because both our
requirements are meant, the company should go and have their value chain in such countries
and areas to maximise the profits and also increase the sales.
There are only two countries in the world where coca cola is not sold legally. Among all the
other countries the company must have a thorough study of what the economic strength of the
country is and search for the countries which have cheap labour.
Cheap labour will lower the costs and help in increasing the profits.

Reference List