M.

E-COMPUTER ENGINEERING

STRATEGIC MANAGEMENT
BIRLA
VISHVAKARMA
MAHAVIDHYALAYA

(2721407)

REVIEW PRESENTATION OF PAPER (RP)

GLOBAL

PREPAIRED BY:

MOHIT Y.SURATI
(140080702019)
M.E-COMPUTER ENGINEERING
B.V.M. ENGINEERING COLLEGE
VALLABH VIDHYANAGAR

GUJARAT
TECHNOLOGICAL
UNIVERSITY

BUSINESS STRATEGY

UNDER GUIDANCE OF:

PROF. J.R.PITRODA
ASSISTANT PROFESSOR &
RESEARCH SCHOLAR
CIVIL ENGINEERING DEPARTMENT
B.V.M. ENGINEERING COLLEGE
VALLABH VIDHYANAGAR

UNDER GUIDANCE OF:

PROF. J.J.BHAVSAR
ASSOCIATE PROFESSOR
CIVIL ENGINEERING DEPARTMENT
B.V.M. ENGINEERING COLLEGE
VALLABH VIDHYANAGAR

PAPER-1
2

Author
Name
(YEAR),
GLOBAL
BUSINESS
STRATEGY, Journal Full Name (SHORT NAME),
VOL:1, ISSUE:2, PP:12-18.

TABLE OF CONTENTS

Abstract.

Introduction to COCA-COLA Company & Overview.

PESTEL Analysis.

PESTEL Analysis for COCA-COLA Company.

SWOT Analysis.

SWOT Analysis for COCA-COLA Company.

Globalization,

Brief History Of Globalization.

Extent Of Globalization For COCA-COLA Company.

Challenges Of Globalization.

Structure Of COCA-COLA Company.

Conclusion.

References.

ABSTRACT

This paper focuses on Global Business Strategy of Coca-Cola Company.

The first part of the paper concentrate on the Internal & External Analysis
of the company in the international business environment.

The second part of the paper concentrate on issues like Globalization & its
Challenges of organisations with regards to moral and ethical issues, & the
conflicts between them.

INTRODUCTION & COCACOLA Companys Overview

According to a report by United State Securities and Exchange Commission

(2006) the Coca-Cola Company was established in Atlanta, Georgia, in the
year 1886.

The company is considered to be the world number one non-alcoholic

beverages company, leading in manufacturing, marketing and distribution of
its product.

Coca-Cola Company produces a wide range of about 500 different beverage

brands across the world.

In the late 1920s the company begins its journey for globalisation and presently
operating in more than 200 countries following a simple global formula Provide a
moment of refreshment for a small amount of money a million times a day.

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 companys objectives as their number one
priority.

Products of this company have proven to be the number one soft drink 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 companys assets.

PESTL ANALYSIS

PESTL analysis is an mnemonic meaning Political, Economical, Social,

Technological and Legal.

It is often use as a tool by companies to analyze the whole EXTERNAL

environment from every angle the company is operating under.

Although Coca-Cola Company is the world leading non-alcoholic beverages

company in the world, its still needs to undertake PESTL analysis to know
more about its external environment, precisely the opportunities out there and
its competitors.

The Political factors establish the extent as to which The serving political
policies and rules influence the economy or rather the business organisation.
This policies and rules include, how much tax is impose, trade tariffs etc.

The economic factors are the determinants of Economic Performance that

impact the company in one way or the other, factors such as interest rate,
inflation rate, foreign exchange rate and economic growth.

The social factors comprises of environmental trends, which includes cultural

trends, population analytics, seasonal trends etc. For example, in the western
countries there is high demand of things during holiday seasons.

The Technological factors includes Innovations & technological

development that affect the organisational performance in either in positive or
negative way. This can be in form of automation of some organisational.

The Legal factors involves both Internal & external segment of the
organisation, internal in the sense that the organisation develop some inside
laws and regulations to maintain its operations and dealings while external in
the case where certain law, policies and regulations are imposed to the
company by government or regulatory agency.

PESTL ANALYSIS FOR THE

COCA-COLA COMPANY

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POLITICAL :

Political changes in accordance with the ruling government, changes that has to do
with Government regulations & policies as to how a companies should operate
and as to how the products should be.

By setting up those rules and regulations the government intervene with the
companys decisions because the board have to make sure in every decision that
is being made, those rules and regulations must in no circumstance be violated.

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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) .

FDA 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.

The Coca-Cola company cautiously examine their ingredients to meet up

requirements of the FDA before presenting it for approval.

Other political factors includes 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.

ECONOMICAL :

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Economical factors, which companies uses in forecasting future decisions on

investment. These includes interest rate, inflation, standard of living, wages,
exchange rate, unemployment rate and the overall economic growth of the country.

These economical factors differs in each of the operating countries, which is why
before a company venture any country it has to comprehensively analysed the
economy of the country.

Economic growth of a country gives a company a glimpse of high purchasingpower, this is what most marketers use in penetrating the market. 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.

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However, due to constant fluctuation on exchange rate strong or weak currency
are some of the determinants of exporting product world wide 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 couldnt be
reflected on the product price due to competition and risk of the market.

SOCIAL :

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The social factors have to do with peoples cultures, traditions, health perception, safety
majors, population growth and new trends among the population. A company is not
expected to change the social factors but rather, to adapt and adjust to suit these social
factors.

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 .

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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.

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 :

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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 dont have total control power over.

This is why its essential for the company to keep a healthy relationship not just with
its bottling company but within and outside the entire departments companies involve.

The availability of different Coca-Cola packaging has everything to do with the

advancement in technology, this let to the production of some stylish non-refillable
bottles and cans, which are trending among youth and attractive to children.

LEGAL :

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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.

SWOT ANALYSIS

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According to Berry (2014) SWOT is mnemonic representing Strengths,

Weaknesses, Opportunities and Threats which are considers to be internal and
external factors some of which the company has control over and some of which it
has no control over.

This analysis is been used as a tool of auditing of generally strategic position of an

organization.

The Factors for SWOT :

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Strengths:

These are qualities of an organization that facilitate that support the organization to achieve its
mission.

These qualities could be what the organization is versed on or expertise on, these includes
individual and team quality of employee, the diverse qualities that distinguished the organization
from its competitors. Strengths of an organization can be on its brand, financial resource etc.

Weaknesses:

It regards to the attributes the prevent an organization from achieving its mission or operating
effectively, these weaknesses hinder the growth and success of the organization. Weaknesses
include poor machinery, ineffective decision-making, deficient research and development
capability etc.

Opportunities:

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It is usually presented by the external environment within which the organization

operates to take advantage of, when opportunities arise its expected for an
organization to strategized on how to take advantage of it be its in profitability,
brand, customer loyalty, product/service recognition, penetrating new market etc.

Threats:

This are attributes presented by external environment, attributes that have

tendency of jeopardizing the organization. This are sometimes being mistaken
weakness, but threats are external while weakness are internal within
organization example of which includes technological changes, increase
competition etc.

the
for
the
in

SWOT ANALYSIS FOR

COCA-COLA COMPANY

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Jurevicius (2013) in a site conducted a detailed SWOT analysis of the Coca-Cola

Company using so many factual statistics and evidences in validating the analysis.

SWOT analysis comprises of Strengths, weakness, opportunity and threats, where

the strengths and weakness are considered to be internal factors while the
opportunities and threats are the external factors influencing the company.

STRENGTHS
Worlds foremost brand:

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Coca-Cola as a brand is consider to be the global leading brand, in the year 2006 an
international branding consulting firm ranked Coca-Cola number one brand on the
hierarch of top 100 global brand in the same year week-inter-brand valued the brand
at $67,000,000.

The brand is ranked far above it competitors in the beverages industry, the brand
following it in the beverages industry is Pepsi which was ranked number 22 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.

Large Scale Of Operation:

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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) consumed 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 produce bottle water and concentrates juice. This
advantage enable the company to be able to meet up to its high demands of products
as well as increase the companys revenue.

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Vigorous revenue growth:

Coca-Cola Companys revenues double it growth 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 raise in revenue in those segments contributed effectively in the

overall growth of the Company during the year.

WEAKNESS
Negative Publicity:

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The Company has been allege to 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 where
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 suit by United State Consumer Group I early
January 2009 against the companys flavours for Vitamins Water.

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Slow performance in some regions:

In North America Coca-Cola Company generate about 30% of it 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 study estimate 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 companys warehouse.

Slow performance in this region will defiantly impact the company negatively in
terms of revenue growth and hinder the company in entering the top growth list of
companies.

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Decline liquidity from operating activities:

As recorded in the companys annual report, there is a clear declination in cash flow
from operating activities in the year 2006. Comparing it to the preceding year in
2006 the operating activities cash-flow decrease by 7%.

Total cash flow generated in the year 2005 is recorded to be $6,423,000 which
decrease to $5,957,000 in the year 2006. The decrease of $216,000,000 is as a result
of tax-qualified trust, which is set up to promote and fund retiree medical sector.

However, the decrease is also as a result of positive marketing strategy in the year
2005, which was lacked in 2006.

OPPORTUNITIES

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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 join ventures.

Likewise in Germany Apollinaris was acquired, a company that is engage in

sparkling and mineral water. More also the company owns 100% interest in South
African company named TJC Holdings, more acquisitions where made in Australia
and New Zealand in the year 2006.

This acquisition did not only expand the companys revenue but rather strengthened
the companys international operation, which is an added advantage.

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Emergence Of Water Bottle:

In beverage market today bottle water is the fastest growing commodity study has
showed that in the year 2006 bottle 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 statistics expect it to
increase in 2010 by 38.6 billion unit.

The value of bottle water is estimated to reach $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 best selling water.

Rapid Population Growth:

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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 2006 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.

Translating this to buying power, the Nielsen media proclaimed Hispanic buying
power will increase to $1 trillion by the year 2003.

THREATS
High Competition:

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Coca-Cola Company being among the non-alcoholic beverages find its self in
highly competitive position in various market within the United State and outside.

PepsiCo is the major competing company to Coca-Cola Company; other companies

include Danone, Krafft Foods, Cadbury Schweppes, and Nestle to mention few.

The presence of these competitors elevated the factors which include issues of
pricing, innovations, brand, advertising, sales and protection.

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Depedance On Bottling Company :

The Company generate lion share of it 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 been produce and
distributed by various bottling companied across the world.

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Health Cautiousness:

Health cautiousness is now becoming major concern among people. In the

United State of America people are searching for different variety of non-alcoholic
beverages and at the same time highly cautious with carbonated and sweetened
drinks are are align to prompt a decline rate in consumption of those carbonated
drinks.

The general revenue generated in 2005 by carbonated drinks decrease by about

$63.9 billion USD. Beverages Company faces criticism for promoting obesity and
poor diet to their consumers.

GLOABLIZATION

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As defined by McGrew (2014) in the general scale, The way of eliminating the
difference between different countries, continent and economy so as to make it
easier to trade and conduct transactions within and between every nations there by
putting the whole world under the same umbrella is called GLOBALIZATION.

This process has been going on over a century particularly in the 1945, but the
process has been moving on a slow rate until in the last 20 year when it became
much more faster due to development.

BRIEF HISTORY OF
GLOABLIZATION

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According to James and Peck (1998) Globalization started in the 17th century with
the inventions of new ships which gave Europeans avenue to trade with other
centuries on a large scale, comparing to agriculture trade was still a tiny part of the
economy as of then.

With the recent development and innovations in transport sector such as rails, steam
ships and Airplanes, shrinks the world and make it more convenient and faster for
people to travel across the world and carry out trade, with the presence of the
Internet it makes it even much more easier to communicate internationally.

Decline in barriers to trade between different countries increase international trade

that makes the worlds GDP increasing in a steady rate.

EXTENT OF
GLOABLIZATION ON
COCA-COLA COMPANY

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According to Coca-Cola Companys report (2006) The name Coca-Cola is one of

the most popular brands in the world and the company is ranked the largest
company in beverages industry today.

This is so because the Coca-Cola Company continuer to gain growth due to the
prompt expanding across the world, the Company operate presently in more than
200 countries with 84,000 suppliers this makes 70% of the companys turn over to
be from other foreign country.

This is possible due to globalization; John Pemberton founds the company in the
1880s in United State of America with a good reputation of consistency and high
quality.

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Cola and a red and white attractive 21 package with a uniform taste of product
across the country, this became some of the foundation strategy of the company.

Globalization in Coca-Cola Company started in the 1900s when bottling plants

where built in Panama and Cuba as military spread through those regions, this
spread prompt the rise in demand of the product.

These plants reduced the shipping cost of the product in these regions, the success
of these plants swift the Company to build many more across which includes
Hawaii, Puerto Rico and Philippines.

By the year 1926 the Company established a strong foreign relationship with other
countries around the world, this gave the company a chance to continue on its quest
of rapid expansion and mass production.

CHALLENGES OF
GLOABLIZATION

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The road to success has never been smooth and easy. For Coca-Cola Company
the phrase seems perfectly matched, the Company faced a lot of challenges in some
countries as it was trying to globalize.

Some countries prohibited the used of Coca-Cola products with the assertion that
the products are health threatening and cheering obesity.

Aside from these assertions so many suits had been filed against the Coca-Cola
Company with the allegation of child labour sweatshops. Other countries suits the
Company for being selective in providing healthcare to their workers.

Another major challenged faced by the Company was the infiltration of the
beverages market by other strong Companies such as Pepsico.

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However, upon the above mentioned challenges, the Coca-Cola Company remain
strong and overcome the obstacles by focusing on its mission to provide good
quality, satisfying and refreshing products to their customers.

The Coca-Cola Company uses a strategy of uniform tastes, which is been achieved
by ensuring strict control of recipes and facilities.

This strategy really helped the Company in overcoming some of the challenges and
the Companys number one goal to be the number one beverages company in the
world.

STRUCTURE OF COCACOLA COMPANY

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The Coca-Cola company has a similar organisational structure with a distinct

international division which is in the head office commanding the five continental
divisions around the world.

This includes Eurasia and Africa Group, Pacific Group, Europe Group, North
America Group and South America Group.

Each of those continental groups has a vice president that assumes the control of
each sub-division.

The companys structure is uniformly irrespective of region or country of operations

with rigid command of operations control from the head office.

CONCLUSION

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The report commenced with a brief introduction of Coca-Cola Company with a

detailed analysis of the international market of its products.

PESTL and SWOT analysis was being conducted to identify potential segments
the management needs to focus on in order to achieve its objectives.

The report also examines the global position and structure of the company.
Although there were some limitations and challenges being faced by the
company, it still maintained its position due to its Brand.

It is clear that customers are being regards as the number one factors to be considers
in operating under international or local level. Hence, for any company or
organization to endure its market competition they need to put in their best in given
customers what the desired because customers are no longer loyal.

REFERENCES

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