Strategic Management Issues of Coca-Cola Company
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 a decision on it.
The specific objectives of the study are to have knowledge about-
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- 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 that 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 Methodology
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 on this data we like to analysis the Economic Review, Statistical Strategic condition of the Coca-Cola Company. Both the official and the 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.
LIMITATIONS OF THE REPORT
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
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 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.
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.
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.
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 STRATEGIC MANAGEMENT
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.
As public and common investors own and more companies managers need to acquire skills to maximize shareholder value. To have/take a strategic perspective, managers should foresee the future and track changes in customer expectation. Intuitive, logic reasoning is required for proper decision- making.
Significance of Strategic
As corporate are becoming more integrated with the public life, corporate governance is becoming important which Management manager may have to practice. To the shape the Its helps to increase Future of business the productivity Effective strategic idea To Makes discipline Mangers and employer are
To make control innovative and It’s decentralized the Page 7 Management To makes forward s 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, the 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 attaining 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 Company 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 an 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.
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 Page 12 13. Strategic Management Issues of Coca-Cola Company 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 OF COCA-COLA 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. 6 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. Strategic Management Issues of Coca-Cola Company 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. Page 15 16. Strategic Management Issues of Coca-Cola Company 1920s and 30s … 1950s … Packaging 1916 … International innovations expansion Birth of the contour bottle 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
- Indian society in the form of a contribution to economic and social development.
- 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 BRANDS OF COCA-COLA
Coca-Cola Zero® has been one of the most successful product launch hes in Coca-Cola’s history. In 2007, Coca Cola’s sold nearly 450 million cases globally. Put into perspective, that's roughly the same size as Coca Cola’s total business in the Philippines, one of our top 15 markets.
As of September 2008, Coca-Cola Zero is available in more than 100 countries. Energy Drinks For those with a high-intensity approach to life, Coca Cola’s brands of Energy Drinks contain ingredients such as ginseng extract, guarana extract, and caffeine and B vitamins. Juices/Juice Drinks We bring innovation to the goodness of juice in Coca Cola’s more than 20 juice and juice drink brands, offering both adults and children nutritious, refreshing and flavorful beverages Soft Drinks Coca Cola’s dozens of soft drink brands provide flavor and refreshment in a variety of choices.
From the original Coca-Cola to most recent introductions, soft drinks from The Coca-Cola Company are both icons and innovators in the beverage industry. Sports Drinks Carbohydrates, fluids, and electrolytes team together in Coca Cola’s Sports Drinks, providing rapid hydration and terrific taste for fitness-seekers at any level Tea and Coffee Bottled and canned teas and coffees provide consumers' favorite drinks in convenient take- anywhere packaging, satisfying both traditional tea drinkers and today's growing coffee culture.
Water Smooth and essential, our Waters and Water Beverages offer hydration in its purest form. Other Drinks So much more than soft drinks, Coca Cola’s brands also include milk products, soup, and more so you can choose a Coca Cola Company product anytime, anywhere for nutrition, refreshment or other needs.
CONSUMER CHOICE AT A GLANCE
Limca Common Fanta Basically Preferred by Maaza also Ladies and drink. Kids Sprite not clearly Kinley Soda Mostly those who defines consume liquor Factors affecting the strategic management issues of domestic and international operations of Coca-Cola Company.
Language| English used as a second language| Use the local language in many situations required| Cultures| Relatively homogeneous| Quite diverse, both between countries and within countries| Politics| Unstable| Often volatile and of decisive importance| Economy| Underdeveloped| Wide variations among countries and among regions within countries| Governmental interferences| Reasonably Predictable| Often extensive and subject to rapid change| Labor| Skilled labors are not available| Skilled labors are often scarce, requiring trainings or redesigned of production methods|
Financing| Moderately developed financial markets| Often poorly developed financial markets; capital flows subject to governmental control| Market Research| Data collect is not very easy| Sometimes data difficult and expensive to collect| Advertising| Media are available with some restrictions| Media limited; many restrictions; low literacy rates rule out of prints media in some countries| Money| | Must change from one currency to another| Transportations| It is not developed| Often Adequate| Control| Always a problem| A worse problem| Labor Relations| Collective bargaining, layoff of workers| Layoff of workers often not possible, may have mandatory participation in management; workers may seek political change rather than collective bargaining| Factors affecting the strategic management issues
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 corporations 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— Home Multi-domestic Replication Strategy Strategy v Transnational Global Strategy Strategy 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 Figure: Levels of Strategies 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 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 whereas 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.
E-COMMERCE OF COCA-COLA COMPANY
- 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. 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, THE SWOT 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 Page 37 38. Strategic Management Issues of Coca-Cola Company penetrate markets. However, the company is threatened by intense competition which could have an adverse impact on the company’s market share. 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-tonne 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.
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-tapism’, the Company finds it very difficult to invest in technological advancements and achieve economies of scale.
Large Domestic Markets: The domestic market for the products of the Company is very high as compared to any other soft drink. 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.
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, THE PEST ANALYSIS
A scan of the external macro-environment in which the firm operates can be expressed in terms of the following factors:
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: Environmental Scan / External Analysis Internal Analysis / Macro environment Microenvironment | P. E. S. T. 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:
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
- 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 nonalcoholic 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 hes 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.
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
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The key systems of the Coca-Cola Organization incorporate; The principle methodology and motto of the organization are accessibility, moderateness, and adequacy of the brand all through the whole world. Feasible development of the organization, staying up with the market to guarantee its future nearness.
The principle goals for the Coca-Cola Organization are to be all inclusive known as a business that conducts business duty and morally and to quicken feasible development to work in tomorrow's reality. By having these targets, it shapes the establishment for organizations in the dynamic procedure.
They created exceptionally rich promoting for the organization highlighting trademarks like "Coca-Cola is a Scrumptious Refreshment, Wonderfully in Agreement With the Soul All things considered," "The Incomparable National Moderation Drink," or "Coca-Cola Resuscitates and Supports."
Coke's Way Forward. Coca-Cola is developing its business technique to turn into an all out refreshment organization by giving individuals a greater amount of the beverages they need – including low and no-sugar alternatives over a wide exhibit of classifications – in more bundles sold in more locations.