American International University –Bangladesh

Semester Project

“Operation strategy of Coca-Cola”

Submitted To:

Dr. Md. Mamun Habib

Assistant Professor

American International University –Bangladesh

Submitted By:

Group Number # F

Section: A

Mohammad Anowarul Kabir 08-11542-2

Mohammad Anas 08-11523-2

Zakia Reza 08-11543-2

Khanum Fatema Akter 08-11450-2

Sunny Sanjida Yasmin 08-12190-3

Submission Date: 24 july, 2011

TABLE OF CONTENTS

Topic Page number

Chapter:1 Introduction 1-5

Chapter:2 Literature Review 6-10

Chapter:3 Discussion 11-15

Chapter:4 Conclusion 16

Referances 17

Chapter: 1

Introduction

The Coca-Cola Company is the world's largest beverage company, refreshing

consumers with more than 500 sparkling and still brands. Led by Coca-

Cola®, the world's most valuable brand, the Company's portfolio features 14

billion dollar brands including Diet Coke, Fanta, Sprite, Coca-Cola Zero,

vitamin water, PowerAde, Minute Maid, Simply and Georgia. Globally, we are

the No. 1 provider of sparkling beverages, juices and juice drinks and ready-

to-drink teas and coffees. Through the world's largest beverage distribution

system, consumers in more than 200 countries enjoy the Company's

beverages at a rate of 1.7 billion servings a day. With an enduring

commitment to building sustainable communities, our Company is focused

on initiatives that reduce our environmental footprint, support active, healthy

living, create a safe, inclusive work environment for our associates, and

enhance the economic development of the communities where we operate.

History of Coca-cola:

Coca cola describe their history in two ways: one is form of coca cola and

another is bottle of coca cola. They think lots about their bottle. So, they

have changed their bottle based on public demand and also situation.

History of pattern of coke:

In 1886, when Atlanta and Fulton County passed prohibition legislation,

Pemberton responded by developing Coca-Cola, essentially a non-alcoholic

version of French Wine Coca. The first sales were at Jacob's Pharmacy in

Atlanta, Georgia, on May 8, 1886. It was initially sold as a patent medicine

for five cents  a glass at soda fountains, which were popular in the United

States at the time due to the belief that carbonated water was good for the

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health.[10] Pemberton claimed Coca-Cola cured many diseases,

including morphine addiction, dyspepsia, neurasthenia, headache,

and impotence. Pemberton ran the first advertisement for the beverage on

May 29 of the same year in the Atlanta Journal.

History of Bottle:

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.

1894 … A modest start for a bold idea

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.

1899 … The first bottling agreement

Two young attorneys from Chattanooga, Tennessee believed they could build

a business around bottling Coca-Cola. In a meeting with Candler, Benjamin F.

Thomas and Joseph B. Whitehead obtained exclusive rights to bottle Coca-

Cola across most of the United States (specifically excluding Vicksburg) -- for

the sum of one dollar. A third Chattanooga lawyer, John T. Lupton, soon

joined their venture.

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1900-1909 … Rapid growth

The three pioneer bottlers divided the country into territories and sold

bottling rights to local entrepreneurs. Their efforts were boosted by major

progress in bottling technology, which improved efficiency and product

quality. By 1909, nearly 400 Coca-Cola bottling plants were operating, most

of them family-owned businesses. Some were open only during hot-weather

months when demand was high.

1916 … Birth of the contour bottle

Bottlers worried that the straight-sided bottle for Coca-Cola was easily

confused with imitators. A group representing the Company and bottlers

asked glass manufacturers to offer ideas for a distinctive bottle. A design

from the Root Glass Company of Terre Haute, Indiana won enthusiastic

approval in 1915 and was introduced in 1916. The contour bottle became

one of the few packages ever granted trademark status by the U.S. Patent

Office. Today, it's one of the most recognized icons in the world - even in the

dark!

1920s … Bottling overtakes fountain sales

As the 1920s dawned, more than 1,000 Coca-Cola bottlers were operating in

the U.S. Their ideas and zeal fueled steady growth. Six-bottle cartons were a

huge hit after their 1923 introduction. A few years later, open-top metal

coolers became the forerunners of automated vending machines. By the end

of the 1920s, bottle sales of Coca-Cola exceeded fountain sales.

The Coke Company operates three primary delivery systems for its business

channels:

• Bulk delivery for the channels of large Supermarkets, Mass Merchandisers

and Club stores;

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• For smaller channels Coke does advanced sale delivery for convenience

stores, drug stores, small supermarkets and on-premise fountain accounts.

• Full service delivery for its full service vending customers.

Key Channel Listing

Supermarkets

Convenience Stores

Fast Food

Petroleum Retailers

Chain Drug Stores

Hotels/Motels/Resorts

Mass Merchandisers

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Chapter: 2

Literature review:

Global operation Strategy:

We know about 4 kind of global operation strategy:

1. International

2. Multinational

3. Global

4. Transnational

Coca cola is a part of transnational. They are activities same as

transnational. And local responsiveness and cost reduction is so high.

Showing it below based on graph:

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Sowt Analysis of Coca cola:

TOWS Analysis is an effective way of combining to develop a strategy.

a) Internal strengths with external opportunities and threats

b) Internal weaknesses with external opportunities and threats.

Strengths weakness

World’s leading brand

Large scale of operations

Robust revenue growth in three

segment

Negative publicity

Sluggish performance in North America

Decline in cash from operating

activities

opportunities Threats

Acquisitions Intense competition

Growing bottled water market

Growing Hispanic population in US

Intense competition

Dependence on bottling partners

Sluggish growth of carbonated

beverages

Supply chain strategy of Coca cola:

Coca cola is world largest beverage Food Company. And they are also a

franchisor company. So, supply chain strategy is different one country to

another country. But every franchisor maintains a basic supply chain. It is

showing below.

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Operation and marketing strategy of coca cola:

TARGET MARKET

Coke’s commercials basically based on young generations, So, the young

generation is the target market of Coke because they want to represent

Coke with the youth and energy but they also consider about the old people

they take then as a co-target market

MAJOR SEGMENTS

Major segments are basically those people who take this drink daily and

those areas where the demands are higher than the other areas. There are

so many people who take this drink daily and those people who take weekly

and those who take less often are always there as well. So, their basic

segments are those people who take this drink regularly.

FACTORS EFFECTING SALES

There are so many factors, which affects the sale of coke. Here we are

discussing three

major factors which effects coke.

1. Per capita income

2. Competitors

3. Weather

MARKETING STRATEGY

Our local marketing strategy enables Coke to listen to all the voices around

the world asking for beverages that span the entire spectrum of tastes and

occasions. What people want in a beverage is a reflection of who they are,

where they live, how they work and play, and how they relax and recharge.

Whether you're a student in the United States enjoying refreshing Coca-Cola,

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a woman in Italy taking a tea break, a child in Peru asking for a juice drink, or

a couple in Korea buying bottled water after a run together, we're there for

you. We are determined not only to make great drinks, but also to contribute

to communities around the world through our commitments to education,

health, wellness, and diversity.

Coke strives to be a good neighbor, consistently shaping our business

decisions to improve the quality of life in the communities in which we do

business. It's a special thing to have billions of friends around the world, and

we never forget it.

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Chapter: 3

Discussion:

Just three decades ago, the competitive environment of the

carbonated soft drink (CSD) industry was based on recognition of an implicit

acquiescence to the dominance of The Coca-Cola Company. Beginning in the

1960s, however, Coca-Cola's dominance has been increasingly challenged,

particularly by Pepsi-Cola. The new competitive environment is well

publicized and intense. The Cola Wars were declared and the battle

continues. Pepsi-Cola and Coca-Cola are widely recognized as being two of

the premier marketing companies in the world. A great variety of new

products and package types have been introduced. Celebrity advertising has

been raised to a new level. Coca-Cola even changed the formula for Coke.

These and other developments in the CSD industry came about from major

changes in strategy by Pepsi-Cola and Coca-Cola. To some extent these

strategic changes arose from Pepsi's challenge to Coke's dominance of the

industry. In addition, several factors external and internal to the industry

have been important catalysts for these changes. Rather than simply

reacting to a changing competitive environment, PepsiCo and The Coca-Cola

Company have created and implemented strategies that turned the new

environment to their advantage (Muris, Scheffman & Spiller 1993).

 

Although Pepsi Cola attacked Coca-Cola's dominance and achieved

near parity with Coke in bottled soft drinks, both Coke and Pepsi have

benefited from fighting the Cola Wars because the battle between them has

stimulated continuing growth in an industry regularly pronounced by the

experts for many years to be on the verge of maturity (Muris, Scheffman &

Spiller 1993). As the industry existed in the early 1970s, the reasons for

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predictions of impending maturity were not difficult to see. The apparent

limits of the human stomach argued strongly against further significant

growth of per capita consumption of soft drinks. Certainly, substantial growth

in sales of the limited number of products offered by Pepsi and Coke

appeared unlikely (Muris, Scheff man & Spiller 1993). The competitive

advantages of the two industry leaders were built on delivering a few

unchanging, high-quality products through a distribution system that,

although complicated, was effective. In the face of the predicted maturation

of their domestic market, the prudent course appeared to be a holding action

in the United States, with attention and resources shifted to offshore markets

and diversification a classic cash cow strategy.

Strength

Strengths are the strong points of the business. To know the strengths

of the things that should be known includes the sources of the company’s

revenue, the market share of the company in various product lines, the

availability of strong brands of a company, the effectiveness of the

advertisement of the brand or product, the availability of pool of skilled

workers, the morale of the employees,   the innovativeness of the company

and the ability of the company to withstood international competition. Coca-

cola’ strength is the international popularity it has. The company is known

throughout the world. People from all over the world purchase and drinks the

different products the two companies have.

 

Strength of the company is the strong brand name it has. The strong

brand name is what makes the company and its products popular. It brings

the company huge amounts of profit and worldwide notoriety. Furthermore

strength of the company is the effective advertising it uses. The company

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uses a different advertising method. The company uses television and

magazine commercials as well as other methods for people to be informed of

its product. Lastly strength of Coca Cola is its website that is easy to use,

attractive, and informative. The website is visited by people from different

countries and this can help companies promote its products. The website of

the company is attractive, informative and easy to use for clients this gives

the clients interest in purchasing the company’s products.

 

Weakness

Weaknesses are the current problems of the company. To determine

the weakness of the company the things that should be known includes the

products that are least profitable, areas of the company that is not able to

recover cost, the weak brands, the ability of the company to raise money

when it needs to, the ability of the company to stand price pressures against

competitors, the ability of the company to create new ideas, the faith of

employees in management and the ability to compete with other companies

in the technology front. The main weakness of the company is the health

issues when their product is partaken. The products they have can cause

health problems when taken so many times. The company cannot restrict

the consumption of their product at all times, thus they might not be able to

stop health problems to be present to clients.

 

 A weakness of the company is its inability to restrict certain gender

from using their product. Young children who might acquire health problems

from taking their products are not restricted. Children who can get their

products anywhere might over-consume their products since they are not

given proper warning and restriction. Lastly a weakness of the company is it

not being able to separate from other beverage companies. When Coca Cola

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is being talked about Pepsi can also be talked about subsequently. They

have a strong brand name but they don’t have one thing that gives them

distinction.

 

Opportunities

Opportunities are those events or situations that may arise in the

future. To determine the opportunities of the company the things that should

be known includes competitive position of the company, new technologies

that the company can innovate for low costs, the capacity and opportunity to

extend brands, the capacity to implement incentive plans to boost employee

effectiveness, the ability of the company to move up the value chain, the

ability of employees to be multi-skilled to reduce levels of redundancy,

opportunities to cooperate with companies that are not competitors for both

companies to be beneficial.

 

Opportunity for the company is to create products that can give not

only satisfaction to clients but health benefits as well. The company can

create a product that is not harmful to one’s health at the same time it does

not taste bad.  An opportunity for the company is to find out more ways to

give a distinctive taste to their product. By doing this the company will not

be co related with Pepsi and other competitors products. Lastly an

opportunity for the company is to reach newer territories where it can offer

its products and services.  The company can reach more territories not yet

reached by its competitors.

Threats

Threats are problems that may arise and should be avoided. To

determine the threats of the company the things that should be known

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includes the capacity of employees to be adequately trained, the capacity of

the company to withstand sudden changes in the environment, the ability of

the brands to withstand price competition, the financial being on the verge of

liquidity, is the company considered a good employer, and the ability of the

company to cope up with technological changes. Coca Cola’s threat includes

the laws in the country they are operating in. Laws are a vital part of a

country. These laws are the ones that initiate order and discipline in the

country. There may be laws that can cause some delay in selling the

products. These laws can hamper business transactions to be completed.

These laws are enacted to protect the welfare of local sellers in that specific

country.  Since there are different laws in different countries it can also

cause problems for the company. Laws in Taiwan are different from the laws

in Switzerland therefore the laws in one country may cause problems for the

company while in another country it may not be a problem.   Another threat

to the company is the tariffs and taxes that the company has in different

countries, each countries has its own rate of taxes and tariff. Taxes and

tariffs are collected by the countries government as additional funds for their

projects in that country. The taxes and tariffs collected by a country depend

on what the law of the country states. The taxes and tariffs collected by a

country is a threat because this causes expenditures to a company.

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Chapter: 4

Conclusion

Coca Cola Company is currently one of the biggest and most recognized soft

beverage brands in the world. With over 3000 products in more than 200

countries, Coca-Cola Company has surely become part of people’s lives. The

Coca-Cola Company owes its success to the people who do their best to

achieve the task at hand. Thus, the Cola-Cola Company takes cares of its

employees in return by creating a good working environment and working

along with unions and government agencies to make sure its employees are

safe. The Coca-Cola Company understands that in today’s business world

technology is very essential to run such a big company like Coca-Cola.

Therefore, the Coca-Cola Company uses different types of technology such

as creating databases and data warehouse about their customers and

suppliers, doing business with consumers and other businesses through the

internet. The Coca-Cola Company knows that no business can run without a

plan. Because the Coca-Cola Company has been able to the set the entry

barrier in the beverage business very high, new companies are discourage to

compete with Coca-Cola. In addition, the Coca-Cola Company has

agreements with many of its supplier (mostly bottling company) to

exclusively provide by their services to Coca-Cola. Thus, it is almost

impossible for new comers to keep up with Coca-Cola and similar

competitors with recognized names in the business such as Pepsi. The Coca-

Cola success isn't something that has been achieved over night. Many years

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has passed since John Pemberton created the secret formula for Coca-Cola in

1886.

References:

1. http://www.thecoca-colacompany.com

2. http://www.coca-cola.com

3. http://www.google.com

4. http://www.wikipedia.org

5. Coca-Cola Beverage Private Limited in Dhaka

6. www.cocacolastore.com.

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