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COCA-COLA COMPANY
INTERNATIONAL BUSINESS
MANAGEMENT
SUBMITTED TO:
PROF. EMIL HEILNEK
SUBMITTED BYGARIMA ARORA (13)RADHIKA KOHLI (34)
SHIVANI AGGARWAL (45)SMITA SWARUP KAPUR (51)
TARUNA KASHYAP (56)
“The Coca-Cola Company exists to
benefit and refresh everyone it touches.”
COCA-COLA COMPANY
ACKNOWLEDGEMENT
This report has been prepared with the support and guidance provided by Dr.
Emil Helienek, International Business faculty, Nottingham Trent University.
We gratefully acknowledge the co-operation and inputs we have received
from our faculty without whose guidance and help we would have been
unable to complete this report.
COCA-COLA COMPANY
TABLE OF CONTENTS
1. INTRODUCTION
2. COMPANY HISTORY
3. SCOPE OF OPERATIONS
FINANCIALS
OPERATING STRUCTURE
PRODUCT AREA
TYPE OF MARKET/ INDUSTRY
4. COCA COLA- GLOBAL COMPANY
5. INDUSTRY ANALYSIS- PORTERS FIVE FORCE MODEL
6. CULTURE AT COCA-COLA COMPANY
CORPORATE CULTURE
ETHICS
VALUE SYSTEMS
7. SWOT ANALYSIS
8. BIBLIOGRAPHY
COCA-COLA COMPANY
COCA-COLA’S MISSION
Mission Statement: “We exist to create value for our share
owners on a long-term basis by building a business that enhances
The Coca-Cola Company’s trademarks. This is also our ultimate
commitment. As the world’s largest beverage company, we refresh
the world. We do this by developing superior soft drinks, both
carbonated and non-carbonated, and profitable non-alcoholic
beverage systems that create value for our Company, our bottling
partners and our customers.” (www.coca-cola.com)
Company History:
Dr John Syth Pemberton in Atlanta, United States of America
developed coca cola in 1886. In its very first year of existence - on
an average - nine glasses of coca-cola were sold daily. The
ownership of coca-cola was passed on to Asa Candler in 1888,
after Dr Pemberton sold of his share in coca-cola. The first syrup
manufacturing plant of coca-cola was set up in Dallas Texas in
1894. 1894 also witnessed the appointment of Coca-cola’s first
ever bottler – Joesph Biednham. Coca cola set foot in the foreign
Mission + Commitment = Focus
Focus + Action = Results
COCA-COLA COMPANY
markets in 1906 by setting up a bottling plant in Canada. The
ownership of coca cola changed hands once again in September
1919. Ernst Woodruff purchased coca cola along with an investor
group. During the 1960’s and 1970’s the coca cola company
diversified its business ranging from food, wine and soft drinks to
film and water treatment. Coca cola took one of the most drastic
steps in 1985 by changing the concentrate formula. Coke lovers
rejected the new coca cola that was introduced. This gave
competitors like PepsiCo a chance to break into the coke market.
The severe dislike of the new coke by the public forced coca cola
to quickly relaunch the old coke in the market. Presently coca cola
produces nearly 230 different brands in over 200 countries. Today
the daily average consumption of coke is more than one billion
drinks per day.
Scope Of Operations:
Since it’s beginning in the spring of 1886, Coca-Cola has grown to
become the most recognized trademark in history. Operating out of
more than 200 countries worldwide, Coca-Cola is the most popular
beverage on earth and is enjoyed over one billion times daily. The
Coca-Cola Company is the world’s leading manufacturer,
COCA-COLA COMPANY
marketer, and distributor of non-alcoholic beverage concentrates
and syrups, with world headquarters in Atlanta, Georgia. The
Company and its subsidiaries employ nearly 31,000 people around
the world. Syrups, concentrates and beverage bases for Coca-
Cola, the Company’s flagship brand, and over 230 other Company
soft-drink brands are manufactured and sold by The Coca-Cola
Company and its subsidiaries in nearly 200 countries around the
world. Seventy percent of coca cola’s revenue is generated from
outside North America. The Company takes pride in being a
worldwide business that is always local. Bottling plants are, with
some exceptions, locally owned and operated by independent
business people who are native to the nations in which they are
located. Bottlers provide the required capital for investments in
land, buildings, machinery, equipment, trucks, bottles and cases.
Most supplies are purchased from local sources, often creating
new supply industries and areas of employment within local
economies. The Company supplies the concentrates and
beverage bases used to make its products and provides
management assistance to help its bottlers ensure the profitable
growth of their businesses. Product manufacturing, quality control,
plant and equipment design, marketing and personnel training are
just a few of the areas in which the Company shares its expertise.
COCA-COLA COMPANY
COCA-COLA COMPANY
FINANCIALS:
THE COCA-COLA COMPANY AND SUBSIDIARIES
Operating Segments
(In millions)
2002 2001
Net
Operating
Revenues
Opera
ting
Incom
e*
Income before
income taxes
and cumulative
effect of
accounting
change*
Net
Opera
ting
Reve
nues
Operati
ng
Income
Income before
income taxes and
cumulative effect of
accounting change
North
America
$ 6,264 $
1,494
$ 1,515 $
5,729
$ 1,480 $ 1,472
Europe,
Eurasia &
Middle East 5,262 1,612 1,540 3,961 1,461 1,413
Asia 5,054 1,820 1,848 4,861 1,763 1,808
Latin
America
2,089 1,033 1,081 2,181 1,094 1,279
Africa 684 224 187 633 276 262
Corporate 211 (725) (672) 180 (722) (564)
Consolidate
d
$ 19,564
$
5,458* $ 5,499*
$
17,54
5 $ 5,352 $ 5,670
COCA-COLA COMPANY
As on December 31st 2002 coca cola owned assets worth $24501
million. The asset base of the company increased from $22417
million in 2001. The coca cola trademark is invaluable. The value
of the coca cola trademark was approximated at $3553
million in 2002. The net operating revenue of Coca Cola
Company and subsidiaries in 2002 increased to $19564 million
from $17545 million in 2001.
Operating Structure:
The Company’s operating management structure consists of five
geographic groups.
1) The North America Group comprises of the US and
Canada.
2) The Latin America Group includes the Company’s
operations across Central and South America, from Mexico
to the tip of Argentina.
3) The Europe and Eurasia Group stretches from Greenland
to Russia’s Far East, including some of the most established
markets in Western Europe and the rapidly growing nations
of East and Central Europe.
COCA-COLA COMPANY
4) The Africa and Middle East Group , the Company’s most
populated operating group, encompasses the Middle East
and the entire continent of Africa.
5) The Asia Pacific Group has operations from India through
the Pacific region including China, Japan and Australia.
(source – www.cocacola.com)
The North American group has the highest sales volume of coca
cola of 30%. Africa and Middle East group is the smallest market
of coca cola with the sales volume equaling 7%.
COCA-COLA COMPANY
Product Area:
The product area of coca cola ranges from non-alcoholic
carbonated soft drinks, teas & coffees, sports drinks, juices & juice
drinks to mineral water. Coca cola holds a forty seven percent
market share in the carbonated soft drinks market. The company
divides all its brands into four categories. These are as follows:
1) Refreshment
Within Coca cola’s range of carbonated soft drinks, they refresh
consumers through a variety of brands that appeal to different
tastes, different cultures and lifestyles. The company’s global
brands, Coca-Cola, diet Coke/Coca-Cola light; Fanta and Sprite
are some of the refreshing brands of Coca Cola. These are also
supported by some local carbonated soft drinks like Kuat, Lift
Apple, Barq's root beer, Quatro grapefruit, Thums Up and Limca.
2) Rejuvenation
Beverage Partners Worldwide (BPW), is the company which has
been formed by a strategic alliance between coca cola and Nestle
S.A. BPW's portfolio features successful products with solid
presence in a wide range of markets: The rejuvenating products of
Coca Cola are marketed by BPW. BPW markets ready-to-drink
COCA-COLA COMPANY
coffees like Georgia, teas like Nestlé’s iced tea, and herbal
beverages.
3) Health and nutrition
Minute Maid Premium orange juice is the world’s leading marketer
of juices. Coca Cola’s complete range of health products meets
the needs of consumers who are looking for foods and drinks that
taste good and help them live a healthier life.
4) Replenishment
Coca Cola’s replenishment drinks are healthy and convenient and
are tailored to the local tastes. Some of the replenishment
products are simple and basic — safe, purified water like Dasani.
In the sports drink category, the PowerAde beverage is the No. 2
sports drink in the United States, but outside the U.S, the sports
drinks hold the number one position.
Market/Industry Type:
The beverage industry comprises of the carbonated Soft Drinks,
Water, Juices and Juice Drinks, Sports Drinks and Tea’s &
Coffees. The commercial beverage industry only provides 25% of
the liquid that is consumed by the world’s population. The non-
commercial beverage consumption is tap water and/or homemade
COCA-COLA COMPANY
fruit juices. The commercial beverage industry is divided into three
segments i.e. alcoholic, not ready to drink and ready to drink
nonalcoholic.
Segments Of Commercial Beverage Industry:
(http://www.thecoca-colacompany.com/investors/octpresents/sld012.htm).
The CSD (carbonated soft drinks) and packaged water segments are the
largest. The coca cola company is one of the largest players of CSD sector.
The CSD sector has the largest growth rate. Coca cola and Pepsi together
hold a forty percent market share in the CSD segment.
COCA-COLA COMPANY
Coca-Cola’s share in beverage categories in 2000
(http://www.thecoca-colacompany.com/investors/octpresents/sld014.htm).
Coca-Cola - A Global Company:
Originally designed as a cure for the flu in 1886, Coca-Cola has
turned into the world’s largest manufacturer, marketer and
distributor of non-alcoholic beverages and in this process it has
become the icon of globalization.
Coca-Cola expanded beyond the American borders in the early
1900’s into numerous countries including Cuba, Puerto Rico and
France. In 1920’s Coca –Cola pursued aggressive global branding.
COCA-COLA COMPANY
This was done through a central strategy, where the branding was
done, by being insensitive to local conditions.
However, in the 1990’s, a greater degree of localization took place
whereby global marketing also took place but the company often
tailored the flavor, packaging, price and advertising to match the
tastes in specific markets. Indeed, it was Coca-Colas global
strategy that made coke a worldwide success and thus today
Coca-Cola stands as a global soft-drink industry leader. The
strategy of the company has for a long time
been best characterized as “think global, act local”. Coca-Cola
grants national businesses the freedom to conduct operations in a
manner appropriate to the market. However Coca Cola still stands
to be a global company as a “global product” maybe the “same”
product everywhere, but yet “different”. For eg, In Spain coke is
used as a mixer with wine; in Italy, Coke is served with meals in
place of wine or cappuccino and in China, the beverage is served
at special government occasions. Thus Coca-Cola adapts its
product according to consumer tastes and preferences.
Coca-Cola’s global business system consists of three partners:
The coca-cola company itself, which develops brands and
produces concentrates.
COCA-COLA COMPANY
Its bottlers who manufacture and distribute finished products
and undertake local marketing.
And it’s customers- for e.g. retailers who present the
company’s product to the public.
Thus, Coca-Cola’s management is a Geocentric Orientation,
where the company sees similarities and differences in markets as
well as countries and seeks to create a global strategy that is fully
responsive to local needs and wants, but the key assets like
product manufacturing, quality control, product and engineering
design, marketing and personnel training are undertaken by the
company in the home country itself.
However in the year 2000, Coca-Cola has changed its global
corporate strategy by delegating more authority to the franchise
bottlers to market its products to suit local demand. Thus, Coca-
Cola’s phrase has changed from “think global, act local”, to “think
local, act local”. This is primarily because of the following reasons:
The company is using innovative and tailored marketing
programmes to adapt to customer preferences. For e.g. the
company is using local celebrities of each country in their
advertising campaigns to appeal to the masses of each
specific country.
COCA-COLA COMPANY
The company is setting up local offices around the world so
that the company becomes an integral part of each
community.
Thus, Coca-Cola is a truly global company because their products
meet the various taste preferences of consumers everywhere!
However the Coca-Cola Company has chosen to expand into the
ready-to-drink non-alcoholic segment of the commercial beverage
industry because this is the fastest growing segment. For e.g.
Coca-Cola manufactures and sells soft drinks and non-carbonated
beverage concentrates and syrups including fountain syrup, some
finished beverages and certain juice drink products.
Coca-Cola’s Industry Environment
:
Every industry has an underlying structure, or a set of fundamental
economic and technical characteristics that gives rise to
competitive forces. To analyze the industry environment where
Coca-Cola operates, we have fit Coca-Cola in the Porters Five
Force Model.
PORTERS FIVE FORCE MODEL
DIAGRAM
COCA-COLA COMPANY
Source: Michael E. Porter, Competitive Strategy (New York: Free press,
1980)
THREAT OF NEW ENTRANTS:
Porter has described 8 major sources of barriers to entry, the
presence or absence of which determines the extent of the threat
new industry entrants. These are as follows:
Economies of scale, product differentiation, capital requirements,
one-time switching costs, government policy, difficulty in accessing
supply or distribution channels and expected competitor response.
THREAT OF SUBSTITUTE PRODUCTS:
RIVALRY AMONG
EXISTING COMPETITORS
THREAT OF NEW
ENTRANTS
BARGAINING POWER OF BUYERS
THREAT OF SUBSTITUTE
PRODUCTS OR SERVICES
BARGAINING POWER OF SUPPLIERS
COCA-COLA COMPANY
The availability of substitute products places limits on the prices
market leaders can charge in an industry; high prices may induce
buyers to switch to the substitutes.
BARGAINING POWER OF SUPPLIERS:
The suppliers to an industry include providers of raw materials,
components, labour, etc. supplier power will be greatest when they
are few in number and large in size, their products are important to
the industry, when switching costs are high. By locating alternative
sources of supply, the supplier power can be reduced.
BARGAINING POWER OF BUYERS (CUSTOMERS):
The customers purchasing a product can include manufacturers,
retailers, wholesalers, etc. Customers are powerful if individually
they are large purchasers of the industry’s product, switching costs
are low, etc.the business will try to reduce the power of their
customers by differentiating their products and taking other action
to increase actual or perceived switching costs.
RIVALRY AMONG EXISTING COMPETITORS IN THE
INDUSTRY:
COCA-COLA COMPANY
Rivalry among competitors can take various forms. The most
common are price competition, product development, product
differentiation, promotion and advertising.
COCA-COLA COMPANY
EVALUATION OF PORTERS FIVE FORCE MODEL
WITH RESPECT TO COCA-COLA:
Threat of New Entrants: (Low)
•Coca-Cola enjoys significant economies of scale.
•Coca-Cola has huge market share.
•Coca-Cola has tremendous brand loyalty.
These factors minimize the threat of new entrants into the soda
industry.
Threat of Substitutes: (Medium)
•Coca-Cola has successfully differentiated their product.
•Loyal Coca-Cola patrons do not see Pepsi as a conceivable
substitute.
•Tremendous brand loyalty minimizes threat of substitutes.
Consumers may replace their carbonated beverages, juices, and
sports drinks with milk, coffee and alcohol.
Bargaining Power Of Suppliers: (Low)
•Coca-Cola faces no significant threats in this area
COCA-COLA COMPANY
•Within U.S., Coca-Cola uses high fructose corn syrup as a raw
material.
•Outside U.S., Coca-Cola uses sucrose
•Both are readily available therefore restricting supplier power.
Bargaining Power Of Buyers:( High)
•Coca-Cola was restricted from vertically integrating until 1980.
•With this restriction lifted, Coca-Cola has been investing in its
distribution systems to improve them.
•Consumers have many categories of soft drinks to choose from
as well as brands and flavors.
As proven when Coca-Cola introduced a new Coke, buyers will
walk away from flavors they think are below their standards and
switch brands.
Intra-Industry Rivalry: (High)
•Pepsi is Coca-Cola’s main rival
• However, Coca-Cola prevailed from the “Cola Wars”
•Coca-Cola has two of the top three soft drinks:
Coca-Cola Classic (#1)
–Pepsi (#2)
–Diet Coke (#3)
CORPORATE CULTURE
COCA-COLA COMPANY
An organisation’s culture is the way in which it does things - its
culture defines what Coca-Cola considers to be important and
what the company stands for. The culture will be reflected in
everything the organisation does. Coca-Cola has a strong
commitment to the wider community through every aspect of the
way the Company operates e.g. the way in which it sponsors
sporting activities or its commitment to recycling and minimum use
of scarce resources etc. Philanthropy is a central part of the
Coca-Cola culture and contributes to one of the Company’s
strongest assets.
"Coke has a very corporate, conservative culture”. The
company's culture is aggressive, as Coca-Cola maintains a
professional business environment among employees, the Coca-
Cola business systems as well its customers. Coke is a large
company and has a large company corporate culture. The
company is very proud of its heritage and integrity. Coke people
tend to be professional in dress and nature, and tend to be
conservative in behavior. However, this is not to say enthusiasm is
not appreciated, in many cases, it is required.
Coca-Cola Company therefore has established strategies
for corporate citizenship. Coca-Cola’s strategy recognizes that the
well being of communities is inextricably linked to the well being of
COCA-COLA COMPANY
the business environment. The vision is clear, and the corporate
culture remains strong and focused, regardless of changes
occurring in the marketplace. The Company believes that it is
important to give something back to the communities in which it
does business. This philosophy, grounded in the Company’s value
system, is a key part of the corporate culture. At The Coca-Cola
Company, employees are fervently attached to their employer.
"Everyone is very
loyal to the company. They are very proud of all of the
accomplishments achieved. The "intense" loyalty meshes with
what is invariably described as a” conservative" atmosphere, an
ambience linked to the sheer size of the company. Coca-Cola is
thus committed to cultivating a diverse, rewarding culture that
encourages its employees to develop to their fullest potential. The
heart and soul of coca cola has always been its
Employees. Over the past century, employees have led successes
by living and working with a consistent set of values. Coca cola
believes while the world and its business will continue to change
rapidly, respecting these values will continue to be essential to
their long-term success.
COCA-COLA COMPANY
CORE PRINCIPLES AND ORGANIZATIONAL VALUES
COCA-COLA COMPANY
ETHICS AND VALUE SYSTEMS AT COCA COLA
Coca-Cola is committed to managing business around the world
with a consistent set of values - honesty, integrity, diversity,
quality, respect, responsibility and accountability - that
represent the highest standards of integrity and excellence.
The essence of Coca-Cola Promise is to benefit and refresh
everyone who is touched by their business i.e. to continually
operate as a model business citizen, consistently shaping
business decisions to improve the quality of life in the communities
in which it does business. The Company is committed to
monitoring performance in the area of social responsibility against
benchmarks to make sure that it is, and continues to be, a good
citizen as well as the benchmark global brand.
The Coca-Cola Company has used its resources to benefit the
global community and to demonstrate its leadership to such an
extent that the Coca-Cola name has become synonymous with
good corporate citizenship.
COCA-COLA COMPANY
COCA-COLA AND THE ENVIRONMENT
INTERNAL ENVIRONMENT
WORKPLACE:
The Company is an equal opportunity employer, committed to
fair and effective practices in relation to workplace diversity,
work/life balance, health and safety, training and staff
development. The Company uses professional benchmarking
and diagnostic tools to evaluate performance, ensuring
continuous improvement in these areas and in addition,
measures and reports on the outcomes of its impact in the
workplace, including employee perception measures. The
Company engages in effective two-way consultation with
employees and has in place a team that represents each
function and meets fortnightly to raise topics and discuss
developments with senior management.
THE EXTERNAL ENVIRONMENT
CUSTOMERS:
More than a billion times every day, thirsty people around the
world reach for Coca-Cola products for refreshment. Coca-
Cola believes the customers deserve the highest quality—
COCA-COLA COMPANY
every time. Coca-Cola promises to deliver the highest quality
and that is the most important promise they make. It involves a
worldwide, yet distinctively local, network of bottling partners,
suppliers, distributors and retailers whose success is
paramount to their own sucess. The company’s investment in
local communities in some 200 countries totals billions of
dollars in jobs, facilities, marketing, the purchase of local goods
and services, and local business partnerships. Always and
everywhere, Coca-Cola pursues continuous innovation in the
products they offer, the processes they use to make them, the
packages they develop and the ways they bring them to
market.
COMMUNITY
The Coca-Cola Company, believes that being a model
corporate citizen is central to doing business. The company
understands that their business decisions should improve the
quality of life in the communities where we do business.
Society advances on the strength of community: people
sharing their ideas and resources to reach common goals.
Coca-Cola seeks to strengthen local communities worldwide
through our support for education, through partnerships with
COCA-COLA COMPANY
other organizations and through the acts of citizenship by the
people of Coca-Cola. Coca-Cola supports education because
of its power to expand opportunities for individuals and
increase understanding between cultures. Coca-Cola partners
with national and international organizations to alleviate
economic disadvantage and help improve the quality of life in
local communities. Together with their local bottling partners,
the company strengthens communities by giving with their
hands and their hearts, as partners in the promise of a better
life.
DIVERSITY:
Coca-Cola has created the world's leading brand by
establishing a deep and lasting bond with their consumers.
From there, they built a global marketing and distribution
system second to none. They wove a global web of
interconnected
relationships. But all those relationships are local. And diversity
is at the core of those relationships. . When they connect with
consumers locally, their brands - particularly Coca-Cola - have
become significantly stronger and more relevant.
COCA-COLA COMPANY
Coca-Cola’s commitment to diversity also extends into the
community. Valuing people helps them better meet the needs
of their customers and partners. Through their people and their
local bottling partners, they build relationships through local
marketing, local civic programs and local business
opportunities.
The company is energized with a new entrepreneurial
operating culture, fuelled by the twin engines of innovation and
diversity. They’re committed to their values and we are trying to
live them every day.
ENVIRONMENT:
The environmental management system of The Coca-Cola
Company is known as the eKOsystem. The Company
‘conducts its business in ways that protect, preserve and
enhance the environment.’ The eKOsystem of the company
translates this principle into action by establishing a framework
for successfully managing the company’s environmental
performance worldwide. ‘Coca-Cola’ sets itself this objective:
‘we cooperate with public, private and governmental
organisations in seeking solutions to environmental challenges.
We direct our skills, energies and resources to those activities
COCA-COLA COMPANY
and issues where we can make a positive and effective
contribution.’ The Company takes progressive actions that
focus on minimizing environmental impact, striving for
continuous improvement and seeking to provide leadership in
three critical areas - water efficiency and quality, energy
efficiency and the elimination or minimization of solid
waste. It also supports local initiatives that have a positive
environmental impact. Taken together, these help promote a
sustainable future.
COCA-COLA COMPANY
Analysis of Coca Cola’s Corporate Culture
Corporate culture drives the organization and its actions. It guides
how employees think and feel. The important aspects of Coca
cola’s culture are the organizations heritage, integrity and diversity.
Philanthropy is the central part of coca cola’s corporate culture,
thus making it the company’s strongest asset.
Thus, Coca cola’s management orientation is Geocentric. An
organization with a geocentric management orientation views the
entire world as a potential market and strives to develop integrated
world market strategies. (Keegan W.J, Global Marketing
Management, 7th edition, page 13) and this is what Coca-Cola as a
company believes to do by adapting its products to the consumer
tastes and preferences keeping in mind the customer,
environment, community and employees beliefs.
COCA-COLA COMPANY
SWOT ANALYSIS OF COCA-COLA COMPANY:
STRENGTHS:
More than 100 years in the business
World’s most recognized brand name
World’s largest producer and distributor of soft drink syrups
and concentrates.
Produces more than 230 brands in nearly 200 countries
Positioned as a worldwide company acting locally
WEAKNESSES:
Product recall in Europe
Possible decline in sales due to health conscious consumers
Relationships with bottling subsidiaries could create territorial
and other legal problems.
COCA-COLA COMPANY
OPPURTUNITIES:
New opportunities in the foreign market
New technology such as Go2
Worldwide economic development and population growth
to sustain sales and profits.
THREATS:
Government regulations from other countries
Competition from Pepsi and other generic brands
Political and economic instability in many developing regions
of the world.
Competition from other national, regional and global soft
drink companies.
COCA-COLA COMPANY
BIBLIOGRAPHY
Keegan, W.J., Global Marketing Management, 7th Edition,
Pearson Education Asia, 2002
Hill, C. T.W, International Business, 3rd Edition, McGraw-Hill
Higher Education, 2000
www.cocacola.com
www.cokecce.com
www.coca-cola.com
www.cocacola.co.jp
www.economist.com
www.securities.com
www.thecocacolacompany.com
www.diversitydtg.com
www.vault.com
Pendergrast, M, For God, Country and Coca-Cola, Orion
Business Books