Our Coca Cola Company Project

8/6/2019 Our Coca Cola Company Project

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ANALYSIS OF COCA COLA

PROJECT DEVELOPMENT, EVALUATION & FEASIBILITY

GROUP MEMBERS

AADIL HANIF 01

KASHIF ALI 16

MBA-5th

Semester (evening) University of Karachi

COURSE INSTRUCTOR: SIR A.R. ZAKI



INTRODUCTION

Coca-Cola is a carbonated soft drink sold in the stores, restaurants, and vending machines of

more than 200 countries. It is produced by The Coca-Cola Company of Atlanta, Georgia, and is

often referred to simply as Coke (a registered trademark of The Coca-Cola Company in the

United States since March 27, 1944).

The company produces concentrate, which is then sold to licensed Coca-Cola bottlers throughout

the world. The bottlers, who hold territorially exclusive contracts with the company, produce

finished product in cans and bottles from the concentrate in combination with filtered water and

sweeteners. The bottlers then sell, distribute and merchandise Coca-Cola to retail stores and

vending machines.

Coca-Cola Pakistan

The Coca-Cola Company began operating in Pakistan in 1953. Coca-Cola, Fanta and Sprite arethe brands in Pakistan. The Coca-Cola System in Pakistan operates through eight bottlers, four of which are majority-owned by Coca-Cola Beverages Pakistan Limited (CCBPL). The CCBPL plants are in Karachi, Hyderabad, Sialkot, Gujranwala, Faisalabad, Rahimyar Khan, Multan andLahore. The remaining two plants, independently owned, are in Rawalpindi and Peshawar. TheCoca-Cola System in Pakistan serves 70,000 customers/retail outlets. The Coca-Cola System inPakistan employs 1,800 people. During the last two years, The Coca-Cola System in Pakistan

has invested over $130 million (U.S.)

Major Brands of Coca-Cola

The major brandsof Coca-Cola sold in Pakistan include:1. Coca-Cola2. Sprite3. Fanta4. Minute Maid5. Kinley Water



MARKET & DEMAND ANALYSIS

Target Market For Coca-Cola

The target market for Coca-Cola is all consumers worldwide. Coke¶scommercials basically focuson younger generations, because they want to represent Coke with the youth and energy but theyalso consider older people which they then take as a co-market. According to theCoca-ColaCompany Coca-Cola consumers can choose between the products that can be divided into softdrinks, juices, sports drinks and mineral water. The market of the company is geographically vastand it is being controlled with enormous success. Carbonated soft drinks are the largest growthsegment within the non-alcoholic ready-to-drink beverage category measured by volume, whichis why Coca Cola is focusing on expanding its product portfolio because that is the key to futuresuccess.

Major Target Market Segments

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

demands is higher then 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. Coca cola can segment its market

on Geographical and Demographical basis and in geographical segmentation Coca cola runs on a

national and international basis as Coca cola leads because of its deep insight of various

marketing and leadership strategies.

y Demographic ± knowing the cultural traits and characteristics of the Pakistani people

and investigating their tastes in terms of drinks and beverages so that Coca Cola

Company will know how to adopt to certain changes in its products, operations and

industry management to really cater the needs of the people trusting their business ways.

y Psychographics ± having a pattern or illustration with regards to the opinion and

views of the Pakistani¶s so that the company could easily fit in to the type of culture and

lifestyle they have.



y Behavioral ± evaluating the behavior aspects of the business sectors, the possible

partners, dealers, retailers, employees and to the customers as well for the company to

have a good business ground in the region.

Market Size

Coca Cola is one of the leading beverage companies in Pakistan. It covers the large market

segment. From the facts it is revealed that the market for coca cola is encouraging. It is the

second largest usage in Pakistan. Still it has a great potential in Pakistan market. It focuses on itS

deficiencies and try to over come it than it will definitely grow more than any other beverage

company in Pakistan. So it has a large margin for growth.

Growth rate Coca Cola

In Pakistan market the growth rate is 22% which is a significant rate. Similarly In Asia region the

amount of revenues which company earn is 5052 dollar.

Market Share

Coca cola has doubled its market share in Pakistan, in recent years its market share was 16% but

in 2007 its market share increased up to 36%, on the other hand its competitors share is going

down day by day.

Coca Cola is world leader in beverages, and is on the way to success in Pakistan and has crossed

the Pepsi last year..

Market Competition

Coca Cola Company uses market leaders¶ strategies to meet with its competitors because in the

world of soft drinks and beverages, Coca cola enjoys the top position around the world, but like

other companies it also faces stiff competition in the market. Coca cola's focus on brand

management and intensive distribution and advertising its product makes it the leading and most

profitable soft drink company.



Major factors influencing the level of demand of the product

There are a lot of factors that affect the demand of the product. The list of these factors is given

below:

y Price

Price is the major factor that affects the demand of the product. If the price Is not suitable to the

consumers or customers than they will switch of the product.

y Quality

If a company provides the quality services or products than the demand of the product also

increases. In the quality of the product the consistency in the performance of the product is very

important.

y Supply

Supply and the demand of the product are the market forces and played the main role in the

product demand. If the supply of the product decreased than in some cases the demand of the

product increase as well as the price f the product can also increased.

y Taste

Taste of product is the major factor that affects the demand of the product. Like if the product is

of good taste than the future demand of the product will increase and vise versa. If customersdon¶t find the taste of product according to their taste, than they will not buy that product in

future.

y Number of users

If the number of users increase in the market than the demand of the product also increases.

y Income

Income level of the customers had a great impact on the demand of the product. It directly relatesto the purchasing power of the customer. If customer has a purchasing power than definitely he

can buy the product which he/she demand.



y Competitors

Competitors are the biggest threat to the demand of product. If competitors offer the same

products as the company offers than the customers got more alternatives. So

increasedalternatives, increases the bargaining power of the customers and they can switch of to

more suitable product.

Product Life Cycle

Products go through various steps throughout their useful lives. They are introduced, grow,

mature and eventually decline. In the introduction phase of the life cycle, start-up expenses are

high and sales are low. This is the stage in which the product in placed in the market for

consumer use. Sales begin to increase and expenses tend to decrease during the growth phase.

This is the point in which the product becomes more known in the market and consumers begin

purchasing.

During the mature phase of the product life cycle, the company must re-examine the product and

determine new ways to make it marketable. Consumers begin to take the product for granted and

no longer necessarily choose it first. If a new product comes in at this point with new, more

attractive features, it can force the product into the decline stage. Eventually sales will begin to

decline and the company must decide whether to continue with production or to part ways with

the product.

Coca-Cola has been in the industry since the nineteenth century, so if they continue with the

same marketing strategy, then they will send themselves irrevocably into the decline stage. Coca-

Cola (Coke) is in maturity stage but gradually moving towards the declining stage of the product

life cycle. At the moment, the soft drink company is attempting to effectively seek new markets.

Fluctuation in demand with cyclical factors

Nothing is in isolation in this world. The brands also have personality and thus also affected bythe different situations like weather, occasions, events, economical factors etc.

Demand of the product doesn¶t remain consistent because it exists in the real world which is

gradually changing. Coca Cola advertisement has a great affect in its demand. Its advertisement

removes the risk of no use of brands on different extreme weathers like in winters. Its ads

stimulate its purchase regardless of weather or cyclic factors.



Similarly on different events the buying patterns also changes. Company has a great strategy thatthey use those events as their strengths and advertise their product on right time which results inincrease sale.

Placement & Distribution

Coca-Cola indulges in two types of selling:1. Direct Selling 2. Indirect Selling Direct Selling ±

In direct selling they supply their products in the shops by using their own transport. In this type

of selling the Coca-Cola Company has more profit margins. Indirect Selling ± In indirect selling

the Coca-Cola Company has their whole-sellers and agencies to cover the areas that they wish to

target.As it is literally impossible to supply the products to the consumer themselves due to the

sheer volume of the demand, hence the company understands that marketing through suppliers is

crucial for the availability of Coca-Cola products.

In Pakistan, Coca-Cola Beverages Pakistan Limited(CCBPL) is managing and marketing the

whole production distribution process.Through this decentralized channel the company is

ensuring a smooth and efficient flow of the process which increases the performance of the

company.

MARKETING STRATEGY

Promise Of Coke

The basic proposition of our business is simple, solid and timeless. When we bring refreshment,value, joy and fun to our stakeholders, then we successfully nurture and protect our brands, particularly Coca-Cola. That is the key to fulfilling our ultimate obligation to provide

consistently attractive returns to the owners of our business.

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 beverageis a reflection of who they are, where they live, how they work and play, and how they relax andrecharge. Whether you're a student in the United States enjoying a refreshing Coca-Cola, awoman 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.



Coke is determined not only to make great drinks, but also to contribute to communities aroundthe 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.

Brand Differentiation

Coca-Cola has made an aggressive come back mainly by brand differentiation, effectiveadvertising and attractive brand initiatives.Moreover, Coca-Cola is an µUs¶ brand because they believe in togetherness; people as well as communities, and this is the nature they target inPakistan.Moreover Coca-Cola has amazingly marketed its product with eye catchy commercials and

celebrated brand ambassadors. Ali Azmat was their brand ambassador and for the youth of

Pakistan he is someone that they idolize, endorsements like these can have a major role in

strengthening Coca-Cola position in the mind of the customer. Seeing their favourite celebrities

drinking coke, the fans are most definitely influenced.

Coke Studio one of the most watched shows in Pakistan is basically Coca-Cola¶s unique way of

marketing their product. A show adored y a huge number of music lovers. This helps in

establishing brand loyalty, indirectly leading to higher sales. Furthermore Coca-Cola was a

sponsor for the FIFA 10 world cup as well. All of these unique ways of promotion of Coca-Cola

are a major strength for the Company with regard to the competition it faces.

Coca-Cola Company Uses Different Sources For Marketing

The Coca-Cola Company uses sources like TV, billboards, newspaper advertisements and promotional campaigns to attract the customers and create product awareness about their new products. Coca-Cola tells the customers that their products give you energy, good taste and agood life to enjoy. It also gives out the message that the products are good for your health and inaddition to enjoying the taste you are also taking care of your body.

The potential customers of Coke would be of age groupof 14-30 years. As for the income levels,Coke target customers from the middle class to the upper class. Every country has a differentculture. In Pakistan, due to the Islamic Cultural values people prefer to use products made fromHalal ingredients. As a result, Coke has to be vigilant to use only the ingredients acceptable in anIslamic country in order to avoid bad publicity and controversies.



TECHNICAL ANALYSIS

Marketing Mix

In order to evaluate the current situation of any company and to analyze their position for thefuture outcomes, marketing mix is known as one of the best tool. Marketing mix of Coca Cola ismentioned as under:

y Product

Around 300 beverages are produced by this company including; Sprite, Fanta, Coke and juicestoo. Packaging also varies from the size of 250mL, 500mL, 1 litres, 1.25 litres, 2.25 litres andcans of 375mL.One of the well-known and best trademark that is recognized by around 94% of the population.

Coca Cola holds the best reputation in the market too.

y Price

Price of Coca Cola brands vary from different size and amount. Prices offered by the companyare genuine and readily accepted by the population too. This is all due to the increase rate of demand.

y Promotion

Promotion is another important issue as well as a main tool of marketing mix of Coca Cola. This brand did promotion from the very start in an effective manner in order to retain customers andto attract them. This is the best way with the help of which demand can increase and that canincrease the revenue too. The promotion of Coca Cola comprises of television, radio, internet,and billboards too.

y Place

Coca Cola is one of the leading brand that is easily available worldwide. You can find iteverywhere due to the increased rate of demand. Anywhere at any time, you can find this brand

and this is all because of the strategies implemented by Coca Cola.



Environmental Aspects

y Coca Cola¶s Green Initiative

Coca Cola has just made another change to its packaging component of the product mix,as it hasadvised its bottle suppliers to go green and make bottles that would have 30% of its componentsmade of plant derivatives. This is yet another way to wield the packaging component to project asocially responsible image for the company.

y Health Effects Of Coca-Cola Products

The Coca-Cola Company, its subsidiaries and products have been subject to sustained criticism by both consumer groups and watchdogs, particularly since the early 2000s. Allegations againstthe company are varied and criticism has been based around; possible health effects of Coca-Cola products, questionable labour practices (including allegations of involvement with

paramilitary organisations in suppression of trade unions), the company's poor environmentalrecord , perception of the companies engagement in monopolistic business practices,questionable marketing strategies and violations of intellectual property rights. Perception of thecompany as behaving unethically has led to the formation of pressure groups such as "Killer Coke", boycotts of Coca-Cola and related products and lawsuits.

y Acidity and tooth decay

Numerous court cases have been filed against the Coca-Cola Company since the 1940s allegingthat the acidity of the drink is dangerous. In some of these cases, evidence has been presentedshowing Coca-Cola is no more harmful than comparable soft drinks or acidic fruit juices.Frequent exposure of teeth to acidic drinks increases the risk of tooth damage through dentalerosion.[1][2] This form of tooth decay is unrelated to dental caries.

y Pesticide use

In 2003, the Centre for Science and Environment (CSE), a non-governmental organisation in New Delhi, said aerated waters produced by soft drinks manufacturers in India, includingmultinational giants Pepsico and Coca-Cola, contained toxins including lindane, DDT, malathionand chlorpyrifos ² pesticides that can contribute to cancer and a breakdown of the immune

system. Tested products included Coke, Pepsi, and several other soft drinks (7Up, Mirinda,Fanta, Thums Up, Limca, Sprite), many produced by The Coca-Cola Company.

y Water use

Environmental degradation in the form of depletion of the local ground water table due to theutilisation of natural water resources by the company poses a serious threat to manycommunities.



Further, a scientific study requested by the court found that while the plant had "aggravated thewater scarcity situation," the "most significant factor" was a lack of rainfall. Critics respond thatCoke shouldn't be locating bottling plants in drought-stricken areas.

y Packaging

Packaging used in Coca-Cola's products has a significant environmental impact but the companystrongly opposes attempts to introduce mechanisms such as container deposit legislation.

Technological Forces

There is a huge amount of investment coming from the government to develop the infrastructureand to exploit the market opportunities to create new products in order to revive the market thatmight have reached the maturity level. This will majorly affect the sales of the soft-drinks as a

greater product portfolio will definitely mean a larger customer base and subsequently higher revenues.

Political and Legal

Pakistan has a comparatively unstable political & legal environment, and as a result foreigninvestors are sceptical about investing over here, however due to the presence of such a hugemarket for both Coca-Cola they have continued expanding their area of operation in Pakistan.Moreover, the investment is crucial for the sound health of the economy so the Pakistanigovernment makes a regular effort to improve business and trade relations with US and Asia.

Placement & Distribution

Coca-Cola indulges in two types of selling:1. Direct Selling 2. Indirect Selling Direct Selling ±

In direct selling they supply their products in the shops by using their own transport. In this type

of selling the Coca-Cola Company has more profit margins. Indirect Selling ± In indirect selling

the Coca-Cola Company has their whole-sellers and agencies to cover the areas that they wish to

target.As it is literally impossible to supply the products to the consumer themselves due to the

sheer volume of the demand, hence the company understands that marketing through suppliers is

crucial for the availability of Coca-Cola products.

In Pakistan, Coca-Cola Beverages Pakistan Limited(CCBPL) is managing and marketing thewhole production distribution process.Through this decentralized channel the company is

ensuring a smooth and efficient flow of the process which increases the performance of the

company.



FINANCIAL ANALYSIS

Highest Market Share

The processed food and beverages industry is considered to be one of the largest industrialsectors and accounts for approximately 27% of total production and 16% of total employmentinthe manufacturing sector. The total value of production is over Rs. 46 billion.(Figuresaccording to our research)Being the largest company in the soft drink industry, Coca Cola enjoys the highest market share

and controls about 59% of the world market.The financial health and success of Coca Cola¶s

bottling partners is a critical component of Coca Cola¶s ability to build and deliver leading

brands.

Dominance In Markets

Among the Asian countries, Japan has the highest percentage of around 42% followed closely by

Pakistan, India and Bangladesh where the average consumption exceeds day by day. Coca-Cola

has about 35% marketshare in Pakistan while its competitor Pepsi dominates with about 65%.

Total Profits Of Coca Cola

The total profits of coca cola company were up to $2.37bn (£1.56bn), up 16% from a year ago

and slightly above forecasts of $2.3bn. Improving its quality and winning more of the market

share. According to BBC µCoca-Cola has reported strong second-quarterprofits, beating market

expectations, thanks to rising international sales¶. With increasing revenues yearly Coca-Colanow can invest more in Research and Design and help the company in better performance and

will lead to further innovations.

Economic Forces

When the economy is in recession, the real incomes fall and the expenses are high so theconsumers move towards the product that they can afford. During this time, the pricing strategiesof Coke would have a very major influence on the overall sales volume.

Per Capita Income

This is major factor that affects the sale of this soft drink. Because which every passing year budgets are becoming very strict and tight in order to purchase things. So the disposable incomesof the people are coming down. They spend heavily on rents, utilities, and education and basicnecessities and after that when they get extra money they think about this soft drink .So thedecreasing per capita income effects badly in selling and production of this soft drink.



Strategies Of Getting Goals i.e. ³High Profits´

To increase the price is the least thing, which Coke can adopt. There are so many waysthrough which Coke can increase the profits. Some major ways are as follows.

� Volume can be increased� Interest level of consumers

� To take part in energetic festivals

Coke can increase the volume by expanding the industry of coke. Through advertisements,offering different interesting things to attract people towards this product.Coke is increasing the interest level of consumers by offering different flavors. For exampleCoke is increasing the number of flavors in ³Fanta´, this is one of the product of coke. Throughoffering different flavors Coke can increase the Level of consumers and through this profits can be gained.Coke is already taking part in the festival like ³Basant´ . Coke offers different attractive things in

their festival and through this Coke gained high profit and consumption of coke increased onthese occasions.

Different Price In Different Seasons

Some times Coca Cola Company change their product prices according to the season. Summer issupposed to be a good season for beverage industry in Pakistan.So in winter they reduce their prices to maintain their sales and profit. But normally they reducethe prices of their pet bottles or 1 litter glass bottle.

Expectations For The Coming Year

Every thing starts from the attitude of consumer¶s behavior. And the basic key to attract theconsumers is to throw the ³money away´. And positive feeling felling with the brand, which theyused to have Coke wants to advertise their products heavily in the coming year. Coming year isthe challenging year for the industry of Coke. They have to take lots of decisions that how toincrease the production and where they have to spend money.

How Coke Determine The Yearly Budget

Coke determines its yearly budget by the� Sales volume

� Profitability� Target volume

y Sales VolumeCoke determines its yearly budget through the sales volume. They first concentrate on the thingis ³what is the condition of their sales?´ if the condition is good of their sales then they definitelyincrease their production and sales volume. Otherwise they concentrate on their old strategies.



y Profitability

The second thing through which they determines budget is the ³profit´ .if they are getting profitswith the high margin, then they definitely want to increase their profits in the next coming year.Every organization runs on the basis of getting high profits. No organization wants to face Loss

in their business. To get profit is the first priority of the Coke.

y Target Volume

To run the business every industry has some targets, which they want to achieve in a specifictime period. If industry achieves those goals in that period then for the coming year it increasesthe volume of the target. So Coke Follow the same thing it has also some goals and targets toachieve in the given time period. When they succeed to achieve that target then they increase

their target volume in the next year.

Accounting Policies

y Revenue Recognition

Coca-Cola recognizes revenue when the title of the company¶s products are transferred toPartners, resellers, retailers, and other customers. Customer incentives are deducted fromrevenue.

y Cash and Equivalents

Marketable Securities that are highly liquid and reach maturity in less than 3 months from purchase are considered equivalent to cash.

y Plant, Property, and Equipment

All Plant, Property, and Equipment are stated at cost. The Depreciation is recorded using thestraight-line method. The company generally follows such guidelines: Buildings andimprovements 40 years or less, Machinery and Equipment 15 years or less, Containers 10 yearsor less.

y Inventories

The inventories consist of mostly raw materials, packaging and finished goods.

y Cost Calculations

Cost is calculated on the average cost method and the First in First out Method (FIFO),Inventories are valued at lower of cost or market.



Financial Analysis of Latest 12 Months Data Items

Latest 12 Months Data Items

Latest Full Context Quarter Ending Date

2010/12

Gross Profit Margin68.0%

EBIT Margin42.6%

EBITDA Margin28.2%

Pre-Tax Profit Margin

40.6%

Interest Coverage20.4

Current Ratio1.2

Quick Ratio0.9

Leverage Ratio2.4

Receivables Turnover 8.6

Inventory Turnover 4.5

Asset Turnover 0.6

Revenue to Assets0.5

ROE from Total Operations

38.1%

Return on Invested Capital26.2%

Return on Assets16.2%

Debt/Common Equity Ratio 0.45

y

Price Earnings Ratios

Current P/E Ratio13.2

P/E Ratio 1 Month Ago12.8

P/E Ratio 26 Weeks Ago18.8

P/E Ratio 52 Weeks Ago18.8

P/E as % of 2 Digit MG Group P/E73%

P/E as % of 3 Digit MG Group P/E90%

12 Month Normalized P/E Ratio13.2

Most recent data



Price/Book Ratio (Price/Equity)4.95

Book Value per Share$13.51

Total Debt/ Equity0.76

Long-Term Debt to Total Capital0.31

SG&A as % of Revenue39.8%

R&D as % of Revenue0.0%

Receivables per Day Sales $45.41

Days CGS in Inventory80

Working Capital per Share$1.34

Cash per Share$3.71

Cash Flow per Share$5.78

Free Cash Flow per Share$0.75

Tangible Book Value per Share$1.78

Price/Cash Flow Ratio11.6

Price/Free Cash Flow Ratio89.8

Price/Tangible Book Ratio37.49

Most recent data



5-Year Averages

Return on Equity30.9%

Return on Assets 15.1%

Return on Invested Capital25.1%

Gross Profit Margin68.4%

Pre-Tax Profit Margin29.9%

Post-Tax Profit Margin23.5%

Net Profit Margin (TotalOperations)

23.5%

R&D as a % of Sales0.0%

SG&A as a % of Sales38.8%

Debt/Equity Ratio0.23

Total Debt/Equity Ratio 0.51



SWOT ANALYSIS

Strengths Of Company

y World¶s Leading Brand

Coca-Cola has strong brand recognition across the globe. The company has a leading brandvalue and a strong brand portfolio. Coca-Cola as one of the leading brands in their top 100 global brands ranking in 2006.The Business Week-Interbrand valued Coca-Cola at $67,000 million in2006. Coca-Cola ranks well ahead of its close competitor Pepsi which has a ranking of 22 havinga brand value of $12,690 million.

y Large Portfolio Of Product

Coca-Cola owns a large portfolio of product brands. The company owns four of the top five softdrink brands in the world: Coca-Cola, Diet Coke, Sprite and Fanta. Over the years, the companyhas made large investments in brand promotions. Consequently, Coca-cola is one of the bestrecognized global brands. The company¶s strong brand value facilitates customer recall andallows Coca-Cola to penetrate new markets and consolidate existing ones.

y Large scale of operations

With revenues in excess of $24 billion Coca-Cola has a large scale of operation. Coca-Cola is the

largest manufacturer, distributor and marketer of non alcoholic beverage concentrates and syrupsin the world. Coco-Cola is selling trademarked beverage products since the year 1886 in the US.The company currently sells its products in more than 200 countries. Of the approximately 52 billion beverage servings of all types consumed worldwide every day, beverages bearingtrademarks owned by or licensed to Coca-Cola account for more than 1.4 billion.

y Strong Infrastructure Across TheWorld

The company¶s operations are supported by a strong infrastructure across the world. Coca-Colaowns and operates 32 principal beverage concentrates and/or syrup manufacturing plants locatedthroughout the world.

In addition, it owns or has interest in 37 operations with 95 principal beverage bottling andcanning plants located outside the US. The company also owns bottled water production and still beverage facilities as well as a facility that manufactures juice concentrates. The company¶s largescale of operation allows it to feed upcoming markets with relative ease and enhances its revenuegeneration capacity.



y Most Popular Brand

Coca cola is one of the most popular brands in the world. Sold in over 200 countries and offering

around 400 brands, coca cola is one of the most renowned companies. Coca Cola¶s popularity is

a strength for the company. When launching new products Coca cola can use its popularity to

sell its product.

y Loyal Customer Base

Another major strength of the Coca-Cola Company is its brand loyalty. Coca cola is right now

earning 80% of its profit by its 20% loyal customer for whom coke is not a beverage, it¶s an

addiction.

y Major Market Share

Coca cola has majority of the market share in the soft drink industry making them the major

players in the beverage industry and giving them a control over the market; winning automatic

preference of the consumers through its reputation Coca-Cola has improved its revenues

generously.

y Healthier Brand Image

A lot of people are concerned about their health and hence are sceptical of the products launched

by the brand Coca-Cola hence building a healthier brand image is very essential. Coca Cola

focuses on consistently reinforcing its core product benefits of taste and refreshment to ensure

the brand is continuously achieving new peaks.

Weaknesses

y Negative Publicity

The company received negative publicity in India during September 2006.The company wasaccused by the Center for Science and Environment (CSE) of selling products containing pesticide residues. Coca-Cola products sold in and around the Indian national capital regioncontained a hazardous pesticide residue. These pesticides included chemicals which could cause

cancers, damage the nervous and reproductive systems and reduce bone mineral density.

Such negative publicity also have an adverse impact on the company¶s growth prospects in theinternational markets.



y Decline In Cash From Operating Activities

Coca-Cola¶s cash flows from operating activities also decreased. Decline in cash from operatingactivities reduces availability of funds for the company¶s investing and financing activities,which, in turn, increases the company¶s exposure to debt markets and fluctuating interest rates.

y Strong Competition From Pepsi Co.

Coca cola has a strong competition from Pepsi Co. Products like Pepsi, 7-up, Slice are direct

substitutes of Coke Classic, Sprite and Minute Maid.

y Weak Products Or Brands

Weak products or brands are the weakness of the company. These products are the Dogs in theBCG matrix. These brands are actually supported by either cash cows or starslike Coke Classic

and Diet Coke. These brands failed because of improper test marketing and poor productdevelopment. These products indirectly decrease the profit as they increase the operating cost of the company itself.

In Pakistan most of the people associate the brand name Coca-Cola to the drink Coca-Cola itself,since most of them are unaware of the huge number of products that the company actually has allaround the world.

Opportunities

y Strengthening Its Customer Base

Coca cola has been sponsoring events which help in brand positioning in the minds of consumer.Company can capitalize upon which may help the company in strengthening its customer baseand increasing its brand loyalty. Coca cola could have improved its brand image by running acampaign to collect flood relief revenues for the flood affected in Pakistan.

y Coca Cola Can Expand Its Product Line

Coca cola is sold over 200 countries but still there are third world countrieswhere coca cola isnot available. The company should start capturing these markets and spread its distributionworldwide.Coca cola can expand its product line by product development.



Threats

y Strong Competitors

Pepsi is usually second to Coke in sales, but outsells Coca-Cola in some markets. Around the

world, some local brands compete with Coke.

Coca-Cola¶s major competitor is Pepsi Co. that occupies more than 60% of the Pakistani soft-

drink market. In Pakistan, Pepsi started their operationsin 1970 by establishing their regional

office in Lahore which monitors allthe operations carried out in South West Asia. They currently

have aproduct portfolio that competes with Coca-Cola on every level. Theproducts of Pepsi sold

throughout Pakistan include:1. Pepsi2. Mirinda3. 7UP4. Mountain Dew5. Aquafina.

Threats posed by Pepsi are also price-related. When the price goes beyond a certain level it

effects the consumption of the soft drinks. Athigher prices, consumers are more likely to

substitute Pepsi with Coke and vice versa.

All through the 1950s to date ,Coca-Cola occupied a very dominant position in the soft-drink

market, however slowly over the passage of time Pepsi had risen up to go into competition head-

to-head by discounts in the distribution outlets, targeting younger consumers withµPepsi

Generation¶, motivating its bottlers and competing on packagesize and advertising.

y Perfect Substitutes

Coca-Cola¶s major threat is Pepsi Co. They are the major competitors and everybrand of cocacola is being competed by a product of Pepsi co.Pepsi co. although has been beaten at times but they still pose a threat to CocaCola company

because they are the perfect substitutes of each other.

y Health Consciousness of Customers

This will lead to a decrease in the sales of coca cola. People have become more health conscious

and this may tend to decrease the sales of the company. Moreover in the recent years, beveragecompanies such as Coca-Cola have been criticized for selling carbonated beverages with high

amounts of sugar and unacceptable levels of dangerous chemical content, and have been

implicated for facilitating poor diet and increasing childhood obesity.



y Lower Purchasing Power

A decrease in the GDP of the country means lower purchasing power. Lower Exchange Rate

may lead to lower profits. Change in technology is a threat. With this change Industry practices

changes aswell the company has to upgrade its technology as well.Coca Cola had also suffered

before when American products were boycotted by Muslim around the globe because of the Iraq

war. This meant that coke was also boycotted. This happened in 2008. This is a threat to

company as these events could repeat once again and could lessen the company¶s sales.

y Criticism

Since studies indicate "soda and sweetened drinks are the main source of calories in [the]American diet",most nutritionists advise that Coca-Cola and other soft drinks can be harmful if

consumed excessively, particularly to young children whose soft drink consumption competeswith, rather than complements, a balanced diet. Studies have shown that regular soft drink usershave a lower intake of calcium, magnesium, ascorbic acid, riboflavin, and vitamin A. The drink has also aroused criticism for its use of caffeine, which can cause physical dependence. A link has been shown between long-term regular cola intake and osteoporosis in older women (but notmen). This was thought to be due to the presence of phosphoric acid, and the risk was found to be same for caffeinated and noncaffeinated colas, as well as the same for diet and sugared colas.

PEST ANALYSIS

Political Analysis

There are very little chances of ³political variables´ to effect the coke¶s production and selling behavior. In the ³political variables´ most of the things are related to Governmental activities.So, they don¶t leave any good or bad impact in the Industry of coke.And there are some exceptional things like: ³environmental protection laws´ they some whateffect the industry of Coke. Government is going to be really very much conscious about theenvironment. But after making the adjustments in plants and applying the proper way of wastagethe chances of being affected by the ³protection laws´ are going to be diminished. So it impactgood for the Coke¶s reputation. And the second thing in political variables which effects Coke is

³elections & military take over´ Because in the days of elections and marshal law¶s condition thecountries production in any field is declined. So it affects slightly the revolution of Coke.So ³political conditions´ are over all leave neutral effects on coke¶s industry.



Economical Analysis

Economical variables highly affects the Coke¶s resolution. Economic factors are those actorswho effect the production of any industry. So, Coke is not the out of question. If the economicconditions of the country is not that strong and Coke increases its Price in this situation. Then it

would impact highly negative. And inflation is also not a good position for any country¶s production point of view. It also impacts highly negative in the Coke¶s production.

And as a country concerned like ³Pakistan´ where the unemployment rate is very much high.The Coca-Cola system in Pakistan employs thousands of people. When we draw the conclusionof ³economic variables´. Then we come to know that if economic variables are in the favorable

position of country then they impact good other wise the impact highly bad.

Social Analysis

y Education

The Coca-Cola Company has always believed that education is a powerful force in improvingthe quality of life and creating opportunity for people and their families around the world. TheCoca-Cola Company is committed to helping people make their dreams come true. All over theworld, Coca-Cola involved in innovative programs that give hard-working, Knowledge- hungry

students books, supplies, places to study and scholarships.

y Environment

The Coca-Cola Company uses their significant resources and capabilities to provide activeleadership on environmental issues, particularly those relevant to their business. They want theworld we share to be clean and beautiful. They are always innovating to bring different delicious beverages. This same spirit of innovation comes alive in their environment programs. They arecommitted to preserving the environment, in recycling content and suppliers, and environment.

Technological Analysis

Of course business innovation leaves highly good impacts in the business of Coke. As coke usemore advance technology in its production process. It will resulted in increment of their

production through out the country.

As far as the ³governmental hindrances´ are concerned the impacts highly bad on coke¶s production. This approach of government decreases the profit margin of Coke.

As the coke helping in promoting ³paperless environment´ .it impacts good, because computersare the basic need of any person now a days. And though it¶s a big industry so it is promoting thetrend of paperless environment. And it is giving the way of other industries to come to newtechnologies and into a new world of business. Through computers coke can increase the

efficiency of its business and can have up ±to-date data about their productions.

Documents

Our Coca Cola Company Project