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Strategic Management Report On Cocal Cola by Noor
Strategic Management Report On Cocal Cola by Noor
STRATEGIC June 12
2010
MANAGEME
NT REPORT
ON COCA-
COLA
SUBMITTED BY : NOOR
MOHAMMAD
SUBMITTED TO: SIR. Dr.
SHAHEER ALAM
I have the only pearl of eyes to admire the blessing of the Compassionate and
Omnipotent because the words are bound, knowledge is limited and time is short to
express His dignity. All thanks are due only toAlmighty Allah, most gracious, the most
merciful, who gave me the strength to do this job. My special praise for Holy Prophet
Muhammad (Peace Be Upon Him) who is, for even humanity as a whole.
It is a matter of great honor and pleasure for me to express my ineffable gratitude
and profound indebtedness to my venerable supervisor Sir SHAHEER ALAM, for his
kind supervision, valuable suggestion and
sympathetic attitude through my research. I am much impressed of his intellectual
activities, inexhaustible energy to steer forth the student. His sympathetic and sincerest
attitude is highly qualified experience.
3
Executive Summary
The purpose of this report is to construct strategies by analyzing the general beverage
industry in particular, carbonated drinks and the competitive environment. Coca- Cola
is one of the most popular and recognizable brands in the world of business (Heller et al
2006,). Thus, from this analysis, COCA COLAs potential growth and strategic
management to maximize profitability will be examined. Eventually, these crucial factors
in business management are affecting COCA COLAs performance in the market,
including expanding into larger market and launch takeovers of other companies that
COCA COLA believe will create value for the company.
This report will also discuss and outline each aspect in the general environment of COCA
COLA and also the strength of each aspect in regards to Porters five forces. Along with
the analysis, the effect that each aspect brings to strategic management will also be
discussed, focusing mainly towards several aspects to COCA COLAs strategic
management.
4
Table OF Contents Page No.
CHAPTER #1
Introduction 6
6
1.1 Company Overview
6
1.2 History Of Coca-Cola Company
7
1.3 The Slogan
7
1.4 History Of Bottling
1.5 ( The Secret Formula Of Coca Cola)
CHAPTER #2
Internal Analysis
10
2.1 Mission, Vision & Values Of Coca Cola Company
10
2.1.1 Our Mission
10
2.1.2 Our Vision
11
2.1.3 Our Wining Culture
12
2.2 Objectives Of Coca-Cola Company
12
2.2.1 The Corporate Objectives
14
2.3 Management Philosophy And Attitudes, Culture And Leadership
14
2.3.1 Decision-Making:
15
2.3.2 Organizing
18
2.3.4 Leading
21
2.3.5 Controlling
21
2.4 Market Share Of Coca Cola
22
2.5 Strategies
22
2.5.1 Positioning Strategy
22
2.5.2 Promotion Strategies
23
2.5.3 Utc Scheme
23
2.5.4 Getting Shelves
23
2.5.5 Eye Catching Position
23
2.5.6 Sale Promotion
23
2.5.7 Distribution Channels
24
2.5.8 Advertisement Strategies
24
2.5.9 Our Competitive Strategies
25
2.5.9.1 Marketing:
25
2.5.9.2 Innovation:
26
2.5.9.3 Globalization:
26
2.6 Value Chain Of Coca Cola
5
2.6.1 Our Suppliers 26
2.6.2 Our Customers: 26
2.6.3 Coca Cola Retailing Research Council 26
2.6.4 Collaboration Customer Relationship Process 27
2.6.5 Customer Development And Training 27
2.7 Financial Analysis Of Coca Cola Company 28
CHAPTER #3
(External Analysis)
3.1 Coca-Cola Company, The Pestle Analysis 29
3.1.1 Political Analysis For Coca-Cola 29
3.1.2 Economic Analysis For Coca-Cola 30
3.1.3 Social Analysis For Coca-Cola 31
3.1.4 Technological Analysis For Coca-Cola 32
3.2 Industrial Environment And 5 Forces Model For Coca Cola 33
3.2.1 Bargaining Power Of Supplier 33
3.2.2 Bargaining Power Of Buyers 33
3.2.3 Threats Of Substitute 33
3.2.4 Rivalry Among Competing Firms 34
3.2.5 Threats Of New Entrants 34
3.3 Coca-Cola Company, The SWOT Analysis 35
3.3.1 Strengths 36
3.3.2 Weaknesses 38
3.3.3 Opportunities 39
3.3.4.Threats 40
3.4 General Analysis Of Coca Cola 42
5 Recommendation 43
6 Conclusion 44
7 REFRENCES 44
6
CHAPTER #1
(INTRODUCTION)
7
to echo today wherever Coca-Cola is enjoyed. Dr. Pembertons 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.
8
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.
1950s Packaging
Innovations
192
0s and 30s
9
Inte
rnational
ex
pansion
10
CHAPTER #2
(INTERNAL ANALYSIS)
11
To create value and make a difference.
2.1.2 OUR VISION
Our vision serves as the framework for our Roadmap and guides
every aspect of our business by describing what we need to
accomplish in order to continue achieving sustainable, quality
growth.
People: Be a great place to work where people are inspired
to be the best they can be.
Portfolio: Bring to the world a portfolio of quality beverage
brands that anticipate and satisfy people's desires and
needs.
Partners: Nurture a winning network of customers and
suppliers, together we create mutual, enduring value.
Planet: Be a responsible citizen that makes a difference by
helping build and support sustainable communities.
Profit: Maximize long-term return to shareowners while
being mindful of our overall responsibilities.
Productivity: Be a highly effective, lean and fast-moving
organization.
2.1.3 Our Wining Culture
Our Winning Culture defines the attitudes and behaviors that will be
12
Accountability: If it is to be, it's up to me
Passion: Committed in heart and mind
Diversity: As inclusive as our brands
Quality: What we do, we do well
Focus on the Market
Focus on needs of our consumers, customers and franchise
partners
Get out into the market and listen, observe and learn
Possess a world view
Focus on execution in the marketplace every day
Be insatiably curious
Act Like Owners
Be accountable for our actions and inactions
Steward system assets and focus on building value
Reward our people for taking risks and finding better ways to
solve problems
Learn from our outcomes -- what worked and what didnt
To engage Coca-Cola in exploring the viability and options for using their distribution
networks in developing countries to distribute social products such as oral rehydration
salts (ORS) and related educational materials on health, hygiene and sanitation.
To help engage an appropriate international NGO, or NGOs, to partner with Coca-Cola
at a global level and local levels on this initiative.
To support Coca-Cola and its partners in modeling different scenarios which combine
Coca-Colas distribution network with local health initiatives in order to achieve our
aims.
To support Coca-Cola and its partners in selecting the most promising scenarios as the
basis for field trials.
13
To support the international NGO, or NGOs, to engage local NGOs and local Health
Institutions in order to undertake trials linking this idea with local support infrastructure.
To engage and inform as many people as possible, encouraging them to support this
campaign, managing expectations and offers of help and promoting constructive debate.
To establish a core group of enablers and activists to lead on the different aspects of this
campaign.
To monitor the progress of the campaign and ensure that any trials and roll-outs are
effectively monitored and evaluated.
STRATEGIC GOALS
The strategic goals are considered when company is thinking of the long-term objectives
but at coca cola strategic objectives and goals are set up for three years. These strategic
goals are decide by the top management with consultation by the parent company head
quartered at Singapore. However, they are reviewed every year in the annual meeting to
make sure that they are in line with the changing environment. They are:
To continue to be an organization providing the quality products to the valuable
customers.
To select and retain the professional people for the organization.
To project an outstanding corporate image.
To satisfy the customer through extra ordinary service and an excellent service along
with the complete tactical and operational support.
TACTICAL GOALS:
The top management of the company on an annual basis devises these goals together with
the consultation of the lower level employees. Then each departmental director is given
these annual tasks that then subdivide it on the quarterly or monthly basis to have a
proper check to ensure that these objectives are achieved, mainly through marketing, is
the job of the director of each division. For this year, these goals are:
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To increase the revenues by 20% as compared to last year.
To increase the total retail customers by around 10%.
To increase the market share by 5%.
To reactivate the discontinued customers by 30%.
OPERATIONAL GOALS:
Operational goals are decided by the top management in consultation with the lower level
employees. They are following the concept of management by objectives
(MBO). Each employee is assigned its goals and is told what is expected of him and then
he is evaluated on the basis of certain rules and regulations followed evenly by the
company.
For example: a sales man is given following tasks, duties and certain targets: Each
salesman has to oversee around 100-125 outlets. The frequency of visits to each outlet
depends upon the sales of that particular outlet. Normally, a salesman has to visit a single
outlet thrice a week i.e. every alternate day. This means that a salesman visits at least 20-
30 outlets per day.
.
2.3 Management philosophy and attitudes, culture and leadership
15
2.3.1 DECISION-MAKING:
Competing in the market place is like a war. You have Injuries and casualties, and the best
strategy win (John Collins)
The decision-making process in CCBPL is centralized. The model used is classical, whereby the
top management takes their time while making decisions and explore and evaluate all the possible
alternatives before choosing the rationally economic and feasible situation.
Programmed decisions are made only by the top management with no consultation what so ever
with the line managers while the daily and routine decisions are made by the line managers at the
middle level with the prior permission or approval from the general manager.
Decisions, which are normally taken at the top management, are related to
The package positioning
Trade discounts
Advertisement
Price reductions
Distribution
While recruiting new employees, the top management approves the vacancies and asks the
Human Capital Department to conduct the written test and this test normally is conducted for the
employees at the lower level. Then prospective applicants are short listed through the interview
process. Then the Business and operations manager or general manager personally interviews the
employees and then makes the final decision about the selection himself.
Hence, the style of decision-making followed by the CCBPL model is AII. That is, the decisions
are made on the basis of the inputs provided by the lower level employees and the managers at
the middle management level. Top management asks for the suggestions and ideas of his
subordinates and then takes the final decision himself.
However, the remaining decisions, which are mainly related to the daily operations, are made by
the respective managers who are eventually made responsible for the results. The management is
very much cooperative and encourage its employees to come up with new ideas related to their
duties and the work they do so as to increase the overall efficiency of the organization and
eventually increasing the profits..
2.3.2 ORGANIZING
1: DEPARTMENTALIZATION:
16
CCBPL is divided into different departments on the basis of functional approach. People are
grouped together on the basis of common skills and work activities. This approach helps
company in achieving the economies of scale through high quality of problem solving and lesser
needs of the training of the employees.
CCBPL is headed by the General Manager. There are five departments at CCBPL namely,
Production, Industrial Relations, Sales and Marketing, Human Capital, and Finance and
Accounting.
Production Department is responsible for the overall production of the
CCBPL. There are 8 plants of CCBPL operating throughout the country. Different areas are
distributed the products on the basis of nearness so as to reduce the transportation cost.
Industrial Relations Department is responsible for dealing with the
Problems related to the working environment of the employees and the
Issues related to the labor unions.
Sales and Marketing Department is responsible for the making the
Product available in the market and to deal with the issues related to the
advertisements of the products.
Human Capital Department is responsible for looking for the efficient
pool of workers, selecting the professionals and makes them happy so that they should stick to the
company. The Human Capital department deals with management level employees grievances.
Finance Department deals with the overall costing and pricing of the
products. This also handles the import related issues of the company. Accounting department
assists the sales department in making invoices and payroll entries.
WORK SPECIALIZATION
The work specialization is high, as each Manager is made responsible for only a particular
function, which is his expertise. There is no boredom or monotony as each salesman is meeting
the different sort of person and the work is challenging and promotions are based on performance
there is no monotony and boredom.
17
performance of the employees. These salesmen are monitored on an on-going basis by their
manager, which serves as an effective control mechanism.
The employees have a lot of authority, responsibility and information relative to the work that
they are doing. However, all the information and authority relative to the work is provided by
their respective managers.
The procedure is same in the other departments as well.
SPAN OF CONTROL:
The span of control is low as there are 3-5 employees reporting to their managers. This low
structure is due to the fact that organization is a vertical and different people have different works
to do so. It is also difficult to control more than five people and still manage the resources and
people in an effective manner.
RESOURCE ALLOCATION:
As far as resource allocation is concerned, the managers of each department have the authority to
utilize the organizational resources whenever needed for the functions of his department. They
have to get the approval from the other managers if these assets belong to other managers. These
resources may be capital, human or any other available.
18
Recruitment is normally done on the required positions and not on the standby basis.
Recruitment starts whenever a supervisor or sales manager needs a salesperson and it is first
approved by the general manager before sending it to the human resources department.
All the vacancies are first internally advertised so that all the employees who fulfill the
requirements can avail this opportunity. If there arent any suitable persons for a particular job
then human resource department search its data bank and if there is no suitable person then at last
it is advertised in the newspaper but it is rarely the case at coca Cola for the sales man.
Selection is based on different criterion for different positions. Education requirements are the
first and the most important and are the first part of the screening of the personnel.
After the screening stage, applicant is called for the aptitude test. For a salesman job simple
arithmetic and general knowledge is tested. Know how of English is also necessary in some
cases.
After passing the aptitude test applicant is asked to appear for an interview. This interview is
normally carried out by the sales and human resource department. Purpose of this interview is to
confirm the data and claims, which the applicant has produced and made.
If the applicant is selected, he is asked for four sureties or any other references, which he can
make and sometimes, human resource department also like to confirm from their Ex-Employers
about the conduct and the reason for leaving of the applicant.
2.3.3 TRAINING:
At Coca cola on the job training is given the utmost importance. At first a sales man is given
information about the product, sales environment and company policies and procedures. Ethical
behavior is emphasized most so as not to create any sort of bad habits which can cause great
problems for the company. Normally a new sales man is supposed to work under another
salesman to learn the basics of selling techniques and the overall environment in which he will be
working.
A salesman is then allowed to work under the salesman but he is asked to perform all the
operations by his own. These include filling out the route card, dealing with the customers,
communicating with to loader, cash management, setting the visi cooler and the next days order
to be loaded. After doing this entire if has any problems in learning then he is guided by
salesman, market developer, and sales manager if required.
19
Apart from this on the job training, the company also has some in-house training facilities. The
company has a sales hall in which all the sales personnel are given some tips regarding the
changes in the selling environment and how to improve efficiency and efficacy. These tips are
normally given by the general manager.
Coca Cola also arranges some type of seminars, work shops and modules related to the sales
management, Forecasting of the daily sales, merchandising, selling skills, supervisory techniques
and other areas related to the sales.
Coca Cola does not have any library and special trainers but they do have the separate space for
the training and they also use some sort of videos to elaborate and show the examples of effective
selling skills and techniques.
To maintain the professional employees company has a policy of promotion from within.
Promotions are based on the performance, which is measured very objectively. Apart from this
the company pays its employees more than the industry wages. Not only the wages and salary but
different other benefits are also given to employees to motivate and retain them in the
organization. The company also has an effective incentive plan.
2.3.4 LEADING
LEADERSHIP STYLE:
The general manager of the company is at the topmost position in the organizational hierarchy;
Even though he is not directly involved in its operations he is responsible for taking major
administrative decisions regarding the company policy and Operations. Departmental managers
are responsible for leading and directing their subordinates. These leaders focus on these areas:
Increasing business with a coordinated approach by helping each other in its
operations.
Encouraging the employees to give new ideas so as to increase the customer
satisfaction.
As there is a very high degree of delegation and participation so they believe that the leadership
style used in all the departments of CCBPL is democratic. The concept of team management is
only practiced in the sales and marketing department as they have to work in dependence of one
another. Subordinates are given a fair treatment and are dealt in a very good manner so as to give
them a feeling that you are not only an employee but also a member of the family.
The managers at CCBPL are very supportive as they use teams and treat subordinates as equals,
and have a highly open communication system. They are participative since they encourage the
20
involvement of the employees in decision-making and make use of group discussions. However,
some monetary and non-monetary rewards are used to create a high involvement from the
employees especially at the lower level.
MOTIVATION:
Employee motivation is given a very high consideration at CCBPL. At CCBPL they have the
policy of promotion from within policy. Promotions are bestowed on the performance basis. This
performance base motivates employees to work hard and achieve the goals, which are very
objective and are perceived achievable by most of the employees.
Apart from this compensation plan is also a motivating factor as CCBPL is paying more than the
industry averages. Not only this different campaigns and competitions between the employees
itself are also used to motivate the employees.
Managers play a vital role in motivating employees as they give them the timely feedback about
their activities. They also help them solve different problems, which can be job related or
personal problems. Working environment and a challenging milestone are a major factor in
employee motivation at CCBPL.
COMMUNICATION:
There is open environment in CCBPL, which discourages barriers among the members sharing
information. The top management consults lower ranks before deciding on the policy matters and
then these things are communicated downwards. Every employee is allowed to see the general
manager at any time if he has any problem. Inter departmental communication is done through
formal and informal manners. Grapevine is also used to get the feedback about the employees
views about the management.
CORPORATE CULTURE:
The Top management at coca cola also tries to emphasize to follow the prescribed culture of the
organization. CCBPL has formal and documented values that are communicated to all the
employees. To ensure proper application of the rules and behaviors of the values, the top
management act as role models, and closely administer and review their employees behaviors.
Our Winning Culture
Our Winning Culture defines the attitudes and behaviors that will be required
of us to make our 2020 Vision a reality.
Our values serve as a compass for our actions and describe how we behave
21
in the world.
Leadership: The courage to shape a better future
Collaboration: Leverage collective genius
Integrity: Be real
Accountability: If it is to be, it's up to me
Passion: Committed in heart and mind
Diversity: As inclusive as our brands
Quality: What we do, we do well
Focus on the Market
Focus on needs of our consumers, customers and franchise partners
Get out into the market and listen, observe and learn
Possess a world view
Focus on execution in the marketplace every day
Be insatiably curious
Work Smart
Act with urgency
Remain responsive to change
Have the courage to change course when needed
Remain constructively discontent
Work efficiently
2.3.5 CONTROLLING
Control is done through the evaluation, which is based on the very objective basis. Certain criteria
are fixed in advance and if these criteria are not met then the employees are asked and evaluated
for the reasons and corrective actions are taken by the respective managers. Different departments
22
have different criteria and different reporting and controlling systems. The reporting, evaluation
and control system of sales departments is follows:
23
2.5 Strategies
DIFFERENTIATION STRATEGY
In order to serve your target market you introduce different things to your product so that your
product can be differentiated from other products.
Basis of Differentiation There are many bases on which a product can be differentiated but
Coke has differentiated its product on the following base: Product Differentiation Coke
differentiate its product from its competitors on the basis of brand, quality and taste. Image
Differentiation Logo is used for image differentiation. Logo is what establishes a brand name in
the consumer mind. It is the brands identification, signature and image. Coca cola has kept on
changing its logo from time to time.
24
UTC mean under the crown scheme, coca cola often do this type of scheme and they offer very
handy prizes in it. Like once they offer bicycles, caps, TV sets, cash prizes etc. This scheme is
very much popular among children.
1. Direct Selling:
In direct selling they supply their products in shops by using their own
transports. They have almost 450 vehicles to supply their bottles. In this type of selling company
have more profit margin.
2. Indirect Selling :
They have their whole sellers and agencies to cover all area. Because it is
very difficult for them to cover all area of Pakistan by their own so they have so many whole
sellers and agencies to assure their customers for availability of coca cola products.
Facilitating the Product by Infrastructure
25
For providing their product in good manner company has provided infrastructure these includes.
Vizi cooler
Freezers
Display racks
Free empty bottles and shells for bottle
(1)Print Media:
They often use print media for advertisement. They have a separate department
for print media.
(2)TV Commercials:
As everybody know that TV is a most common entertaining medium so TV
commercials is one of the most attractive way of doing advertisement. So Coca Cola Company
does regular TV commercials on different channels.
The Coca-Cola Company is one of the largest, most successful and most widely recognized
corporations in existence. Coca-Cola is a dominating force in the beverage industry and sets a
very high standard of competition. Research shows that its trademark is recognized by over 94%
of the worlds population. There are many factors contributing to Coca-Colas success, however,
we believe that their key success factors are Marketing, Innovation, and Globalization.
2.5.9.1 Marketing:
26
Coca-Cola is seen as one of the founding fathers of the modern day marketing model. They were
among the pioneers of advertising techniques and styles used to capture an audience. They were
also one of the first companies to offer a gimmick with their product, this being a mini yo-yo. It
was around 1900 when Coca-Cola began presenting their signature drink as a delicious and
refreshing formula. This slogan has been repeated for over the last 100 years selling Coke all over
the world. Through its intense marketing campaigns, Coke has developed an image that is
reflected in what we think of when we buy Coke and what we associate with drinking Coke. This
image has been subconsciously installed in our brain by the advertising campaigns that show
Coca-Cola associated with good times.
2.5.9.2 Innovation:
Coca-Cola has been able to survive and grow in an ever-changing market because of its ability to
systematically innovate and deliver new products. In the late 90s the company, typically showing
earnings growth of 15-20% per year, turned in three straight years of falling profits. It was
apparent that the market was changing and in order to keep up with these changes, Coca-Cola had
to move from a single core product to a total beverage company. This was a major change
because their past success was base on having one successful core product. Coca-Cola began to
employ a strategy referred to as play to win innovation. The company began operating in a
decentralized environment that was unfeasible in previous years. Now Coca- Cola offers nearly
400 different products in and is still dominating the beverage industry. This is made possible by
the companys ability to innovate and adapt to changing markets.
2.5.9.3 Globalization:
Todays big business takes place on a global scale, and Coca-Cola is no exception. Technology is
continually changing business, and these constant changes have been making it more feasible and
profitable for businesses to expand their operations globally in order to serve all different types of
diverse markets around the world. This global view is reflected in Cokes recent Id like to teach
the world to sing commercial. Coca-Cola is taking advantage of the large revenue opportunities
made possible by participating in a global market and now offers products in 200 countries
around the world.
27
2.6.1 Our Suppliers
Our suppliers are business partners who provide our system with materials, including ingredients,
packaging and machinery, as well as goods and services. Our Company's Supplier Guiding
Principles (SGP) communicates our values and expectations, emphasizing the importance of
responsible environmental and workplace policies and practices.
Suppliers' policies and practices must comply, at a minimum, with all applicable laws and
regulations, including those concerning child labor; forced labor; abuse of labor; freedom of
association and collective bargaining; discrimination; wages and benefits; working hours and
overtime; health and safety and environmental practices. New agreements with suppliers require
compliance with our SGP. We have communicated these expectations, trained suppliers and
started a comprehensive auditing process. In 2007, we conducted 1,313 supplier audits, a 28
percent increase since 2006. We have also worked with our bottling partners so that they have
similar principles to target suppliers not covered by our program.
28
Our Collaborative Customer Relationship process has been refined in three lead markets -- Japan,
Mexico and Switzerland -- and is now being implemented with key customers in other markets
around the world. We work with our customers to improve shopper marketing and supply chain
collaboration and to accelerate innovation in order to provide superior beverage selections to
every consumer on every shopping trip.
Coca-Cola Mexico's Collaborative Customer Relationship program was recently recognized by
Oxxo, a convenience store chain that has 5,700 stores in 30 states in Mexico. The program has
proven successful in understanding shopper needs, drives and preferences, and migrating from a
transactional and commercial link to a collaborative and multifunctional business relationship.
29
0.9 9.2 0.7
24.2%
Most Recent Data
Return on Assets 5-Year Averages Return on Invested
Total Debt/ Return on Equity Capital
Equity 14.9% 28.5%
25.1%
0.47
Gross Profit Net Profit Margin Current P/E Ratio 5-Year High P/E
Margin (Total Operations) 16.9 Ratio
26.3
68.5% 20.6%
CHAPTER #3
(EXTERNAL ANALYSIS)
Political
Economic
Social
Technological
30
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.
Coca-Cola Companys 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.
31
E: Economic change, for example a recession creating increased activity at the lower
ends of product price ranges. Rate of interest raises depressing business and causing
redundancies and lower spending levels.
32
there has been economic improvement in many major international markets, such as
Japan, Brazil, and Germany." These markets will continue to play a major role in the
success and stable growth for a majority of the non-alcoholic beverage industry.
S: Social change involves changing attitudes and lifestyles. The increasing number of
women going out to work, for example, led to the need for time-saving products for the
home.
33
Introduction of cans and plastic bottles have increased sales for Coca-Cola as
these are easier to carry and you can bin them once they are used.
As the technology is getting advanced there has been introduction of new
machineries all the time. Due to introduction of this machineries the production of
the Coca-Cola company has increased tremendously then it was few years ago.
CCE has six factories in Britain which use the most stat-of the-art drinks
technology to ensure top product quality and speedy delivery. Europe's largest
soft drinks factory was opened by CCE in Wakefield, Yorkshire in 1990. The
Wakefield factory has the technology to produce cans of Coca-Cola faster than
bullets from a machine gun.
Applying Porters 5 forces allows the garnering a retrospective view of the potential
attractiveness in terms of profitability of the company. Analyzing the beverage industry
will also allow a more accurate outlook on its potential. The analysis below
will concentrate on the industry from COCA COLA perspective and also its effect on
strategies discussed before.
34
COLA and perform function in-house. Since COCA COLA is producing at large scale, to
suppliers, this business is very important; however the cost of purchase has significant
influence on overall costs. This requires COCA COLA to carefully choose its suppliers to
suppress cost problem.
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this will result in less competition, thus enabling COCA COLAs chance to gain more
market share.
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Common drink. Fanta Basically Preferred by Ladies and Kids. Maaza also Ladies and
Kids Sprite not clearly defines. Kinley Soda Mostly those who consume liquor
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 Companys strong brand
value facilitates customer recall and allows Coca-Cola to penetrate markets. However,
the company is threatened by intense competition which could have an adverse impact on
the companys market share.
SWOT Analysis
Strengths Weaknesses
Internal -Popularity -Word of mouth
-well known -lack of popularity of many Coca Colas
-branding obvious and easilybrands
recognized -Most unknown and rarely seen
-A lot of finance -result of low profile or non-existent
-customer loyalty advertising
-International Trade -health issues
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Threats Opportunities
External -changing health-consciousness attitude -many successful brands to pursue
-legal issues -advertise its less popular products
-Health ministers -buy out competition.
-competition (Pepsi) -More Brand recognition
3.3.1 STRENGTHS
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The companys operations are supported by a strong infrastructure across the world.
Coca-Cola owns and operates 32 principal beverage concentrates and/or syrup
manufacturing plants located
throughout the world. In addition, it owns or has interest in 37 operations with 95
principal beverage bottling and canning 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 companys large scale of operation allows it to feed
upcoming markets with relative ease and enhances its revenue generation capacity.
3.3.2 WEAKNESSES
Negative publicity:
The company received negative publicity in India during September 2006 The Company
was accused 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 region contained 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 could adversely impact the
companys brand image and the demand for Coca-Cola products. This could also have an
adverse impact on the companys growth prospects in the international markets.
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Sluggish performance in North America
Performance in North America:
Coca-Colas performance in North America was far from robust. North America is Coca-
Colas core market generating about 30% of total revenues during fiscal 2006. Therefore,
a strong performance in North America is important for the company.
In North America the sale of unit cases did not record any growth. Unit case retail
volume in North America decreased 1% primarily due to weak sparkling beverage trends
in the second half of 2006 and decline in the warehouse-delivered water and juice
businesses. Moreover, the company also expects performance in North America to be
weak during 2007.
Sluggish performance in North America could impact the companys future growth
prospects and prevent Coca-Cola from recording a more robust top-line growth.
3.3.3 OPPORTUNITIES
Acquisitions
For the last one year, Coca-Cola has been aggressively adopting the inorganic growth
path. During 2006, its acquisitions included Kerry Beverages, (KBL), which was
subsequently, reappointed Coca-Cola China Industries (CCCIL). Coca-Cola acquired a
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controlling shareholding in KBL, its bottling joint venture with the Kerry Group, in Hong
Kong. The acquisition extended Coca-Colas control over manufacturing and distribution
joint ventures in nine Chinese provinces. In Germany the company acquired Apollinaris
which sells sparkling and still mineral water in Germany. Coca-Cola has also acquired a
100% interest in TJC Holdings, a bottling company in South Africa. Coca-Cola also
made acquisitions in Australia and New Zealand during 2006. These acquisitions
strengthened Coca-Colas international operations. These also give Coca- Cola an
opportunity for growth, through new product launch or greater penetration of existing
markets.
Stronger international operations increase the companys capacity to penetrate
international markets and also gives it an opportunity to diversity its revenue stream.
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reach 60 million or almost 18% of the total US population. The economic influence of
Hispanics is growing even faster than their population. Nielsen Media Research estimates
that the buying power of Hispanics will exceed $1 trillion by 2008- a 55% increase over
2003 levels. Coca-Cola has extensive operations and an extensive product portfolio in the
US.
The company can benefit from an expanding Hispanic population in the US, which would
translate into higher consumption of Coca-Cola products and higher revenues for the
company.
3.3.4. THREATS
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manufacture or distribute their own products or certain products of other beverage
companies.
If Coca-Cola is unable to provide an appropriate mix of incentives to its bottling partners,
then the partners may take actions that, while maximizing their own short-term profits,
may be detrimental to Coca-Cola. These bottlers may devote more resources to business
opportunities or products other than those beneficial for Coca-Cola. Such actions could,
in the long run, have an adverse effect on Coca-Colas profitability. In addition, loss of
one or more of its major customers by any one of its major bottling partners could
indirectly affect Coca-Colas business results. Such dependence on third parties is a weak
link in Coca-Colas operations and increases the companys business risks.
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Coca Cola being the multinational and reputed organization apply all the good traits of
planning, organizing, leading and controlling from top to bottom. When we look at the
planning procedure of the Coca Cola it runs very smoothly in every department. There is
very well integrated effort of all the department of the organization to organize and
control an individual for a particular task. its forecasting planning system is according to
the company requirements in which each department has to justify the employees it
required in the Annual Business Plan of the year.
Taking about organizing and controlling all the work done by their respective
departments as the company is divided in different departments planning starts (strategic
planning) from top authority and afterwards organizing and leading and controlling is
done as per the requirements of each and every department
5 Recommendation
Coca cola is a multinational company and running their business successfully. Americans
took over the organization in 2000. They introduced many advantageous programs to the
employees which were very lucrative such as life insurance, health and safety insurance
and many other reward-giving policies. But there are some draw backs in there
organization, these are:
Coca cola does not use advertisement media extensively as most of the jobs are
filled by
referrals and unsolicited applications files. Unsolicited applications files are good
approach but most of the people do not know about such methods.
Coca cola does not hire fresh graduates at middle level management, this creates
bad Image of the organization. They should hire fresh graduates as it may give
them new and fresh ideas.
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To some extend they include the lower management staff in decision mailing so
their
should be De-centralized structures of planning to some extend.
Their should be proper communication cycle from top to bottom employees so
their should be no chance of miscommunication.
And at the end their should be proper motivational practices should be implement
to increase the moral of employees so they work more efficiently.
The Coca-Cola Company has a high level of uncertainty when it comes to
the raw materials it uses. For a few of the ingredients, the company only has
one or two viable suppliers. This could be extremely problematic for a variety of
reasons. Another problem could arise if a supplier experiences an event that
economically devastates them. If a supplier goes bankrupt, or is in some type of
natural disaster, the Coca- Cola Company would suffer greatly as well.
The Coca-Cola Company can improve and secure relationships with suppliers.
The most optimal method would be to use backward vertical integration and
purchase a supply.
6 Conclusions
This report gives complete briefing about all the planning process carried
out in an Organization.
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REFERENCES:
o www.Companies.Online.com
o www.Wikipedia.com
o www.cocacola.com
o www.world.book.com
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