Coca Cola in 2004: The crisis of leadership Introduction The Coca-Cola Company (Coca-Cola, or popularly called Coke) was the largest aerated beverage manufacturer in the world. Based in Atlanta, Coca-Cola recorded sales of $21 billion and profits of $4 billion in 2003. Coca-Cola was one of the most global companies. Its subsidiaries operated in about 200 countries. In 2003, $12.43 billion of sales and $3.8 billion of profits came from its international operations. The flagship brand, Coca-Cola, was arguably the world’s most valuable brand contributing to nearly 70% of Coke’s total sales. Worldwide, Coca-Cola had two of the three top-selling soft drinks, Coca-Cola Classic (No.1) and Diet Coke (No. 3), with Pepsi at No. 2. Under CEO Roberto Goizueta, Coke seemed to have reached the height of its glory. But after Goizueta’s death in 1997, the company’s competitive position had weakened significantly. Coke would shortly be having its third CEO in seven years. The crisis of leadership seemed to have taken its toll on the company’s performance. Coke’s governance, particularly the functioning of the board had come in for sharp criticism. Background Note Early History The original formulation of Coca-Cola was developed by Dr. John Pemberton, an Atlanta-based pharmacist in 1886. The formulation was based on a combination of oils, extracts from coca leaves (cola nut) and other additives that together created a stimulating drink. Pemberton’s book keeper, Frank Robinson, suggested that the product be named ‘Coca-Cola’ and developed a way of lettering Coca-Cola in a distinctively flowing script. On May 8, 1886, Coca-Cola went on sale for the first time. The first Coca-Cola advertisement appeared in ‘The Atlanta Journal’ on May 29, 1886. The product slowly gained acceptance after a heavy outpouring of free sample drinks. In 1888, after Pemberton’s death, Asa Candler, a wholesaler druggist and an old friend of Pemberton purchased a stake in the company. Sensing the business potential, Candler decided to wind up his drug business and devote himself fully to the Coca-Cola business. As the business expanded, Candler also increased the advertising outlay. By 1891, the complete control of Coca-Cola had passed to Candler. In 1892, Candler formed ‘The Coca-Cola Company.’ A year later, he registered ‘Coca-Cola’ as a trademark. Only Candler and his associate Robinson knew the formula. It was then passed on by word of mouth and became known as the ‘most closely guarded secret in American industry’. Despite occasional rumors, the company maintained that

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cocaine was not an ingredient in the formula of Coca-Cola. While Robinson concentrated on the creation and development of advertisements, Candler modified the original formulation developed by Pemberton. Sales grew rapidly from 20,000 gallons in 1891 to 76,244 gallons in 1895, thanks to heavy advertising. By 1895, Coca-Cola was being sold in all parts of the US, primarily through distributors and fountain owners. Coca-Cola had initially been positioned as a drink, which relieved mental and physical exhaustion, and cured headaches. Later, Candler and Robinson repositioned Coca-Cola as a refreshment drink. In the late 1890s, Coca-Cola expanded its sales network, moving into cities such as Dallas (1894), Chicago (1895) and Philadelphia (1897). By 1904, there were over 120 manufacturing facilities covering almost every state. When imitators emerged, the company took them to court for infringement of trademark and patent rights. After winning the legal battles, Coca-Cola emerged as the dominant player in the industry. The term cola was, however, ruled to be generic and other competitors were free to use it. The Robert Woodruff Era In 1919, Coca-Cola was sold to an investment group headed by Ernest Woodruff for $25 million. The takeover took place at a time when post-war inflation had increased the price of sugar by 400% leading to a dispute with bottlers over the fixed price of syrup in their contracts. A weak sales force had also contributed to the sales decline. In 1923, Ernest asked his son, Robert Woodruff to take charge. He later became known as ‘Mr. Coke’, ‘Mr. Anonymous’, and the ‘Boss’. Robert Woodruff believed in a simple product line. He also emphasized the development of systems and procedures. A Marketing Research department began to take shape. Woodruff took steps to ensure that every bottle of Coca-Cola tasted exactly the same. Bottlers who refused to fall in line were bought out. Woodruff began efforts to make Coca-Cola as popular overseas as it was in the US. While expanding in foreign markets, Coca-Cola faced several problems. It had to initially rely on local bottlers who did not promote the product aggressively, or on wealthy entrepreneurs who were unfamiliar with the beverages business. Government regulations, trademarks registration, language and culture were some of the other problems, which Coca-Cola faced. By 1927, Coca-Cola’s sales had climbed steadily to nearly 23 million gallons. The company’s strong financials enabled it to survive the stock market crash of 1929. Despite the ‘Great Depression’, Coke flourished even as many reputed corporations languished. Even though Pepsi Cola emerged as a major competitor to Coke in the 1930s, Coca-Cola remained well ahead. By the time the US entered the Second World War, Coca-Cola was over fifty years old and well established.

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Paul Austin’s Tenure In 1962, Paul Austin became Coke's tenth president and, four years later, was appointed chairman and CEO. One of Austin’s first initiatives was to launch a diet drink. By 1965, soft drink sales had risen to 200 drinks per capita in the US, and Coca-Cola’s market share had risen to 41% against Pepsi’s 24%. In 1964, Coke also acquired a coffee business. The company developed drinks with new flavors and targeted food chains, which were fast gaining in popularity. Austin launched new initiatives to popularize Coca-Cola in the erstwhile communist bloc countries. In spite of numerous political problems, Coca-Cola continued to perform well in the 1960s. By 1969, sales had reached $1.3 billion and profits $121 million. Coca-Cola was being sold in 135 countries. In the 1970s, Coke had to face stiff competition from Pepsi. Coke’s performance continued to decline in the late 1970s as the company moved into new businesses such as shrimp farming, water projects and viniculture. Political and social unrest in countries like Iran, Nicaragua and Guatemala also took a heavy toll on Coca-Cola’s market share. During the period 1977-79, the Coca-Cola stock declined in value despite a 2 for 1 stock split in 1977. After adjusting for inflation, the company grew at the rate of 5% in the 1970s. The poor performance of Coca-Cola and the increasing frustration of the employees, led to the intervention of Robert Woodruff. ‘The Boss’ nominated Roberto Goizueta, a 48-year-old chemical engineer of Cuban origin, as the new CEO. Roberto Goizueta After becoming CEO in 1980, Goizueta nominated Don Keough as his chief operating officer (COO). Keough had been a contender for the top post, but lost out to Goizueta. From the beginning, Goizueta was gracious. He remarked1,

"The day of the one-man band is gone. It would be absolutely a crime for me to try to lead the bottlers the way Don Keough can. I would look like a phony.... My job is to pick the people, then give them the responsibility and authority to get the job done."

Over the next dozen years, Goizueta and Keough formed one of the most effective senior management teams in corporate history. They seemed to complement each other well. Goizueta was happy to operate from the company headquarters in Atlanta. Keough liked to travel, meet customers and entertain audiences. Keough adored the

1 Patricia, Sellers; Lisa, Munoz. “Who's In Charge Here?” Fortune, 24th December 2001, pp.70-76.

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limelight, and Goizueta, seemed happy to share it. But according to media reports2, behind the scenes, it was a delicate balancing act of big egos. Keough wanted more credit for the company's big moves like the creation of Coca-Cola Enterprises, the company’s biggest bottler, a decision spearheaded and implemented by Douglas Ivester. Meanwhile, Goizueta got down to the task of maximizing returns for shareholders. He realised that the obsession with market share was doing little good to the company. In certain businesses, the return on capital employed (ROCE) was actually less than the cost of capital. Goizueta drafted a strategic statement, which made it clear that the company had to earn profits at ‘a rate substantially in excess of inflation’, in order to give shareholders an above average return on their investment. Most of the capital employed was equity, with an effective cost of about 16%. But all its businesses except soft drink and juices were generating a return of only 8-10% a year. Coca-Cola sold off non-performing businesses such as wine, coffee, tea, industrial water treatment, and aquaculture. On the other hand, it paid $750 million to acquire Columbia Pictures in 1982. Columbia Pictures seemed a promising acquisition. Coke believed there was a close fit between the entertainment industry and its core beverages business. Columbia had varied lines of business including motion pictures, television studios, home entertainment programs, coin operated amusement games, a music printing division, an advertising division, and a merchandising division. It also had a valuable film library. Coca-Cola was confident that the synergies identified could be used to manage assets efficiently and reduce risk in the motion pictures business, which was characterized by high production costs, unprofitable films, fluctuating box office receipts, and rapid technological change. By 1989, however, Coca-Cola realized that Columbia Pictures was not an attractive proposition and sold off its stake to Sony for $1.55 billion. While Diet Coke, introduced in 1982, was a major success, New Coke, launched in 1985, proved to be a major embarrassment for Goizueta and Coca-Cola. Goizueta, reacted fast by bringing back the old formulation as Coca-Cola Classic. Coca-Cola had another major setback in 1993, when the markets reacted violently and the stocks of big brand name companies, including Coke, tumbled, following a drastic price cut by Philip Morris in response to price undercutting by private cigarette brands. In 1997, Goizueta died of lung cancer. While he was at the helm of affairs, the firm’s value had risen from $4 billion to $145 billion. Ivester, who had been with Coke for nearly 20 years, succeeded Goizueta.

2 Betsy, Morris; Sellers, Patricia; Schlosser, Julie; Florian, Ellen; Helyar, John; Neering, Patricia.

“The Real Story,” Fortune, 31st May 2004, pp. 44-52.

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Coke under Ivester Coke managed the succession very smoothly. Many people praised Goizueta liberally for his foresight and vision in selecting Ivester for the top job. According to the Economist3,

“Robert Goizueta will be severely mourned at Coca Cola, … but he might not be missed. Strangely enough, that would be one of the greatest compliments a departed chief executive could receive… Douglas Ivester, Coke’s 50 year old president and chief operating officer, is now expected to succeed Mr Goizueta and to carry out the same strategy that has served Coke so well. Mr Goizueta deserves the credit for this smooth transition. He was responsible for succession at Coke, and his plans had been laid well in advance.”

Fortune4 also heaped lavish praise on Goizueta,

“It is indeed a tribute to Goizueta that succession at Coca Cola is, to Wall Street at least, no big deal. The consummate long-term strategist, he planned well. Ivester has been Coca Cola’s virtual CEO since 1994, when Goizueta appointed him president and chief operating officer. For the past three years, the two men have had an almost perfect partnership - Ivester managing the business and Goizueta managing big picture strategy and Coke’s marvellous relationship with the Street.”

Ivester had started his career as an auditor at Ernst and Young. He joined Coke in 1979 and spent the next 10 years in the finance function. In 1985, at the age of 37, he became the company’s CFO. Ivester demonstrated his financial engineering skills when he masterminded the consolidation and spin-off of Coke’s bottling business as Coca Cola Enterprises. Coke retained 49% of the stock for adequate management control. By doing so, Coke reduced debt drastically and removed a relatively low return asset from its books. Ivester had served overseas briefly as president of Coke’s European operations before becoming president of Coke USA in 1990. Four years later, when he was appointed as Coke’s president and COO, he had emerged as the clear successor to Goizueta. With Goizueta referring to Ivester in public as his ‘partner,’ it became clear to everyone that Ivester’s star was on the ascendant. Despite his lack of line function experience, board members felt there was no person better equipped than Ivester to take over the reins of the company. One of them, Herbert Allen5 remarked,

3 “The secrets of succession,” The Economist, 25th October 1997, Vol. 345, Issue 8040, p-73. 4 Woods, Wilton; Sellers, Patricia. “Where Coke goes from here,” Fortune, 13th October 1997, Vol. 136,

Issue 7, pp. 88-91. 5 Morris, Betsy. “Doug is it,” Fortune, 25th May 1998, Vol. 137, Issue 10, pp.70-78.

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“Ivester has been proving himself for the past 20 years at a variety of jobs. Everything he’s touched has improved dramatically. Whatever target he sets he hits.” The legendary Warren Buffet, another board member remarked6, “The one thing I can guarantee is Doug will not become complacent for five minutes.”

Ivester made it clear that he wanted rapid growth. He projected himself as a CEO who was keen on becoming fully involved in finding solutions to problems. He did not believe in isolating himself from the activities of the company. An aggressive, though introverted manager, Ivester also believed in discipline. He once remarked,7

“The highly disciplined organizations are the most creative. If you can create high discipline, in effect, you have created security and safety... We operate with a rigid control system. It is an enabler, not a restrictor.”

Ivester’s hands on style were reflected in his use of voice mails and messages, which executives were expected to reply to within a certain time frame. Ivester also had 16 senior executives reporting to him directly. He decided against a second in command since it would create another layer and distance him from the operations of the company. A series of crises Within a few months of taking over as the CEO, Ivester faced a series of set-backs. In the middle of 1997, Asian currencies went into a tail spin. Gradually, the crisis spread to other parts of the world, including Russia and Latin America. With less dollars being generated per unit of overseas currency, Coke, which generated a substantial portion of its revenues in overseas markets, faced a major decline in net income. In December 1997, Coke’s attempts to acquire Orangina, the beverages division of Pernod Ricard, a French company, fell through. The main reason seemed to be Coke’s failure to understand the magnitude of anti-Americanism in France. Many French politicians disliked the idea of Orangina being anything but French. Coke pursued the deal for too long and even made a revised bid. This dogged determination to go ahead with the deal seemed to be a strategic blunder. Coke also bungled its takeover (announced in December 1998), of Cadbury Schweppes’ beverage brands. It structured the acquisition to make it look different from a pan-European deal. This infuriated the European antitrust authorities. To get their approval

6 ibid. 7 Sellers, Patricia; Morris, Betsy. “What really happened at Coke,” Fortune, 10th January 2000, Vol. 141,

Issue 1, pp.114-116.

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for the acquisition, Coke had to give up some national markets like Germany, Italy and Spain. Another controversy in which Coke found itself was a racial discrimination suit. Black employees complained about disparities in compensation. Carl Ware, a black executive, who had been nominated to a senior post, was sidelined in a subsequent reorganization. Again, analysts felt that the issue had not been handled with sufficient sensitivity. An incident in Belgium in June 1999, involving the alleged contamination of Coke bottles, was probably the biggest crisis, which Ivester faced. He was late to visit the country and apologise to customers. European authorities were furious with Coke and rejected its technical explanation of the problem. Many European countries imposed a ban on Coke sales. The ban was lifted on June 23, 1999, but Coke’s image had taken a severe beating by then. Ivester promised to spend whatever was required to regain the confidence of European customers. He also admitted that Coke had made a mistake by not showing deference to government agencies. However, by the time he realized this, the damage had already been done. Ivester triggered off another controversy in October 1999, after an interview with a Brazilian magazine. Ivester stated that Coke was considering technology that enabled vending machines to change the prices based on atmospheric temperature. The higher the temperature, the higher the price charged. Ivester explained that there was nothing wrong in pricing a product on the basis of supply and demand. Capitalizing on this statement, rival Pepsi argued that the move would offend loyal customers and those living in warmer climates. Later, a Coke spokesman explained that the company had no intention of introducing such vending machines. Ivester’s comment, however, upset Coke executives who were managing the vending machines business. A self-made man, Ivester believed he had reached the top through brains and hard work. He resented Don Keough's interference (Keough had retired) and not appreciated the importance of being in touch with directors. Before long, fully immersed in dealing with crises in a turbulent market, Ivester had alienated European regulators, executives at big customers like Wal-Mart and Disney, and some big bottlers, including Coca-Cola Enterprises. As he raced to put out fires, he also became increasingly isolated from his own board of directors. Keough had continued to attend Coke board meetings as a consultant to Goizueta until he died. But Ivester declined to renew Keough's consulting contract. When Keough sent Ivester memos and suggestions, Ivester's replies were short, curt, and designed to keep the former executive at a distance. Making matters worse, Ivester had not done much over the years to develop a rapport with Keough's ally, Herbert Allen, either. Allen had come on to the board following the acquisition of Columbia Pictures. His company Allen & Co. became Coke's de facto investment advisor. From 1982 until 1989, the firm

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earned anywhere between $1 million and $30 million in annual fees on Coke business. But this income declined substantially in the early 90s as Ivester gained influence, and then dried up altogether in 1993, the year Keough retired. In the middle of 1999, as Coke struggled with several problems, Ivester came under attack. Fortune8 reported:

“Many people who have followed Coke over the years believe that if Goizueta were still running the company, Coke’s problems would not be festering as they are.”

Others felt that it was quite beyond Ivester to solve so many problems by himself. They pressed for a No. 2. Warren Buffett9 however, defended Ivester:

“I think it’s a mistake to designate a No. 2 to run the business. I like a CEO who does that job himself… Doug is capable of doing a lot.”

Buffett felt that in spite of the various problems facing Coke, the prospects for the company remained bright; “From an investor’s standpoint, the whole game is about realising what you’ve got, which is the world’s greatest brand. And it’s about looking at where Coke is going. People will drink more Coke every year and the company will make a little more on each serving. As a Director, the only concern is, Do you have the right people? We’ve got the right people.” A few months later, Buffett seemed to change his opinion. In December 1999, he and Allen met Ivester in Chicago, where they shared their concerns. The meeting was inconclusive, but Ivester made up his mind to submit his resignation. He called an emergency board meeting immediately and announced that he was moving out and would be replaced by Douglas Daft, a 56 year old Australian, who had spent most of his time managing Coke’s operations in Asia. When Ivester resigned, the Wall Street Journal10 quoted an analyst,

“He knew he wasn’t gaining the confidence of the people out there… It was like a pitcher who wasn’t throwing any strikes and the bases are loaded. He finally took himself out of the game.”

8 Sellers, Patricia. “Crunch Time For Coke,” Fortune, 19th July 1999, Vol. 140, Issue 2, pp.72-76. 9 Sellers, Patricia. “Crunch Time For Coke,” Fortune, 19th July 1999, Vol. 140, Issue 2, pp 72-76. 10 21st December 1999.

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According to an analyst quoted in the Financial Times11,

“At any time until now, if you lined up 100 Coca Cola people around the world and asked them who would be the senior executive to run the business over the next decade, 100 of 100 would have said Doug Ivester. This was the man to run the business.”

During Goizueta’s tenure, Coke had rewarded its shareholders handsomely. But under Ivester, return on shareholders’ equity declined from 56.5% to 35%, while market capitalisation remained stagnant. Coke under Daft Daft was virtually unknown to outsiders. The 56 year old Australian, had joined the company as a planning officer in Sydney in 1969 and had spent most of his 30 years in Asia, including a successful stint as president of Coke Japan, one of the company's biggest overseas markets. Insiders felt his success in Asia was due to his consensus-driven style and his knack for diplomacy. Having spent the bulk of his 30-year Coke career in Asia, Daft was relatively unfamiliar with the Atlanta headquarters and the power politics. Unlike Woodruff and Goizueta, Daft was low-key, unassuming and press-shy. In fact, he had been preparing for retirement when the call came. In sharp contrast to Ivester, Daft decided to take a lot of advice from Keough on a regular basis, Daft once remarked12,

"It's nice to have someone who can tell you you're a fool." While Keough was once again welcome at Coke board meetings, Allen & Co. began to advise Coke. In 2001, Allen & Co. gave Coke advice to the tune of $3.5 million; in 2002 Allen received $2.75 million. In 2003, an Allen affiliate, in which Allen’s son and Keough were both principals, received some $10 million. Meanwhile, Daft downsized the company, eliminating 5,200 jobs to cut costs. Just as Ivester had pushed out many of Keough's favorite executives, Daft got rid of Ivester’s. Daft continued to seek Keough's advice on big personnel decisions. Keough orchestrated the return of Brian Dyson, a seasoned Coke executive, from retirement. He also had a big say on whether Steve Heyer, president and COO at Turner

11 8th December 1999. 12 Betsy, Morris; Sellers, Patricia; Schlosser, Julie; Florian, Ellen; Helyar, John and Neering,

Patricia. “The Real Story,” Fortune, 31st May 2004, pp. 44-52.

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Broadcasting, could be recruited as a possible successor to Daft. According to media reports, Keough took a quick liking to him. After Heyer joined Coke, with a huge signing bonus and salary, it looked as though Daft’s days were numbered. Heyer was known to be an ambitious, scheming executive. Keough was actively involved in Coke’s attempt to buy Quaker Oats, (which owned the popular sports drink, Gatorade and offered ready-to-eat cereals) in November 2000. But the attempt turned out to be an embarrassing failure. In the three-way bidding for Quaker, Coke, represented by Allen & Co., offered an attractive deal--a stock transaction valued at more than $115 a share along with downside protection if Coke's stock were to fall. Coke insisted that Quaker break off talks with Pepsi and Danone. On Nov. 18, Quaker's board agreed to that requirement, but only if it could get assurances that Coke's board would support the deal. In a conference call, Daft and Keough assured Quaker CEO, Bob Morrison that the board had been informed of the proposed transaction and that management was committed to finalizing it and getting board approval in time for the Thanksgiving holiday. Quaker ended talks with the other contenders. But three days later, the Coke board objected to the deal. Based on his calculations, Buffett felt that giving up 10% of Coke stock for Quaker's assets did not make sense. Daft, who according to press reports, did not have a good grasp on the due diligence, did not press for the deal. Ultimately, Daft failed to win over his directors. Later, Pepsi acquired Quaker Oats. Almost two years into the job, by most accounts, Daft, unlike Ivester, had proven himself on the relationship front. He dutifully rebuilt bridges that Ivester seemed to have burned. He apologized to foreign regulators and Coke bottlers, settled a racial discrimination suit filed by black Coke employees for $188 million, and made peace with the African-American community. Daft was also particular that Coke be a good citizen. After the September 11 tragedy, the company gave $12 million, one of the largest corporate contributions, to the Red Cross, New York City and Washington D.C. Daft even refused to issue a press release. Daft's gift for building relationships was impressive. But many felt at this critical juncture, Coca-Cola needed more than diplomacy. It needed both leadership and execution. Here, they felt Daft had often failed. Daft, however, believed, he was in full control. Mid-way through his tenure, he announced that he strived to combine Don Keough's skill at building relationships with Roberto Goizueta's masterful strategic vision. The search for a new CEO

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As Daft’s retirement drew near, Coke found the search for the new CEO, more complicated than at any time in its history. The job was offered to Home Depot CEO Bob Nardelli, who said he was not interested. Steve Burke, executive vice president of Comcast, also declined. Directors also sounded Jim Kilts, CEO of Gillette. But Kilts bowed out of the running because he and his wife did not want to move to Atlanta. At the reception after Jack Welch's wedding to Suzy Wetlaufer, on April 24, 2004, Coke director and search committee member Jim Robinson, former CEO of American Express, spoke with Welch about the job. The former CEO of General Electric, showed interest but later withdrew his name. Meanwhile, the person widely considered favorite for the job, Steve Heyer, did not seem to be in consideration, as he had not fitted into the core culture. Finally Neville Isdell, a tall, charismatic former globetrotting operating executive and a favourite of Keough's, sidelined a decade ago in the race to the top was pulled out of his retirement. Isdell outlined his plans.13

"I believe there is significant future growth to be had for brand Coke. Obviously some of that will come out of new markets--the Chinas, the Indias--but there is still growth in the U.S. and Europe."

Keough looked happy:

"For the first time in 119 years, we have as the head of the Coca-Cola Co. a person who has worked on both sides of the system...He brings a fresh new perspective into the system with the experience of being a bottler and a concentrate person, having worked on five continents. . ."

The Road Ahead Coke’s competitive position seemed to have been sharply eroded in the seven years since Goizeuta’s death. The crisis of leadership had certainly contributed to this state of affairs. But one analyst14 believed that Coke’s problems ran deeper.

“Coke's fundamental problem is one that Daft inherited: His predecessor, Ivester, was fixated on deal making and financial engineering at the expense of marketing and new products. The pattern actually started under Goizueta, who, in the mid-'80s, devised a strategy of consolidating Coke's distribution system by acquiring weak bottlers and selling them to stronger ones around the world. Year after year, Goizueta delivered 17% earnings growth--magically, it seemed. In reality, Goizueta

13 Betsy, Morris. “The Real Story,” Fortune, 31st May 2004, pp. 44-52. 14 Patricia, Sellers; Lisa, Munoz. “Who's In Charge Here?” Fortune, 24th December 2001, pp.70-76.

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was chasing unrealistic growth targets and bolstering Coke's earnings with one-time gains from the sales of bottlers.”

The analyst added that hoping to perpetuate the magic, Ivester had stretched the system to its near-breaking point. He had overcharged Coke's bottlers for cola concentrate and forced them into making high-priced acquisitions. Consequently, the bottlers who were essential to Coke's success were leveraged to the hilt and earning poor returns: an average 5% on invested capital. Meanwhile, many analysts believed that Coke’s way of functioning was far from transparent. As the same analyst quoted earlier, put it,

“It's worth observing that power at the top can be deceptive, particularly at Coca-Cola”. In 1980, when CEO Paul Austin was supposedly running the company…former chairman Robert Woodruff was the one actually making the big calls. Seventeen years later, Austin's successor, Roberto Goizueta, was ill with cancer; few people knew that Ivester was essentially running Coke for at least a year before Goizueta died. And then, when Ivester moved up, he thought he had the power--but he failed to cultivate the board and Keough, and learned the hard way that he didn't have the power after all…. Power at this company can be as mysterious as the secret formula itself.

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Figure (i) Net Operating Revenues

Source: Annual Report 2003. Figure (ii) 2003 Worldwide Net Operating Revenues

Source: Annual Report 2003.

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Figure (iii) Diluted Net Income Per share

Source: Annual Report 2003. Figure (iv) 2003 Worldwide Unit Case Volume

15

Source: Annual Report 2003. Figure (v) Constant Innovation

Source: Annual Report 2003.

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Figure (vi) Year-End Market Value of Common Stock (dollars in billions)

Source: Annual Report 2003. Figure (vii) Worldwide Annual Per Capita Consumption of Company Products: 74

Source: Annual Report 2003.

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Figure (viii) Unit Case Volume (in billions)

Source: Annual Report 2003. Exhibit: I Segment Information

Source: Annual Report 2003. Exhibit: II Geographical Net Operating Revenues

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Source: Annual Report 2003. Exhibit: III Revenues

Source: Annual Report 2003. Exhibit: IV Segment Products and Services

Source: Annual Report 2003.

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Exhibit: V Financial Highlights

20

Source: Annual Report 2003. Bibliography

21

1. Woods, Wilton; Sellers, Patricia. “Where Coke goes from here,” Fortune,

13th October 1997, Vol. 136, Issue 7, pp. 88-91.

2. “The secrets of succession,” The Economist, 25th October 1997, Vol. 345,

Issue 8040, p-73.

3. “Roberto Goizueta,” The Economist, 25th October 1997, Vol. 345, Issue

8040, p-97.

4. Morris, Betsy. “Doug is it,” Fortune, 25th May 1998, Vol. 137, Issue 10, pp

70-78.

5. Sellers, Patricia. “Crunch Time For Coke,” Fortune, 19th July 1999, Vol.

140, Issue 2, pp 72-76.

6. Financial Times, 8th December 1999.

7. Wall Street Journal, 21st December 1999.

8. Sellers, Patricia; Morris, Betsy. “What really happened at Coke,” Fortune,

10th January 2000, Vol. 141, Issue 1, pp. 114-116.

9. Patricia, Sellers; Lisa, Munoz. “Who's In Charge Here?” Fortune, 24th

December 2001, pp. 70-76.

10. Betsy, Morris; Sellers, Patricia; Schlosser, Julie; Florian, Ellen; Helyar,

John; Neering, Patricia. “The Real Story,” Fortune, 31st May 2004, pp. 44-

52.

11. Company Annual Reports.

12. www.cocacola.com

13. www.hoovers.com

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