sm 2nd term

7/28/2019 SM 2ND TERM

1/37

GLOBAL CHALLENGES IN STRATEGIC MANAGEMENT OF COCA- COLA COMPANY

1

K. M. AGRAWAL COLLEGE OF ARTS, COMMERCE AND SCIENCE.

TABLE OF CONTENTS

CHAPTER 1 : INTRODUCTION

1. EXECUTIVE SUMMARY............................22. OBJ OF THE STUDY.23. IMPORTANCE OF THE STUDY.34. RESEARCH METHODOLOGY.3

CHAPTER 2 : CONCEPTUAL FRAMEWORK OF THE TOPIC

5. STRATEGIC MANAGEMENT.4CHAPTER 3 : COMPANY PROFILE : COCA COLA LTD

6. COCA COLA COMPANY OVERVIEW.107. GLOBAL CHALLENGES IN STRATEGIC MANAGEMENT IN COCA COLA..18

CHAPTER 3: FINDINGS

8. FINDINGS.349. CONCLUSION3610.BIBLIOGRAPHY...37

7/28/2019 SM 2ND TERM

2/37


2


Executive Summary

A global perspective is a matter of survival for businesses. Strategic management is

the process of specifying an organization's objectives, developing policies and plans

to achieve these objectives, and allocating resources so as to implement the plans.

The Coca-Cola Company (Coca-Cola) is a leading manufacturer, distributor and

marketer of Non-alcoholic beverage concentrates and syrups, in the world. The

company owns or licenses more than 400 brands, including diet and light beverages,

waters, juice and juice drinks, teas, coffees, and energy and sports drinks. The

company operates in more than 200 countries. Coca-Cola Enterprises is the world's

largest marketer, producer and distributor of Coca-Cola products. It operates in 46

U.S. states and Canada, and is the exclusive Coca-Cola bottler for all of Belgium,

continental France, Great Britain, Luxembourg, Monaco and the Netherlands. Coca-

Cola is the non alcoholic bottled beverages.

OBJECTIVES OF THE STUDYEvery successful study should have specified and well-defined objectives. A careful

statement of the objective helps in preparing a well-decorated report facilitatingothers to take decision on it. The specific objectives of the study are to have

knowledge about-

To know about the strategic management issues of multinationalcompanies. i.e coca cola ltd.

To know about the strategies of the multinational companies To characterize the challenges of international strategic management To know about the international strategic management process To identify and characterize the levels the international management

strategies

To know about the Coca-Cola Companys strategies management process.
http://www.economicexpert.com/a/Organization.htmhttp://www.economicexpert.com/a/Organization.htm

7/28/2019 SM 2ND TERM

3/37


3


Importance OF THE STUDY

This study has focused upon the Management Issues those are followed by the Coca-

Cola Company for capturing the global market. Through our report we try to findout the global challenges of International Strategic Management to assess the basic

strategies, describe the international strategic management process of Coca-Cola

Company. We hope this study will help to whom, who want to know more clearly

about strategic management, its issues as well as the key factors which affect the

process of Internationalization for a company.

RESEARCH METHODOLOGYI have examine secondary data of which related to the Strategic Management Issues

at the global based Market. Data are collected on various issues from annual report

of Coca-Cola Company (2005-2009). In our report we analysis the monthly,

quarterly, half-yearly news Review of this company. Based upon this data we like to

analysis the Economic Review, Statistical Strategic condition of the Coca-Cola

Company. Both the official and regional website helps us to find out more related to

the issues with the global market. Form those huge data we take the necessary and

used them for the analysis. Our analysis data are clearly represented in our main

part of the report through relevant chart, graph with proper description.

7/28/2019 SM 2ND TERM

4/37


4


Definition of Strategic Management

Strategic management is the process of specifying an organization's objectives,

developing policies and plans to achieve these objectives, and allocating resources

so as to implement the plans. It is the highest level of managerial activity, usually

performed by the company's Chief Executive Officer (CEO) and executive team. It

provides overall direction to the whole enterprise.

International strategic management is a comprehensive and ongoing management

planning process aimed at formulating and implementing strategies that enable a

firm to complete effectively internationally. The process of developing a particular

international strategy is often referred to as strategic planning. Strategic

Management is the study of function and responsibilities of senior management.
http://www.economicexpert.com/a/Organization.htmhttp://www.economicexpert.com/a/Chief:Executive:Officer.htmhttp://www.economicexpert.com/a/Team.htmhttp://www.economicexpert.com/a/Team.htmhttp://www.economicexpert.com/a/Chief:Executive:Officer.htmhttp://www.economicexpert.com/a/Organization.htm

7/28/2019 SM 2ND TERM

5/37


5


Five Essential Parts of Strategic Management

Goal-setting

Goal-setting enables a firm to articulate its vision: identify what needs to be

accomplished, define short-and long-term objectives, and relate them to what theorganization needs to do.

Analysis

Analysis guides to collect and consider information so that a firm understands the

situation. Assess external environments and internal situations to identify the

strengths and weakness of the organization and the opportunities and threats face

to reach the goals.

Strategy FormulationTo determine a strategy, the firm reflects prioritize, develop options, and make

decisions. Review the results of the analysis, identify the issues that a firm

implementing partners need to address, and prioritize them in terms of their

urgency and magnitude. Use these results to design alternative strategies and plans

that address the key strategic issues.

Strategy Implementation

To implement the strategy, assemble the necessary resources and apply them. Put

the chosen plans into practice, marshal the resources and commitments necessary

for moving ahead, tap existing capacity and/or build new capacity, and seek to

achieve results.

Strategy Monitoring

Monitoring allows checking the progress toward achieving the firms goals andassessing whether any changes in the environment necessitate alternatives to the

firms strategy. Modify plans and actions to adjust to the impact of changing in the

operating environment.

7/28/2019 SM 2ND TERM

6/37


6


SIGNIFICANCEOF STRATEGIC MANAGEMENT

Strategic management integrates the knowledge and experience gained in various

functional areas.

It helps to understand and make sense of complex interaction in various areas ofmanagement.

It helps in understanding how policies are formulated and in creating appreciation

of complexities of environment that the senior management faces in policy

formulation.

Managers need to begin by gaining an understanding of the business environment

and to in control.

They should know to manage and understand information technology, which is

changing the face of business.

As public and common investors own and more companies managers need to

acquire skills to maximize shareholder value.

To have/take a strategic perspective, managers should foresee the future and track

changes in customer expectation. Intuitive, logic reasoning is required for proper

decision-making.

As corporate are becoming more integrated with the public life, corporate

governance is becoming important which manager may have to practice.

To the shape the Future of

business

Effective strategic idea

Mangers and employer are

innovative and creative

Its decentralized theManagement

Its helps to increase the

productivity

To Makes discipline

To make control

To makes forward s thinking

SignificanceofS

trategic

Management

7/28/2019 SM 2ND TERM

7/37


7


Challenges in Strategic Management Decision Making

While making a decision the company might have different people at different

periods of time.

Decision requires judgments; personal related factors are important in

decision-making. Hence decision ma y differs as person change.

Decisions are not taken individually, but often there is a task in decisions

which could be Individual Vs Group decision making. There will be a

difference between the individual and group decision-making.

On what Criteria a company should make its decision, for evaluation of the

efficiency & effectiveness of the decision making process, a company has to

set its objectives which serves as main bench mark.

3 Major Criteria in decision Making are---

a. The concept of Maximization.b. The concept of satisfying.c. The concept of instrumentalism.

Based on the concept chosen the strategic decisions will differ.

Generally decision-making process is logical and there will be rationality in

decision-making.

When it comes to Strategic decision making point of view there would be

proper evaluation & then exercising a choice from various available

alternative resources, which leads to attain the objectives in a best possible

way.

Creativity in decision-making is required when there is a complete situation &

the Decision taken must be original & different.

There could be variability in decision-making based on the situation &

Circumstances.

International strategic management results in the development of various

international strategies, which are comprehensive frameworks for achieving a firmsfundamentals goals. Conceptually, there are many similarities between developing a

strategy for competing in a single country and developing one for competing in

7/28/2019 SM 2ND TERM

8/37


8


multiple counties. In both cases, the firms strategic planners must answer the samefundamental questions

What products and/or services does the firm intend to sell?

Where and how will to make those products or services?

Where and how will it sell them?

Where and how will it acquire the necessary resources?

How does it expect to outperform its competitors?

But developing an international strategy is far more complex than developing a

domestic one. Because managers developing a strategy for a domestic firm must

deal with one national government, one currency, one accounting system, one

political and legal system and usually a single language and a comparativelyhomogeneous culture. But managers responsible for developing a strategy for an

international firm must understand and deal with multiple governments, multiple

currencies, multiple political and legal system, and variety of language and cultures.

Various Roles of Strategic Management

Senior management plays n important role in Strategic Management.

Role of Board of Directors: Board of Directors is the supreme Authority in a

company. They are the owners/ shareholders/ lenders. They are the ones who

direct and responsible for the governance of the company. The Company act and

other laws blind them and their actions & they sometimes do get involved in

operational issues. Professionals on the B.O.D help to get new ideas, perspectives

and provide guidance. They are the link between the company and the environment.

Role of C.E.O: Chief Executive Officer is the most important Strategist and

responsible for all aspects from formulations/Implementation to review of Strategic

Management. He is the leader, motivator & Builder who forms a link between

company and the board of directors and responsible for managing the external

environment and its relationship.

Role of Entrepreneur: They are independent in thought and action and they set /

start up a new business. A Company can promote the entrepreneurial spirit and this

7/28/2019 SM 2ND TERM

9/37


9


can be internal attitude of an organization. They provide a sense of direction and are

active in implementation.

Role of Senior Management: They are answerable to B.O. Directors and The C.E.O

as they would look after Strategic Management a responsible of certain areas / parts

of terms.

Role of SBU Level Executives: They Co-ordinate with other SBUs & with SeniorManagement. They are more focused on their product / burners line.

They are more on the implementation role.

Role of Corporate Planning Staff: It provides administrative support tools and

techniques and is a Co-ordinate function.

Role of Consultant: Often Consultants may be hired for a specified new business orExpertise even to get an unbiased opinion on the business & the Strategy.

Role of Middle Level Managers: They form an important link in strategizing &

Implementation. They are not actively involved in formulation of Strategies and they

are developed to be the future management.

7/28/2019 SM 2ND TERM

10/37


10


COMPANY OVERVIEW

The Coca-Cola Company (Coca-Cola) is a leading manufacturer, distributor and

marketer of Non-alcoholic beverage concentrates and syrups, in the world. The

company owns or licenses more than 400 brands, including diet and light beverages,

waters, juice and juice drinks, teas, coffees, and energy and sports drinks. The

company operates in more than 200 countries. Approximately 74% of its products

are sold outside of the US. The company is headquartered in Atlanta, Georgia and

employs 71,000 people as of September 2006.The company recorded revenues of

$24,088 million during the fiscal year ended December 2006, an increase of 4.3%

over 2005. The increase in revenue was primarily due to increase in sales of Unit

cases of companys products from approximately 20.6 billion unit cases of the

companys Products in 2005 to approximately 21.4 billion unit cases in 2006, theincrease in the Price and Product/geographic mix also boosted the revenue growth.

The company-wide gallon sales and unit case volume both grew 4% in 2006 when

compared to 2005. The operating profit of the company was $6,308 million during

fiscal year 2006, an increase of 3.7% over 2005. The net profit was $5,080 million in

fiscal year 2006, an increase of 4.3% over 2005.

HISTORY OF COCA-COLA

Coca-Cola was first introduced by John Smyth Pemberton, a pharmacist, in the year1886 in Atlanta, Georgia when he invented caramel-colored syrup in a three-legged

brass kettle in his backyard. He first distributed the product by carrying it in a jugdown the street to Jacobs Pharmacy and customers bought the drink for five centsat the soda fountain. Carbonated water was teamed with the new syrup, whether by

7/28/2019 SM 2ND TERM

11/37


11


accident or otherwise, producing a drink that was proclaimed delicious andrefreshing, a theme that continues 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 eventoday. He suggested that the two Cs would look well in advertising. The firstnewspaper 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 clothsigns reading Coca-Cola appeared on store awnings, with the suggestions Drinkadded to inform passersby that the new beverage was for soda fountain

refreshment.

By the year 1886, sales of Coca-Cola averaged nine drinks per day. The first year, Dr.

Pemberton sold 25 gallons of syrup, shipped in bright red wooden kegs. Red hasbeen a distinctive color associated with the soft drink ever since. For his efforts, Dr.

Pemberton grossed $50 and spent $73.96 on advertising.

Dr. Pemberton never realized the potential of the beverage he created. He gradually

sold portions of his business to various partners and, just prior to his death in 1888,

sold his remaining interest in Coca-Cola to Asa G. Candler, an entrepreneur from

Atlanta.

By the year 1891, Mr. Candler proceeded to buy additional rights and acquire

complete ownership and control of the Coca-Cola business. Within four years, his

merchandising flair had helped expand consumption of Coca-Cola to every state and

territory after which he liquidated his pharmaceutical business and focused his full

attention on the soft drink. With his brother, John S. Candler, John Pembertonsformer partner Frank Robinson and two other associates, Mr. Candler formed a

Georgia corporation named the Coca-Cola Company. The trademark Coca-Cola,used in the marketplace since 1886, was registered in the United States Patent

Office on January 31, 1893.

The business continued to grow, and in 1894, the first syrup manufacturing plant

outside Atlanta was opened in Dallas, Texas. Others were opened in Chicago, Illinois,

and Los Angeles, California, the following year. In 1895, three years after The Coca-

Cola Companys incorporation, Mr. Candler announced in his annual report to shareowners that Coca-Cola is now drunk in every state and territory in the UnitedStates.

7/28/2019 SM 2ND TERM

12/37


12


As demand for Coca-Cola increased, the Company quickly outgrew its facilities. A

new building erected in 1898 was the first headquarters building devoted

exclusively to the production of syrup and the management of the business. In the

year 1919, the Coca-Cola Company was sold to a group of investors for $25 million.Robert W. Woodruff became the President of the Company in the year 1923 and his

more than sixty years of leadership took the business to unsurpassed heights of

commercial success, making Coca-Cola one of the most recognized and valued

brands around the world.

HISTORY OF BOTTLING

Coca-Cola originated as a soda fountain beverage in 1886 selling for five cents a

glass. Early growth was impressive, but it was only when a strong bottling system

developed that Coca-Cola became the world-famous brand it is today.

Year 1894: A modest start for a bold idea

In 1894 the Coca-Cola Company is in a candy store in Vicksburg, Mississippi, brisk

sales of the new fountain beverage called Coca-Cola impressed the store's owner,

Joseph A. Biedenharn. He began bottling Coca-Cola to sell, using a common glass

bottle called a Hutchinson. Biedenharn sent a case to Asa Griggs Candler, who

owned the Company. Candler thanked him but took no action. One of his nephews

already had urged that Coca-Cola be bottled, but Candler focused on fountain sales.

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.
http://www.kijikiji.com/english/coca/panama.htmhttp://www.kijikiji.com/english/coca/panama.htmhttp://www.kijikiji.com/english/coca/bangladesh.htmhttp://www.kijikiji.com/english/coca/panama.htmhttp://www.kijikiji.com/english/coca/bangladesh.htmhttp://www.kijikiji.com/english/coca/panama.htmhttp://www.kijikiji.com/english/coca/bangladesh.htmhttp://www.kijikiji.com/english/coca/panama.htmhttp://www.kijikiji.com/english/coca/bangladesh.htmhttp://www.kijikiji.com/english/coca/panama.htmhttp://www.kijikiji.com/english/coca/bangladesh.htm

7/28/2019 SM 2ND TERM

13/37


13


Our mission declares our purpose as a company. It serves as the standard againstwhich we weigh our actions and decisions. It is the foundation of our Manifesto.

To refresh the world in body, mind and spirit

To inspire moments of optimism through our brands and our actions

To create value and make a difference everywhere we engage.

To create consumer products, services and communications, customer service andbottling system strategies, processes and tools in order to create competitiveadvantage and deliver superior value to;

Consumers as a superior beverage experience

Consumers as an opportunity to grow profits through the use of finished drinks

Bottlers as an opportunity to grow profits in volumes

Bottlers as a trademark enhancement and positive economic value added

Suppliers as an opportunity to make reasonable profits when creating real value-

added in an environment of system-wide team work, flexible business system

and continuous improvement

Indian society in the form of a contribution to economic and social development.Refresh the World... In body, mind, and spirit

Inspire Moments of Optimism... Through our brands and our actions

Create Value and Make a Difference... Everywhere we engage.

MISSION OF COCA-COLA COMPANY

VISION OF COCA-COLA COMPANY

7/28/2019 SM 2ND TERM

14/37


14


Our vision guides every aspect of our business by describing what we need to

accomplish in order to continue achieving sustainable growth.

People: Being a great place to work where people are inspired to be the best theycan be.

Portfolio: Bringing to the world a portfolio of quality beverage brands thatanticipate and satisfy people's desires and needs.

Partners: Nurturing a winning network of customers and suppliers, together wecreate mutual, enduring value.

Planet: Being a responsible citizen that makes a difference by helping build andsupport sustainable communities.

Profit: Maximizing long-term return to shareowners while being mindful of our

overall responsibilities.

Coca-Cola Company follows different quality standard for different countries across

the globe. Coca-Cola Company has a long-standing commitment to protecting the

consumers whose trust and confidence in its products is the bedrock of its success.

In order to ensure that consumers stay informed about the global quality of all Coca-

Cola products sold in World, Coca-Cola products carry a quality assurance seal on

them. The One Quality Worldwide assurance seal appears on the entire range ofCoca-Cola Companys beverages.

VISION FOR SUSTAINABLE GROWTH

QUALITY POLICY

7/28/2019 SM 2ND TERM

15/37


15


BRANDS OF COCA-COLA

Coca-Cola Zero has been one of the most successful product launch

hes in Coca-Colas history. In 2007, Coca Colas sold nearly 450 millioncases globally. Put into perspective, that's roughly the same size as

Coca Colas total business in the Philippines, one of our top 15markets. As of September 2008, Coca-Cola Zero is available in more

than 100 countries.

Energy Drinks

For those with a high-intensity approach to

life, Coca Colas brands of Energy Drinkscontain ingredients such as ginseng extract,

guarana extract, and caffeine and B vitamins.

Juices/Juice Drinks

We bring innovation to the goodness of juice

in Coca Colas more than 20 juice and juicedrink brands, offering both adults and

children nutritious, refreshing and flavorful

beverages

Soft Drinks

Coca Colas dozens of soft drink brandsprovide flavor and refreshment in a variety

of choices. From the original Coca-Cola to

most recent introductions, soft drinks from

The Coca-Cola Company are both icons andinnovators in the beverage industry.

7/28/2019 SM 2ND TERM

16/37


16


Sports Drinks

Carbohydrates, fluids, and electrolytes team

together in Coca Colas Sports Drinks,providing rapid hydration and terrific taste for

fitness-seekers at any level

Tea and Coffee

Bottled and canned teas and coffees provide

consumers' favorite drinks in convenient

take-anywhere packaging, satisfying both

traditional tea drinkers and today's growing

coffee culture.

Water

Smooth and essential, our Waters and Water

Beverages offer hydration in its purest form.

Other Drinks

So much more than soft drinks, Coca Colasbrands also include milk products, soup, and

more so you can choose a Coca Cola Company

product anytime, anywhere for nutrition,

refreshment or other needs.

7/28/2019 SM 2ND TERM

17/37


17


CONSUMER CHOICE AT A GLANCE

Factors affecting the strategic management issues

Limca

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

7/28/2019 SM 2ND TERM

18/37


18


Table 1: GLOBAL CHALLENGES IN STRATEGIC MANAGEMENT IN COCA COLA LTD

Language English used as a

second language

Use the local language required in many

situations

Culture Relatively homogenous Quite diverse, both between countries andwithin countries

Politics Unstable Often volatile and of decisive importance

Economy Underdeveloped Wide variations among countries and amongregions within countries

Governmental

interference

Reasonably predictable Often extensive and subject to rapid change

Labor Skilled labors are notavailable

Skilled labors often scarce, requiringtraining or redesign of production methods

Financing Moderately developedfinancial markets

Often poorly developed financial markets;capital flows subject to government control

Market research Data collect is not veryeasy

Sometimes data difficult and expensive tocollect

Advertising Media are availablewith some restrictions

Media limited; many restrictions; lowliteracy rates rule out print media in somecountries

Money Must change from one currency to another

Transportations It is not developed Often adequate

Control Always a problem A worse problem

Labor relations Collective bargaining,

layoff of workers

Layoff of workers often not possible; may

have mandatory worker participation inmanagement; workers may seek change

through political process rather than

collective bargaining

7/28/2019 SM 2ND TERM

19/37


19


There are some factors which affect strategic of Coca-Cola Company in case of

international operation. Language is one of the main considerations when it does

business domestically, they generally domestic language. But when it does business

outside the country it follows Polycentric policy that is it used different language indifferent countries. Side by side culture is relatively homogeneous in domestic

operation and quite diverse, both between countries and within countries. Political

stability and policy also be considered by the Coca-Cola Company. Control function

is done by centrally in case of domestically but when it goes beyond outside, it must

work a tightrope between over centralizing and losing control to much

decentralizing. Labor is another consideration because their skills and collective

bargaining that is labor relation differ from country to country. Advertising in

domestic country is very easy because domestic cultures are known to them. But in

case of international operation it faces many problems for advertising such as

shortage of media, huge advertising cost and so forth. However economy is

relatively uniform in domestics country but outsides, it faces wide variation amongcountries and among region within country. In case of Coco-Cola Company the

market research data is easy to collect but when it goes to foreign sometimes face

Language Culture Politics Economy Government Labor

Financing Market Money Control Advertising Contracts

Transportation and Communication Labor Relations

Global Challenges in Strategic

Management IN COCA COLA LTD

7/28/2019 SM 2ND TERM

20/37


20


difficult and expensive to collect data. At last we see that government interference in

case of domestically, it is minimal and reasonably predictable but in international

operation it is often expensive and subject to rapid change.

Strategic Alternatives of Multinational CompaniesMultinationals corporations typically adopt one of four strategic alternatives in their

attempt to balance the three goals of global efficiencies, multinational flexibility, and

worldwide learning. There four strategies are as follows

Home Replication Strategy

In this strategy, a firm utilizes the core competency or firm-specific advantage it

developed at home as its main competitive weapon in the foreign markets that it

enters. That is, it takes what it does exceptionally well in its home market and

attempts to duplicate it in foreign markets.

Multi-domestic Strategy

It is the second alternative available to international firm. A multi-domestic

corporation views itself as a collection of relatively independent operating

subsidiaries, each of which focuses on a specific domestic market.

Global Strategy

It is the third alternative available for international firms. A global corporations

views the world as a single marketplace and has as its primary goal the creation of

standardized goods and services that will address the needs of customers

worldwide.

Transnational Strategy

The transnational corporation attempts to combine the benefits of global scale

efficiencies with the benefits of local responsiveness.

7/28/2019 SM 2ND TERM

21/37


21


Strategies for Coca Cola Company

These four strategy are shown in the following figure

From these four strategies Coca-Cola Company follow the Multi-domestic strategies.

They produce their products independently in different countries. All countries

product are not same. They produce their products by following different strategy

for different countries, based on the internal and external environment of the

country. Coca-Cola Company developed their strategy by considering the nature of

the people of different countys people, culture, status and so many other relatedfactors. Behind the reasons of following of this strategy may be that, different

countries economies of scale for production, distribution, and marketing are low,

side by side cost of coordination between the parent corporation and its various

foreign subsidiaries is high. Because each subsidiary in a multi-domestic

corporation must be responsive to the local market, the parent company usually

delegates considerable power and authority to managers of its subsidiaries in

various host countries.

Home Replication

Strategy

Multi-domestic

Strategy

Transnational

StrategyGlobal Strategy

7/28/2019 SM 2ND TERM

22/37


22


Levels of Strategies followed by Coca-Cola Company

There are three levels of strategies followed by Coca-Cola Company. This may be

stated as the following

Figure: Levels of Strategies

7/28/2019 SM 2ND TERM

23/37


23


Corporate Level Strategy

Corporate level strategy attempts to define the domain of business the firm intends

to operate. Corporate level strategy fundamentally is concerned with the selection

of businesses in which the company should compete and with the development and

coordination of that portfolio of businesses. A firm might adopt any of three forms of

corporate strategy:

A single business strategy

Related diversification strategy and

Unrelated diversification strategy.

Coca-Cola Company follows related diversification strategy that is calls for the firm

to operate in several different but fundamentally related businesses. Each of its

operations linked to the others Coca-Cola characters, the Coca-Cola logo, and a

theme of wholesomeness and a reputation for providing high quality family

products. Coca-Cola Company follows this strategy because it has several

advantages. At first, the firm depends less on a single products so it is less

vulnerable to competitive or economic threats. Secondly, related diversification may

produce economies of scale for a firm. Thirdly, related diversification may allow a

firm to use technology or expertise developed in one market to enter a secondmarket more cheaply and easily. Corporate level strategies of Coca-Cola Company is

following

Figure: Corporate Strategy of Coca-Cola Company

Corporate Level Strategy of Coca-

Cola Company

Marketing

Strategies

R&D StrategiesSystem

Strategies

Reward System

Strategies

Financial

Strategies

7/28/2019 SM 2ND TERM

24/37


24


Business Unit Level Strategy

A strategic business unit may be a division, product line, or other profit center that

can be planned independently from the other business units of the firm. Corporate

strategy deals with the overall where as business strategy focuses on specific

business, subsidiaries or operating units within the firm. Business seeks to answer

the question how should we compete in each market we have chosen to enter?The firms develop unique business strategy for each of its strategic business units,

or it may pursue the same business strategy for all of them. The three basic business

strategy are differentiation, overall cost leadership and focus. Coca-Cola Company

uses the differentiation strategy effectively.

Functional Level Strategy

The functional strategies attempts to answer to question How we manage thefunction? The functional level of the organization is the level of the operatingdivisions and departments. The strategic issues at the functional level are related to

business processes and the value chain. Functional level strategies in marketing,

finance, operations, human resources, and R&D involve the development and

coordination of resources through which business unit level strategies can be

executed efficiently and effectively.

Functional units of an organization are involved in higher level strategies byproviding input into the business unit level and corporate level strategy, such as

providing information on resources and capabilities on which the higher level

strategies can be based. Once the higher-level strategy is developed, the functional

units translate it into discrete action-plans that each department or division must

accomplish for the strategy to succeed.

7/28/2019 SM 2ND TERM

25/37


25


E-COMMERCE OF COCA-COLA COMPANY

Good points of Coca-Cola Company

Brand Promotion

Attractive products selection

Look and feel 8

Provision of multimedia product, catalogue pages

Personal attention

Community relationships

Weak points of Coca-Cola Company

Performance and service: that is not easy navigation, shopping and

purchasing, and prompt shipping and delivery.

Discount pricing is not being offered.

7/28/2019 SM 2ND TERM

26/37


26


Developing International Strategies

Developing international strategies is not a one-dimensional process.. Simply put,

put strategy formulations deciding what to do and strategy implementation is

actually doing it. Firms generally carry out international strategic management intwo broad strategies-

Strategy Formulation

In strategies formulation, a firm establishes its goals and strategic plan that will lead

to the achievement of their mission goals. In international strategy formulation,

managers develop, refine, and agree on which markets of enter (or exit) and how

best to compete in each.

Strategy Implementation

A firm develops the tactics for achieving the formulated international strategies is

known as strategy implementation. Strategy implementation is usually achieved via

the organizations design, the work of its employees, and its control systems andprocesses.

Every Multinational Companies are developing their international strategies so that

they can survive in the complex business situation. Now the modern market is fully

globalized and as a result its really difficult for every multinational organization inthe right track. In such aspect the importance of strategy formulation and strategy

implementation played an important role. Side by side there is some important

process which helps in international strategy formulation.

Developing International Strategies in Aspects of Coca-Cola Company

TCCQS is the Coca-Cola systems branded quality management system. It helpscoordinate and guide our activities to ensure quality in everything they do. For

entering in to a new market and be survive in the market it always ready to copewith change. Different government policy, economic condition, political situation,

barrier and ban are associated with different market.

Coca-Cola Companys basic strategies are to develop a mission statement forentering a new market depending on a fully fledged market survey. Identifying

external and internal environment strength, weakness, opportunity, and threats is

7/28/2019 SM 2ND TERM

27/37


27


the next management strategies. Depending on the scope and opportunity the

company will go forward as well as try to resolve the weakness and threats. After

entering into a new market Coca-Cola Company try to achieve strategic goals and

guide its daily activities with proper observation.

Lastly this company establishes a control framework for controlling the managerial

and organizational systems and process as well. This company believes that, for

taking a position in a new country is fully depends on the good formulation

strategies and keeping it. To do business outside the local market is depending on

the quality control of the product and quality ensures the customer perception and

the choice for consuming this products.

Figure: Quality Management System of Coca-Cola Company

7/28/2019 SM 2ND TERM

28/37


28


Through this model, we see that the company is first take the response of customers

and consumers through market survey. Then the management accumulates the best

quality resources for making their products. This process includes-

Skilled employee involvement for production and quality control High quality materials for production Up to date technology for quality control Effective methods and newly developed strategies

They will follow some sequential steps in developing the international strategy

formulation. Those steps help the Coca-Cola Company to enter and establish their

business in multinational base. They are following multi-domestic strategies for

their produced product as well as their marketing system. The analysis of different

levels of strategic formulating of Coca-Cola Company is given below.

Developing the Mission Statement

Coca-Cola Company begins the international strategic planning process by creating a

mission statement, which clarifies the organizations purpose, value, and directions.The mission statement is often used as a way of communicating with internal and

external constituents and stakeholders about the firms strategic direction.

Mission statement of Coca-Cola Company

This company focused on driving growth in of their business in selected profitableand emerging categories. To develop, implement and continuously improve the

integrated management systems in a culture of continuous improvement which:

Directs the continual up-gradation for efficient and environment friendlymanufacturing technology.

Monitor and improve the efficiency and effectiveness of all businessprocesses.

Promotes professional and flexible work environment, teamwork andinnovation through employee participation and process ownership.

Drives customer orientation at all levels within the organization. Monitor and economize the Cost of Quality.

Comments on mission Statements

(In terms of how they support the strategies)

7/28/2019 SM 2ND TERM

29/37


29


The vision statement of this company supports the existing strategies that are

(generic strategy) that Coca Cola needs to pursue is that of differentiation. In their

current vision and mission statements, the company says it aims to be a low cost

leader, yet through their analysis of the strategic direction, the company needs toadopt a generic strategy of differentiation. This will allow Coca cola to do two

things;

1. Increase unit sales

2. Gain buyer loyalty

However, at the expense of sounding simplistic, it is necessary that the company

communicate its differentiation to its customers, otherwise these two advantages

will not avail themselves. Initially Coca cola will need to adopt a focused

differentiation approach, which means that they should selectively choose which

markets will profit them the most and then target only those markets until such

provisions are in place from where the company is able to expand its target base.

After which they should opt for a broad differentiation generic strategy.

COCA-COLA COMPANY, THESWOTANALYSIS

SWOT ANALYSIS

The Coca-Cola Company (Coca-Cola) is a leading manufacturer, distributor andmarketer of Non-alcoholic beverage concentrates and syrups, in the world. Coca-

Cola has a strong brand name and brand portfolio. Business-Week and Inter brand, a

branding 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 Companysstrong 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.

7/28/2019 SM 2ND TERM

30/37


30


Analyzing the primary competitor and identifying their Strengths, Weaknesses,

Opportunities, and Threats (SWOT Analysis) help determine target markets,

marketing plan, and customer service, sales forecasting and sales planning.

Examining the following will assist in the competitive analysis:

Identify the level of rivalry among competing sellers in the industry Review strategies of companies to encourage customers to switch from a

competitor

Analyze ease of entry for new competitors Determine bargaining power for suppliers of key materials and components Determine bargaining power for buyers of the product

SWOT Analysis represents the analysis of the following four things

STRENGTHS

Distribution network: The Company has a strong and reliable distribution

network. The network is formed on the basis of the time of consumption and the

amount of sales yielded by a particular customer in one transaction. It has a

distribution network consisting of a number of efficient salesmen, 700,000 retail

outlets and 8000 distributors. The distribution fleet includes different modes of

7/28/2019 SM 2ND TERM

31/37


31


distribution, from 10-tonne trucks to open-bay three wheelers that can navigate

through narrow alleyways of Indian cities and trademarked tricycles and pushcarts.

Strong Brands: The products produced and marketed by the Company have a

strong brand image. People all around the world recognize the brands marketed bythe Company. Strong brand names like Coca-Cola, Fanta, Limca, and Maaza add up to

the brand name of the Coca-Cola Company as a whole. The red and white Coca-Cola

is one of the very few things that are recognized by people all over the world. Coca-

Cola has been named the world's top brand for a fourth consecutive year in a survey

by consultancy Inter brand. It was estimated that the Coca-Cola brand was worth

$70.45billion.

Low Cost of Operations: The production, marketing and distribution systems are

very efficient due to forward planning and maintenance of consistency of operationswhich minimizes wastage of both time and resources leads to lowering of costs.

WEAKNESSES

Low Export Levels: The brands produced by the company are brands produced

worldwide thereby making the export levels very low. In India, there exists a major

controversy concerning pesticides and other harmful chemicals in bottled products

including Coca-Cola.

Small Scale Sector Reservations Limit Ability To Invest And Achieve

Economies Of Scale:The Companys operations are carried out on a small scale anddue to Government restrictions and red-tapism, the Company finds it very difficultto invest in technological advancements and achieve economies of scale.

OPPORTUNITIES

Large Domestic Markets: The domestic market for the products of the Company is

very high as compared to any other soft drink manufacturer. Coca-Cola India claims

a 58 per cent share of the soft drinks market; this includes a 42 per cent share of the

7/28/2019 SM 2ND TERM

32/37


32


cola market. Other products account for 16 per cent market share, chiefly led by

Limca. The company appointed 50,000 new outlets in the first two months of this

year, as part of its plans to cover one lakh outlets for the coming summer season and

this also covered 3,500 new villages. In Bangalore, Coca-Cola amounts for 74% of

the beverage market.

Export Potential: The Company can come up with new products which are not

manufactured abroad, like Maaza etc and export them to foreign nations. It can

come up with strategies to eliminate apprehension from the minds of the people

towards the Coke products produced in India so that there will be a considerable

amount of exports and it is yet another opportunity to broaden future prospects and

cater to the global markets rather than just domestic market.

Higher Income among People: Development of India as a whole has lead to anincrease in the per capita income thereby causing an increase in disposable income.

Unlike olden times, people now have the power of buying goods of their choice

without having to worry much about the flow of their income. The beverage

industry can take advantage of such a situation and enhance their sales.

THREATS

Imports: For example: As India is developing at a fast pace, the per capita incomehas increased over the years and a majority of the people is educated, the export

levels have gone high. People understand trade to a large extent and the demand for

foreign goods has increased over the years. If consumers shift onto imported

beverages rather than have beverages manufactured within the country, it could

pose a threat to the Indian beverage industry as a whole in turn affecting the sales of

the Company.

Tax and Regulatory Sector: The tax system in India is accompanied by a variety of

regulations at each stage on the consequence from production to consumption.

When a license is issued, the production capacity is mentioned on the license and

every time the production capacity needs to be increased, the license poses a

problem. Renewing or updating a license every now and then is difficult. Therefore,

this can limit the growth of the Company and pose problems.

7/28/2019 SM 2ND TERM

33/37


33


Slowdown In Rural Demand: The rural market may be alluring but it is not

without its problems: Low per capita disposable incomes that is half the urban

disposable income; large number of daily wage earners, acute dependence on the

vagaries of the monsoon; seasonal consumption linked to harvests and festivals and

special occasions; poor roads; power problems; and inaccessibility to conventionaladvertising media. All these problems might lead to a slowdown in the demand for

the companys products.

Develop Strategic and tactical goals and plans of Coca-Cola Company

After completion of SWOT analysis international strategic planning is largely

framed by the setting of strategic goals. Based on different market situation as wellas customers response this company will set up their tactical goals for being a

strong position in the global market place. Strategic goals are the major objectives

that the Company wants to accomplish through pursuing a particular course of

action.

The basic objective of set up this strategic and tactical plan and goals is to exploit

the firms strengths and environmental opportunities, neutralize external threatsand overcome the firms weakness. Depending on those vital factors this Coca-ColaCompany is develop a Control Framework for their overall controlling of

management. Through this framework managerial and organizational systems are

observed, monitor, and processed.

7/28/2019 SM 2ND TERM

34/37


34


Findings

By preparing this report about the strategic management issues of multinational

companies (MNCS), the case study on the Coca-Cola Company, we get some

important things. These findings are as followsCoca-Cola Enterprises is the world's largest marketer, producer and

distributor of Coca-Cola products.

Coca-Cola was first introduced by John Smyth Pemberton, a pharmacist, in the

year 1886 in Atlanta, Georgia when he invented caramel-colored syrup in a

three-legged brass kettle in his backyard.

It operates in 46 U.S. states and Canada, and is the exclusive Coca-Cola bottler

for all of Belgium, continental France, Great Britain, Luxembourg, Monaco andthe Netherlands. Coca-Cola is the non alcoholic bottled beverages.

The company owns or licenses more than 400 brands, including diet and light

beverages, waters, juice and juice drinks, teas, coffees, and energy and sports

drinks.

The company operates in more than 200 countries

Strategic management integrates the knowledge and experience gained in

various functional areas.

3 Major Criteria in decision Making are---the concept of Maximization, the

concept of satisfying, the concept of instrumentalism.

The vision of Coca-Cola Company is to refresh the world in body, mind and

spirit

Bringing to the world a portfolio of quality beverage brands that anticipate

and satisfy people's desires and needs.

Coca-Cola Zero has been one of the most successful product launch hes in

Coca-Colas historyIt has soft drinks, energy drinks, juice drinks, sports drinks, tea and coffee,

water and other drinks.

Coca-Cola Company follows the multi-domestic strategy for operating their

business.

7/28/2019 SM 2ND TERM

35/37


35


After entering into a new market Coca-Cola Company try to achieve strategic

goals and guide its daily activities with proper observation.

Good points of Coca-Cola Company are brand promotion, alternative products

selections, Provision of multimedia product, catalogue pages and so on.

7/28/2019 SM 2ND TERM

36/37


36


CONCLUSION

Being in such a tense competition (just like the brand Coca-Cola), Coca-Cola should

not take the direct and tough attack upon it. There is no good to either side. The best

way is to keep a peaceful relationship with it and always compare with others; weshould find their disadvantages and show our advantages on this aspect. Then by

and by, the people would think ours is betted Of course the most important rule is to

improve ourselves to meet the consumers. An organizations strategic thinking isgoverned by the situation prevalent in its external environment. The external

environment comprises of the strategic moves adopted by the organizationscompetitors. The organization has to carefully study these moves and accordingly

devise strategies to gain competitive advantage. For the same, the organization

needs to conduct an industry and competitive analysis. The paper discusses the

steps and processes involved in the same. In formulating business strategy,

managers must consider the strategies of the firm's competitors. While in highly

fragmented commodity industries the moves of any single competitor may be less

important, in concentrated industries competitor analysis becomes a vital part of

strategic planning.

7/28/2019 SM 2ND TERM

37/37


BIBLIOGRAPHY

Cooper, R. D., Schindler, S. P. (2001), International Business Research MethodSeventh Edition.

Gerard Prendergast and Leyland Pitt (2007) International Journal of StrategicManagement: a World Issue.

James Prendergast and Eammon Murphy and Malcom Stephenson (1996)

International Journal of Quality & Reliability Management.

www.coke/homeContent.asp.htm

www. Google.com
http://www.coke/homeContent.asp.htmhttp://www.coke/homeContent.asp.htmhttp://www.coke/homeContent.asp.htm

sm 2nd term

Documents