strategic management

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Strategic Management

University of Lahore


Project Report:

Coca Cola Pakistan

Submitted To: Miss Aqsa

Submitted By: Abdul Rafay MBA-02093076

Raza Mehdi MBA-02093117

Mohammad Kashif MBA-02093072

Shahan Rafiq MBA-0209385

Numan Ahmad MBA-02093127

Rubina Waris MBA-02093-099

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Lahore Business School

Table of ContentsINTRODUCTION...........................................................................................................................................4

HISTORY OF COCA COLA..............................................................................................................................6

COKE HISTORY IN PAKISTAN...............................................................................................................8

VISION STATEMENT.....................................................................................................................................9

MISSION STATEMENT................................................................................................................................10

External Environment Audit......................................................................................................................10

Pestle Analysis.......................................................................................................................................10

Industry Analysis (Coca Cola):................................................................................................................13

Competitive Analysis.............................................................................................................................18

Internal Environmental Audit....................................................................................................................20

Value Chain Analysis..............................................................................................................................20

Objectives (Strategic & Financial)..............................................................................................................23

The Role Of Corporate Governance...........................................................................................................23

Proposed Strategy-Formulation Analytical Framework.............................................................................24

Stage 1:......................................................................................................................................................24

EFE Matrix of Coca-Cola Company.........................................................................................................24

Competitive Profile Matrix of Coca-Cola................................................................................................26

IFE Matrix of Coca-Cola Company..........................................................................................................27

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Stage 2:......................................................................................................................................................29

SWOT Analysis of Coca-Cola Company..................................................................................................29

Space Matrix..........................................................................................................................................32

Space Matrix Calculations.............................................................................................................33

BCG Matrix............................................................................................................................................34

IE Matrix................................................................................................................................................36

Grand Strategy Matrix of Coca-Cola......................................................................................................37

Stage 3:......................................................................................................................................................38

Quantitative Strategy Planning Matrix(QSPM) of Coca-Cola.................................................................38

Strategy\Structure Match..........................................................................................................................39

Strategy Evalution (Corporate Controls)....................................................................................................40

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INTRODUCTIONFounded in 1886, the coca-cola company is the world’s leading manufacturer, marketer, and distributor of nonalcoholic beverage concentrates and syrups. The company’s corporate headquarters are in Atlanta, with local operations in over 200 countries around the world.

Although Coca-Cola was first created in the United States, it quickly became popular wherever it went. Our first international bottling plants opened in 1906 in Canada, Cuba and Panama, soon followed by many more. Today, Coca-Cola has a portfolio of more than 3,000 beverages. Coca-Cola has 92,400 employees worldwide. More than 70 percent of our income comes from outside the U.S., but the real reason we are a truly global company is that our products meet the varied taste preferences of consumers everywhere.

The scope of the project is to discuss the marketing strategies adopted and applied by ‘Coca Cola’, Pakistan. From the last month or so our group is in the process of a continuous research on marketing functions and strategies adopted by ‘Coca Cola’. These marketing functions mainly include the marketing mix i-e, Product Strategy, Pricing Strategy, Pricing Tools and Strategies and Placement and Distribution Strategies as well as other market strategies.

Moreover the project also discusses the analysis of competition, market growth and trend, opportunity analysis and strategies for creating competitive advantage adopted by ‘Coca Cola’.

We will like to add that the project will provide the readers and listeners very high profile information about the marketing strategies as a whole and also about the Coca Cola Company. In the end we hope that the project will result very profitable for the readers and Coca Cola. Your feedback in the end either critical or substantial will be very highly appreciated.

Type Soft Drink (Cola)Manufacturer The Coca- Cola CompanyFounder(s) John S. PembertonCountry of Origin United States

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Introduced 1886Area served Over 200 countriesColor Caramel E-150dFlavors Cola, Cola Green Tea, Cola Lemon, Cola

Lemon Lime, Cola Lime, Cola Orange and Cola Raspberry.

Related Products Pepsi, Irn Bru, RC Cola, Cola Turka, Zam Zam Cola, Mecca Cola, Virgin Cola, Parsi Cola, Qibla Cola, Evoca Cola, Corsica Cola, Breizh Cola, Afri Cola

Employees 92,400Servings per Day 1.6 BillionWebsite www.coca-cola.com

HISTORY OF COCA COLA

Coca-Cola was first introduced by John Syth Pemberton, a pharmacist, in the year 1886 in

Atlanta, Georgia when he concocted caramel-colored syrup in a three-legged brass kettle in his

http://www.coca-cola.com/

http://en.wikipedia.org/wiki/Afri_Cola

http://en.wikipedia.org/wiki/Breizh_Cola

http://en.wikipedia.org/wiki/Corsica_Cola

http://en.wikipedia.org/wiki/Corsica_Cola

http://en.wikipedia.org/wiki/Evoca_Cola

http://en.wikipedia.org/wiki/Qibla_Cola

http://en.wikipedia.org/wiki/Parsi_Cola

http://en.wikipedia.org/wiki/Parsi_Cola

http://en.wikipedia.org/wiki/Virgin_Cola

http://en.wikipedia.org/wiki/Mecca_Cola

http://en.wikipedia.org/wiki/Zam_Zam_Cola

http://en.wikipedia.org/wiki/Zam_Zam_Cola

http://en.wikipedia.org/wiki/Cola_Turka

http://en.wikipedia.org/wiki/RC_Cola

http://en.wikipedia.org/wiki/Irn_Bru

http://en.wikipedia.org/wiki/Pepsi

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backyard. He first “distributed” the product by carrying it in a jug down the street to Jacob’s

Pharmacy and customers bought the drink for five cents at the soda fountain. Carbonated

water was teamed with the new syrup, whether by accident or otherwise, producing a drink

that was proclaimed “delicious and refreshing”, a theme that continues to echo today wherever

Coca-Cola is enjoyed.

Dr. Pemberton’s 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.

By the year 1886, sales of Coca-Cola averaged nine drinks per day. 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 Pemberton’s former partner Frank Robinson and two other associates,

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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 Company’s

incorporation, Mr. Asa G. Candler announced in his annual report to share owners that “Coca-

Cola is now drunk in every state and territory in the United States.”

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.

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COKE HISTORY IN PAKISTAN

“To provide Coca-Cola at arms ‘length”

The Coca-Cola Company began operating in Pakistan in 1953. Coke, Fanta and Sprite are the brands with whom Coca-Cola is operating in Pakistan. The Coca-Cola System in Pakistan operates through eight bottlers, four of which are majority-owned by Coca-Cola Beverages Pakistan Limited (CCBPL). The CCBPL plants are in Karachi, Hyderabad, Sialkot, Gujranwala, Faisalabad, Rahim Yar Khan, Multan and Lahore. The Coca-Cola System in Pakistan serves 70,000 customers/retail outlets. The Coca-Cola System in Pakistan has nearly 3,000 people working constantly for the company. During the last two years, The Coca-Cola Company in Pakistan has invested over $130 million (U.S) and coke has successfully provided 56 years of dedicated service to its customers in Pakistan. Since the beginning of Coke Company the firm has been continuously changing its slogans and that’s a very creative idea to get the attention of the customers.

. Here we would like to include some of the popular slogans of coke since the coke journey started.

1886 Drink Coca-Cola 1908 Get the genuine 1923 Enjoy thirst 1934 When it's hard to get started, start with a Coca-Cola 1942 The only thing like Coca-Cola is Coca-Cola itself 1956 The friendliest drink on earth 1963 Things go better with Coke 1993 Always. Coca-Cola 2001 Life is Good 2003 Jo Chaho Ho Jaye Coca Cola Enjoy 2004 Flight Of Delight 2005 Galay Delicious Taste 2006 Thanda matlab coca cola 2007 khaly pily jila coca cola 2008 Aja jashan mena ly

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TODAYToday CCBPL is operated directly under the supervision of the Coca-Cola International

based in Atlanta Georgia State___ USA .It owns 8 plants all around in Pakistan. Coca Cola Company offers the brand range as Coca Cola, Diet Coke, Fanta, Sprite and Kinley water in Pakistan.

VISION STATEMENT

Our vision guides every aspect of our business by describing what we need to accomplish in order to continue achieving sustainable 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.

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Productivity: Be a highly effective, lean and fast-moving organization.

MISSION STATEMENTMission statement is a statement of organization’s purposes that what it wants to

accomplish. In order to achieve mission of increasing market share and maintaining good relations with our customers all over the world, we wish to create value for all the constraints we serve, including our consumers, our bottlers, and our communities. The Coca Cola Company creates value by executing business strategy guided by four key beliefs:

Customer is king; Customer demand drives everything we do. Brand Coca Cola is the core of our business. We will serve consumers a broad selection of the nonalcoholic ready-to-drink

beverages they want to drink throughout the day. We will be the best marketers in the world.

Everything we do is inspired by our enduring Mission:

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.

External Environment Audit

Pestle Analysis

POLITICAL FACTORS

The political environment of Pakistan affects the coca-cola beverages and Coca-Cola Export Corporation, to some extent. For instance, the political instability in Pakistan causes trade and import policies to change rapidly as the government changes which causes many problems in the import of raw materials. Trade barriers such as tariffs and duties on the import of syrup (concentrate) from USA increases the operational cost. A relaxation has been given by the current government. So the situation for the beverage industry is getting better day by day for the last couple of years. Also the policies have been more or less constant and also the

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emaciation of free trade zones by the government will help the Coca-cola to flourish more effectively in Pakistan.

ECONOMIC FACTORS

The economic condition of Pakistan has not been stable for a long time but The recent economic indicators suggest that the economy is growing and macroeconomic issues are getting sold but at the same time there has not any marked increase in the consumer buying power (inflation). When the recession occurs the price of bottles are dropped down to increase the sales and to achieve the targets of the company. So overall economy of Pakistan directly affects the cost and price of the Coca-Cola Company.

On the contrary in the all parts of the country coke is viewed as the partner in the major events like Basant and promoter of music thereby making a place in the hearts of young generation of the society.

Social environment

In 2000, when eastern Pakistan suffered its worst droughts, The Coca-Cola system initiated a famine-relief program to help victims and was the first private-sector company to assist. The Coca-Cola system in Pakistan initiated a voluntary Hajj program that allows one employee from each plant, selected through a draw, to be sent on the Holy Pilgrimage to Mecca at the Company’s expense.

TECHNOLOGICAL FACTORS

The making of Coke, Fanta, Diet coke and sprite involves "mixing and blending, filling and capping ". For this process, concentrate or syrup is imported from USA and is then mixed in the local plants .Machinery for the local plants was also imported but now the coca-cola company follows Local content law as most of the spare parts are locally made. The system is automated and equipment is fully operational and up-to-dated. In technology Coca-cola company is far ahead than the several other local beverage brands of Pakistan. It is a Highly Technical 10 Steps Process. Which are all done in the local plants using local content law.

Legal factors

Changes in laws and regulations, including changes in accounting standards, taxation requirements, (including tax rate changes, new tax laws and revised tax law interpretations) and environmental laws in domestic or foreign jurisdictions.

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Environmental Factor

We have always sought to be sensitive to the environment, we must use our significant resources and capabilities to provide active leadership on environmental issues, particularly those relevant to our business. We want the world we share to be clean and beautiful. We are always innovating to bring you different delicious beverages. This same spirit of innovation comes alive in our environment programs. We’re committed to preserving our environment, from use of more than $ 2 billion (U.S) a year in recycling content and suppliers, and environment

Management initiatives, are down to very local neighborhood collection and beautification efforts. Here’s a sample of what we’re doing in different communities around the world regarding the conservation of water and natural resources, climate changes, waste environment education.

The Coca-Cola system in Pakistan operates through eight bottlers. Four of which are majority-owned by Coca-Cola Beverages Pakistan Limited (CCBPL). Demographic environment.

Demographic environment

Demographic environment of any country is having a great influence on the purchasing pattern of consumers. It involves age, gender, race, occupation, location and density of population. It varies from country to country. Coke in Pakistan is focusing on the demographic variables of its customers in order to create a positive image in their minds and position their brand also. For example coke is having its focus on the mobile generation who are born in 1980’s.

Global Environment:

A large part or our relationship with the world around us is our relationship with the physical world. While we have always sought to be sensitive to the environment, we must use our significant resources and capabilities to provide active leadership on environmental issues, particularly those relevant to our business. We want the world we share to be clean and beautiful. We are always innovating to bring you different delicious beverages. This same spirit of innovation comes alive in our environment programs. We’re committed to preserving our environment, from use of more than $ 2 billion (U.S) a year in recycling content and suppliers, and environment.

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Industry Analysis (Coca Cola):Five forces model is a framework for the industry analysis and development of business strategy. Three (3) of Porter’s five (5) forces refers to rivalry from external/outside sources such as micro environment, macro environment and rest are internal threats. It draws ahead Industrial Organization economics to develop five forces that conclude the competitive intensity and consequently attractiveness of a market place or industry. Attractiveness in this framework refers to the generally overall industry profitability. An "unattractiveness" in industry is one in which the mixture of these five forces proceed to constrain behind overall profitability. An extremely unattractive industry would be one moving toward "pure competition", in which existing profits for all companies are moving down to zero.

1. The threat of the entry of new competitors

Advertising and Marketing

Soft drink industry needs huge amount of money to spend on advertisement and marketing. In 2000, Pepsi, Coke and their bottler’s invested approximately $2.58 billion. In 2000, the average advertisement expenditure per point of market share was $8.3 million. This makes it exceptionally hard for a new competitor to struggle with the current market and expand visibility.

Customer Loyalty/ Brand Image

Pepsi and Coke have been investing huge amount on advertisement and marketing throughout their existence. This has resulted in higher brand equity and strong loyal customers’ base all over the globe. Therefore, it becomes nearly unfeasible for a new comer to counterpart this level in soft drink industry.

Retail Distribution

This industry provides significant margins to retailers. For example, some retailers get 15-20% while others enjoy 20-30% margins. These margins are reasonably enough for retailers to entertain the existing players. This makes it very difficult for new players to persuade retailers to carry their new products or substitute products for Coke and Pepsi.

Fear of Retaliation

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It is very difficult to enter into a market place where already well-established players are present such as Coke and Pepsi in this industry. So these players will not allow any new entrants to easily enter the market. They will give tough time to new entrants which could result into price wars, new product line, etc in order to influences the new comers.

Bottling Network

In this industry manufacturers have franchise contracts with their presented bottler’s that have privileges in a definite geographic area in eternity such as both Pepsi and Coke have contracts with their presented bottler’s. These contracts forbid bottler’s from taking on new competing brands for similar products. Latest consolidation between the bottler’s and the backward integration with Coke buying considerable numbers of bottling firms, it makes very difficult for new player to contract with bottler’s agreeable to distribute their brands. The alternative is that new entrances build their bottling plants, which will need intense capital and exertion. Because in 2000 new bottling plant needs capital of $80 million.

2. Rivalry among the competitors

The industry is almost dominated by the Coke and Pepsi. This industry is well known as a Duopoly with Coke and Pepsi as the companies competing. These both players have the majority of the market share and rest of the players have very low market share. Otherwise; competition is comparatively low to result any turmoil of industry structure. Coke and Pepsi primarily are competing on advertising and differentiation rather than on pricing. This resulted in higher profits and disallowed a decline in profits. Pricing war is nevertheless experienced in their global expansion strategies.

Composition of Competitors

Except the Coke and Pepsi other competitors are of unequal size especially in local markets. Coke and Pepsi both players have the majority of the market share and rest of the players have very low market share.

Scope of Competition

Scope of competition in this industry is generally global; Coke and Pepsi are approximately presents in 200 countries.

Market Growth Rate

The soft drinks business will not see growth in near future, with the smoothie and bottled water sectors mainly hit by a decline in 2008, and across all sectors volume declined by 1.1 percent.

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Fixed Storage Cost

This industry needs huge manufacturing plants and contracts with bottling network companies. These contracts make sure that bottler’s must have standard manufacturing plant; these plants need huge capital and exertion.

Degree of differentiation

Marketing and Product differentiation have become more significant. Coke and Pepsi mainly are competing on advertising and differentiation rather than on pricing. Coke has diverse advertisement campaigns according to conditions. Coca-Cola is recognized as the best-known brand name in the globe. More prominently, its consumers would not do without it, and have established a loyalty.

Strategic Stake

Coke’s core operation is the manufacturing and distribution both for itself and beneath franchise, of non-alcoholic beverages and related products. Because of the strategic stake the main brand of the Coke has been around for a lot of years.

3. The threat of substitute products

This industry is enriched with enormous statistics of substitutes such as: water, tea, beer, juices, coffee, etc presented to the end-consumers. But all the suppliers of these substitutes need massive advertising, brand equity, brand loyalty and making sure that their brands are effortlessly accessible to the consumers. Most of the substitutes cannot counterpart the existing players’ offers or diversify business by offering new product lines of the substitute products to safeguard themselves from rivalry.

Aggressiveness of substitute products in promotion

Soft drink industry companies spend huge amount of money on advertisement and marketing to differentiate their products from others and also create brand equity, base of loyal customers and increase visibility.

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Switching Cost

Switching cost of the substitute products is very low so consumers can easily shift towards the substitute products.

Perceived price/ value

Perceived price/value in this industry is very low because all products are comparatively same and are only differentiated by promotional activities.

4. The bargaining power of Customers (Buyers)

The most important buyers for the Soft Drink industry are fast food fountain, vending, convenience stores, food stores, restaurants, college canteens and others in the categorize of market share. The profitability/revenue in each of these segments obviously demonstrates the bargaining power of the buyers to pay different prices.

Fast Food Fountain

Pepsi and Coke mainly regard this segment as “Paid Sampling” due to small margins. This division of buyer’s is the slightest profitable because of the high bargaining power of the buyers. The bargaining power of the buyers is high because they purchase in bulks.

Vending Machines

Vending Machines provide products to the customers in a straight line with enormously no power with the buyer.

Convenience Stores

This segment is tremendously fragmented and has no bargaining power due to which it has to pay superior prices.

Food Stores

This segment of buyers’ is fairly merged with few local supermarkets and numerous chain stores. Since this segment presents best shelf space it demands lower prices.

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5. The bargaining power of Suppliers

Most of the raw materials desirable to manufacture soft drink are basic merchandise such as flavor, color, caffeine, sugar, and packaging etc. The suppliers of these commodities have no bargaining power over the pricing due to which the suppliers in soft drink industry are relatively weak.

Number of important Suppliers

Raw materials for soft drink are basic commodities which are easily available to every producer and have low cost which makes no difference for any supplier.

Switching cost All the raw material ingredients are basic merchandize and easily accessible to manufacturers. Switching cost to the suppliers is very low; manufactures can easily shift towards the other suppliers.

Availability of substitutes

Soft drink products have standard raw material ingredients which could not have any alternatives or used instead of the actual ingredients.

Threat of forward integration

Threat of forward integration is very low in this industry because manufacturers of the soft drinks need huge manufacturing plants, bottling network, strong distribution network and best shelf space. Suppliers could not afford such kind of well-established network.

Importance of buyer industry to suppliers

Soft drink industry is very important to the suppliers because buyers purchase larger amount of raw material. This encourages suppliers to remain in good contact with buyers.

Suppliers’ product an important input to the buyer’s

Product of the suppliers is very important input for the manufacturers in this industry because these products do not have any substitute.

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Competitive Analysis

C OMPETITORS

Coke’s major competitor is “PEPSI” and there is no hesitation to say this because every one knows that and all the other cold drinks and water, coffee, tea is the competitors.

MAJOR COMPETITORS

Consumers firstly decide that they are going to have a soft drink. Then they compete brands with each other. Like they compete Coke with Pepsi and Sprite with 7up and team. So the major competitor of Coke is Pepsi.

When they motivate to any other brand or on Coke it’s in instinct basically that based on messages derive certain feelings.

But Coca Cola thinks in a different way, they believe that RC Cola, new coming Beverages, and all juices, even they take water and tea as their competitors.

MAJOR COMPETITOR

PEPSI INTERNATIONAL

HISTORY

PepsiCo is a world leader in convenient foods and beverages, with revenues of about $27 billion and over 143,000 employees. The company consists of the snack businesses of Frito-Lay North America and Frito-Lay International; the beverage businesses of Pepsi-Cola North America, Gatorade/Tropicana North America and PepsiCo Beverages International; and Quaker Foods North America, manufacturer and marketer of ready-to-eat cereals and other food products. PepsiCo brands are available in nearly 200 countries and territories.

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Many of PepsiCo's brand names are over 100-years-old, but the corporation is relatively young. PepsiCo was founded in 1965 through the merger of Pepsi-Cola and Frito-Lay. Tropicana was acquired in 1998 and PepsiCo merged with The Quaker Oats Company, including Gatorade, in 2001.would entertain the listener with the latest musical selections rendered by violin or piano or both. The new name, “Pepsi Cola”, is derived from the two of the principle ingredients, Pepsin and Kola Nuts. It was first used on the August 28. At that time, Braham’s advertising praises his drink as “Exhilarating, invigorating, aids digestion”.

1990-2010

The advertisement of the Pepsi changes to, “You got the right one baby, Uh-Huh!” With the extensive usage of the stars in the ads, the popularity of Pepsi increase. In 1992 Pepsi-Cola formed a partnership with Thomas J. Lipton Co. Today Lipton is the biggest selling ready-to-drink tea brand in the United States. Outside the United States, Pepsi-Cola Company's soft drink operations include the business of Seven-Up International. Pepsi-Cola beverages are available in more than 190 countries and territories.

PEPSI’S PRODUCTS

Pepsi

Teem

Miranda

Pepsi Max

Pepsi Lemon

Pepsi Blue

Mountain Dew

7up

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Internal Environmental Audit

Value Chain AnalysisA value chain is a model used to disaggregate a firm into its strategically relevant value generating activities, in order to evaluate each activity's contribution to the firm's performance (Terms V 2006). Through the analysis of this model we can gain insight as to how a firm creates their competitive advantage and shareholder value.

The value chain of the nonalcoholic beverage industry contains five main activities. These include inbound logistics (suppliers), operations, outbound logistics (buyers/ customers), marketing and sales, and service.

Inbound Logistics (Suppliers)

Some of Coca Cola most notable suppliers include Spherion, Jones Lang LaSalle, IBM, Ogilvy and Mather, IMI Cornelius, and Prudential. These companies provide Coca Cola with materials such as ingredients, packaging and machinery. In order to ensure that these materials are in satisfactory condition, Coca-cola has put certain standards in place which these suppliers must adhere to (The Supplier Guiding Principles). These include: compliance with laws and standards, laws and regulations, freedom of association and collective bargaining, forced and child labor, abuse of labor, discrimination, wages and benefits, work hours and overtime, health and safety, environment, and demonstration of compliance (Coca Cola 2006).

From time to time, Coca-Cola uses third parties to assess their suppliers by having interviews with employers and contract workers. If a supplier has issues about the supplier guiding principles, they are usually given a certain amount of time to take corrective measures; if not, Coca-Cola has the right to terminate their contract with these suppliers.

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Operations

Coca Cola core operations consist of Company-owned concentrate and syrup production (Coca Cola 2006). According to their website, some of the main environmental impacts of their business occur further along the value chain through system's bottling operations, distribution networks, and sales and marketing activities (Coca Cola 2006). Management of these operations across the business value chain tends to be more challenging outside of the core operations. According to Coca Cola, they continue to address this by working with their partners to reduce the effects at every level of the manufacturing process by enlarging their comprehension of the complete environmental impact of their business through the entire lifecycle of their products from ingredient procurement to production, delivery, sales and marketing, and post-consumer recycling (Coca Cola 2006).

Please see Appendix for additional information.

Outbound Logistics (Buyers/ Customers)

The activities required to get finished products to customers include warehousing, order fulfillment, transportation, and distribution management. Coca Cola has the world largest distribution system. They own, lease, and operate in over 800 plants around the world (Coca Cola 2006). The 2,400 beverage products which they market reach consumers in more than 200 different geographic locations (Coca Cola 2006). Grocery stores such as Sobeys, fast food restaurants such as McDonalds (fountain sodas), and vending machines are just a few of the distribution units used to ultimately reach consumers.

Coca Cola has over 300 bottling partners which range from publicly traded businesses to small family owned operations (Coca Cola 2006). They have implemented the Coca Cola Systems in which they work cohesively with their partners in order to develop strategies aimed to meet the needs of all their customers.

Examples of their commitment to these strategies are seen in their plant in Indonesia, where boats are used to transport the products between hundreds of islands throughout the Amazon. This is often because waterways are often the main way to access these remote islands. In some of the higher elevations of in the Andes, Coca Cola products are sometimes transported by four-legged power. Across much of Africa, bottlers deliver to thousands of family-run kiosks and home-based stores.

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Marketing and Sales

Out of approximately 2,400 products, Coca Cola markets four of the worlds top sales drink brands. Although the industry is relatively small and they only directly compete with two companies, creativity is a vital marketing strategy to Coca Cola.

Coca Cola ultimate goal is to deepen their brands connection with consumers. As a result, they have to constantly reinvent their product (Coca Cola 2006). The marketing strategy they use is directly linked to the consumer; from advertising, to point of sale, to ultimately opening and consuming a Coca Cola beverage. Techniques which they have used to achieve this include developing new products and brands, changing the design of their packaging, and designing various new advertising campaigns (Coca Cola 2006).

On October 19th, Coca Cola reported their earnings for the third quarter. Earnings per share are up which results in higher benefits for shareholders. According to Neville Is dell, CEO of Coca Cola, they have experienced a growth in sales of five percent compared to the same quarter last year. This is as a result of balancing performance across their global markets and their product portfolio (Coca Cola 2006).

Service

Activities that maintain and enhance a product value include customer support, repair services, installation and training.

Coca Cola customers range from large international retailers and restaurants to smaller independent businesses and vendors. As a result, they provide services tailored to meet their customer’s needs.

Coca Cola also supports their customers by providing them with the training necessary to help their businesses become more effective and profitable. They have established Customer Development and Training Centers which are available to more

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Objectives (Strategic & Financial)People: Being a great place to work where people are inspired to be the best they can be.

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

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

· Planet: Being a responsible citizen that makes a difference by helping build and support sustainable communities.

· Profit: Maximizing long-term return to shareowners while being mindful of our overall responsibilities.

Coca-Cola's financial objectives are to make money.

The Role Of Corporate GovernanceThe Coca-Cola Company is committed to sound principles of corporate governance.

The Board is elected by the shareowners to oversee their interest in the long-term health and the overall success of the business and its financial strength. The Board serves as the ultimate decision making body of the Company, except for those matters reserved to or shared with the shareowners. The Board selects and oversees the members of senior management, who are charged by the Board with conducting the business of the Company.

The Corporate Governance Guidelines, along with the Charters of the each of the Board Committees and the key practices of the Board provide the framework for corporate governance at The Coca-Cola Company. The Corporate Governance Guidelines and the Charters of each of the Board Committees can be accessed by clicking on the links below the image.

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Corporate Responsibility

Corporate responsibility is managed through the Public Policy and Corporate Reputation Council, a cross-functional group of senior managers from our Company and bottling partners. The Council identifies risks and opportunities faced by our business and communities and recommends strategies to address these challenges.

Proposed Strategy-Formulation Analytical Framework

Stage 1:

EFE Matrix of Coca-Cola CompanyExternal Factor Evaluation (EFE) matrix is a strategic-management device which is frequently used for evaluation of current business environment. The EFE matrix is a superior instrument to prioritize and visualize the opportunities and threats that a company is facing. An external factor in the EFE Matrix comes from social, political, legal, economic and other external forces. An example of external factor evaluation (EFE) matrix is given for the Coca-Cola Company.

Steps in the Construction of EFE Matrix

In the first column, lists down all the opportunities and threats. EFE matrix should include 10 to 20 key external factors.

In the second column assign weights to each factor that ranges from 0.0 (not important) to 1 (most important). The total weights must sum to 1.00 (It should be noted that the importance of weights depend upon the probable impact of factors on the strategic position of the company).

In the column three, rate each factor (ranging from 1 to 4) on the basis of company’s response to that factor. (Here, 1 shows poor response, 2 shows average response, 3 shows above average response and 4 shows superior response).

In the column four, calculate the weighted score by multiplying the each factor’s weight by its rating.

Find the total weighted score by adding the weighted score for each variable.

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External Factor Evaluation Matrix of Coca-Cola Company

By adding the weighted score of various opportunities and threats of Coca-Cola Company, we get the total weighted score of 3.05. Here it should be noted that the highest possible total weighted score of a firm is 4 whereas the lowest possible total weighted score is 1. The total weighted score remains in the limit of 1 to 4 regardless of the total number of opportunities and threats. Similarly, the average total weighted score is 2.5. If the total weighted score of a company is 4, it means that the company is effectively taking advantage of existing opportunities and is also able to minimize the risk. On the other hand, the total weighted score of 1 show that firm is not able to take advantage of current opportunities or avoid external threats.

In the case of Coca-Cola Company, the total weighted score is above average, which means that the Coca-Cola Company strategies are effective and the company is taking advantage of existing opportunities along with minimizing the potential adverse effects of external threats.

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Competitive Profile Matrix of Coca-ColaA competitive profile matrix (CPM) categorizes a firm’s main rivals and its particular strengths and weaknesses in relation to a design firm’s strategic position. In Competitive Profile Matrix an organization assess itself as well its rivals by giving rating and weights to the critical/key success factors. It then recognizes its strategic competitive place with its major rivals. A firm which obtains superior weighted points would have the strong competitive place than its rivals. The construction of competitive profile matrix for the Coca-Coal company is given below:

Steps in the construction of CPM

Here we will be using weighted rating system for the construction of competitive profile matrix. Some of the important steps involved in the construction of competitive profile matrix are given below:

In the first column, lists down all the key success factors of Industry (usually from 6 to 10).

In the second column, assign weights to each factor ranging from 0.0 (not important to 1 (most important). Greater weights should be given to those factors which have grater influence on the organizational performance. The sum of all weights must equal 1.

Now rate each factor ranging from 1 to 4 for all the firms in analysis. Here, rating 1 represents major weakness, rating 2 shows minor weakness. Similarly, rating 3 indicates minor strength whereas rating 4 shows major strength. It means that weakness must receive 1 or 2 rating while strength must get 3 or 4 rating.

Calculate weighted score by multiplying each factor’s score by its rating.

Find the total weighted score of all the firms by adding the weighted scores for each variable.

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Competitive Profile Matrix for the Coca-Coal Company

The competitiveness of a company can be assessed on the basis of its general strength rating. If the dissimilarity among firm’s overall rating and the points of lower-rated rivals is greater then the firm has greater net competitive advantage. Alternatively, if the dissimilarity among a firm’s overall rating and the points of higher-rated rivals is larger then the company has net competitive disadvantage. In the above example, CPM Matrix demonstrates that Coca-Cola is the market leader and dominates its rivals with highest points of 3.74. Pepsi is the runner up with 3.42 points and Cadbury Schweppes is the weakest rival among these three with the score of 2.80. This Matrix also shows that Coca-Cola is strong in all the aspects of rivalry and has strong position in the market place.

IFE Matrix of Coca-Cola CompanyInternal Factor Evaluation (IFE) matrix is a strategic management instrument for assessing main strengths and weaknesses in useful areas of a company. IFE matrix also gives a foundation for

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recognizing and assessing associations among those parts. The IFE matrix is utilized in strategy formulation. An example of internal factor evaluation matrix is given for the Coca-Cola Company.

Steps in the Construction of IFE Matrix

In the first column, lists down all the strengths and weaknesses. IFE matrix should include 10 to 20 key internal factors.

In the second column, assign weights to each factor ranging from 0.0 (not important to 1 (most important). Greater weights should be given to those internal factors which have grater influence on the organizational performance.

The sum of all weights must equal 1.

In the third column, rate each factor ranging from 1 to 4. Here, rating 1 represents major weakness, rating 2 shows minor weakness. Similarly, rating 3 indicates minor strength whereas rating 4 shows major strength. It means that weakness must receive 1 or 2 rating while strength must get 3 or 4 rating.

In the fourth column, calculate weighted score by multiplying each factor’s score by its rating.

Find the total weighted score by adding the weighted scores for each variable.

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IFE Matrix of Coca-Cola Company

The total weighted score ranges from 1 to 4 (where 1 is low, 4 is high and 2.5 is average) regardless of the total number of internal factors used in the analysis. If the total weighted score is less than 2.5 it indicates that the organization is weak internally. On the other hand, the scores above 2.5 show strong internal position. An internal factor could be included twice in the IFE Matrix if the factor is both strength and weakness. In case of Coca-Cola Company the total weighted score is above than average, it means that the company is strong internally.

Stage 2:

SWOT Analysis of Coca-Cola CompanyCoca-Cola is the world’s largest soft-drink company which manufactures and markets non-alcoholic beverage concentrates and syrups. Besides the well known Coca-Cola and Coke brands the company offers more than 500 brands in over 200 countries or territories and serves 1.6 billion servings each day. It is headquartered in Atlanta, Georgia.

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Strengths

1. Coca-Cola is the world’s most valuable brand and has strong brand loyalty.

2. Wide variety of Coca-Cola products is sold in the restaurants, stores and vending machines over 200 countries.

3. Coke is the dominant market leader of the global soft-drink industry right through the 20th century.

4. Coke primarily competes on advertising and differentiation and has the high market share.

5. Coca-Cola has enormous distribution and production facilities of non-alcoholic beverages and related products.

6. Joint venture with Nestle has resulted in the formation of Beverage Partners Worldwide (BPW).

7. The company has strong financial position and profits throughout the history. Its average ROE (return on equity) for the past five years is 37.08% whereas its ROC (return on capital) is 33.6%.

8. Coca-Cola has the heavy advertising and promoting activities.

9. More than 70 percent of revenue comes from outside the United States.

10. Enormous number of loyal customer’s and brand equity all over the world.

Weaknesses

1. New coke formula leading to a backlash which results in bad image of coke.

2. The company is facing high burden of external debts for the last few years. In 2002, long-term debt of the company was 2700 million dollars.

3. Product offering is restricted to beverages.

4. In November 2009, because of a dispute over wholesale prices of Coca-Cola goods, Costco blocked the replenishment of their shelves with Diet Coke and coke.

5. Coca-Cola has discontinued its many products after few years of launching such as New Coke, Coca-Cola with Lemon, Coca-Cola with Lime, Coca-Cola Blak, etc. which result in bad image of the brand.

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6. Coke has taken less aggressive market standing in today’s changing economic surroundings.

Opportunities

1. Bottled water drinking has increased 11 percent.

2. Consumers prefer to drink new smaller beverage products that are not sold on a mass scale.

3. One of the biggest opportunities is to diversify into the non-carbonated drinks such as coffee, water, juices, etc.

4. The company can offer the hygienic products due to increasing number of health conscious consumers.

5. European market and China show marvelous potential for growth.

6. The economic conditions are improving globally after economic meltdown 2007-10.

7. Diversify into complementary food products which will ultimately increase the drink consumption.

8. Coca cola should increase its partnership with fast food chains.

Threats

1. There is Low growth rate in the carbonated drinks market in North America which is the main market of Coca-Cola.

2. There is a problem with Coke to raise its prices by an edge that would permit it to keep pace with inflation.

3. Huge numbers of substitutes such as beer, water, juices, coffee etc are accessible to the end consumers.

4. Pepsi is the strong competitor which competes with advertising and differentiation.

5. Since the consumer lifestyle is changing rapidly and they are becoming more health conscious therefore there demand is shifting towards non-carbonated products such as juices, tea and bottled drinks.

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6. Many smaller players are furious competitors which are also creating the competition severe.

7. The prices of raw material such as sugar and metals used in manufacturing of cans are increasing rapidly.

8. Carbonated drink revenues have been decreasing due to association of sugar to obesity and lofty fructose lump syrup to heart disease.

9. Pepsi has more diversified selling beverage and food products as compared to the Coca Cola.

10. Coca Cola is facing various regulations in respective countries around the globe.

Space MatrixThe Strategic Position and Action Evaluation Matrix commonly (SPACE Matrix) is one of the important tools to assess the company and its environment. It has four quadrants and each quadrant indicates which strategy a firm should adopt i.e. competitive, aggressive, conservative, or defensive in a current position. X axis of the SPACE Matrix contain internal dimensions (Competitive Advantage (CA) and Financial Strengths (FS)) and Y-axis contain external dimensions (Industry Strengths (IS) and Environmental Stability (ES)). These four dimensions are the most important determinants of a firm’s overall strategic position. Each dimension holds many factors from EFE, IFE, and SWOT Analysis etc.

How to Construct Space Matrix?

Following are some of the important steps involved in the construction of Space Matrix.

1. Choose a set of variables to define industry strength (IS), Environmental stability (ES), Competitive advantage (CA), and financial strength (FS).

2. Assign numerical values to all the variables of FS and IS ranging from +1(worst) to +6 (best).

3. Assign numerical values to all the variables of ES and CA ranging from -1(best) to -6 (worst).

4. Calculate the scores for CA, ES, FS, and IS.

5. Plot the average for CA, ES, FS, and IS on the appropriate axis.

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6. Now add the two scores on the Y-axis and plot the resultant point on Y. Similarly add the two scores on the x axis and plot the resultant point on X and Plot the intersection of the new XY point.

7. Sketch a directional vector from the origin of the SPACE Matrix through the new intersection point. The vector shows the type of strategies recommended for the organization: competitive, conservative defensive, and aggressive.

SPACE Matrix of Coca – Cola Company

Space Matrix Calculations

ES Average Score = -1.83 + Average FS Score (+5.00) = +3.17

Average CA Score = -1.50 + Average IS Score (+5.00) = +3.50

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according to the graph above, we noticed that the Coca-Cola Company falls into the aggressive quadrant of the SPACE matrix. It is located at the coordinates of +3.50 for x-component and a y-component of 3.17. It shows that the company has an admirable position to use its IS in order to take advantage of external opportunities, overcome weaknesses, and avoid threats. So, in this position Coca-Cola Company has set of possible strategies such as market development, product development, market penetration, forward integration, backward integration, horizontal integration, horizontal diversification, concentric diversification and conglomerate diversification depending on detailed conditions that face the company.

BCG MatrixIn the BCG approach, a company classifies all its Bus according to the growth share

matrix.

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Coke is one of the main product lines of the Coca Cola Company. It is the one which is giving maximum revenues to it by different products in this line. Here we have classified some of its major products in the BCG matrix on the basis of their fame and liking of the people.

STAR

Coke Classic is the basic product through which the Coca Cola Company got the fame. It is one product, which gives the maximum revenue from all over the world. It is one flavor, which has the maximum consumers all over the world. Coke has already worked a lot on it by launching new flavors in it, but still it is a product they can turn as famous as coke Classic.

CASH COWS

Fanta and Sprite are the products, which the Coca Cola Company can never think of stop producing. It is the one which make the coke company a huge success; it was one product which gives billions of dollars as revenue from world over. Whenever the company thinks of launching its product in a country the first product they launch is coke classic as they know that if don’t work here then nothing else can.

QUESTION MARK

Products that are still not a big hit as they haven’t consumed much time yet. Sprite 3G, Sprite Zero, Diet Coke and Kinley are the examples of these question marks as the question marks as they have not taken much time yet to get a hold of market & not even the large percentage of the people have tasted it. So it needs time to be fully tested by the company & the company needs to think whether it should continue the production or should divert to something new.

DOGSA product that has not worked good or a product which has been a source of loss.

flavored Fanta is one product that was not a big hit. Even it’s not a long period which flavored

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Fanta has consumed but still there are signs that it won’t be a success. So it’s better for the company to get rid of it.

IE Matrix

1 2 3

4 5 6

7 8 9

IFE = 2.86

EFE = 3.05

4

3

2

1

E

F

E

4 3 2.86 2 1

IFE

Grow and BuildGrow and Build

Hold and MaintainHold and Maintain

Harvest and DivestHarvest and Divest

3.05

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As it lies in 5th place so it will have hold and maintain strategy.

Grand Strategy Matrix of Coca-ColaGrand Strategy Matrix is famous tool for alternative strategies in addition to Space Matrix, BCG Matrix, IE Matrix and SWOT Matrix. All the firms can fall in one of the GSM’s four strategy quadrants. Grand strategy Matrix evaluation is based on two dimensions i.e. market growth and competitive position. Each quadrant provides the set of possible strategies in which company falls such as Quadrant 2 contains market development, market penetration, product development, horizontal integration, divestiture, and liquidation strategies. Quadrant 3 contains the set of retrenchment, related diversification, divestiture, unrelated diversification and liquidation strategies. Quadrant 4 contains the set of diversification, joint ventures and unrelated diversification strategies.

Grand Strategy Matrix of Coca-Cola Company

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As figure identify that Coca-Cola Company comes in the 1stquadrant. The company management must focus on current market and achieve growth by adopting product development, market development and market penetration strategies. The company has abundant resources and competitive advantage through which it can achieve growth by adopting the backward and forward integration strategies. Coca-Cola Company can also adopt the related diversification strategy to reduce its risk with broad portfolio or product line. Coca-Cola can afford to take benefit of external opportunities in many areas. It can also take risks being aggressive when necessary.

Stage 3:

Quantitative Strategy Planning Matrix(QSPM) of Coca-Cola

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Strategy\Structure Match:

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Strategy Evalution (Corporate Controls)

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

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responsiveness.

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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

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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 second market more cheaply and easily. Corporate level strategies of Coca-Cola Company is following—

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 the function?” The functional level of the organization is the level of the operating divisions and departments. The strategic issues at the functional level are related

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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 by providing 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.

strategic management

Documents

assign numerical

total weighted

corporate

support sustainable

local content

provide active

supplier guiding

grand strategy