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Strategic Management Issues of Coca-
INTRODUCTION
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.
ORIGIN OF THE REPORTWeare lucky to say that our honorable course teacher Md. Muzahidul
Islam Lecturer, Department of Management Studies, Faculty of
Business Administration and Management, assigned us a report on
Strategic Management Issues of Multinational Companies
(MNCs): A Case Study on Coca-Cola Company. This report is
prepared on the basis of secondary data.
OBJECTIVES OF THE STUDY
Every successful study should have specified and well-defined
objectives. A careful statement of the objective helps in preparing a
well-decorated report facilitating others to take decision on it. The
specific objectives of the study are to have knowledge about-
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To know about the strategic management issues of multinational
companies
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.
SCOPE 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 find out 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.
Data and Methodology
We examine secondary data of which related to the StrategicManagement 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
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analysis data are clearly represented in our main part of the report
through relevant chart, graph with proper description.
LIMITATIONS OF THE REPORT
As a student of faculty of Business Administration and Management,
7th semester, this is our first initiative for making a report on Strategic
Management Issues of Multinational Companies (MNCs): A Case Study
on Coca-Cola. We were really unable to collect enough information
from due to their official restrictions. Many things were so confidential
that we were not entitled to access there. Beside this we have facedthe following hindrances in preparing this report:
Lack of knowledge and experience
Short of time
Lack of computer facilities
Lack of sufficient privileges Lack of communication facilities
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.
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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.
Five Essential Parts of Strategic Management
Goal-setting
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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 the organization 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 Formulation
To 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 keystrategic 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 and assessing whether any changes in the environmentnecessitate alternatives to the firms strategy. Modify plans and
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actions to adjust to the impact of changing in the operating
environment.
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 of management.
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 managersneed 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.
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Issues 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.
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To the shape the Future
of business
Effective strategic idea
Mangers and employer
are innovative and
creative
Its decentralized the
Management
Its helps to increase the
productivity
To Makes discipline
To make control
To makes forward s
thinking
Signific
anceof
Strat
egic
Management
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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 firms fundamentals goals. Conceptually, there are
many similarities between developing a strategy for competing in a
single country and developing one for competing in multiple counties.
In both cases, the firms strategic planners must answer the same
fundamental 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?
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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 comparatively homogeneous 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
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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 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. Directorsand 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 Senior Management. 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 or Expertise even to get an unbiased opinion on the
business & the Strategy.
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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.
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 companyoperates 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, the increase 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
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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.
He first distributed the product by carrying it in a jug down the street
to Jacobs 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. Pembertons partner and book-keeper, Frank M. Robinson,
suggested the name and penned Coca-Cola in the unique flowing
script that is famous worldwide even today. He suggested that the
two Cs would look well in advertising. The first newspaper ad for
Coca-Cola soon appeared in The Atlanta Journal, inviting thirsty
citizens to try the new and popular soda fountain drink. Hand-
painted oil cloth signs reading Coca-Cola appeared on store awnings,
with the suggestions Drink added to inform passersby that the new
beverage was for soda fountain refreshment.
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 has been 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 partnersand, 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 heliquidated his pharmaceutical business and focused his full attention
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on the soft drink. With his brother, John S. Candler, John Pembertons
former 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 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.
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
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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.
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1916
Birth of the
1920s and 30s
International
expansion
1950s Packaging
innovations
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Our mission declares our purpose as a company. It serves as thestandard against which we weigh our actions and decisions. It is thefoundation 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, customerservice and bottling system strategies, processes and tools in order tocreate competitive advantage and deliver superior value to;
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MISSION OF COCA-COLA COMPANY
VISION OF COCA-COLA COMPANY
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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 andsocial 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.
Our vision guides every aspect of our business by describing what weneed to accomplish in order to continue achieving sustainable growth.
People: Being a great place to work where people are inspired to bethe best they can be.
Portfolio: Bringing to the world a portfolio of quality beverage brandsthat anticipate and satisfy people's desires and needs.
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VISION FOR SUSTAINABLE GROWTH
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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 helpingbuild and support 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 of Coca-Cola Companys beverages.
CURRENT ORGANIZATIONAL ORGANOGRAM
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QUALITY POLICY
CEO
EVP/
President
Bottling
Invest/
Supply
Chain
CFO and
EVP
EVP/
Presiden
t MKT
Strategy
Presiden
t
SVP &
General
Counsel
SVP &
Director
Human
Resource
s
SVP &
Director
Public Affairs/
Communicati
on
President
of African
Group
President
European
Union
Market
President of
Eurasia
Group
President
Latin
America
Group
President of
Pacific Group
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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 million cases globally. Put intoperspective, that's roughly the same size as Coca Colas
total business in the Philippines, one of our top 15
markets. 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 Drinks contain 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 juice drink brands, offering
both adults and children nutritious,
refreshing and flavorful beverages
Soft Drinks
Coca Colas dozens of soft drink
brands provide flavor and
refreshment in a variety of choices.
From the original Coca-Cola to most
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recent introductions, soft drinks from The Coca-Cola Company are
both icons and innovators in the beverage industry.
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, satisfyingboth traditional tea drinkers and today's growing coffee culture.
Water
Smooth and essential, our Waters and
Water Beverages offer hydration in
its purest form.
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Other Drinks
So much more than soft drinks, Coca
Colas brands also include milk
products, soup, and more so you
can choose a Coca Cola Companyproduct anytime, anywhere for
nutrition, refreshment or other needs.
CONSUMER CHOICE AT A GLANCE
Factors affecting the strategic management issues
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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
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Factors affecting the strategic management issues of domestic and
international operations of Coca-Cola Company.
Table 1: Factors affecting the strategic management issues
Language English used as asecond language
Use the local language required inmany situations
Culture Relativelyhomogenous
Quite diverse, both betweencountries and within countries
Politics Unstable Often volatile and of decisive
importanceEconomy Underdeveloped Wide variations among countries and
among regions within countries
Governmentalinterference
Reasonablypredictable
Often extensive and subject to rapidchange
Labor Skilled labors arenot available
Skilled labors often scarce, requiringtraining or redesign of productionmethods
Financing Moderatelydeveloped financialmarkets
Often poorly developed financialmarkets; capital flows subject togovernment control
Marketresearch
Data collect is notvery easy
Sometimes data difficult andexpensive to collect
Advertising Media are availablewith somerestrictions
Media limited; many restrictions; lowliteracy rates rule out print media insome countries
Money Must change from one currency toanother
Transportations
It is not developed Often adequate
Control Always a problem A worse problem
Labor
relations
Collectivebargaining, layoff ofworkers
Layoff of workers often not possible;
may have mandatory worker
participation in management;
workers may seek change through
political process rather than collectivebargaining
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Figure: Factors affecting the strategic management issues
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 in different
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, hugeadvertising cost and so forth. However economy is relatively uniform
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Langua
geCulture Politics
Econom
y
Governme
ntLabor
Financin
gMarket Money Control Advertising
Contrac
ts
Transportation and
CommunicationLabor Relations
Factors Affecting International
Strategic Management
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in domestics country but outsides, it faces wide variation among
countries 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 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 Companies
Multinationals 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.
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Transnational Strategy
The transnational corporation attempts to combine the benefits of
global scale efficiencies with the benefits of local responsiveness.
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 ofthe people of different countys people, culture, status and so many
other related factors. 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.
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Home
Replication
Strategy
Multi-domestic
Strategy
Transnational
StrategyGlobal Strategy
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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
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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-ColaCompany 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 second market more cheaply and
easily. Corporate level strategies of Coca-Cola Company is following
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Figure: Corporate Strategy of Coca-Cola Company
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.
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Corporate Level Strategy
of Coca-Cola Company
Marketin
g
Strategies
R&D Strategies
System
Strategie
s
Reward
System
Strategies
Financial
Strategies
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Functional Level Strategy
The functional strategies attempts to answer to question How wemanage 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 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.
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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.
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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 outinternational strategic management in two 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 and processes.
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 in the 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
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TCCQS is the Coca-Cola systems branded quality management
system. It helps coordinate 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 cope with 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 for entering a new market depending on a fully fledged
market survey. Identifying external and internal environment strength,
weakness, opportunity, and threats is 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
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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 theorganizations 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 inselected profitable and 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
friendly manufacturing technology.
Monitor and improve the efficiency and effectiveness of all
business processes.
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Promotes professional and flexible work environment, teamwork
and innovation 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)
The vision statement of this company supports the existing strategiesthat 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 to adopt 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 profitthem 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, THE SWOTANALYSIS
SWOT ANALYSIS
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The Coca-Cola Company (Coca-Cola) is a leading manufacturer,
distributor and marketer 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 Companys strong brand value facilitates
customer recall and allows Coca-Cola to penetrate markets. However,
the company is threatened by intense competition which could have
an adverse impact on the companys market share.
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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 willassist 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 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 by the Company. Strong brand names
like Coca-Cola, Fanta, Limca, and Maaza add up to the brand name ofthe 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
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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 operations which 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 and due to Government restrictions and red-
tapism, the Company finds it very difficult to 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 cola market.Other products account for 16 per cent market share, chiefly led by
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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 an increase 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 income has 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
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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.
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 conventional
advertising media. All these problems might lead to a slowdown in the
demand for the companys products.
COCA-COLA COMPANY, THE PEST ANALYSIS
A scan of the external macro-environment in which the firm operates can beexpressed in terms of the following factors:
Political
Economic
Social
Technological
The acronym PEST (or sometimes rearranged as "STEP") is used to describe a
framework for the analysis of these macro environmental factors. A PEST analysisfits into an overall environmental scan, which consists of significant political,
economic, social and technological analysis for a firm to reach their desirable
position or to attain the goals and objectives. For operating a business worldwide it
is too much important, because its analysis represent the overall environmental
scanning as shown in the following diagram:
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Environmental Scan
/ \
External Analysis Internal Analysis
/ \
Macro environment Microenvironment
|
P.E.S.T.
Coca-Cola Companys perform/ operate their business unit in different countrybased on the developing of the PEST analysis. The PEST analysis of Coca-Cola
Company is as following
Political Factors
It is one of the significant parts of a company where, in which country they
operate their business unit. Political factors include government regulations and
legal issues and define both formal and informal rules under which the firm must
operate. Some examples include:
tax policy
employment laws
environmental regulations
trade restrictions and tariffs
political stability
Economic Factors
Another most imperative element for PEST analysis is economic factors.
Economic factor affects the purchasing power of potential customers and the firm's
cost of capital. The following are examples of factors in the macro-economy:
economic growth
interest rates exchange rates
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inflation rate
Social Factors
Social factors include the demographic and cultural aspects of the external macro
environment. These factors affect customer needs and the size of potential
markets. Some social factors include:
health consciousness
population growth rate
age distribution
career attitudes
emphasis on safety
Technological Factors
Technological factors can lower barriers to entry, reduce minimum efficient
production levels, and influence outsourcing decisions. Some technological factors
include:
R&D activity
automation
technology incentives
rate of technological change
Develop Strategic and tactical goals and plans of Coca-
Cola Company
After completion of SWOT and PEST analysis as context, international
strategic planning is largely framed by the setting of strategic goals.
Based on different market situation as well as 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 particularcourse of action.
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The basic objective of set up this strategic and tactical plan and goals
is to exploit the firms strengths and environmental opportunities,
neutralize external threats and overcome the firms weakness.
Depending on those vital factors this Coca-Cola Company is develop aControl Framework for their overall controlling of management.
Through this framework managerial and organizational systems are
observed, monitor, and processed.
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 follows
Coca-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 and the Netherlands. Coca-Cola is
the non alcoholic bottled beverages.
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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 thatanticipate and satisfy people's desires and needs.
Coca-Cola Zero has been one of the most successful product
launch hes in Coca-Colas history
It 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.
After entering into a new market Coca-Cola Company try toachieve 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.
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; we should 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 organizationsstrategic thinking is governed by the situation prevalent in its external
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environment. The external environment comprises of the strategic
moves adopted by the organizations competitors. 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.
REFERENCES
Cooper, R. D., Schindler, S. P. (2001), International Business Research
Method Seventh Edition, New York: McGraw-Hill Irwin
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Gerard Prendergast and Leyland Pitt (2007) International Journal of
Strategic Management: a World Issue, Vol. 26 No.6, 1996, pp. 60-72.
MCB University Press.
James Prendergast and Eammon Murphy and Malcom Stephenson
(1996) International Journal of Quality & Reliability Management,
Vol. 13 No. 5, 1996, pp. 77-90, MCB University Press.
Rose Sebastianelli and Nabil Tamimi How Management Strategies
Defining Quality, Vol. 19 No. 4, 2002, pp. 442-453. MCB UP Limited.
Annual Report of Coca-Cola Company (2005-2009)
www.coke/homeContent.asp.htm
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