INTERNATIONAL BUSINESS

FINAL REPORT

INTERNATIONAL STRATEGIES ADOPTED BY COCA

COLA

SUBMITTED TO:

MR. SUJAN RAJA SHRESTHA

(INSTRUCTOR)

SUBMITTED BY: GROUP 5

ASHISH VAIDYA

ASHTHA KARKI

MALINA JOSHI

PRAMEE ADHIKARI

17th July, 2010

ACKNOWLEDGEMENT

Our primary indebtedness goes to our teacher Mr. Sujan Raja Shrestha for providing us with an

opportunity to bring our theoretical knowledge into practice. During this project, we received a

wholehearted co-operation and support from all teachers and friends at Ace Institute of

Management.

We would also like to thank Mr. IP Sharma from Bottlers Nepal Limited for his tremendous

support.

Submitted By:

Ashish Vaidya

Ashtha Karki

Malina Joshi

Pramee Adhikari

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1. Introduction

1.1 Introduction of the Brand

Coca-Cola is the most popular and biggest-selling soft drink in history, as well as the best-known

product in the world. The Coca-Cola Company claims that the beverage is sold in more than 200

countries. Created in Atlanta, Georgia, by Dr. John S. Pemberton, Coca-Cola was first offered as

a fountain beverage by mixing Coca-Cola syrup with carbonated water. Coca-Cola was

introduced in 1886, patented in 1887, registered as a trademark in 1893 and by 1895 it was being

sold in every state and territory in the United States. In 1899, The Coca-Cola Company began

franchised bottling operations in the United States.

The company produces concentrate, which is then sold to licensed Coca-Cola bottlers throughout

the world. The bottlers, who hold territorially exclusive contracts with the company, produce

finished product in cans and bottles from the concentrate in combination with filtered water and

sweeteners. The bottlers then sell, distribute and merchandise Coca-Cola to retail stores and

vending machines. Such bottlers include Coca-Cola Enterprises, which is the largest single Coca-

Cola bottler in North America and Western Europe. The Coca-Cola Company also sells

concentrate for soda fountains to major restaurants and food service distributors.

There are many factors, internal as well as external that impact the planning function of

management within an organization, and Coca-Cola is no exception. More than a billion times

every day, thirsty people around the world reach for Coca-Cola products for refreshment. Coca-

Cola is the most popular and biggest-selling soft drink in history, as well as the best-known

product in the world. The Coca-Cola franchise covers a population of approximately 398 million

people. Coca-Cola Enterprises employs approximately 72,000 people who operate 463 facilities,

54,000 vehicles and approximately 2.4 million vending machines, beverage dispensers and

coolers. It is present on all seven continents and is recognized by 94% of the world population.

Coca-Cola might owe its origins to the United States, but its popularity has made it truly

universal. Today, you can find Coca-Cola in virtually every part of the world.

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Mission

To refresh the world.

To inspire moments of optimism and happiness.

To create value and make a difference.

Vision

The vision of Coca Cola are as follows:

People: Be a great place to work where people are inspired to be the best they can be.

Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate and satisfy

people's desires and needs.

Partners: Nurture a winning network of customers and suppliers, together we create mutual,

enduring value.

Planet: Be a responsible citizen that makes a difference by helping build and support

sustainable communities.

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

responsibilities.

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

1.2 Objectives of the study:

To perform a brand audit of Coca Cola as a company.

To identify the factors that help built Coca Cola as a brand.

To identify the strategies followed by Coca Cola to sustain as a leading global brand.

To understand the marketing plans of Coke.

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1.3 THE COCA-COLA SYSTEM

Coca Cola is a global business that operates on a local scale, in every community where they do

business. Coke is able to create global reach with local focus because of the strength of the Coca-

Cola system, which comprises more than 300 bottling partners worldwide.

While many view the company as simply "Coca-Cola," the system operates through multiple

local channels. Coca Cola manufactures and sells concentrates, beverage bases and syrups to

bottling operations, owns the brands and is responsible for consumer brand marketing initiatives.

The bottling partners manufacture, package, merchandise and distribute the final branded

beverages to customers and vending partners, who then sell products to consumers.

All bottling partners work closely with customers -- grocery stores, restaurants, street vendors,

convenience stores, movie theaters and amusement parks, among many others -- to execute

localized strategies developed in partnership with the company. Customers then sell the products

to consumers at a rate of 1.6 billion servings a day. 

The Coca-Cola system is not a single entity from a legal or managerial perspective, and the

Company does not own or control most of the bottling partners.

1.4 Bottling Partners

More than 300 bottling partners are responsible for manufacturing the beverages of Coca

Cola. Below are some of list of the bottling partners:

Africa European Union

Coca-Cola Hellenic Bottling Company Casbega

Coca-Cola Sabco Cobega

Peninsula Beverage Company Coca-Cola Enterprises

Eurasia Coca-Cola Erfrischungsgetränke (CCE) AG

Central Bottling Company (CBC) Coca-Cola Hellenic Bottling Company

Coca-Cola Hellenic Bottling Company Latin America

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Coca-Cola Içecek Coca-Cola FEMSA

Coca-Cola Sabco Coca-Cola Embonor

North America Coca-Cola Polar

Coca-Cola Enterprises Embotelladora Andina

Embotelladoras ARCA, S.A.B. de Co.

Grupo Continental, S.A.

2. COCA COLA IN NEPAL

Coca-Cola was first introduced in Nepal in 1973, when it was imported from India, but local

production began in 1979, with the establishment of Bottlers Nepal Limited (BNL). Coca-Cola

Sabco acquired bottling rights from The Coca-Cola Company for Nepal in 2004.

BNL, which has plants in the capital Kathmandu and Bharatpur, is the only bottler of Coca-Cola

products in Nepal. The Marketing, Sales and Distribution strategy for BNL is titled ‘Refresh the

Marketplace’ and includes a robust Consumer Response System to address any consumer

concerns, ideas and suggestions.

BNL is also committed to strengthening the community through various programs, particularly

in the health sector, as the country has the lowest per capita public health expenditure in the

world. In association with the local community, BNL assists by supporting a Free Health Check-

up Clinic at Bharatpur. The Nepalese enjoy Coca-Cola, Fanta and Sprite.

It’s been working under strategy “think global act local”. It means though the company is global

like it maintains the international standard, rules, policies, quality etc but in some way the

company has able to localize itself in various countries in terms of pricing, way of their business,

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products protocol and products values. E.g. as per Mr. IP Sharma, International Affairs In charge

at BNL Nepal, after the cost of production company add VAT of 13% while in India, after the

cost of production, sales tax is added then only the VAT is added to a final product. It’s how

company localizes the product as per the economic standard of the country. It’s the way of

balancing the economy with the price of the product.

In Nepal, Coca cola work under the principle set by the headquarters. Sometimes it acts like

hurdle in the operation. They basically face three kind of problem in Nepal which has often led

them to lose their brand loyalty.

Corruption

Political Instability

Strikes

One of the failures of Coca cola in Nepal was the Pineapple Fanta which was produce to test the

market but it wasn’t appealing to the customer which led to close the plant.

3. Brand development strategy of Coke

The brand development strategy of Coca Cola comprised redesigning of its brand development

policies and techniques to keep up with the changing mindset of its consumers. Earlier, this

brand believed in the following

Affordability: It means every consumer can afford the drink at any part of all.

Availability: it means coke can be found anywhere and consumer can easily buy it.

Acceptability: Coke has been accepted worldwide and its strategy is to make every

customer happy.

However, this brand development strategy of Coca Cola was re worked to stress on the

following instead:

Price to Value

Pervasiveness: It can be bought anytime and everywhere.

Preference: most consumers are partial towards the coke brand. When it comes to choose

in between many prefer coca cola first. It’s because of the brand development and

positioning made by the coca cola around the world.

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Year after year, Coca Cola Company has been discovering new foreign markets to bring higher

profits. The analysis regarding the external environment helps the organization develop and

manage the different changes that may leave an impact in the entire company.

Political Analysis

The political conditions of a country affects the way business is done, especially in

internal markets and other governmental changes that affects their ability to penetrate the

developing and emerging markets that involves the political and economic conditions.

Therefore Coca Cola continuously monitors the policies and regulations set by the host

government. For e.g Governments of some Arab nations boycotted Coca-Cola’s products

due to a political dispute and discontented with the company for maintaining distributors

in Israel and so the company had to change its strategies.

Economic Analysis

Economic analysis examines the local, national and world economy impact which also

includes the issue of recession and inflation rates. The non-alcoholic beverage industry

has high sales in countries outside the U.S. Coca Cola company has done major economic

improvement in many major international markets, such as Japan, Brazil, and Germany.

Sociological Analysis

This analyzes the ways in which changes in society affects the organization such as

changes in lifestyles and attitudes of the market. . Culture has a tremendous effect on

people’s preferences and perception. Language is one of the aspects of culture that this

company takes care of, in terms of translating product name, slogans and promotional

messages so as not to convey the wrong meaning.

Before Coca-Cola did not look much into this aspect when entering into the markets of

countries like China and Taiwan as the literal translation of Coca-Cola in Chinese

characters mean, “bite the wax tadpole” and so had to face difficulties.

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Technological Analysis

Technology is the main focus of the analysis where the introduction and the emerging

technological techniques are valued. The advancement in technology has led to the

creation of cherry coke in 1985 but consumers still prefer the traditional taste of the

original coke.  

Legal Analysis

Legal aspect focuses on the effect of the national and world legislation. The Coca Cola

Company receives all the rights applicable in the nature of their business and every

inventions and product developments are always going into the patented process.

Environmental Analysis

Environmental analysis examines the local, national and world environmental issues.

According to the data of the Coca Cola Company, all of the facilities are strictly

monitored according to the environmental laws imposed by the government. The

environmental concern of the organization is included in their corporate social

responsibility and aims to minimize their contribution on waste.

3.1 SWOT Analysis:

SWOT stands for Strengths Weakness Opportunities Threats. SWOT analysis is a

technique much used in many general management as well as marketing scenarios.

SWOT consists of examining the current activities of the organisation- its Strengths and

Weakness- and then using this and external research data to set out the Opportunities and

Threats that exist.

Strengths:

Coca-Cola has been a complex part of world culture for a very long time. The product's

image is loaded with over-romanticizing, and this is an image many people have taken

deeply to heart. The Coca-Cola image is displayed on T-shirts, hats, and collectible

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memorabilia. This extremely recognizable branding is one of Coca-Cola's greatest

strengths. "Enjoyed more than 685 million times a day around the world Coca-Cola

stands as a simple, yet powerful symbol of quality and enjoyment" (Allen, 1995).

Additionally, Coca-Cola's bottling system is one of their greatest strengths. It allows

them to conduct business on a global scale while at the same time maintain a local

approach. The bottling companies are locally owned and operated by independent

business people who are authorized to sell products of the Coca-Cola Company. Because

Coke does not have outright ownership of its bottling network, its main source of revenue

is the sale of concentrate to its bottlers.

Weaknesses:

Weaknesses for any business need to be both minimisedand monitored in order to

effectively achieve productivity and efficiency in their business’s activities, Coke is no

exception. Although domestic business as well as many international markets are

thriving (volumes in Latin America were up 12%), Coca-Cola has recently reported some

"declines in unit case volumes in Indonesia and Thailand due to reduced consumer

purchasing power." According to an article in Fortune magazine, "In Japan, unit case

sales fell 3% in the second quarter [of 1998]...scary because while Japan generates

around 5% of worldwide volume, it contributes three times as much to profits. Latin

America, Southeast Asia, and Japan account for about 35% of Coke's volume and none of

these markets are performing to expectation.Coca-Cola on the other side has effects on

the teeth which is an issue for health care. It also has got sugar by which continuous

drinking of Coca-Cola may cause health problems. Being addicted to Coca-Cola also is a

health problem, because drinking of Coca-Cola daily has an effect on your body after few

years.

Opportunities:

Brand recognition is the significant factor affecting Coke's competitive position. Coca-

Cola's brand name is known well throughout 94% of the world today. The primary

concern over the past few years has been to get this name brand to be even better known.

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Packaging changes have also affected sales and industry positioning, but in general, the

public has tended not to be affected by new products. Coca-Cola's bottling system also

allows the company to take advantage of infinite growth opportunities around the world.

This strategy gives Coke the opportunity to service a large geographic, diverse area.

Threats:

Currently, the threat of new viable competitors in the carbonated soft drink industry is not

very substantial. The threat of substitutes, however, is a very real threat. The soft drink

industry is very strong, but consumers are not necessarily married to it. Possible

substitutes that continuously put pressure on both Pepsi and Coke include tea, coffee,

juices, milk, and hot chocolate. Even though Coca-Cola and Pepsi control nearly 40% of

the entire beverage market, the changing health-consciousness of the market could have a

serious affect. Of course, both Coke and Pepsi have already diversified into these

markets, allowing them to have further significant market shares and offset any losses

incurred due to fluctuations in the market. Consumer buying power also represents a key

threat in the industry. The rivalry between Pepsi and Coke has produce a very slow

moving industry in which management must continuously respond to the changing

attitudes and demands of their consumers or face losing market share to the competition.

Furthermore, consumers can easily switch to other beverages with little cost or

consequence.

4. Brand Audit

Brand audit means assessing how a brand is perceived, what its strengths and weaknesses

are, and how well known and regarded it is. An "audit" may also extend to a review of all

marketing materials, advertising, and corporate identity elements to see how consistent

they are and how well they function to represent the desired brand image.  Brand Audit is

a diagnostic tool that helps companies evaluate how effectively they represent and deliver

their brand strategy across all points of consumer contact. It's a third-party analysis of a

brand’s verbal and visual communications, designed to assess the brand’s integrity,

clarity and consistency.

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4.1 Brand extension

We see product extensions every week, in every industry. Coke has introduced Diet Coke,

Lemon Coke, Vanilla Coke, and Caffeine-free Coke. There are dozens of different bottle and can

sizes, as well as 6-packs, 8-packs, and other assorted combinations. Throughout the consumer

world, we see new formulations and improved flavors. We've seen tiny Cadillacs and giant Fords.

Some of these product line extensions have been successful, and others have failed miserable.

New products and brand extensions: coke has various products and the most common of

these as the produced date are as follows:

• Diet Coke (introduced in 1982), which uses aspartame, a synthetic phenylalanine-based

artificial sweetener in place of sugar

• Diet Coke Caffeine-Free

• Cherry Coke (1985)

• Diet Cherry Coke (1986)

• Coke with Lemon (2001)

• Diet Coke with Lemon (2001)

• Vanilla Coke (2002)

• Diet Vanilla Coke (2002)

• Coca-Cola C2 (2004)

• Coke with Lime (2004)

• Aquarius Mineral Water (2004)

• Diet Coke with Lime (2004)

• Diet Coke Sweetened with Splenda (2005)

• Coca-Cola Zero (2005)

• Coca-Cola Black Cherry Vanilla (2006)

• Diet Coca-Cola Black Cherry Vanilla (2006)

• Coca-Cola BlāK (2006)

• Diet Coke Plus (2007)

• Coca-Cola Orange (2007)

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4.2 Coke as a Global Brand

A global brand is one which is perceived to reflect the same set of values around the world.

Global brands transcend their origins and creates strong, enduring relationships with consumers

across countries and cultures. Global brands are brands sold to international markets. Global

brands make us feel like citizens of the world, and they somehow give us an identity.

Consumers look to global brands as symbols of cultural ideals. They use brands to create an

imagined global identity that they share with like-minded people. Transnational companies

therefore compete not only to offer the highest value products but also to deliver cultural myths

with global appeal. Coke remains the most powerful “syrup turned secret formula” in the world. 

Remarkably, a small beverage company from the 1800s turned into and sustained itself as a global icon.   Interbrand,

which just released itsannual list of top 100 brands, declares Coke the #1 brand for 10 years running.  Its brand value

of $68 billion is the majority of its $128 billion enterprise value.

4.3 CBBE analysis

4.4 Brand recognition:

Coca-Cola is recognized by 94% of the world’s population. Approximately 10,450 Coca-Cola

brand drinks are consumed around the world each second of every day. Coke is a genuine drink,

so it is sold internationally. Coke vending machines appear in many schools around the world too

so even the school going children are familiar with coke. Coca-Cola sold only 25 bottles in the

first year Nowadays, they sell over one billion bottles per day which shows us the current

position in the market as a top brand.

4.5 Brand value and brand equity

Company was 44.13 billion US dollars. In 2007, Coca Cola ranked 4th in the list of top 10

powerful brands in the world as published by Millward Brown's BrandZ index. Their survey was

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based on the financial strength of the brands. The brand value of Coca Cola was nearly 44.134

billion US dollars, preceded by only Microsoft, GE and Google. The once small French wine

company called “ Coca” is now world famous as Coca Cola. It is the best known

soft drink brand in the world. 

In 2005, Coca Cola claimed top place in the Interbrand's list of the 100 most valuable brands in

the world. Its brand value was then 67.5 billion dollars. This is up from 2004 when Coke held a

brand value of 67.39 billion dollars. An American brand, Coco Cola has been generating 70% of

its sales from outside of US. The company's efficient brand management system has successfully

established a global brand. At present, Coca Cola possesses a strong brand identity in the global

market for which, sales are rapidly increasing. 

Various tests can be done to measure the brand equity they are blind test, Coca-Cola, then the king of brands, ignored the importance of its brand and of the marketplace. It spent $4m testing a product-feature that in fact had little effect on sales. Instead of spending $4m on merely asking people what tasted best, Coca-Cola should have thoroughly trialed New Coke on a test-bed audience first to gauge the actual market reaction. That way Coca-Cola would have got a forewarning for the extreme reaction the change would cause.

4.6 Brand awareness;

Brand awareness is an important way of promoting commodity-related products. The product

that maintains the highest brand awareness compared to its competitors will usually get the most

sales. For example, in the soft drink industry, very little separates a generic soda from a brand-

name soda, in terms of taste. However, consumers are very aware of the brands Pepsi and Coca

Cola, in terms of their images and names. This higher rate of brand awareness equates to higher

sales and also serves as an economic moat that prevents competitors from gaining more market

shares.

4.7 Brand Image

Brand images are usually evoked by asking consumers the first words/images that come to their

mind when a certain brand is mentioned (sometimes called "top of mind"). When responses are

highly variable, non-forthcoming, or refer to non-image attributes such as cost, it is an indicator

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of a weak brand image. Good brand images are instantly evoked, are positive, and are almost

always unique among competitive brands.

According to the report presented by Interbrand, a brand consultancy company, the image of

Coca-Cola Co. was overall the most valuable for eight years in a row.

4.8 Brand personality

Brand Personality is a set of human characteristics associated with a brand. Personality is how

the brand behaves. Coke is ‘conforming’ while Pepsi is ‘irreverent’. In consumer’s mind, the

impressions merge to form an overall concept of what to expect from brand. It shows the

differences in responses by different consumers provide useful insights. Personality traits are

what the brand will live and die for’.

There are 5 facets of brand personality namely;

We have tried to analyze coke’s brand personality on the five aspects.

Sincerity: Coke has been a very old and genuine brand and people can relate themselves to it.

It has been sincerely serving customers from their very starting days.

Excitement: Coke can be related to excitement, fun and enjoyment. Whenever there are people

gathered for special occasions coke has always been a part of it. In Nepalese context the tag

line “ramailo cha coke jindagi” explains it all.

Competence: it is a very successful, reliable and a competent product. Though Pepsi has

always been a tough competitor it has been able to leave it behind.

Sophistication: Coke is a huge brand that can be associated with the sophistication also.

Ruggedness: whenever people think about outdoorsy, toughness coke comes in people’s mind.

5 FAILURES AND CHALLENGES

Some Challenges and failures faced by the company

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New Coke is the reformulation of Coca-Cola introduced in 1985 by The Coca-Cola

Company to replace the original formula of its flagship soft drink, Coca-Cola. New Coke

had no separate name of its own, but was simply known as "the new taste of Coca-Cola"

until 1992 when it was renamed Coca-Cola II. The public's reaction to the change was

poor, and the new cola was a major marketing failure. The new formula hurt Coke as

consumers requested Classic Cokes’ return.

The former CEO of Coca cola Late Roberto Guizueta declared in 1996 there is no more

international or domestic rather it’s global. Every company should think global and act

global. So the company went for global product. But after 1999, the market share of Coca

cola declined in Asia by one-third due to Asian currency crisis. Then company realizes

people do not drink globally but local people get thirsty and buy a locally made drink so

the company went for localization.

Vanilla Coke was touted as the greatest innovation since Diet Coke in 1983. It also has

the distinction of the greatest flops after the New Coke. Vanilla Coke came with a bang

in the Indian market in April 2004. It went without much noise in 2005.

It has been said that Coca Cola was unable to maintain good relationship with its partner

organization especially with the bottling partners. There is always some complaint about

poor communication.

As per the critics, the company is reluctant to change. They do not react immediately as

per the demand.

Coca cola wasn’t so popular in Pakistan because the large market share is obtained by its

competitor Pepsi. It’s a challenge for the Company to gain more market in Pakistan.

6. Conclusion

Coca Cola is gradually changing its product portfolio and business practices, as CEO Is dell has

brought in new management to reinvigorate Coke. Looking forward, Coca Cola must also

leverage the depth of its global reach and dominance, while tailoring retailer based strategies

designed to drive maximum marginal utility for customers.

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There are a lot of challenges that Coke has to face as there is fierce competition to gain market

share. Consumers nowadays are more aware about the products they are buying. In order to

survive Coca Cola has to come up with new innovations to match the consumer’s expectations.

Company should also focus on improving the communication with its bottleling partners so that

they could maintain long term and sustainable relationship in international market. The three

main ways are through innovation, relations or reputation.  

First of all innovation can be used. This may certainly give coca cola competitive advantage

because it introduces a new product, which many people will want to try

People will like to purchase the commodity even though price is high because no substitutes are

available. It may also give coca cola brand loyalty which means customers will stay loyal to

them no matter what happens.

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