Evaluating the Growth and Competitive Strategy of Coca Cola

Evaluating the Growth and Competitive Strategy of coca plant ColaINTRODUCTIONThe coca plant-Cola phoner is the worlds largest drinkable family, largest manufacturer and trafficker of non-alcoholic beverage concentrates and syrups in the world and in one of the largest corporations in the United States. The beau monde is best k in a flashn for its flagship amplification coca-Cola, invented by pharmacist John Stith Pemberton at Atlanta USA, in 1886. They used to make Coca-Cola syrup by melted sugar, water, and some other ingredients (especially coca plant leaf and the kola nut). Frank M. Robinson, Pembertons bookkeepers, was the person who suggested the telephone Coca-Cola. The company has 92,400 employees in two hundred+ countries. It refreshes the consumers nearly 1.6 billion per day. The companys portfolio includes 13 billion dollar brands.The Coca-Cola corporation is a nonalcoholic beverage brands which is the worlds largest manufacturer, distrisolelyor. It is worlds mos t valuable brands where the company got license for more than ergocalciferol nonalcoholic beverage brands mostly scintillate beverages and a mixture of still beverages such as water, juices, teas and c send offees, energy and sports drinks. Basically, the company introduces beverage concentrates and syrups which be sold to authorized bottling and canning operations (which are called Bottlers) where they manufacture the concentrates and syrups to produce finished beverage crops (The Coca- locoweed, 2009). It has worlds largest distribution networks through bottling partners, distributors, wholesalers, and retailers.FINANCIAL POSITION tax income US$ 31.0 Billion (FY 2009)Operating income US$ 8.23 Billion (FY 2009)Net Income US$ 5.82 Billion (FY 2009)Total Assets US$ 48.7 Billion (FY2009)Total Equity US$ 24.8 Billion (FY2009) wizard year Growth 3.0%Income Growth 17.5%Employee Growth 0.4%Coca-Cola, a $62 Bn Brand(The Coca-Cola, Annual Report, 2009)COMPETITIORSPepsiCoNestle S.A.Dr Pe pper Snapple GroupCadbury Schweppes plcGroup DanoneKraft Foods Inc.THE COCA-COLA COMPANYS nurtureTH1886-1892 The Coca-Cola Company was acquired the complete ownership of its business by Asa Candler for $2300 in 1891. In 1898 the company entered the grocery of Canada and Mexico.1893-1904 An invention into a business, introduced promotion, advertisement, building plants in Chicago, Dallas and Los Angeles, establishing travel-off bottling franchises.1905-1918 Cuba and Panama became the first two countries outside the U.S. to bottle the Coca-Cola. The company started delivering a unique bottle to ensure people are getting real Coca-Cola with free of cocaine, and introduced new solve of coke bottle.1919-1940 The Company was sold for $25 million to Atlanta banker Ernest Woodruff and a group of investors in 1919. The Company established a manufacturing operation in France in 1923. The company became the public circumscribed at $40 per share. It delivered 53 countries worldwide.1940-1 959 Expanding in 120 countries, promoting the word COKE, setting up new Coca-Cola plants in northeastern America and Europe.1960-1981 Expanding with new flavors, Fanta, Sprite, TAB, Fresca, acquiring the Minute Maid Company, promoting exciting and dynamic advertisement. In 1960, metal cans were introduced first time which are now uncommitted in the market.1982-1989 165 countries enjoyed Coca-Cola, introducing Diet coke, Cherry Coke.1990-1999 200 Countries enjoyed Coca-Cola, associated with Sports including the Olympic Games and FIFA World Cup.2000-Now More than 200 countries enjoy Coke, delivering global marketing platform.Ingredients and PackagingThe Coca-Colas Manufacturing and Distribution ProcessIngredients and wad PackagingConcentrate PlantsTransportProduction and Sales FacilitiesThird-Party Transport by Rail/RoadSalesmarting EquipmentConsumersCustomers e.g.Tesco, Asda(Coca- low-down Enterprise, 2009, Corporate Responsibility and Sustainability Report)THE COCA-COLA BUSINESS SYSTEMThe Coca-Cola Company and/or subsidiaries only produce syrup concentrate which is then sold to various bottlers throughout the world who hold a Coca-Cola franchise. The Coca-Cola 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 exchange, distribute and merchandise the solutioning Coca-Cola product to retail stores, vending machines, restaurants and food inspection and repair distributors.The Coca-Cola Enterprise (CCE) is the largest bottler of Coca-Cola beverage who manufactures and distributes the most popular beverage brands in the world. The CCE is one of more than 300 bottling companies CCE delivered approximately 41 billion bottles and cans in 2009. It represents approximately 16 % of total Coca-Cola product volumes. It creates revenues of $21.6 billion, with free cash flow of $872 million (Coca-Cola Enterprise, 20 09). In North America, it operates 46 U.S States and all 10provinces of Canada, composed of five business units. It has 59 ware facilities and 314 principal distribution facilities. It also has 59000 employees in US Canada. In Europe, it has 16 beverage output facilities and 35 principal distributors facilities with approximately 1 one hundred0 employees.(www.answer.com)THE COCA-COLAS USE OF STRATEGIC CHOICESstrategic choices are concerned with decisions about an organizations future and the way in which it has to respond to the myriad of pressures and influences as a result of its immediate and macro environment. To this end in that location are three underlying choices to be made as shown below.Strategic choicesStrategic choicesMethods for pursuing strategiesThe choices about how strategies are to be pursuedStrategy directionsThe choices of products and markets available to an organizationBases of competitive StrategyThe choices as how to an organization positions itself in r elation to competitorsBases of competitive Strategy directions Methods for pursuingStrategy strategiesWhittington (2008, p. 217)Bases of competitive strategyThis area has to do with how Coca-Cola has positioned itself in relation to its competitors. The Coca-Cola Company competes in the non-alcoholic beverages segment of the commercial beverages diligence. The non-alcoholic beverages segment of the commercial beverages industry is highly competitive, consisting of numerous firms. These include firms that, like Coca-Cola, compete in multiple geographic areas, as well as firms that are primarily regional or local in operation. Competitive products include numerous non-alcoholic sparkling beverages various water products, including incase, flavored and enhanced waters juices and nectars fruit drinks and dilatable (including syrups and powdered drinks) coffees and teas energy and sports and other performance-enhancing drinks dairy-based drinks functional beverages and various other no n-alcoholic beverages. These competitive beverages are sold to consumers in both ready-to-drink and other than ready-to-drink form. In legion(predicate) of the countries in which Coca-Cola does business, including the United States, PepsiCo. Inc. is one of its primary competitors. Other significant competitors include, Nestl, Dr Pepper Snapple Group, Inc., Group DANONE, Kraft Foods Inc, and Unilever etc. In certain markets, its competition includes beer companies. Coca-Cola also competes against numerous regional and local firms and, in some markets, against retailers that attain developed their own store or private punctuate beverage brands.The strategy clock competitive strategy optionHighDifferentiation24HybridFocused differentiation53Perceived Product/ Service2 wretched price6No frills71Strategies destined for ultimate failure8LowHighLowPriceWhittington (2008, pp. 225)The strategy clock above represents different positions in a market, where customers or potential customers h ave different requirement in terminuss of value for money. Coca-Cola has therefore taken the strategy option of hybrid, in which case it maintains its price but tries to differentiate itself from competitors. The Company has had a mix of pricing, advertising, sales promotion programs, product innovation, increased efficiency in deed techniques, the introduction of new packaging, new vending and dispensing equipment, and brand and trademark development and protection. In this want Coca-Cola has increased its annual marketing budget substantially, launched many new products, and developed a model to help its retail customers maximize their sales while it put out to plan for the future. The risk of this choice is that one could lose market share due to its low prices but then it can be tackled through economies of crustal plate where the company produces in large quantities to cover cost and tries to penetrate different geographies as is the case of Coca-Cola. This choice has actu ally proved beneficial to Coca-Cola even though its market share has not grown tremendously as one would think over the last ten years but it definitely has a much higher market share than its competitors, especially Pepsi Co. This has been possible for Coca-Cola due to its recognized brand name and strong social movement in so many geographies including Africa, Asia, Europe, Latin America, North America and the Pacific spanning across 200 countries.Strategy DirectionThis has to do with the scope of a company in terms of its products. all over the last few years Coca-Cola has introduced a lot of products to its portfolio, including the recent Coca-Cola zero, which sold more than 600 million cases globally. Today Coca-Cola does not only deal in non-alcoholic frail drinks, but it also makes a lot of juices and juice drinks, still and carbonated products. As a matter of fact Coca-Cola has more than 3,300 products in more than 200 countries. In general one can rightly say that Coca-C ola has gone into diversification since it has not only shifted from soft drink to juices and even energy drinks but has also ventured and penetrated larger market over the years. Diversification is simply a strategy that takes the organization away from both its existing market and its existing products. We have therefore used the Ansoff matrix below to identify the strategy direction which Coca-Cola is pickings Box D, which is diversification. The Ansoff matrix provides a simplified way of generating four basic alternative directions for strategic development.Strategic directions (ansoff matrix)ProductsExisting stark nakedA BMarket penetration Product developmentConsolidationC DMarket development DiversificationExistingMarketsNewWhittington, (2008, p.258)Diversification happened to be a good strategic option for Coca-Cola as it helped the Company to break new pace in business. For instance a new product like the Coca-Cola zero did so well in terms of sales. This therefore impact ed positively on the companys market share. Again shifting from soft drinks to energy and sports drinks also gave Coca-Cola an opportunity of a larger market share.However diversification can be smashing intensive as not all organizations will be able to cope with the finances involved since a lot of finances will be needed to go into research and development for the new product. For instance Pepsi-cola once came up with a new product called Meca cola but it wasnt thriving and the product was withdrawn later on. Surely there will be a lot of laboratory works and feasibility studies to go with a new product and this will equally require skilled people getting involved and consequently hiring more employees so if the organization does not have enough finances it may not be able to cope. Again the organization which decides to diversify will put in place an adequate amount of public sensory faculty in terms of advertisements and trainings. This may involve using news papers, televis ion, internet etc. All these can be very enormous for an organization so suffice it to say that diversification requires careful planning.Methods for pursuing strategiesMost of Coca-Cola products are manufactured and sold by its bottling partners. The Company typically sells concentrates and syrups to its bottling partners, who convert them into finished packaged products which they sell to distributors and other customers. Separate contracts (Bottlers Agreements) exist between the Company and each of its bottling partners regarding the manufacture and sale of Company products. Subject to specified terms and conditions and certain variations, the Bottlers Agreements slackly authorize the bottlers to prepare specified Company Trademark Beverages, to package the same in authorized containers, and to distribute and sell the same in (but, subject to applicable local law, generally only in) an identified territory. The bottler is obligated to purchase its entire requirement of concentra tes or syrups for the designated Company Trademark Beverages from the Company or Company-authorized suppliers. Coca-Cola agrees to refrain from interchange or distributing, or from authorizing third parties to sell or distribute, the designated Company Trademark Beverages throughout the identified territory in the particular authorized containers.The Coca-Cola Company has created and achieved a strategic lock-in such that it has achieved dominance in the industry. For instance many people will think of Coke once they think of using or taking a soft drink.Strategic ImplementationInternational strategic management is divided by Strategies monitoring, goal setting, strategies formulation, strategic weaponation. Mostly, companies is going to face challenges when they implement their strategies. in that location are follo benefitg challenges such asResistance to change and inertiaInsufficient attention to contextWrong choice of style for managing the changeEducation, participation, in tervention, direction, irresistible impulseInsufficient understanding of power and political processesLack of clarityLack of stakeholder supportInsufficient re beginnings or capabilitiesSay in modelling coca cola Company decided to launch a new product in the market. So they consider with how do they decide what new product to sell? And who to sell them to? After that company has to do market research through the hypothesis test. They can do research two methods. Such as primary info and secondary data methods. According to coca cola company products they can do the following research such asDesk research which is identify their counterpane in the market in particular productDetailed research which is using small groups like qualitative research such as survey. vicenary research which is a large scale surveys to collect breeding. This method can identify which type of product and what design of productTrial test market which is a sample that mean company launch their product in the market after finishing and if consumers like the product they can increase their production and tracking success of product and in the other hand if consumers dont like the product they can stop their new product activities. throngPeople are a most valuable asset and greatest liability in any organization. If people dont perform well with productivity standards, provide good advantage business that will affect the organization business is doomed. Mostly organization select the people who can do get more jobs done, developed implement support program to the people and sell their goods and services. Employees are the best source of competitive advantage because cant copy by the customers. In case coca cola companys employees are sacrificing their competences within organization. They treated employees as good as well. They have to maintain their organizational structure to motivate their employees. As a sympathy that can do their work well done company needs to implementing com pensation, performance management, training, reward and retention programs. Finally they may able to stave off competitors.They wanted caliber people for this century. They would use facts and the knowledge in orderliness to add value to the organization. In any stage everyone should have the same information in order quickly put it to effective and profitable use. They believed having right people in right place can create competitive advantage. People participate all levels of product delivery from production workers to salespeople and corporeal managers in Coca-Cola Company. Rebuilding the coke bubble is important issues of people within the coca cola company.Coca cola company is unable to control their people internally because poor handling of public relations. In globalization Coca-Cola Company will increase social pressure say as community friendly. Coca cola Companys future profitability depends on societal marketing with on ethics and corporate social responsibility. Cola Company has challenge with profitability and responsibility into stakeholders such as consumers, customers, employees, communities, governments and environment.Culture is effect on Cola Company with their managers and workers. If they dont have stiff and genial culture they will face among staff and managers likely say staffs will not be motivated to work say in example staff may have to lose their rest days. This cause will effect with staff will be tired from their day to day running(a) and also not have time to enjoy with their family. I think Coca Cola Company has warm culture because success of their company mainly depends on their employees. They sacrificed their skills and ability on their particular task. Company has friendly environment and they motivated themselves.ResourcesAppropriate resources are time, money, talent and tools. Water is a main source of coca cola companys products. It is a limited resource. Which is availability, quality and sustainability nature res ource? In addition principal raw materials are nutritive and non- nutritive sweeteners. nutritious sweeteners are High Fructose corn syrup (HFCS) and Sucrose. Which is form of sugar? Which are available from numerous domestic sources? Those are fluctuation of market price. Coca Cola Company has no experience in difficulty in nutritive sweetener.Coca cola bottlers sales and services (CCBSS) is limited liability Company owned by coca cola bottlers. Non-nutritive sweeteners are aspartame, acesulfame, potassium, saccharin, cyclamate, sucrose. These raw materials are ready to available from numerous sources. Aspartame is a important non-nutritive sweetener. This is used alone or mixed with other sweeteners.According to coca cola company has above production factors such as people, system, raw materials, capital and brands etc. focus on the last ten years coca cola company has changed within the production factors to improve their business efficiency and competitive with other companies. Mostly start of their production people is most part of their business. Increase the cost of production is going to affect to decrease the marginal revenue and increase the marginal cost. Coca cola has Increasing completion which that they can develop their business in globally. In the economics most part is production factors which are limited resources and scarcity. With the limited resource Coca Cola Company has many choices. They consider with opportunity cost. I suggest that Coca Cola Company is using more with their production through water. Water is unlimited resources. So they cant use without control. Because geographical condition is going to affect in the environment, that is also affected to people.FinanceCoca Cola Company is doing their business with not only their money but also they have debt. Due to coca cola is a global presence and strong capital position now. They can increase their currency through low effective cost. In order to they could achieve mix of short term and long term debt and mix of fixed rate and variable rate debt. As a result is lower overall cost of adoption.Basically funds are vital in order invest in new asset including people, machinery. The structure change would require more funds in order to move closer to the customer. It considered how the company has been raised the fund both internally (retain profits) and externally (capital markets sources long term loans, share issues) over ten years. Lower come to rate is increase to consumer demand in economy. In this situation Coca Cola Company will increase their debt as result of low borrowing rates. It can use of debt on innovation of new products. In the point of view Coca Cola Company has spent less cost and also sell low price to the people. Due to this low price people get feel cheaper products in coca cola. Most of the non alcoholic beverage industry particularly coca cola company has high sales due to they have got major social function in success and growing m arket in non-alcoholic beverage industryThe non-alcoholic beverage industry has high sales in countries outside the U.S.According to the Standard and Poors Industry surveys, For major soft drink companies, 32 there has been economic improvement in many major international markets, such as Japan, Brazil, and Germany. These markets will compensate to play a major role in the success and stable growth for a majority of the non-alcoholic beverage industry.This analysis basically examines the local, national and world economy impact which includes issues of recess and inflation rates. Since the September 11 attack the world has been facing a rapid change with increase instability further more give to the period of recession there has been a cut in the interest rate by ten times due to which the companys can increase the use of debt as result of low borrowing rates. Cola company contracts with larger number of bottling partners in the world to increase their distribution of beverages. The Company has threatened of stability due to the subordinate relationship that impact with bottling partners.GROWTH ACROSS ALL CATEGORIES2008-2020 Percentage of NARTD Industry Incremental GrowthVol.ValueSparkling17%24%succus Juice Drink13%19%RTD Tea / Coffee18%13%ENERGY4%12%Packaged Water25%10%Sports5%9%(The Coca-Cola, Annual Report, 2009)Winning with Coca-Cola TM + Core and New in Developed and Emerging MarketsCOCA-COLA TMCORE AND NEWMEXICO3%12% dud5%24%RUSSIA7%13%BRAZIL8%18%S AFRICA4%6%CHINA11%20%Volume CAGR 2005 2008Coca-Cola TM Growth Potential Is Just Beginning To Be Unlocked(2008 PER CAPITA)Delivering Through Unique Global scheme CapabilitiesConsumerConsumer MarketingShopperCoca-Cola GrowthFranchise LeadershipSystemCustomer Commercial LeadershipCONSUMER MARKETING1.6 Bn serving per day1 MM per minute206 CountriesCUSTOMER LEADERSHIP20 MM customer per workweek7 MM CoolersFRANCHISE LEADERSHIP$64 Bn supply chain900 + mfg operations8500 sales centers and warehouses500,000 ve hiclesKEY SUCCESS FACTORSThe Coca-Cola Company is one of the largest, most successful and most widely recognized corporations in existence. Coca-Cola is a dominating force in the beverage industry and sets a very high standard of competition. explore shows that its trademark is recognized by over 94% of the worlds population. There are many factors contributing to Coca-Colas success. It is believed that their key success factors are Marketing, Innovation, and Globalization.MARKETINGCoca- Cola is seen as one of the winning business model. They were among the pioneers of advertising techniques and styles used to capture the markets. Through its intense marketing campaigns, Coke has developed an image that is reflected in what we think of when we debase Coke and what we associate with drinking Coke. This image has been subconsciously installed in our brain by the advertising campaigns that show Coca-Cola associated with good times.Marketing Strategy of Coca-ColaSpeed up carbonated so ft-drink growth, led by Coca-Cola.Selectively expand the family of beverage brands to oblige gainful growth.Develop system productivity and capability together with bottling partners.Provide customers with rapture and consistency to generate growth across all channels.Direct investments to highest potential areas across markets.Drive efficiency and cost-effectiveness everywhere.Incorporated promotional activities.(Www. Scribd.com)INNOVATIONCoca-Cola has been able to continue to exist and develop in an ever-changing market because of its ability to steadily innovate and deliver new products. Coca-Cola began to a strategy referred to as play to win innovation. The company started operating in a decentralized environment that was unfeasible in few years ago. Now Coca-Cola offers nearly 500 different products in and is still dominating the beverage industry. This is made possible by the companys ability to innovate and adapt to changing markets. Innovation brings markets faster. To sat isfy the needs of older consumers, the Company made sophisticated Soda for social occasion. The Coca-Cola Company develops innovative premium brands, such asBurn Soft Drinks- now in 85 countries.New Burn Intense Soft Drinks- Now in 7 countries.Illy Coffee- Now in 18 countries.The Company is also acquiring and expanding premium brands, such asMaking Glaceau vitamin water will be next global brand.Investing in premium platforms, such as Innocent, Juice Smoothies, Lunch pack Smoothies, 100% NFC Orange Juice. Now they are in 11 countries in Europe.GLOBALIZATIONTodays big business takes place on a global scale, and Coca-Cola is no exception. engineering is continually changing business, and these constant changes have been making it more feasible and profitable for business to expand their operations globally in order to behave all different types of diverse markets around the world. Coca-Cola is taking advantages of the large revenue opportunities made possible by participating in glob al market and now offers products in 200+ countries around the world.$ 20 TRILLION gross domestic product GROWTH BY 2020Global Real GDP ($T)$70$5020202008INCRIMENTAL GLOBAL GDP GROWTH RATECOUNTRY / REGIONPERCENTAGERest of the World21%China, India, Latin America39%USA21%Japan3%Europe16%THE COCA-COLAS CONFIDENCE IN THE BEVERAGE INDUSTRY LONG TERM OPPORTUNITIES5% CAGR145 Bn Cases4% CAGR$1,100 Bn55 Bn Cases Incremental Growth$500 Bn Incremental Growth90 Bn Cases$600 Bn2008202020082020Industry ValueIndustry VolumeTRACK RECORD OF PROFITABLE GROWTHGROWTH SINCE 197722X16X13XXX6X9X4XXOperating IncomeNet RevenueOperating IncomeOperating IncomeNet RevenueNet RevenueTotal WorldRest of WorldUNITED STATESHEALTHY SYSTEM INVESTING TO GROWHigher MarginReinvesting -Long termImproving ProfitabilityCapital ExpendituresReturn on Invested CapitalEBIT / Revenue14.9%14.6%11.2%13.8%$4 Bn$6 Bn2005200820052008200520088Comparison of Five family Cumulative Among The Coca-Cola Company, The Peer Group Index and The SP 500 IndexTotal Return Stock Price Plus Reinvested DividendsKOPeer GroupSP31/12/04$100$100$10031/12/05$99$111$10531/12/06$122$132$12131/12/07$160$158$12831/12/08$121$120$8131/12/09$158$146$102The total return assumes that dividends were reinvested quarterly and is based on a $100 investment on declination 31, 2004. motion AT-A-GLANCE200720082009Unit Case Volume(in billions)22.723.724.4200720082009Net Operating Revenues(in millions)$28,857$31,944$30,990200720082009Operating Income(in millions)$7,252$8,446$8,231200720082009Operating Cash Flow(in millions)$7,150$7,571$8,1862006200720082009Total Assets(in millions)$29,963$43,269$40,519$48,671Long -Term Debt(in millions)$1,314$3,277$2,781$5,059The Comparison with PepsiCoPepsiCo is the main competitors and threats to the Coca-Cola.(Year Ended December 31, 2009)(In Millions except per share data, and no.)DESCRIPTIONSThe Coca-ColaThe PepsiCoTotal Assets