Strategic Management Issues Of Multinational Companies Mn Cs A Case Study On Coca Cola Company

Strategic Management Issues of Coca-Cola Company

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 REPORT
We are 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

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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-

 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 Company’s 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

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We examine secondary data of which related to the Strategic
Management Issues at the global based Market. Data are
collected on various issues from annual report of Coca-Cola
Company (2005-2009). In our report we analysis the monthly,
quarterly, half-yearly news Review of this company. Based
upon this data we like to analysis the Economic Review,
Statistical Strategic condition of the Coca-Cola Company. Both
the official and regional website helps us to find out more
related to the issues with the global market. Form those huge
data we take the necessary and used them for the analysis.
Our analysis data are clearly represented in our main part of
the report through relevant chart, graph with proper
description.

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 faced
the 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

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Strategic management is the process of specifying an organization's
objectives, developing policies and plans to achieve these
objectives, and allocating resources so as to implement the
plans. It is the highest level of managerial activity, usually
performed by the company's Chief Executive Officer (CEO) and
executive team. It provides overall direction to the whole
enterprise.

International strategic management is a comprehensive and ongoing
management planning process aimed at formulating and
implementing strategies that enable a firm to complete
effectively internationally. The process of developing a
particular international strategy is often referred to as strategic
planning. Strategic Management is the study of function and
responsibilities of senior management.

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Five Essential Parts of Strategic Management

Goal-setting

Goal-setting enables a firm to articulate its vision: identify what
needs to be accomplished, define short-and long-term
objectives, and relate them to what 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

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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 key strategic issues.

Strategy Implementation

To implement the strategy, assemble the necessary resources
and apply them. Put the chosen plans into practice, marshal
the resources and commitments necessary for moving ahead,
tap existing capacity and/or build new capacity, and seek to
achieve results.

Strategy Monitoring

Monitoring allows checking the progress toward achieving the
firm’s goals and assessing whether any changes in the
environment necessitate alternatives to the firm’s strategy.
Modify plans and actions to adjust to the impact of changing in
the operating environment.

SIGNIFICANCE OF 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.

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It helps in understanding how policies are formulated and in
creating appreciation of complexities of environment that the
senior management faces in policy formulation.

Managers need to begin by gaining an understanding of the
business environment and to in control.

They should know to manage and understand information
technology, which is changing the face of business.

As public and common investors own and more companies
managers need to acquire skills to maximize shareholder
value.

To have/take a strategic perspective, managers should
foresee the future and track changes in customer expectation.
Intuitive, logic reasoning is required for proper decision-
making.
Significance of Strategic

As corporate are becoming more integrated with the public
life, corporate governance is becoming important which
Management

manager may have to practice.

To the shape the Its helps to increase
Future of business the productivity

Effective strategic
idea To Makes discipline

Mangers and
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It’s decentralized the Page 7
Management To makes forward s


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.

• 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.

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• 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 firm’s 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 firm’s
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?
• 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

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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 actions & they sometimes do get involved
in operational issues. Professionals on the B.O.D help to get

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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. Directors
and The C.E.O as they would look after Strategic Management
a responsible of certain areas / parts of terms.

Role of SBU – Level Executives: They Co-ordinate with other SBU’s
& 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.

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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.

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 company operates in more
than 200 countries. Approximately 74% of its products are sold
outside of the US. The company is headquartered in Atlanta,
Georgia and employs 71,000 people as of September
2006.The company recorded revenues of $24,088 million
during the fiscal year ended December 2006, an increase of
4.3% over 2005. The increase in revenue was primarily due to
increase in sales of Unit cases of company’s products from
approximately 20.6 billion unit cases of the company’s
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

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sales and unit case volume both grew 4% in 2006 when
compared to 2005. The operating profit of the company was
$6,308 million during fiscal year 2006, an increase of 3.7%
over 2005. The net profit was $5,080 million in fiscal year
2006, an increase of 4.3% over 2005.

HISTORY OF COCA-COLA

Coca-Cola was first introduced by John Smyth Pemberton, a
pharmacist, in the 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 Jacob’s Pharmacy and
customers bought the drink for five cents at the soda fountain.
Carbonated water was teamed with the new syrup, whether
by accident or otherwise, producing a drink that was
proclaimed “delicious and refreshing”, a theme that continues
to echo today wherever Coca-Cola is enjoyed.

Dr. Pemberton’s partner and book-keeper, Frank M.
Robinson, suggested the name and penned “Coca-Cola” in
the unique flowing script that is famous worldwide even today.
He suggested that “the two Cs would look well in
advertising.” The first newspaper ad for Coca-Cola soon
appeared in The Atlanta Journal, inviting thirsty citizens to try “the
new and popular soda fountain drink.” Hand-painted oil cloth
signs reading “Coca-Cola” appeared on store awnings, with
the suggestions “Drink” added to inform passersby that the
new beverage was for soda fountain refreshment.

By the year 1886, sales of Coca-Cola averaged nine drinks per
day. The first year, Dr. Pemberton sold 25 gallons of syrup,
shipped in bright red wooden kegs. Red has been a distinctive

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color associated with the soft drink ever since. For his efforts,
Dr. Pemberton grossed $50 and spent $73.96 on advertising.

Dr. Pemberton never realized the potential of the beverage he
created. He gradually sold portions of his business to various
partners and, just prior to his death in 1888, sold his remaining
interest in Coca-Cola to Asa G. Candler, an entrepreneur from
Atlanta.

By the year 1891, Mr. Candler proceeded to buy additional
rights and acquire complete ownership and control of the
Coca-Cola business. Within four years, his merchandising flair
had helped expand consumption of Coca-Cola to every state
and territory after which he liquidated his pharmaceutical
business and focused his full attention on the soft drink. With
his brother, John S. Candler, John Pemberton’s 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 Company’s 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

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the year 1919, the Coca-Cola Company was sold to a group of
investors for $25 million. Robert W. Woodruff became the
President of the Company in the year 1923 and his more than
sixty years of leadership took the business to unsurpassed
heights of commercial success, making Coca-Cola one of the
most recognized and valued brands around the world.

HISTORY OF BOTTLING

Coca-Cola originated as a soda fountain beverage in 1886
selling for five cents a glass. Early growth was impressive, but
it was only when a strong bottling system developed that
Coca-Cola became the world-famous brand it is today.

Year 1894: A modest start for a bold idea

In 1894 the Coca-Cola Company is in a candy store in
Vicksburg, Mississippi, brisk sales of the new fountain
beverage called Coca-Cola impressed the store's owner,
Joseph A. Biedenharn. He began bottling Coca-Cola to sell,
using a common glass bottle called a Hutchinson. Biedenharn
sent a case to Asa Griggs Candler, who owned the Company.
Candler thanked him but took no action. One of his nephews
already had urged that Coca-Cola be bottled, but Candler
focused on fountain sales.

In 21st century the Coca-Cola bottling system grew up with
roots deeply planted in local communities. This heritage serves
the Company well today as consumers seek brands that honor
local identity and the distinctiveness of local markets. As was
true a century ago, strong locally based relationships between
Coca-Cola bottlers, customers and communities are the
foundation on which the entire business grows.

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1920s and 30s … 1950s … Packaging
1916 … International innovations
expansion
Birth of the
contour bottle

VISION OF COCA-COLA COMPANY

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

• To refresh the world in body, mind and spirit
• To inspire moments of optimism through our brands and
our actions
• To create value and make a difference everywhere we
engage.

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MISSION OF COCA-COLA COMPANY

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

• Consumers as a superior beverage experience
• Consumers as an opportunity to grow profits through the
use of finished drinks
• Bottlers as an opportunity to grow profits in volumes
• Bottlers as a trademark enhancement and positive
economic value added
• Suppliers as an opportunity to make reasonable profits
when creating real value-added in an environment of
system-wide team work, flexible business system and
continuous improvement
• Indian society in the form of a contribution to economic and
social development.

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• 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.

VISION FOR SUSTAINABLE GROWTH

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

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

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

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

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

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

QUALITY POLICY

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 Company’s beverages.

CURRENT ORGANIZATIONAL ORGANOGRAM

CEO

EVP/ EVP/ SVP & SVP & SVP &
President CFO Preside Genera Director Director
Bottling and nt MKT l Human Public
Preside
Invest/ EVP Strateg Counse Resourc Affairs/
nt
Supply y l es Communica
Chain tion

President President Presiden President President
of Eurasia European t of Latin of Pacific
Group Union African America Group
Market Group Group

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BRANDS OF COCA-COLA

Coca-Cola Zero® has been one of the most
successful product launch hes in Coca-Cola’s
history. In 2007, Coca Cola’s sold nearly 450 million
cases globally. Put into perspective, that's roughly
the same size as Coca Cola’s 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 Cola’s
brands of Energy Drinks contain

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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 Cola’s
more than 20 juice and juice drink
brands, offering both adults and
children nutritious, refreshing and flavorful beverages

Soft Drinks

Coca Cola’s dozens of soft drink
brands provide flavor and
refreshment in a variety of
choices. From the original Coca-Cola to most recent
introductions, soft drinks from The Coca-Cola Company are
both icons and innovators in the beverage industry.

Sports Drinks

Carbohydrates, fluids, and
electrolytes team together in Coca
Cola’s Sports Drinks, providing
rapid hydration and terrific taste
for fitness-seekers at any level

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Tea and Coffee

Bottled and canned teas and
coffees provide consumers'
favorite drinks in convenient take-
anywhere packaging, satisfying
both traditional tea drinkers and today's growing coffee
culture.

Water

Smooth and essential, our Waters
and Water Beverages offer
hydration in its purest form.

Other Drinks

So much more than soft drinks,
Coca Cola’s brands also include
milk products, soup, and more so
you can choose a Coca Cola
Company product anytime,
anywhere for nutrition, refreshment or other needs.

CONSUMER CHOICE AT A GLANCE

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Limca Common Fanta Basically Preferred by Maaza also Ladies and
drink. Ladies and Kids. Kids

Sprite not clearly Kinley Soda Mostly those who
defines. consume liquor

Factors affecting the strategic management issues

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 a Use the local language required
second language in many situations

Culture Relatively Quite diverse, both between
homogenous countries and within countries

Politics Unstable Often volatile and of decisive

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importance
Economy Underdeveloped Wide variations among countries
and among regions within
countries
Government Reasonably Often extensive and subject to
al predictable rapid change
interference
Labor Skilled labors are Skilled labors often scarce,
not available requiring training or redesign of
production methods
Financing Moderately Often poorly developed financial
developed markets; capital flows subject to
financial markets government control
Market Data collect is Sometimes data difficult and
research not very easy expensive to collect

Advertising Media are Media limited; many restrictions;
available with low literacy rates rule out print
some restrictions media in some countries

Money Must change from one currency
to another
Transportati It is not Often adequate
ons developed
Control Always a problem A worse problem
Labor Collective Layoff of workers often not
relations bargaining, layoff possible; may have mandatory
of workers worker participation in
management; workers may seek
change through political process
rather than collective bargaining
Factors Affecting International Strategic
Management

Language Culture Politics Economy Government Labor

Financing Market Money Control Advertising Contracts

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Transportation and Communication Labor Relations


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, huge advertising cost
and so forth. However economy is relatively uniform in
domestic’s 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

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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.

Transnational Strategy

The transnational corporation attempts to combine the
benefits of global scale efficiencies with the benefits of local
responsiveness.

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Strategies for Coca Cola Company

These four strategy are shown in the following figure—

Home Multi-domestic
Replication Strategy
Strategy

√
Transnational
Global Strategy
Strategy

From these four strategies Coca-Cola Company follow the
Multi-domestic strategies. They produce their products
independently in different countries. All countries product are
not same. They produce their products by following different
strategy for different countries, based on the internal and
external environment of the country. Coca-Cola Company
developed their strategy by considering the nature of the
people of different county’s 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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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-Cola Company follows this
strategy because it has several advantages. At first, the firm
depends less on a single products so it is less vulnerable to
competitive or economic threats. Secondly, related diversification
may produce economies of scale for a firm. Thirdly, related
diversification may allow a firm to use technology or expertise
developed in one market to enter a second market more
cheaply and easily. Corporate level strategies of Coca-Cola
Company is following—

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Corporate Level Strategy of Coca-
Cola Company

Marketin System Reward
Financial R&D
g Strategi System
Strategies Strategies
Strategie es Strategies

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

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differentiation, overall cost leadership and focus. Coca-Cola
Company uses the differentiation strategy effectively.

Functional Level Strategy

The functional strategies attempts to answer to question
“How we manage the function?” The functional level of the
organization is the level of the operating divisions and
departments. The strategic issues at the functional level are
related 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

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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.

Developing International Strategies

Developing international strategies is not a one-dimensional
process.. Simply put, put strategy formulations deciding what
to do and strategy implementation is actually doing it. Firms
generally carry out international strategic management 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

Page 33


organization’s 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 it’s 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

TCCQS is the Coca-Cola system’s 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 Company’s 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.

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Figure: Quality Management System of Coca-Cola Company

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

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Coca-Cola Company begins the international strategic
planning process by creating a mission statement, which
clarifies the organization’s purpose, value, and directions. The
mission statement is often used as a way of communicating
with internal and external constituents and stakeholders about
the firm’s strategic direction.

Mission statement of Coca-Cola Company

This company focused on driving growth in of their business in
selected 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.

• 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
strategies that are (generic strategy) that Coca Cola needs to

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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 profit them the most and
then target only those markets until such provisions are in
place from where the company is able to expand its target
base. After which they should opt for a broad differentiation
generic strategy.

COCA-COLA COMPANY, THE SWOT ANALYSIS

SWOT ANALYSIS

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 Company’s strong brand
value facilitates customer recall and allows Coca-Cola to

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penetrate markets. However, the company is threatened by
intense competition which could have an adverse impact on
the company’s market share.

Analyzing the primary competitor and identifying their
Strengths, Weaknesses, Opportunities, and Threats (SWOT
Analysis) help determine target markets, marketing plan, and
customer service, sales forecasting and sales planning.
Examining the following will assist in the competitive analysis:

Page 38


 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 of the Coca-Cola Company as a whole. The
red and white Coca-Cola is one of the very few things that are
recognized by people all over the world. Coca-Cola has been
named the world's top brand for a fourth consecutive year in a
survey by consultancy Inter brand. It was estimated that the
Coca-Cola brand was worth $70.45billion.

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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 Company’s 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

Page 40


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 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

Page 41


manufactured within the country, it could pose a threat to the
Indian beverage industry as a whole in turn affecting the sales
of the Company.

Tax and Regulatory Sector: The tax system in India is accompanied
by a variety of regulations at each stage on the consequence
from production to consumption. When a license is issued, the
production capacity is mentioned on the license and every
time the production capacity needs to be increased, the
license poses a problem. Renewing or updating a license
every now and then is difficult. Therefore, this can limit the
growth of the Company and pose problems.

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
company’s products.

COCA-COLA COMPANY, THE PEST ANALYSIS

A scan of the external macro-environment in which the firm operates can be
expressed in terms of the following factors:

• Political
• Economic
• Social
• Technological

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The acronym PEST (or sometimes rearranged as "STEP") is used to describe a
framework for the analysis of these macro environmental factors. A PEST analysis
fits 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:

Page 43


Environmental Scan

/

External Analysis

Internal Analysis

/

Macro environment

Microenvironment

|

P.E.S.T.

Page 44


Coca-Cola Company’s perform/ operate their business unit in different country
based 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
• 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

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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 particular course of
action.

The basic objective of set up this strategic and tactical plan
and goals is to exploit the firm’s strengths and environmental
opportunities, neutralize external threats and overcome the
firm’s weakness. Depending on those vital factors this Coca-
Cola Company is develop a Control Framework for their overall
controlling of management. Through this framework
managerial and organizational systems are observed, monitor,
and processed.

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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.

• 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.

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• 3 Major Criteria in decision Making are---the concept of
Maximization, the concept of satisfying, the concept of
instrumentalism.
• The vision of Coca-Cola Company is to refresh the world
in body, mind and spirit
• Bringing to the world a portfolio of quality beverage
brands that anticipate and satisfy people's desires and
needs.
• Coca-Cola Zero® has been one of the most successful
product launch hes in Coca-Cola’s 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
to achieve strategic goals and guide its daily activities
with proper observation.
• Good points of Coca-Cola Company are brand promotion,
alternative products selections, Provision of multimedia
product, catalogue pages and so on.

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 organization’s
strategic thinking is governed by the situation prevalent in its
external environment. The external environment comprises of
the strategic moves adopted by the organization’s
competitors. The organization has to carefully study these
moves and accordingly devise strategies to gain competitive

Page 48


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

Page 49


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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